Adrift and Rudderless in a Keynesian Fog

San Diego – Only 8 weeks ago, wrapped in the sacred robes of Keynesian wisdom, Fed Chairman Ben Bernanke asserted proudly that from that the country, following the application of the economic policies of that paragon of financial wisdom who, in the history of the world, though he is adored by socialist and liberal thinkers, has yet to once be correct, was now vindicated by the situation where we were seeing slow but steady progress out of our economic woes.  The sentiment was echoed by White House occupants and sycophants and their heralds in the media.  If you listened to network news or to the policy parrots of the administration at MSNBC, you would have every reason but one to think we were on our way to a splendid if slow recovery.

And that one reason not to think so?  It simply was not true.  Last week, according to the AP, Ben Bernanke admitted that it was not happening and he was clueless as to why not and worse, that the troubles could continue into next year.  Well, OK, to be fair, that is not precisely what he said.  What he actually said was,

“We don’t have a precise read on why this slower pace of growth is persisting. … the weak housing market and problems in the banking system might be ‘more persistent than we thought.’”

I want to remember that phrase for my own use: “We don’t have a precise read on…”  What an elegant phrase to admit you are simply stumped.  But the class of the annunciation does not ameliorate the underlying message.  They have tried what their guru told them and when it did not work, their blinders were so tightly aimed they had no way to analyze the results because they fell outside of the paradigm they had accepted totally.

Now bear in mind this is from the same group of briliant policy wonks that insist the way to help us out of a debt crisis is by raising our credit limit.  In talking about the Democrat’s position debate over raising the debt ceiling, Sen Harry Reid and other Democratic leaders said an agreement should include some spending increases for infrastructure, clean energy and other programs to boost the economy.

Don’t you get it?  There is only one reason to want the debt ceiling to be raised and that is so you can spend more?  If you truly don’t want to spend more money and wish to actually cut some spending, why raise the debt ceiling instead of simply starting to pay down the liabilities?  And don’t try the current red herring on me that if we don’t then we will start defaulting.  Bovine Excrement!!!  This is not about any default; the Congressional Budget office declared we take in more than enough in revenue (read, “Taxes”) to pay the interest on the current indebtedness plus basic essential government operations.

Therefore the only way we would default on our debt is for our dear leader to decide to default on the interest in favor of spending elsewhere.  In other words, an abject failure of proper prioritizing.  It is perfectly analogous to the decision by a person facing bankruptcy who decides, instead of paying off existing debt with his income and cutting his spending, to spend all his money buying a new TV and then buys a new car on the credit card before it collapses.  That is exactly what King Barrack, Baron Bernanke, and Lord Geitner are telling you is the best plan for the country.

And how has it worked out so far, do you think?  Has the investments we were assured would stop the recession and put us on the road to recovery worked?  Have they worked even a little bit?  Has unemployment dropped as promised?  Has national productivity started a noticeable climb?  Have housing costs adjusted properly?  No, no, no, and no.

The argument is we need to do MORE “investment” (spending) to boost the economy.  But that is exactly the plan Greece adopted and we all know how that is working out for them,  Ditto Portugal, Ireland, Spain… and we would be different why?

Every word this gang utters about wanting to get spending under control is a bald faced lie or exhibits galactic level stupidity.  The way to get spending under control is to stop spending.  Period.  There is no other.  The way to control debt is to cut up the credit cards not to increase the limits on the ones you have or, worse, get some more.  This is about priorities in a rational spending budget.  Period.  To get us out of this via taxes would require, using CBO, IRS, Census bureau, and Government figures, about $47,000.00 (that is $47 thousand dollars) from every individual in the country including those not now paying any taxes.

The math is, again as i’ve pointed out over and over, incredibly simple.  The only way to not “get it” is to not WANT to get it and be blind to it.  And how about those rich folks including the truly rich plus those owning small business as sole proprietorships whose income is listed at over $200,000.00 (and note the missing item you are not told is that people who want this figure as a criterion do not mention this is “Before Tax” income)?  Well then since it is a smaller number, each of them would have to cough up $3.5 million in taxes.

Sure there are some that could pay it out of pocket change but the majority of people in that income bracket are small business owners and do you seriously believe it would not have a detrimental effect on the same small businesses that are the major employers in this country?  I honestly do not have a problem closing true tax loopholes, but anyone who thinks that will solve the debt problem and let our profligate  spending continue unabated is either hopelessly stupid or sim[ply does not want to face or acknowledge the reality involved.  I’m in favor of the fair flat tax approach but it will not get us out of this mess.  As noted in another post using 100% of our tax revenues will not get us out of this.

So we remain adrift.  Or… as I have suggested before, we are not adrift at all but in the hands of a Captain Ahab, purposefully setting sail after the white whale of democracy and capitalism following the compass of Keynesian/socialist ideals and willing to take us all down with the ship for his ideology which he believes will, in the end be better for us after the ship sinks and he rebuilds us a better boat from the flotsam.  And who is to stop him except us voters?

I just was sent a “civics” test from an inter-collegial studies course.  The friend who sent it to me scored an 87% and I scored a paltry 86%.  But here comes the really frightening statistic.  Of the college professors who took it, the average score was 55% and the overall score of general citizens was 49%. It terrifies me to think our education is in such hands as those professors and worse, that our future is int he hands of those average citizens.   You can take it for yourself at this URL:

http://www.isi.org/quiz.aspx?q=FE5C3B47-9675-41E0-9CF3-072BB31E2692>

Good luck to the rest of you who, along with me, is drifting on the ship of state we need to rename the Pequod!

 

Tough Times

San Diego – Things are getting really grim for education in this state and especially for the Community Colleges.  Under the best case scenario we will lose at least 200 course sections at City College by next Fall Semester.  And it could double that number if the State continues to place more emphasis on protecting prison guards and prisoners, prohibiting drilling and refining, and making sure the snail darter and delta smelt are accorded more attention and sympathy than it provides for educating its next generation.  Never mind that without the education that a college offers, individuals will only get lower paid jobs and the tax base to pay for all of those entitled victims feeding at the public trough will get smaller and smaller, or that as taxes rise the employers themselves will continue, as they have already started, to leave for better business environments and with them more contributors to that tax base will evaporate.

Of course that scenario is mirrored by the Federal government as well which seems determined to spend more, not less, and to adopt as a solution to cash needs the expedient of printing money and loaning it to itself using the wonderful euphemism of “Quantitative Easing” or QE.  Is there no one that reads history?  Are the sycophants of King Barrack or Count Bernacke so willfully blind they refuse to even consider the obvious.  They are all in thrall to the liberal economic theory of John Maynard Keynes but they are so without having actually READ Keynes’s work.  And if they did, they quickly turned the page when he wrote, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”  As Milton Friedman noted, only a government can take expensive paper and very good ink and turn the combination into something worthless.

The really scary thing is that maybe they DO know.  Perhaps they are all as smart as claimed and this is not slipping by them, it is being done on purpose.  How did Keynes phrase it? “…overturning the existing basis of society.”  Does that sound like “transforming” society to you?  Before you can transform or overturn a society, unless you are already starting with a generally illiterate populace or one used to autocracies, you have to seriously dumb it down and make it dependent on the authority to keep the food trough filled.   Hmmmmmm.  And what better way of doing that than to start the devaluation of both the currency and the educational system?

A growing cadre of financial advisors and economists are trying to sound the alarm bell that we are heading toward catastrophic inflation but are ignored by the mainstream press.  The government denies it absolutely and tells us instead, in a wonderful example of a magician’s trick, that we are in lessening danger of DEflation.  But gas at the pump has doubled in the past two years.  The increasing fuel costs have increased food costs (it takes fuel for farm implements, transportation, power to stores, and GETTING to the stores) to, in some cases, nearly 50% in that same period.  People may do little more than complain about gas but when they start cutting back on food it will get their undivided attention.  If we, as a society, sheepishly accept that and then accept the sure-to-follow offer of the government to step in and provide for us, then it is hard to see how something could be more transformative from a self reliant people to a dependent people.  it will be a redistribution of wealth all right, redistributed from he people who earned it to the government so they can pay down the debt and get their credit back.

Machiavelli would be proud of King Barrack if he pulls that one off.  Political “good” is achieved when an environment is created that allows citizens to be self reliant and self sufficient and enjoy the fruits of their own labor.  Political “Evil” is achieved when the citizens are made dependent upon the government or “village” to survive.  And what would we call such a system?

Using labels to demonize philosophical opponents is a scurrilous, but effective trick because it halts debate and clouds issues behind an emotional smokescreen, so I am not going to assert that our progressive thinkers are one thing or another.  I would assert however that their ideas and ideals are more closely aligned with those of William Godwin than of John Locke, more clearly flowing from Jean Jaques Rousseau than from Edmund Burke, far more consistent with the thinking of Karl Marx than of Thomas Jefferson, and would garner greater enthusiasm from Gus Hall than from John Kennedy.  And in that is a message that is both critically important and generally ignored.

The silence is deafening and i can see “deer-in-the-headlights” stares aimed at me.  What?  “Who are those people?” you ask.   If you do not know and do not know what they all stood for then I would suggest you have no business taking part in the political discourse and debate because without knowing how we got to where we are you can have no idea where it is going.  It is like mathematically trying to draw a trend line based on a single data point.  If you want to know the truth about someone’s foundational beliefs and where they are likely to lead, then you must understand the foundations of those beliefs.  And if you will do that, and God knows the web can make it far easier for you than it was in the old days of actually having to have or go to a library and, gasp, READ something, then you may be somewhat unsettled by the information and find yourself needing to rethink things a bit.  In doing so you will start, finally, to become one of those “informed citizens” Jefferson said was essential to the success of democracy.  Perhaps you will read and understand the fear the founders had when Madison, and Jefferson, philosophical opponents in may ways, agreed that the greatest danger would come when the people realized that they could, directly or indirectly, write themselves a check from the public treasury.

We are there now.  The danger is bleak and at the gates.  The only question of value at this point is are you going to man the walls to fight it off or run down and open the gates?  Or does it matter?  Have we in fact, as some economists are saying, passed the tipping point from where recovery without tumult is no longer possible?   If so it will be because too many people sat on their hands and researched no more deeply than the talking points of their chosen party, steeped themselves in the profound philosophies of bumper stickers, and blindly followed those choir masters of the chosen choir.  If this culture and country craters around our ears then those blind followers are the people to blame.

Perhaps it will be too late for California’s education system to recover and it, along with the State’s economy, will need to collapse and wait to be rebuilt until the wreckage of its current policies is utterly inescapable to anyone willing to look.  Perhaps it will be the same for the State’s economy and, for that matter, the Country.  I hope not but I must confess I am no longer optimistic.