Category Archives: Inflation

Dead-In-The-Water Debt Commission

Britain, Debt, Economy, Government, Inflation

My maxim,“Government commissions are where accountability goes to die,” played out today when, as the Washington Examiner reports, “President Barack Obama’s deficit commission failed to forge consensus on what to do about an increasingly urgent debt problem …”

“The 11-7 vote in favor of the panel co-chairmen’s recommendations for a painful mix of spending cuts and tax increases foretells a bitterly partisan and possibly unproductive debate in the House. If there’s a deal to be had, it will likely be reached in the Senate. Fourteen votes were needed to officially send the plan to Congress now for quick action on it.”

“The Details” of the thwarted plan, have been distilled by The Huffington Post’s Sam Stein:

“The draft put out by the commission chairs has been released, coming in at 50 pages. The overarching goal, Simpson and Bowles write, is to achieve ‘nearly $4 trillion in deficit reduction through 2020’ while reducing ‘the deficit to 2.2% of GDP by 2015.'”

“How they get there is going to be a matter of contention as other commission members have already stressed their displeasure with the suggestions. But here are a few of the more noteworthy suggestions.”

* Roll discretionary spending back to FY2010 levels for FY2012, requires 1% cut in discretionary budget authority every year from FY2013 though 2015;

* Fully offset the cost of the ‘Doc Fix’ by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth;

* Reduce farm subsidies by3 billion per year by reducing direct payments and other subsidies;

* Achieve100 billion in Illustrative Defense Cuts;

* Index retirement age for Social security to increases in longevity. ‘This option is projected to increase the age by one month every two years after it reaches 67 under current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075.’ There will be a ‘hardship exemption’ for those unable to work beyond 62;

* Give retirees the choice of collecting half their benefits early and the other half at a later age to minimize impact of actuarial reduction and support phased retirement options;

* Reduce corporate tax rate to 26% and permanently extend the research credit;

* Gradually increase gas tax to fund transportation spending.”

[SNIP]

Think about it: The American president appoints a select group of like-minded officials tasked with coming up with a plan to tackle the deficit, the debt and the government’s long-term, looming liabilities. The commission completes its task by agreeing not to tackle the task. Meanwhile, the British PM has fired hundreds of thousands of state worker and slashed departmental budgets.

UPDATED: 'THE Ben Bernanke' For Babies

Debt, Fascism, Federal Reserve Bank, Inflation, Political Economy

“The printing money is the last refuge of failed economic empires and banana republics and the Fed doesn’t want to admit that this is their only idea. … The plumber is clearly smarter than The Ben Bernank. … The Fed thinks prices are going down [deflation] when in fact they are going up [inflation]. And they think that during a recession with The High Unemployment that it is better if the things people need to buy cost more money. …”

Out of the mouths of babes engaged in a Socratic debate about the Federal Reserve Bank and “The Bernank” comes this delightfully simple, but cerebral, YouTube explanation of the workings of the Fed.

But, change “The Fed has been wrong about every major economic development for the past 20 years” to almost 100 years. For that is the duration of the error that is the Fed. 1913 is when The Fed was founded.

Especially adorable is the “THE”: The Bernanke, The printing of The money, The Deflation, The Inflation, The Goldman Sachs (“they make their living ripping-off The American People”). The Quantitative Easing. The Change.

UPDATE: The creative genius behind the above is also author of the “iPhone4 vs HTC Evo” wonderful clip:

UPDATE II: Not So Pale-Lin

Aesthetics, China, Debt, Federal Reserve Bank, Inflation, Political Economy, Regulation, Sarah Palin

“He’s backwards,” said Sarah Palin about Barack Hussein Obama’s lack of economic smarts. She spoke on the occasion of Judge Andrew Napolitano’s Fox Business show, Freedom Watch, going daily. Palin has an unadorned way of looking at things. She spoke forcefully and fairly knowledgeably about monetary policy tonight.

Less welcome was what Palin adorned on the occasion. Palin, a natural beauty with a glowing skin, had squeezed herself into the sort of Little Black Dress Ann Coulter wears to every event. Worse still was the orange, bottled tan with which Palin’s arms, shoulders, and alarmingly large bosom had been sprayed. The difference between the pallor of Palin’s face and the bright orange of her decolletage was plain to see on the TV. Less so in the online clip. Oy vey.

Palin does not need to heed TV’s repulsive stylists; most of them have acquired their “talents” making-up Kim kardashian’s private parts for public viewing. Palin should tell the image consultants to back off. There is no need to repeat the make-over failures of the McCain campaign.

It’s good to see Mrs. Palin coming to grips with monetary policy. A mature, natural beauty like Palin has no need to adopt the trashy TV look.

UPDATED I: I don’t understand the question below. Was Palin fundamentally wrong about monetary policy tonight? Did she recommend bad policies? Why do you care where she got the ideas she was promoting vis-a-vis the Fed? If she’s reading Ron Paul’s End The Fed, or Tom Woods’ Meltdown—why do you care? Speaking to—and against—current monetary policy makes Palin and Bachmann better than almost any other pol around.

UPDATE II (Nov. 16): Let me correct the above statement: “Speaking to—and against—current monetary policy makes Palin and Bachmann better than almost any other AMERICAN, most of whom draw a blank at the causes of inflation and the devaluation of the country’s coin—except to hoot obscenities at the Chinese, as a primate would scream at a someone with a coveted banana.

UPDATE II: Lazy Boy To China: Quit Producing, Start Printing

Barack Obama, China, Debt, Europe, Federal Reserve Bank, Inflation, Political Economy

This is not even a case of the pot calling the kettle black. It’s plain insane. Barack Obama is the president of a country that is, with full presidential imprimatur, devaluing its coin and all private savings in order to conceal the ever-accreting public debt. China’s monetary policy, which is its business, is geared toward production; toward growing its economy out of any foreseeable economic straits.

Brainy boy is so stupid as to demand that China strive for a “balance” (of what? Debt and credit?)

“The president, speaking at a news conference in Seoul, suggested China bears much of the blame for global trade imbalances, The New York Times reported. He abandoned his usual cautious language on the subject and said China and other countries should not assume ‘their path to prosperity is paved simply with exports to the United States.'”

Wow, BHO is unaware that China produces for the world. But then Americans do think America is the world. In that, BHO is very American, and not so much of an alien.

Recall that Lazy Boy issued the same dire warning to Germany’s Ms. Merkel:

“U.S. President Barack Obama [has called] for Germans to aid the global recovery by spending more and relying less on exports.”It is not only Germany that Obama wishes to knee-cap economically, but Canada, Japan and China too. Given that big-spending Americans exist at the sufferance of the frugal, productive Chinese, I don’t quite know how this would work.

“Ms. Merkel countered that Germany’s growth and employment are rising—and therefore the world’s fourth-largest economy has no reason to rethink its dependence on its powerhouse industrial sector and large trade surplus.”

UPDATE I: WSJ: “We don’t like to see U.S. Treasury Secretaries so completely shot down by the rest of the world, except when they are so clearly misguided.” An understandable sentiment, except that from where I’m perched, I can’t recall when last an American president went abroad on a worthwhile mission.

Rather than leading the world from a position of strength, Mr. Obama and Treasury Secretary Timothy Geithner came to Seoul blaming the rest of the world for U.S. economic weakness. America’s problem, in their view, is the export and exchange rate policies of the Germans, Chinese or Brazilians. And the U.S. solution is to have the Fed print enough money to devalue the dollar so America can grow by stealing demand from the rest of the world. …
But why should anyone heed this U.S. refrain? The Germans are growing rapidly after having rejected Mr. Geithner’s advice in 2009 to join the U.S. stimulus spending blowout. China is also growing smartly having rejected counsel from three U.S. Administrations to abandon its currency discipline. The U.K. and even France are pursuing more fiscal restraint. Only the Obama Administration is determined to keep both the fiscal and monetary spigots wide open, while blaming everyone else for the poor domestic results. …Meanwhile, China and other Asian economies see first-hand that rather than spurring more U.S. growth (on which Asian exporters still depend), U.S. monetary ease has flooded the developing world economies with dollars they’re not able to absorb; produced exchange-rate turmoil to the detriment of the region’s traders; and sent the world’s dollar-denominated commodity prices climbing.

No one is giving voice to the following thought—and whenever I mention this point, posters on this blog equivocate—but truly, the austere economic policies leaders are pursuing in Europe and the UK bespeak of some love of country and sense of duty. These Obama, and Bush before, is without. The terrible two have done things that, ultimately, hurt their countrymen horribly; they’ve trashed the country and its coin via war, welfare and debt.

UPDATE II (Nov. 13): What do busybody conservatives have against China for producing in response to demand? Why is the centrally planned, state counterfeiting of money even remotely comparable to the production of made-in-china junk in response to the demands for made-in-china junk? Mad at the Chinese for their exports? Why do you buy them?

American Sinophobes should remember that “China has undergone considerable economic restructuring and market reforms, the consequence of which is a 300 million strong Chinese middle class. Poverty levels have receded from “53 percent in 1981 to 8 percent in 2001. Only about a third of the economy is now directly state-controlled. As of 2005, 70 percent of China’s GDP was in the private sector.” The Chinese financial system is duly being liberalized—banking is diversifying and stock markets are developing. Protections for private property rights are being strengthened as well.”

“China is changing. It is ‘out of the red’ in more ways than one. The US is changing too: It’s in the red and getting redder.”