Category Archives: Debt

Fed Chief Fights For Fiefdom

Debt, Economy, Federal Reserve Bank, Inflation, Socialism

Single-handedly has Rep. Ron Paul familiarized Americans with the Federal Reserve’s handiwork, and the havoc its monetary policy visits on the value of their coin and worldly goods. Three hundred and thirteen congressmen now sponsor Paul’s Audit the Fed Bill!

Mitt Romney worries that auditing the Fed might impede the Counterfeiter-in-Chief’s status as an independent, private institution. I mentioned Romney in a previous post for his knack for epitomizing the oil-and-water relationship the Republican front runners have with first principles. This is an an example. Romney is against an audit, he told Larry King, as he would like the Fed to remain … private. Where does one begin…

Like any public functionary presiding over a run-away bureaucratic tier, the chairman of the Fed, Ben S. Bernanke, is fighting for his fiefdom. In an editorial in the WaPo he fretted (or, rather, dissembled), “that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions. Amen.

Updated: Statist/Stupid Summit On Mount Olympus

Barack Obama, Business, Debt, Economy, Military, Regulation, Republicans

If you are a private-sector sucker plumping for a panoply of new government programs, consider the following: The more of them there are, the fewer of you there will be. Think zero-sum, or parasite vs. host. The first is sucking the lifeblood of the second. The larger the parasite gets, the weaker the host will grow.

[From “Life In The Oink Sector”]

Alas, STATISM AND STUPIDITY ARE INTERCHANGEABLE. Obama can “summit” (forgive this horrid “verbing” of a noun) about jobs all he likes, nothing will come of it. Because he is a dyed-in-the-wool statist, BO cannot conceive—not even with the aid of Lego or some sort of pop-up children’s model—that dolling out unemployment benefits, state aid, and government jobs programs, which all necessitate the seizure of private wealth through taxing, borrowing, and printing paper—cannot create wealth.

Here’s my simple, crude model for Obama the statist. Play with it with the First Girls. Recommend it to your friends:

Put 10 blocks in box A. Take 5 blocks out of box A and place them in box B. The owner of box A is 5 blocks poorer, the owner of box B is 5 blocks richer. Total number of blocks: still 10. Total wealth created: 0.

Come on BO, you can do it.

There is no big secret about “creating” jobs. Government can’t do it. Unless it sucks more capital and credit out of the private economy, it has only the capacity to consume wealth, not create it.

The best BO can do is take a hike; go on a 4-year vacation; walk the plank; just GET OUT OF THE WAY!

Update: Mitt Romney’s 10-point “to lift our economy” gives you an idea of the limits of Republican economic “thinking,” such that it is.

Repair and re-diretc the stimulus is one of Mitt’s recommendations. In other words, keep businesses that should go under or find a new equilibrium artificially inflated.

Individualists, proponents of the Constitution, who understand that individual liberty cannot coincide with the growth of government both at home and abroad cannot categorically accept the Republicans’ perverse notion of limited government.

Mitt also advises the president (who is beyond hope) to limit only non-military discretionary spending, and limit “new spending … to items that are critically needed and that we would have acquired in the future, such as new military equipment to support our troops abroad.”

To Republicans, the warfare state is viable; commensurate with liberty, and without the pitfalls that plague the welfare apparatus:

When Republicans and conservatives cavil about the gargantuan growth of government, they target the state’s welfare apparatus and spare its war machine. Unbeknown to these factions, the military is government. The military works like government; is financed like government, and sports many of the same inherent malignancies of government. Like government, it must be kept small.
Conservative can’t coherently preach against the evils of big government, while excluding the military mammoth.

[From “Your Government’s Jihadi Protection Program.”]

My Doomsayer Is Better Than Yours

Business, Debt, Economy, Inflation

Via the Business Insider: “Peter Schiff takes on [noted doomsayer] Nouriel Roubini on the subject of gold. Nouriel Roubini believes every asset, including gold, is over-inflated due to the dollar carry trade. Schiff disagrees, and says Roubini doesn’t understand the fundamentals behind gold — that it’s going to keep heading higher as a result of government action.”

Updated: ‘The Truth Behind China’s Currency Peg’

China, Debt, Economy, Inflation

The synophobic narrative in this country has it that somehow China’s currency manipulation is responsible for America’s trade imbalance with that country. In a manner, the pegging of the renminbi to the dollar has enabled America’s grotesque, Fellini-worthy excesses. But the relatively austere Chinese are not responsible for our appetites.

Explains Peter Schiff:

“The peg, they argue, offers China a competitive advantage by making its products cheaper in U.S. markets, thus allowing Chinese firms to gobble up market share and steal jobs from U.S. manufacturers. The thought is that were China to allow its currency to rise, American manufactures would regain their lost edge, and both manufacturing firms and the jobs formerly associated with them would return. In this narrative, the struggle centers on the United States’ diminishing leverage in persuading the Chinese to lay down their unfair weaponry. It’s a sympathetic picture, but it tells the wrong story.

While the peg certainly is responsible for much of the world’s problems, its abandonment would cause severe hardship in the United States. In fact, for the U.S., de-pegging would cause the economic equivalent of cardiac arrest. Our economy is currently on life support provided by an endless flow of debt financing from China. These purchases are the means by which China maintains the relative value of its currency against the dollar. As the dollar comes under even more downward pressure, China’s purchases must increase to keep the renminbi from rising. By maintaining the peg, China enables our politicians and citizens to continue spending more than they have and avoiding the hard choices necessary to restore our long-term economic health.”

Update (Nov. 25): Pat Buchanan too believes the US is owed Chinese “gratitude” for “throwing open its market to Chinese goods”:

had it not been for U.S. magnanimity … Beijing would never have registered the double-digit growth rates it has seen for the past two decades. Some gratitude China is showing.

In other words, Americans had been begged to buy mounds of cheap Chinese goods they had no interest in, and, out of the goodness of their hearts, bless them, they relented, bought Chinese stuff and catapulted China to “double-digit growth rates.”