Benghazigate versus Bridgegate

Posted by PITHOCRATES - January 16th, 2014

Politics 101

Even though Hillary Clinton lied about Benghazi the Press is more Interested in Bridgegate

The Senate Intelligence Committee released its report on the 2012 attacks in Benghazi.  Surprisingly, or perhaps not surprisingly, actually more of a stating of the obvious, at least for those without their heads up their backsides in blind adoration of President Obama, those who can find no fault with him or his administration no matter how many scandals and lies we catch them in, as their heads are up their aforementioned backsides, the report does not agree with the Obama administration version of what caused this tragedy (see Senate report: Attacks on U.S. compounds in Benghazi could have been prevented by Adam Goldman and Anne Gearan posted 1/15/2014 on The Washington Post).

A long-delayed Senate Intelligence Committee report released Wednesday faulted both the State Department and the intelligence community for not preventing attacks on two outposts in Benghazi, Libya, that killed four Americans, including the U.S. ambassador, in 2012.

The bipartisan report laid out more than a dozen findings regarding the assaults on a diplomatic compound and a CIA annex in the city. It said the State Department failed to increase security at its mission despite warnings, and blamed intelligence agencies for not sharing information about the existence of the CIA outpost with the U.S. military…

The document contains only one mention of then-Secretary of State Hillary Rodham Clinton…

President Obama, Secretary of State Clinton and UN Ambassador Rice all stated publically that the attack in Benghazi was caused by a spontaneous protest over an obscure YouTube video.  They didn’t say it once.  They said it again and again.  It was the YouTube video.  Period.  Which can’t be true if the State Department could have prevented this attack.  For the only way that could have happened was if there were in fact identified security issues that were promptly ignored by the Obama administration.  Not an unknown and unexpected spontaneous protest out of nowhere one day.  So they all lied.  It was planned and coordinated.  And had nothing to do with that obscure YouTube video.

And yet they only mentioned Secretary Clinton once in their report.  Odd considering she failed to do everything she could to protect her people and then lied about it.  You’d think that would warrant more than one mention.  This is big news.  At least you’d think it would be.  But other than a few newspapers and Fox News the media isn’t talking about how Secretary Clinton lied.  Instead they are more interested if another politician lied.  A governor.  In New Jersey.  Who the polls show is the greatest threat against a Hillary Clinton presidency.  They want to know what Chris Christie knew.  When he knew it.  And if he lied about knowing it.

Hillary Clinton’s Incompetence and Indifference to Americans dying doesn’t Interest the Press

They call it Bridgegate.  A play on Watergate.  Something a young Hillary Clinton went after Richard Nixon like a hyena tearing away at the entrails of a fallen prey.  Because Nixon lied.  He knew about a rank amateur burglary after the fact.  And then used the power of the executive branch to try and cover it up.  Much like the Obama administration has done often.  Only Nixon didn’t have a complicit press that would do whatever they could for their dear leader.  But I digress.

Apparently the mayor of Fort Lee, N.J., didn’t endorse Governor Christie in his reelection campaign.  And as payback a couple of Christie’s staffers closed some traffic lanes on the George Washington Bridge to cause the mother of all traffic backups in Fort Lee.  No one died like in Benghazi.  But this is what the press and the Democrats (even the Democrats outside of the press) want to know about.  And some are even using the ‘I’ word.  Impeachment (see Subpoenas Expected for Chris Christie Aides Over Bridge Scandal by GILLIAN MOHNEY posted 1/12/2014 on ABC News).

Legislative subpoenas could be served to the aides of New Jersey Gov. Chris Christie as early as Monday sources told ABC News today.

Christie has been under intense political scrutiny after it was revealed that some of his top political aides shut down key traffic lanes on the George Washington Bridge — the busiest bridge in the world — in September for what appear to be politically motivated reasons…

Some Democratic lawmakers are saying that Christie could face impeachment hearings if it turns out he knew about the lane closures and authorized them.

Wow.  Completely different from the approach in getting answers from Secretary Clinton.  Where when she finally appeared before Congress the Democrats spent more time puckering up and kissing her backside.  And when she said “what difference does it make” if it was her incompetence and indifference to Americans dying or if it was some spontaneous protest where average ordinary Muslims pulled rocket propelled grenades and mortars out of their wallets and purses to storm the American mission in a military assault they applauded her moxy.  Saying, “You go, girl.”  Figuratively, of course.

Without an Independent and Free Press you can’t keep Government Honest

It’s not so much a double standard as it is a biased press.  Much of the mainstream media today is more an extension of the Democrat Party than a free press.  Who spend more time writing propaganda for the left.  Democrats.  Elitists who think like they think.  And know as they know that they are better, wiser and more enlightened than the ignorant masses.  This is why they are foaming at the mouth over Bridgegate.  And ignore Secretary Clinton’s incompetence and indifference over the attack in Benghazi.  She who criticized candidate Barack Obama and his lack of experience.  Saying he wouldn’t know what to do if he got that 3 AM call like she would.  “There’s trouble brewing in Benghazi as we approach the anniversary of 9/11?  Well, what do you want me to do about it?”  Or, perhaps, it was something more like this.  “Tell it to someone who gives a damn.”  Of course it should be noted that this trouble did not start with a 3 AM telephone call.  It was a gradual buildup of trouble that she responded to with incompetence and indifference.

It’s sad what the American press has come to.  Even Britain with her socialist tendencies following World War II at least still has a fierce free press.  That will speak truth to power.  Put their country first instead of puckering up and kissing the backsides of those in the political party they favor.  Ignoring their lies, crimes and misdemeanors.  Such as letting Americans die so as not to spoil the campaign narrative.  Al Qaeda was reeling and in retreat.  And they couldn’t allow security concerns in Libya to upset that message.  So they abandoned the Americans in Benghazi.  And hoped the resurgence of al Qaeda in Libya wouldn’t hurt President Obama’s reelection chances.  And counted on their friends in the media not to question and disseminate the lie about the YouTube video causing a spontaneous protest that caused average Muslims to pull out rocket propelled grenades and mortars from their wallets and purses to wage war.  Now contrast the sycophant American press to the British press (see David Cameron says British Press plays ‘vital’ role in democracy by Matthew Holehouse posted 1/17/2014 on The Telegraph).

“At its best, the British Press, the political Press, have a vital role to play in our country.

“Yes: rowdy, tenacious, sceptical, uncontrollable, often uncomfortable for our politicians. But British political reporting is deservedly respected around the world, for the way it probes, it inquires, it scrutinises, and these things are linchpins of our democracy…”

Mr Cameron spoke movingly of a trip he made, accompanied by political reporters including from the Daily Telegraph, to a newspaper office in northern Sri Lanka, where journalists had been murdered after criticising the government.

“It was an incredibly powerful moment. It was a reminder of just how fortunate we are in this country to have a Press that is free, that is open, that is able to stand up to the powerful.”

Without an independent and free press how do you keep government honest?  How do you protect the American people from the lies, crimes and misdemeanors of government?  You can’t.  Instead you get propaganda that helps the powerful grow more powerful.  And it eventually gets to the point that politicians no longer debate in the arena of ideas.  They just look for opportunities to destroy their enemies.  Challengers to their power.  Like Chris Christie.  Who polls better against Hillary Clinton than any other potential Republican candidate.  So they attack Christies over Bridgegate.  To destroy him.  And they circle the wagons around Hillary Clinton to protect her from her incompetence and indifference over Benghazigate.  While never worrying what their helping the powerful to become more powerful could do one day.

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King George, President Nixon and President Obama

Posted by PITHOCRATES - November 7th, 2013

Politics 101

As far as Countries went in 1775 there were None Better than Great Britain

As late as 1775 the American colonists were still seeking reconciliation with Great Britain.  For they were proud to be British.  Citizens of the greatest empire in the world.  The British Empire.  Where there was representative government.  The rule of law.  Free market capitalism.  And no taxation without representation.  As far as countries went in 1775 there were none better.

The problem the colonists had wasn’t with the British Empire.  Or their king.  It was with the people who worked for the king.  And Parliament.  Who were denying them the rights every other British subject enjoyed in the greatest empire in the world.  With things taking a turn for the worse with the Townshend Acts.  The Tea Act.  The Stamp Act.  The Intolerable Acts (Boston Port Act, Massachusetts Government Act, Administration of Justice Act, Quartering Act and Quebec Act). 

The colonists pleaded to King George.  Who they affirmed their loyalty to.  But expressed their frustration with the king’s representatives and Parliament.  Their great incompetence.  And corruption.  Requesting relief from the king.  Wishing the king would see things their way.  And fix things.  Maybe even fire some of his people who were responsible for causing all the trouble they found themselves in.  But kings don’t fire people by request.  For kings are very intolerant.  Especially when their subjects dare to defy them.  Which is why the colonists last attempt at reconciliation, the Olive Branch Petition, was met with scorn from King George.  While the Americans were still debating whether to declare their independence King George saved them the trouble.  And declared that they were in open rebellion.  Hired Hessian mercenaries.  And waged war on his own subjects.

Nixon did not order nor was he aware of the Watergate Break-in but faced Impeachment over the Cover-up

Andy Reid is the most successful coach in the history of the Philadelphia Eagles.  Or, was.  For after going 4-12 in the 2012 season they fired him.  Because the team owner thought he was doing a poor job.  A fate many other head coaches face when they don’t deliver a winning season.  If they aren’t great in their job that’s it.  Owners fire them.  And start looking for someone who will be great.  For the owners have a large investment in their teams.  Money they won’t get back if people stop buying tickets.  Which they will do if they don’t start winning games.

Jacques Nasser was CEO of the Ford Motor Company from 1998 to 2001.  When he took office Ford was the most profitable of all automakers.  During his tenure he tried to change Ford.  To make it even more profitable.  And make Ford more than just a car company.  Sort of what Jack Welch was doing over at GE.  He acquired some other auto companies.  Dabbled in ecommerce.  And other auto businesses down the food chain from new car sales.  Including repair shops.  And even junkyards.  While he was doing all of this Firestone tires were disintegrating on the Ford Explorer.  Suffice it to say that Ford wasn’t as strong financially as it was when Nasser became CEO.  And when you do that there is but one thing to do.  Submit your resignation.  Which he did.

On June 17, 1972, a security guard caught five ‘burglars’ inside the Democratic National Committee’s headquarters at the Watergate Complex.  One of the reasons they were there was to place illegal listening devices.  To hear things that would help President Nixon’s reelection chances.  Nixon did not order this nor was he aware of it.  But names on the burglars led to the White House Plumbers.  Whose job was to stop security leaks.  Something the president did not want made public.  Which led to President Nixon’s involvement as he ordered the cover-up.  A crime so heinous he ultimately had to resign to avoid impeachment.

History shows President Nixon and King George were better Heads of State than President Obama

Scandals have plagued the Obama administration.  Fast and Furious (sending guns to Mexico so they could be ‘found’ after they were used in gun crimes to advance the gun control agenda).  Benghazi (ignoring the security risk in Benghazi and then blaming the murder of 4 Americans by terrorists on a YouTube video to help the president’s reelection chances).  Monitoring phone calls and emails of the Associated Press and Fox’s James Rosen (trying to find the source of security leaks like Nixon’s White House Plumbers).  IRS-gate (using the IRS to target political enemies of the Obama administration to suppress the opposition vote, especially the Tea Party).  And Obamacare. 

The president said if you like your insurance you can keep your insurance.  If you like your doctor you can keep your doctor.  Statements that weren’t true.  As they specifically wrote the new health care law to make sure we would lose our policies and lose our doctors.  Because we had to.  For if they didn’t get these people (the young and healthy with inexpensive ‘crappy’ policies) into their health exchanges Obamacare would be underfunded.  And if these people don’t pay for the old and sick who would?  Besides, the ultimate goal of Obamacare is to get America to a single-payer system.  What the people don’t want.  So the Affordable Care Act has to destroy the private health insurance industry first to force single-payer on the people.  Which will be easier to do when they have no other alternative.

Watergate forced a president to resign and sent some 43 people to jail.  All because of the cover-up.  Which was worse than the crime.  The Obama administration scandals are all worse than a bungled burglary.  And some of the cover-ups have been whoppers of a lie (such as the Benghazi YouTube video).  Yet no one was fired.  No one resigned.  Not even with the debacle of the Obamacare rollout.  (Such a failure would result in firings/resignations in the private sector.)  Any requests for such actions are met with scorn by the Obama administration.  Just like King George did with the American colonists.  For President Obama acts like an imperial president.  Who will lie and deceive to get what he wants (e.g., Obamacare, reelection, etc.).  For he knows what’s best for us.  Gets annoyed when we don’t see his wisdom.  And fumes with rage when his subjects dare defy him.  So President Obama shares some of the worst of President Nixon and King George.  But, sadly, he shares none of their greatness.  For history shows that they were both better heads of state than President Obama.  And that’s with all of their faults.

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Bretton Woods, Nixon Shock, OPEC, Yom Kippur War, Oil Embargo, Stagflation, Paul Volcker, Ronald Reagan and Morning in America

Posted by PITHOCRATES - October 1st, 2013

History 101

(Originally published September 18th, 2012)

Under the Bretton Woods System the Americans promised to Exchange their Gold for Dollars at $35 per Ounce

Wars are expensive.  All kinds.  The military kind.  As well as the social kind.  And the Sixties gave us a couple of doozies.  The Vietnam War.  And the War on Poverty.  Spending in Vietnam started in the Fifties.  But spending, as well as troop deployment, surged in the Sixties.  First under JFK.  Then under LBJ.  They added this military spending onto the Cold War spending.  Then LBJ declared a war on poverty.  And all of this spending was on top of NASA trying to put a man on the moon.  Which was yet another part of the Cold War.  To beat the Soviets to the moon after they beat us in orbit.

This was a lot of spending.  And it carried over into the Seventies.  Giving President Nixon a big problem.  As he also had a balance of payments deficit.  And a trade deficit.  Long story short Nixon was running out of money.  So they started printing it.  Which caused another problem as the US was still part of the Bretton Woods system.  A quasi gold standard.  Where the US pegged the dollar to gold at $35 per ounce.  Which meant when they started printing dollars the money supply grew greater than their gold supply.  And depreciated the dollar.  Which was a problem because under Bretton Woods the Americans promised to exchange their gold for dollars at $35 per ounce.

When other nations saw the dollar depreciate so that it would take more and more of them to buy an ounce of gold they simply preferred having the gold instead.  Something the Americans couldn’t depreciate.  Nations exchanged their dollars for gold.  And began to leave the Bretton Woods system.    Nixon had a choice to stop this gold outflow.  He could strengthen the dollar by reducing the money supply (i.e., stop printing dollars) and cut spending.  Or he could ‘close the gold window’ and decouple the dollar from gold.  Which is what he did on August 15, 1971.  And shocked the international financial markets.  Hence the name the Nixon Shock.

When the US supported Israel in the Yom Kippur War the Arab Oil Producers responded with an Oil Embargo

Without the restraint of gold preventing the printing of money the Keynesians were in hog heaven.  As they hated the gold standard.  The suspension of the convertibility of gold ushered in the heyday of Keynesian economics.  Even Nixon said, “I am now a Keynesian in economics.”  The US had crossed the Rubicon.  Inflationary Keynesian policies were now in charge of the economy.  And they expanded the money supply.  Without restraint.  For there was nothing to fear.  No consequences.  Just robust economic activity.  Of course OPEC didn’t see it that way.

Part of the Bretton Woods system was that other nations used the dollar as a reserve currency.  Because it was as good as gold.  As our trading partners could exchange $35 for an ounce of gold.  Which is why we priced international assets in dollars.  Like oil.  Which is why OPEC had a problem with the Nixon Shock.  The dollars they got for their oil were rapidly becoming worth less than they once were.  Which greatly reduced what they could buy with those dollars.  The oil exporters were losing money with the American devaluation of the dollar.  So they raised the price of oil.  A lot.  Basically pricing it at the current value of gold in US dollars.  Meaning the more they depreciated the dollar the higher the price of oil went.  As well as gas prices.

With the initial expansion of the money supply there was short-term economic gain.  The boom.  But shortly behind this inflationary gain came higher prices.  And a collapse in economic activity.  The bust.  This was the dark side of Keynesian economics.  Higher prices that pushed economies into recessions.  And to make matters worse Americans were putting more of their depreciated dollars into the gas tank.  And the Keynesians said, “No problem.  We can fix this with some inflation.”  Which they tried to by expanding the money supply further.  Meanwhile, Egypt and Syria attacked Israel on October 6, 1973, kicking off the Yom Kippur War.  And when the US supported their ally Israel the Arab oil producers responded with an oil embargo.  Reducing the amount of oil entering America, further raising prices.  And causing gas lines as gas stations ran out of gas.  (In part due to Nixon’s price controls that did not reset demand via higher prices to the reduced supply.  And a ceiling on domestic oil prices discouraged any domestic production.)  The Yom Kippur War ended about 20 days later.  Without a major change in borders.  With an Israeli agreement to pull their forces back to the east side of the Suez Canal the Arab oil producers (all but Libya) ended their oil embargo in March of 1974.

It was Morning in America thanks to the Abandonment of Keynesian Inflationary Policies

So oil flowed into the US again.  But the economy was still suffering from high unemployment.  Which the Keynesians fixed with some more inflation.  With another burst of monetary expansion starting around 1975.  To their surprise, though, unemployment did not fall.  It just raised prices.  Including oil prices.  Which increased gas prices.  The US was suffering from high unemployment and high inflation.  Which wasn’t supposed to happen in Keynesian economics.  Even their Phillips Curve had no place on its graph for this phenomenon.  The Keynesians were dumfounded.  And the American people suffered through the malaise of stagflation.  And if things weren’t bad enough the Iranians revolted and the Shah of Iran (and US ally) stepped down and left the country.  Disrupting their oil industry.  And then President Carter put a halt to Iranian oil imports.  Bringing on the 1979 oil crisis.

This crisis was similar to the previous one.  But not quite as bad.  As it was only Iranian oil being boycotted.  But there was some panic buying.  And some gas lines again.  But Carter did something else.  He began to deregulate oil prices over a period of time.  It wouldn’t help matters in 1979 but it did allow the price of crude oil to rise in the US.  Drawing the oil rigs back to the US.  Especially in Alaska.  Also, the Big Three began to make smaller, more fuel efficient cars.  These two events would combine with another event to bring down the price of oil.  And the gasoline we made from that oil.

Actually, there was something else President Carter did that would also affect the price of oil.  He appointed Paul Volcker Chairman of the Federal Reserve in August of 1979.  He was the anti-Keynesian.  He raised interest rates to contract the money supply and threw the country into a steep recession.  Which brought prices down.  Wringing out the damage of a decade’s worth of inflation.  When Ronald Reagan won the 1980 presidency he kept Volcker as Chairman.  And suffered through a horrible 2-year recession.  But when they emerged it was Morning in America.  They had brought inflation under control.  Unemployment fell.  The economy rebounded thanks to Reagan’s tax cuts.  And the price of oil plummeted.  Thanks to the abandonment of Keynesian inflationary policies.  And the abandonment of oil regulation.  As well as the reduction in demand (due to those smaller and more fuel efficient cars).  Which created a surge in oil exploration and production that resulted in an oil glut in the Eighties.  Bringing the price oil down to almost what it was before the two oil shocks.

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FT185: “When it comes to foreign policy the Republicans do what is best for the country while Democrats do what is best for their party.” —Old Pithy

Posted by PITHOCRATES - August 30th, 2013

Fundamental Truth

Wherever the Soviets pushed the Americans pushed back to Contain the Expansion of Communism

Once upon a time Democrats were practically warmongers.  Woodrow Wilson got us into World War I.  FDR got us into World War II.  Harry Truman got us into the Korean War.  And LBJ got us into the Vietnam War.  While Republicans were nearly pacifists.  Dwight Eisenhower got us out of the Korean War.  And Richard Nixon got us out of the Vietnam War.

Eisenhower was the Supreme Allied Commander in Europe during World War II.  Saw the carnage of war up close.  And was glad when it was over.  Unlike General Patton.  Who wanted to invade the Soviet Union.  Because he knew we would have to fight them sooner or later.  And rather do it then when they had the most awesome military force in the world still in Europe.  General Patton lost command of Third Army because of talk like that.  And later would die from injuries he got in a freak car accident.

It didn’t take long following the end of World War II for the Soviets to become the new big bad in town.  Just like General Patton foresaw.  Truman stood up to them in Berlin.  Greece.  Turkey.  Iran.  And Korea.  Wherever they pushed the Americans tried to hold the line.  To contain the expansion of communism.  It was the Cold War.  And it first got hot in Korea.  But the UN forces held the line in Korea.  After three years of war.  About as long as America spent fighting in Europe during World War II.

JFK’s refusal to commit American Military Power during the Bay of Pigs Invasion led to the Cuban Missile Crisis

Communism was a thorn in the side of democracy.  The democratic West believed in peace through strength.  With the occasional war breaking the peace.  While the communist East believed in a perpetual state of war with the occasional peace breaking that war.  The communists sought to expand through violent revolution.  If you contained it early (like in the Berlin Airlift) you could avoid a shooting war.  And keep it cold.  But if they got a foothold you could find yourself mired in a hot and prolonged war.  Like in Korea.

When Fidel Castro turned Cuba communist it was not a good thing for the United States.  For all their efforts to contain communism throughout the world here they were.  On Cuba.  Within missile range of the United States.  And Castro was cozying up to the Soviets.  Which is why President Eisenhower gave the green light for the CIA to remove Castro from power.  To remove a threat so close to the United States.  The plan was the Bay of Pigs Invasion.  Which proceeded under the following administration.  JFK’s.

The invasion, though, did not go well.  And unlike in the Guatemalan coup d’état, JFK did not commit American military power to help the invaders (unlike Eisenhower did in the Guatemalan coup).  Who were soon pushed back.  And defeated.  Which breathed new life in Cuba’s communist revolution.  Brought them more into the Soviet sphere.  And encouraged the Soviets to test this young president.  Which they did.  By sending nuclear missiles to Cuba.  Leading to the Cuban Missile Crisis.  And near nuclear war (Castro’s right hand man, Che Guevara, was angry with the Soviets because they refused to nuke the United States during the crisis).  While the Cuban people suffered under their communist oppressors.  And still do.

Today Iran—and Radical Islam—is the Thorn in the Side of Democracy that Communism once Was

Truman was the last Democrat warrior president.  LBJ got us into Vietnam.  But he also gave us the Great Society.  Turning the nation towards a welfare state.  A very costly welfare state.  Which the great costs of the Vietnam War threatened.  The government, much like they did during the Revolutionary War, began printing money to pay for all of this spending.  Devaluing a dollar pegged to gold.  With nations concerned with this devaluation they traded their dollars for gold.  Which is what is supposed to happen under a gold standard.  So nations don’t devalue their currencies.  But printing money is easier than cutting spending.  So President Nixon decoupled the dollar from gold.  So they could really print it.  Giving us the inflationary Seventies.

Since then Democrat presidents have done two things.  Expanded the welfare state.  And demonized their political opponents.  Which extended to their foreign policy.  President Carter cut back on defense spending.  And tried to make friends with our archenemy.  The Soviet Union.  A president the Soviets had little respect for.  Even considering a nuclear first-strike policy as they didn’t think Carter would ever launch his nuclear weapons.  And then President Carter criticized American ally, Mohammad Reza Shah Pahlavi, the Shah of Iran, for his human rights violation.  There was revolutionary fervor in the air.  The Shah implored for help from their long-time friend and ally.  The United States.  Who assured the Shah that the Americans would intervene militarily on his behalf.  But didn’t.  The Iranian Revolution followed.  And Iran became America’s new archenemy.

Iranian oil won World War II.  It fed the Red Army.  Iran served as a portal into the Soviet Union.  War material as well as oil flowed through Iran and into the Soviet Union.  After the war the Soviets didn’t want to leave Iran.  Give up that oil.  Or a warm-weather port on the Indian Ocean.  But the British and the Americans helped the Iranians keep the Soviets at bay.  Their actions included a coup.  And some human rights violations.  To keep what happened in Eastern Europe following World War II from happening in Iran.  Iran prospered.  And Westernized.  It was becoming everything the American left loved.  Secular.  It was becoming more like America.  Where men and women enjoyed doing things they could enjoy in New York City.  Which angered the Islamists.

Today Iran—and radical Islam—is the thorn in the side of democracy that communism once was.  And unlike their Cold War warrior forefathers, today’s Democrats choose party over country.  Basing their foreign policy on expanding the welfare state.  Or demonizing their political opponents.  President Clinton treated al Qaeda’s increasing acts of hostility against Western/American interests as a legal issue.  Which grew bolder until they culminated in the 9/11 attacks on the World Trade Center and the Pentagon.  Clinton did this so he wouldn’t waste money on defense by risking war to protect America.  Or anger his liberal base.  After 9/11, George W. Bush fought back.

The Democrats have demonized George W. Bush as a rich oil man who traded blood for oil.  While at the same time they said he was purposely causing oil shortages to raise the price of oil.  When an opportunity came to overthrow America’s new archenemy, Iran, President Obama did nothing to support the Green Revolution in Iran following questionable election results that kept Mahmoud Ahmadinejad in power.  An intervention that would have been in the best interests of both America and the Iranian people.  But when the Arab Spring blew through Egypt he was quick to tell our friend and ally, Hosni Mubarak, that he had to go.  Turning Egypt over to the Islamist Muslim Brotherhood.  But when civil war came to Syria he chose to do nothing.  Until now (to save face from his ‘red line’ comment about chemical weapons?).  When the opposition has most probably been infiltrated by al Qaeda.

What is the constant in these Democrat foreign policy decisions?  They are the opposite of what the Republicans would have done.  So they couldn’t have done them.  For it would have vindicated George W. Bush.  Angered their liberal base.  And made the world a safer place.

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Racist Democrats and Desegregationist Republicans

Posted by PITHOCRATES - August 29th, 2013

Politics 101

The Way to Great Wealth in the South was King Cotton

At the recent 50th anniversary of Dr. Martin Luther King’s “I Have a Dream” speech most if not all of the speakers were liberal Democrats.  As if the Republicans were not welcomed there.  Funny.  As it was the Republicans who battled the Democrats to end slavery, Jim Crowe Laws and discrimination.

America’s original sin, slavery, was a part of the Old World southern planters did not want to give up.  It was very similar to the manorial system of Europe.  Where peasants were tied to the land.  On a manor.  Unable to leave.  Land that a rich landowner owned.  The lord of the manor.  Property and status were hereditary.  And the peasants at the bottom of the ladder had neither.

The lords belonged to the aristocracy.  The nobility.  They lived in glorious mansions.  Gave magnificent parties.  And enjoyed the best of everything.  Courtesy of owning land.  The peasants worked the land.  And produced the greatest wealth in the kingdom for their lord.  Food.  In the American South this soon became cotton.  King Cotton.  The way to great wealth in the South was growing cotton.  And the more slaves you had the more noble your life was.

The Founding Fathers wanted to Eradicate Slavery at the Time of the Founding

Things were different in the North.  Years of growing tobacco had depleted the land.  So they diversified.  Grew different crops.  And rotated the crops around.  This required a more specialized workforce as things changed from year to year.  And few farms grew one large cash crop anymore.  So they turned to paid-labor.  Which was more efficient.  So while the South held on to the Old World the North became more egalitarian.

The Founding Fathers knew that a nation based on all men being equal could not include the institution of slavery.  They wanted to eradicate it at the time of the drafting of the Constitution.  But that created a problem with the South.  At the time of the Founding their economy was dependent on slavery.  And because it was they had more slaves than the North.  So freeing the slaves would not only destroy their economy it would force the South to live in a biracial society that was unheard of at that time.  Nowhere in the world were there biracial societies.  Not to mention the fact that the freed blacks would outnumber the whites.  The very same whites that once brutally oppressed the blacks.

To form a more perfect union they needed the southern states.  Which they had to take as-is.  With the institution of slavery.  It was a bitter pill to swallow.  As some of these Founding Fathers, especially the ones that didn’t own slaves, were conscious of the history books that would one day be written.  As well as being truly opposed to slavery.  But the choice was a new nation with slavery.  Or no new nation.  And continued sectional disputes.  Even hostilities.  Making them ripe for European intrigue.  Especially from the Old World Empires who wanted to expand their empires into North America.

The Republicans Freed the Slaves, Fought against Jim Crowe Laws and Desegregated the South

So the Founding Fathers tabled the subject of slavery for 20 years.  Sure that in 20 years time the South would adopt paid labor as they did in the North.  Sadly, a great invention changed all that.  The cotton gin.  Which could process cotton faster than slaves could pick it.  King Cotton promised more wealth than ever before.  All you needed was a lot of slaves.  Dashing the hopes of the Founding Fathers.

Wealth.  Nobility.  Life was good for the privileged few in the South.  The planter elite.  The southern Democrats.  Who used the power of the federal government to return fugitive slaves.  Then bitched about the federal government after they lost control of it.  The planter elite brought the nation to civil war.  To preserve the institution of slavery.  To keep the Old World in the South.  To keep the nobility in the South.  With them sitting at the top of the aristocracy.  But then came the Republicans.  And Abraham Lincoln.  Who issued the Emancipation Proclamation.  Freeing the slaves in the states in open rebellion.  Then Ulysses S. Grant won the American Civil War.  The Republicans pushed for and ratified the Thirteenth Amendment.  Abolishing slavery and involuntary servitude.  Then Republican President Grant sent federal troops into the South to protect the freed blacks.  As the racist southern Democrats resisted integrating the freed blacks into the South.  Eventually passing Jim Crowe Laws.  Making the freed blacks a permanent underclass with the Democrats’ separate but equal status of the freed blacks.

Democrat Storm Thurmond has the record for the longest filibuster in U.S. history.  He talked for 24 hours and 18 minutes in his opposition of the Civil Rights Act of 1957.  For he wanted to keep blacks separate but equal.  The southern Democrats opposition to civil rights was so strong that it prevailed through JFK’s administration.  Who did nothing for civil rights lest he go against the powerful southern Democrats.  Despite all the Republicans did the Democrats kept the black man down in the South.  Dr. King fought against segregation in Albany, Georgia, in 1962.  And suffered brutal police oppression in Birmingham, Alabama, that same year.  Things were so bad during JFK’s administration that Dr. King helped organized the 1963 March on Washington.  Where he gave his famous “I Have a Dream” speech.  But real change would have to wait until Republican Richard Nixon became president.  Who implemented the first large-scale desegregation of public schools in the Democrat-controlled South.  And Nixon implemented the first affirmative action plan.  The Philadelphia plan.

Yet despite all of this the Democrats claim the title of champion of civil rights.  And dominated the 50th anniversary of Dr. Martin Luther King’s “I Have a Dream” speech.  Even though it was the Republicans who freed the slaves, fought against Jim Crowe Laws and desegregated the South.  While the Democrats fought them every step of the way.  Yet the Democrats are civil rights champions.  While Republicans are racists.  What’s wrong with this picture?

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Quantitative Easing

Posted by PITHOCRATES - June 24th, 2013

Economics 101

The Gold Standard prevented Nations from Devaluing their Currency to Keep Trade Fair

You may have heard of the great gamble the Chairman of the Federal Reserve, Ben Bernanke, has been making.  Quantitative easing (QE).  The current program being QE3.  The third round since the subprime mortgage crisis.  It’s stimulus.  Of the Keynesian variety.  And in QE3 the Federal Reserve has been ‘printing’ $85 billion each month and using it to buy financial assets on the open market.  Greatly increasing the money supply.  But why?  And how exactly is this supposed to stimulate the economy?  To understand this we need to understand monetary policy.

Keynesians hate the gold standard.  They do not like any restrictions on the government’s central bank’s ability to print money.  Which the gold standard did.  The gold standard pegged the U.S. dollar to gold.  Other central banks could exchange their dollars for gold at the exchange rate of $40/ounce.  This made international trade fair by keeping countries from devaluing their currency to gain a trade advantage.  A devalued U.S. dollar gives the purchaser a lot more weaker dollars when they exchange their stronger currency for them.  Allowing them to buy more U.S. goods than they can when they exchange their currency with a nation that has a stronger currency.  So a nation with a strong export economy would like to weaken their currency to entice the buyers of exports to their export market.  Giving them a trade advantage over countries that have stronger currencies.

The gold standard prevented nations from devaluing their currency and kept trade fair.  In the 20th century the U.S. was the world’s reserve currency.  And it was pegged to gold.  Making the U.S. dollar as good as gold.  But due to excessive government spending through the Sixties and into the Seventies the American central bank, the Federal Reserve, began to print money to pay for their ever growing spending obligations.  Thus devaluing their currency.  Giving them a trade advantage.  But because of that convertibility of dollars into gold nations began to do just that.  Exchange their U.S. dollars for gold.  Because the dollar was no longer as good as gold.  So nations opted to hold gold instead.  Instead of the U.S. dollar as their reserve currency.  Causing a great outflow of gold from the U.S. central bank.

Going off of the Gold Standard made the Seventies the Golden Age of Keynesian Economics

This gave President Richard Nixon quite the contrary.  For no nation wants to lose all of their gold reserves.  So what to do?  Make the dollar stronger?  By not only stopping the printing of new money but pulling existing money out of circulation.  Raising interest rates.  And forcing the government to make REAL spending cuts.  Not cuts in future increases in spending.  But REAL cuts in current spending.  Something anathema to Big Government.  So President Nixon chose another option.  He slammed the gold window shut.  Decoupling the dollar from gold.  No longer exchanging gold for dollars.  Known forever after as the Nixon Shock.  Making a Keynesian dream come true.  Finally giving the central bank the ability to print money at will.

The Keynesians said they could make recessions a thing of the past with their ability to control the size of the money supply.  Because everything comes down to consumer spending.  When the consumers spend the economy does well.  When they don’t spend the economy goes into recession.  So when the consumers don’t spend the government will print money (and borrow money) to spend to replace that lost consumer spending.  And increase the amount of money in circulation to make more available to borrow.  Which will lower interest rates.  Encouraging people to borrow money to buy big ticket items.  Like cars.  And houses.  Thus stimulating the economy out of recession.

The Seventies was the golden age of Keynesian economics.  Freed from the responsible restraints of the gold standard the Keynesians could prove all their theories by creating robust economic activity with their control over the money supply.  But it didn’t work.  Their expansionary policies unleashed near hyperinflation.  Destroying consumers’ purchasing power.  As the greatly devalued dollar raised prices everywhere.  As it took more of them to buy the things they once did before that massive inflation.

The only People Borrowing that QE Money are Very Rich People making Wall Street Investments

The Seventies proved that Keynesian stimulus did not work.  But central bankers throughout the world still embrace it.  For it allows them to spend money they don’t have.  And governments, especially governments with large welfare states, love to spend money.  So they keep playing their monetary policy games.  And when recessions come they expand the money supply.  Making it easy to borrow.  Thus lowering interest rates.  To stimulate those big ticket purchases.  But following the subprime
mortgage crisis those near-zero interest rates did not spur the economic activity the Keynesians thought it would.  People weren’t borrowing that money to buy new houses.  Because of the collapse of the housing market leaving more houses on the market than people wanted to buy.  So there was no need to build new houses.  And, therefore, no need to borrow money.

So this is the problem Ben Bernanke faced.  His expansionary monetary policy (increasing the money supply to lower interest rates) was not stimulating any economic activity.  And with interest rates virtually at 0% there was little liquidity Bernanke could add to the economy.  Resulting in a Keynesian liquidity trap.  Interest rates so close to zero that they could not lower them any more to create economic activity.  So they had to find another way.  Some other way to stimulate economic activity.  And that something else was quantitative easing.  The buying of financial assets in the market place by the Federal Reserve.  Pumping enormous amounts of money into the economy.  In the hopes someone would use that money to buy something.  To create that ever elusive economic activity that their previous monetary efforts failed to produce.

But just like their previous monetary efforts failed so has QE failed.  For the only people borrowing that money were very rich people making Wall Street investments.  Making rich people richer.  While doing nothing (so far) for the working class.  Which is why when Bernanke recently said they may start throttling back on that easy money (i.e., tapering) the stock market fell.  As rich people anticipated a coming rise in interest rates.  A rise in business costs.  A fall in business profits.  And a fall in stock prices.  So they were getting out with their profits while the getting was good.  But it gets worse.

The economy is not improving because of a host of other bad policy decisions.  Higher taxes, more regulations on business, Obamacare, etc.  And a massive devaluation of the dollar (by ‘printing’ all of that new money) just hasn’t overcome the current anti-business climate.  But the potential inflation it may unleash worries some.  A lot.  For having a far greater amount of dollars chasing the same amount of goods can unleash the kind of inflation that we had in the Seventies.  Or worse.  And the way they got rid of the Seventies’ near hyperinflation was with a long, painful recession in the Eighties.  This time, though, things can be worse.  For we still haven’t really pulled out of the Great Recession.  So we’ll be pretty much going from one recession into an even worse recession.  Giving the expression ‘the worst recession since the Great Depression’ new meaning.

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Did President Obama use the IRS to attack Enemies of his Administration during the 2012 Election?

Posted by PITHOCRATES - May 11th, 2013

Week in Review

President Obama’s Treasury Department’s IRS is caught harassing perceived enemies of the Obama administration.  To help stifle their free speech during the 2012 election.  But they deny it was political.  And apologize (see IRS apologizes for targeting conservative groups by STEPHEN OHLEMACHER posted 5/10/2013 on the AP).

The Internal Revenue Service apologized Friday for what it acknowledged was “inappropriate” targeting of conservative political groups during the 2012 election to see if they were violating their tax-exempt status.

IRS agents singled out dozens of organizations for additional reviews because they included the words “tea party” or “patriot” in their exemption applications, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups. In some cases, groups were asked for lists of donors, which violates IRS policy in most cases, she said…

About 75 groups were inappropriately targeted. None had their tax-exempt status revoked, Lerner said.

The IRS is an independent agency within the Treasury Department that enforces the nation’s tax laws. Revelations that the agency was targeting political groups because they were affiliated with a movement that is critical of President Barack Obama could become a new headache for the White House…

IRS Commissioner Douglas Shulman told Congress in March 2012 that the IRS was not targeting groups based on politics.

How can this be anything but politics?  And a gross misuse of power?

The Obama administration would identify organizations with ‘Tea Party’ and ‘patriot’ in their name as enemies of the Obama administration.  For with every shooting or bombing on American soil the go-to people are the ‘anti-government’ Tea Party and patriot people.  Radical conservatives as they call them.  Of course it hasn’t yet turned out that a mass murderer was a radical conservative.  They have been either radical Islamists.  Or people with mental health problems.

After what we’ve learned about the Benghazi cover-up this past week is it really hard to believe that the Obama administration used the power of the IRS against political opponents?  President Nixon did that.  So why not President Obama?

Both President Obama and President Nixon lied to the American people to improve their reelection chances.  Who would have thought that the guy who wanted to be compared to FDR would actually be more like President Nixon?  Of course, with President Nixon there was a crime.  A break-in.  But no one died.  As they did in Benghazi.  Because the Obama administration just couldn’t grant the requests of Ambassador Stevens for more security after President Obama declared the War on Terror was over.  For the 2012 campaign message was that ‘Osama bin Laden was dead.  And General Motors is alive’.  With bin Laden gone al Qaeda was defeated.  At least that was what the Obama administration was saying.  After bin Laden’s death there were no more radical Islamists trying to kill Americans.  This was why we needed to vote for President Obama.  For he made the world a safer place.  And beefing up security in Benghazi wouldn’t help that message before the election.  So they denied Ambassador Steven’s request.  For what could possible happen?

A full-scale military assault.  That’s what.  Which was even worse to the Obama campaign than beefing up security.  The Obama administration couldn’t have this.  So they concocted the story about the anti-Islamic YouTube video and a spontaneous uprising.  And when the intelligence reports came in identifying an al Qaeda affiliated terrorist group they took their talking points and edited them down.  Pulling anything ‘militant Islamist’ out of them.  This despite the president of Libya confirming the al Qaeda connection.  This kept the Benghazi mess quiet through the election.  And what’s to say they might have set the IRS on their political opponents to help keep the Benghazi mess quiet through the election?

They lied about Benghazi.  So they’re probably lying about the IRS.  The very same people they’re putting in charge of the funding of Obamacare.  Who will be looking ever more closely at our employers.  And our personal lives.  But there’s nothing to worry about.  For the IRS would never use their power for political purposes.  Not with the most transparent presidency since the Nixon administration.  Well, perhaps not quite as transparent as the Nixon administration.  Then again, it’s probably one of the least transparent administrations in U.S. history.  In fact, the Nixon administration was probably more transparent and honest than the current administration.  Nixon may have lied.  But he didn’t leave his embassy staff unprotected.  So enemies of the United States could kill them.  And then lie to cover it up.

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Civilian Labor Force Participation Rate and Recessions 1950-Present

Posted by PITHOCRATES - April 9th, 2013

History 101

LBJ was able to pass JFK’s Tax Cuts resulting in a Long Period of Economic Growth

The official unemployment rate is stuck around 8%.  But if you count all the people who can’t find a full-time job the actual unemployment rate is closer to 14%.  With every jobs report we hear the positive spin from the government about another down tic in the official unemployment rate.  And the hundreds of thousands of new jobs created.  But after three years or so of hearing these reports people start questioning the numbers.  And the rosy spin.  Because despite all the good news they tell us people are disappearing from the civilian labor force.  Which is the only reason why the official unemployment rate is falling.  Because they’re not counting a lot of unemployed people.  So looking at the civilian labor force may be a better indicator of the health of the economy.  Or better yet, the civilian labor force participation rate (CLFPR).  Which is basically the percent of those who can work that are working.  So let’s do that.  Starting with the Fifties.

Labor Force Participation Rate and Recessions 1950 to 1959

After World War II veterans went to college on the G.I. Bill.  These new college graduates with degrees in science, engineering and business management entered the workforce in the Fifties.  Helping the United States to develop new technologies.  New industries.  And a lot of new jobs.  American wells were busy pumping domestic oil.  Keeping gasoline cheap.  Having escaped the damage of war the American economy exported to those countries that didn’t.  And consumer spending took off.  Thanks to the new advertising industry telling Americans about all the great things to buy.  They bought houses and cars with borrowed money.  And used the new credit card to spend even more money they didn’t have.  Changing the American economy into a consumer-based economy.  Making the Fifties one of the most prosperous times in U.S. history.  Despite the Korean War.  And the Cold War.  Which was getting underway in a big way.  There was a burst of inflation to help pay for the Korean War.  When it ended they contracted the money supply to get rid of that inflation sending the economy into recession.  But once the recession ended the economy took off with all that consumerism.  Shown by the sharp rise in the CLFPR.  To correspond with the very good economic times of the Fifties.  Another monetary contraction happened in 1957 to tamp out some price inflation.  With a corresponding fall in the CLFPR.

Labor Force Participation Rate and Recessions 1960 to 1969

The Sixties started with another recession.  After it ended, though, the CLFPR continued to fall.  The recession was officially over but the economy was not doing well.  The CLFPR fell for almost three years following the recession.  Things were different from the Fifties.  For one, a lot of those war-torn economies were up and running again.  Providing some competition.  Especially a little island nation by the name of Japan.  Which one day would build all the televisions sold in America.  It was because of this fall in economic activity that JFK started talking about tax cuts in 1963.  Congress blocked his attempt to cut tax rates.  But after his assassination LBJ was able to pass the Revenue Act of 1964.  This lowered the top marginal tax rate from 91% to 70%.  And lowered the corporate income tax from 52% to 48%.  Among other favorable business measures.  Resulting in a long period of economic growth.  And a long upward trend in the CLFPR.

The Tax Cuts and Deregulation of the Eighties created one of the Longest Periods of Economic Growth

But following the Revenue Act of 1964 came the Great Society.  The Vietnam War.  And the Apollo moon program.  All paid for with a huge surge in federal spending.  Deficits began to grow.   As the government struggled to pay for everything.  And were unwilling to cut anything.

Labor Force Participation Rate and Recessions 1969 to 1979

The economy fell into a mild recession in 1970.  The CLFPR remained relatively flat.  To meet their spending needs they started printing money.  Devaluing the dollar.  Still part of Bretton Woods the dollar was still pegged to gold at $35/ounce.  That is, the U.S. agreed to exchange gold for dollars at $35/ounce.  But as they devalued the dollar our trading partners no longer wanted to hold dollars.  Because they were losing their purchasing power.  They wanted the gold instead.  So they began exchanging their dollars for gold.  Causing a great outflow of gold from the U.S.  Causing a problem for President Nixon.  He didn’t want the U.S. to lose all of their gold reserves.  But he didn’t want to cut any spending.  Which meant he didn’t want to stop printing money.  In fact, he wanted to print more money.  And the easy way out of his dilemma was by doing the most irresponsible thing.  He slammed the gold window shut in 1971.  And refused to exchange gold for dollars anymore.  And when he did there was no restriction to the amount of money they could print.  And they printed it.  A lot.  Creating double-digit inflation before the Seventies were over.  The inflation caused prices to rise.  Which Nixon tried to prevent with wage and price controls.  Causing a shortage of available rental property as people converted them into condos to get away from the rent control.  Gasoline stations ran out of gas as people filled their tanks with below-market priced gas.  And meat disappeared from grocery stores.  Wage controls kept wages from keeping pace with inflation.  So even though people had jobs they lost more and more purchasing power.  Or simply found there was nothing to purchase.  Throwing the economy into recession in 1973.  After the recession the CLFPR grew throughout the remainder of the Seventies.  But it wasn’t good growth.  It was growth sustained with double-digit inflation.  A bubble of artificial economic activity.  That would have to crash.  As all inflationary periods must crash.

Labor Force Participation Rate and Recessions 1979 to 1989

In the Eighties Paul Volcker, Federal Reserve Chairman, raised interest rates to double digits to wring out the double-digit inflation from the economy.  To restore people’s purchasing power.  And return the nation to real economic growth.  The tax cuts and deregulation of the Eighties created one of the longest sustained periods of economic growth in U.S. history.  With one of the longest upward trends in the CLFPR ever.  Indicating a growing economy.  With more and more people who could work finding work.  Proving that Reaganomics worked.  And worked very well.

If JFK or Ronald Reagan were President Today we wouldn’t be seeing a Freefall of the CLFPR

But it wouldn’t last.  Thanks to the government’s interference into the banking industry.  They had set a maximum limit on interest rates S&Ls (and banks) could offer.  When inflation took off people pulled their money from their savings accounts.  Putting it in higher earning instruments.  So they didn’t lose their savings to inflation.   This bad banking policy begat more bad banking policy.  They deregulated the S&Ls and banks.  So they could do other things to make up for their lost savings business.  And that other thing was primarily real estate.  They borrowed short-term money to make long-term loans.  Helping to create a housing bubble.  And when they began to wring that inflation out of the economy interest rates rose.  When those short-term loans came due they had to refinance them at higher interest rates.  While the interest they were earning on those long-term loans remained the same.  So their interest expense soon exceeded their interest income.  Creating the savings and loan crisis.  And a severe recession that ended the economic expansion of the Eighties.  With a corresponding fall in the CLFPR.

Labor Force Participation Rate and Recessions 1990 to 2000

Once the recession ended the CLFPR resumed a general upward growth.  But not as good as it was in the Eighties.  Also, it would turn out that much of the growth in the Nineties was artificial.  Bill Clinton’s Policy Statement on Discrimination in Lending forced lenders to lower their lending requirements.  And to qualify the unqualified.  Which created a surge in subprime lending.  And the beginning of a housing bubble.  The Internet entered the economy in the Nineties.  Just as the personal computer entered the economy in the Eighties.  Making Bill Gates a very rich man.  Investors were anxious to find the next Bill Gates.  Taking advantage of those low interest rates creating that housing bubble. And poured money into dot-com start-ups.  Companies that had no revenues.  Or products to sell.  Creating a dot-com bubble.  And a surge in computer programming jobs.  Also, as the century came to a close there was the Y2K scare.  Creating another surge in computer programming jobs.  To rewrite computer code.  Changing 2-digit date codes (i.e., ’78) to 4-digit codes (i.e., 1978).

Labor Force Participation Rate and Recessions 2000 to 2013

The Y2K scare proved to be greatly overblown.  Which put a lot of computer programmers out of a job in January of 2000.  And they wouldn’t find a dot-com job for the dot-com bubble burst in the same year they lost their Y2K job.  Throwing the economy into recession in 2001.  And then making everything worse came the terrorist attacks on 9/11.  Prolonging the recession.  As can be seen by the long decline in the CLFPR.  Which leveled out after the Bush tax cuts.  But then that housing bubble peaked in 2006.  And burst in 2007 into the subprime mortgage crisis.  Thanks to all those toxic mortgages Bill Clinton’s Policy Statement on Discrimination in Lending forced lenders to make.  And because Fannie Mae and Freddie Mac bought these toxic mortgages and had Wall Street package them into collateralized debt obligations this crisis spread worldwide.  Selling what they told unsuspecting investors were high yield, low risk investments.  Because they were backed by the safest of all loans.  Mortgages.  What they failed to tell these investors was that these mortgages were not safe 30-year conventional mortgages.  But highly risky subprime mortgages.  In particular adjustable rate mortgages.  Where the monthly payment would increase with an increase in interest rates.  And that is what happened.  And when it happened the unqualified could not afford the new monthly payment.  And defaulted.  Kicking off the Great Recession.  And because President Obama was more interested in national health care than ending the Great Recession he didn’t cut taxes.  Or cut regulations.  Instead, he increased taxes and regulations.  Making the current recovery one of the worst in U.S. history.  As can be seen in the greatest decline in the CLFPR since the Great Depression.  If you look at a continuous graph from 1950 to the present you can see just how bad the Obama economic policies are.

Labor Force Participation Rate and Recessions 1950 to Present

The JFK and Reagan tax cuts caused the greatest economic expansions.  And the greatest rise in the CLFPR.  Also, after most recessions there was a return to a growing CLFPR.  Interestingly, the two times that didn’t happen are tied to Bill Clinton.  Who created two of the greatest bubbles.  The dot-com bubble in the Nineties.  And the subprime mortgage bubble that was built in the Nineties and the 2000s.  The growth was so artificial in building these bubbles that the CLFPR did not recover following the bursting of these bubbles.  It might have following the dot-com bubble if the subprime mortgage crisis didn’t follow so soon after.  The current recovery is so bad that it has taken the CLFPR back to levels we haven’t seen since the Seventies.  Making the current recovery far worse than the official unemployment rate suggests.  And far worse than the government is telling us.  So why are they not telling us the truth about the economy?  Because the government wants to raise taxes.  And if the economy is improving there is no need for recession-ending tax cuts.  So they say the economy is improving.  As they hate tax cuts that much.  Unlike Ronald Reagan.  Or JFK.  And if either of them were president today we wouldn’t be seeing a freefall of the CLFPR.

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FT161: “Only in government can rank amateurs be put in charge of industries.” —Old Pithy

Posted by PITHOCRATES - March 15th, 2013

Fundamental Truth

Politicians love Keynesian Economics because it’s a Pathway to European Social Democracy

For years now we’ve been hearing about President Obama’s efforts to create jobs.  Going all the way back to that laser-like focus he was putting on job creation.  And there was that $800 billion stimulus bill.  That stimulated little but Democrat campaign contributors.  The president has been talking about job creation for a long time.  Yes, he can talk the talk.  But he sure can’t walk the walk.

A big reason why the economy is still so anemic is in large part due to Obamacare.  The onerous requirements of the new health care law have frozen new hiring.  And dampened business growth.  For all those small businesses that are just starting up and trying to gain some traction see massive new costs coming their way.  On top of the massive costs they’re paying already.  From taxes.  To regulatory costs.  Increasing the cost of doing business.  And leaving less and less to reinvest into their business.  So they can grow and hire new people.  Creating jobs.  Which is something the president claims he’s all for.  Yet it is his policies that are preventing these job creators from creating jobs.  And there is a reason for that.

The president and the Democrat Party (and many in the Old Guard of the Republican Party) are Keynesians.  And they believe in the economic policies of John Maynard Keynes.  Which ushered in the era of Big Government.  And massive interventions into the private economy.  A substitution for socialism.  Providing a pathway to socialism.  As in the European variety.  Those social democracies that are all wallowing in the European sovereign debt crisis.  Because their governments grew too large.  Intervened too much into the private economy.  And spent far too much money they didn’t have.

Nixon, Ford and Carter tried Keynesian Economics on a Grand Scale once Nixon Decoupled the Dollar from Gold

All government economists are Keynesian economists.  The Keynesians tell their friends in government to keep interest rates artificially low to stimulate the economy.  Because they believe that even though consumer demand isn’t there businesses will borrow this cheap money and expand production.  And hire more people.  Also, if the economy is not performing as it should be the government needs to spend money.  With make-work programs. Paying people to do things like dig ditches.  And fill them back in.  Because they will take their earnings and spend it.  Creating economic activity.  And the government should do this with deficit spending.  Spending money they don’t have.  Either by printing it.  Or borrowing it.

They have been trying this since World War I or so.  In fact, Keynes met with FDR.  Telling him about his economic theories.  Some of which FDR took to heart.  For he did increase the size of government.  And he spent money on a lot of make-work programs.  None of which pulled the economy out of the Great Depression.  And he tried for over ten years.  Nixon, Ford and Carter tried Keynesian economics on a grand scale.  Once Nixon decoupled the dollar from gold.  Stopping the gold flow out of the country due to Nixon’s inflationary policies (foreign governments said if you want to make the U.S. dollar worthless we’ll take the gold instead at the promised exchange rate of $35/ounce).  Once they no longer had to honor that promise they were able to print even more money. Unleashing an inflation that reached double digits in the Seventies.  And caused massive unemployment and stagnant economic growth.  Stagflation.

This was a failure of Keynesian economics.  For the theory went if you have a recession you used inflation to end it.  And you did that by printing money.  But instead of an improved economy all they got was inflation (and higher prices) to go with an already bad economy.  Which just made everything worse.  Had they continued the classical economic policies that made America the number one economic power in the world (thrift, low taxes, low regulations, the gold standard, savings, etc.) there would have been no inflation.  And there would have been a lot of new economic activity.  Because this is what happened in the past with these policies.  While every time Keynesians tried to spend their way out of a recession it has never worked.  As the historical record clearly documents.

Obamacare will do to Health Care what Government has done to Businesses in our Big Metropolitan Cities

Now either those in government don’t understand this.  Or they do.  And just don’t care about the economic damage they cause as they are more interested in expanding their control over the private economy than they are about the American people.  Which means they’re either not very smart.  Or they’re devious.  Lying to the American people just to advance their agenda.  A larger and more powerful federal government.  Compounding this problem is that most of our politicians don’t understand the first thing about business.  Most are lawyers who think businesses are little more than cash piñatas.  Good for suing.  Or taxing.  But they have no idea how they work.  Which builds the case for our politicians not being very smart.  As well as being devious.

Worse, it’s these same people who are regulating the hell out of our businesses.  These people who don’t understand the first thing about running a business.  But are killing small businesses with costly regulations.  Especially in the big cities.  Where there is so much costly red tape to cut through to open a business.  And to run a business.  Especially if you want to hire employees.  A regulatory nightmare few business owners ever expected.  And so complex and costly that a lot of businesses fail because they don’t charge enough to cover all of their costs.  But these politicians don’t care.  As evidenced by the amount of business they drive out of large metropolitan cities.  Detroit once was the automotive capital of the world.  But the city government grew so large and costly that the costs of doing business in Detroit soared to pay for it.  Making it just too costly to do business in Detroit.  So businesses left.  First the jobs left.  Then the people.  The two greatest employers in Detroit these days are the City of Detroit.  And the Detroit Public Schools.  Both paid with tax dollars.  Generated by businesses.  That are no longer there.  So facing bankruptcy due to the crushing costs of government (primarily pensions and health care benefits), the governor declared an emergency.  And assigned an emergency manager to fix Detroit’s finances.

Now the people who destroyed the business environment in our big metropolitan cities are taking over health care.  Who know even less about health care than they do about running a business.  There are some doctors in Congress.  But only approximately 3.7% are doctors.  And only 16 of the 20 are Republicans.  So they will have little say with the Democrat-passed Obamacare.  While Obamacare will do to health care what government has done to businesses in our big metropolitan cities.  It will destroy it.  Because health care is very complex.  Doctors spent some 8 years of schooling to become a doctor.  And spend their career in continuing education to stay current in their fields.  But who will be managing these professionals now?  Rank amateurs.  For only in government can rank amateurs be put in charge of industries.

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Great Depression, Monetary Expansion, Keynesian, Smoot Hawley Tariff, Gold Window, Subprime Mortgage Crisis and Great Recession

Posted by PITHOCRATES - October 2nd, 2012

History 101

There was Real Economic Activity in the Twenties so the Great Depression should only have been a Recession

The Great Depression began with the Stock Market Crash of 1929.  Which led to a period of record unemployment.  On average the unemployment rate was 13.46% during the Thirties.  Or, if you don’t count all of the make-work government jobs, 18.23%.  So what caused this unemployment?  Was it the expansionary monetary policy of the Twenties?  The Keynesians thought so.  Even the economists from the Austrian school of economics thought so.  The only ones to have predicted the Great Depression.  So were they right?  A little bit.

Yes, there was monetary expansion during the Twenties.  So a recessionary correction was inevitable.  But a depression?  When you look at the economic activity of the Twenties, no.  The Roaring Twenties were a transformative time.  It was when we began to say goodbye to the steam engine.  And said hello to electricity.  We said goodbye to the horse and buggy.  And said hello to the automobile.  We said goodbye to the horse and plow.  And said hello to the tractor.  As well as said hello to radio, motion pictures, air travel, electric lighting and electric appliances in the home, etc.  So there was real economic activity in the Twenties.  It wasn’t all a bubble.  So the Great Depression should have only been a regular recession.  But it wasn’t.  So what happened?

Government.  The government interfered with market forces.  Based on Keynesian advice.  They said the government needed to increase aggregate demand.  As that demand would encourage businesses to expand and hire new workers.  Thus lowering the unemployment rate.  And part of increasing demand was keeping wages from falling.  So people had more money to spend.  Of course, if employers were to continue to pay higher wages that meant that prices could not fall.  Like they normally do during a recession.  So the Keynesian advice was to prevent the market from correcting prices to match supply to demand.  Prolonging the inevitable recession.  But there was more bad government policy.

The Keynesian Cure for Unemployment is Inflation

The stock market was soaring in the late Twenties.  Because of that real economic growth.  So what happened to that economic growth?  Well, in part, the Smoot Hawley Tariff of 1930.  Which was in committee in 1929 before the great crash.  But investors saw it coming.  And they knew tariffs rising as much as 50% were going to cool those hot earnings they’ve been enjoying.  As well as Herbert Hoover’s progressive plans.  Who would go on to double income tax rates.  When Herbert Hoover won the 1928 election the writing was on the wall.  And investors bailed.  Especially when the Smoot Hawley Tariff was moving through committee.  Because raising the cost of doing business does not help business.  So the great earnings ride of the Twenties was ending and the investors sold their stocks to lock in their profits.  Precipitating the Stock Market Crash of 1929.  And the record unemployment that would follow.  And the Great Depression.

So the Keynesians got it wrong during the Thirties.  Their next grand experiment would be in the Seventies.  As government spending took off thanks to the Vietnam War, the Great Society and the Apollo moon program.  There was so much spending that they had to print money to pay for it all.  As they did, though, they devalued the dollar.  Which became a problem.  As the U.S. at the time agreed to exchange gold for dollars at $35/ounce.  So when the Americans made their dollar worth less our trading partners decided to take our gold instead.  Gold flew out of the gold window.  So to stop this gold flow out of the country Nixon did what any Keynesian would do.  No, he didn’t cut back spending.  He decoupled the dollar from gold.  Slamming the gold window shut.  Without any advanced warning to the world.  So we now call this action he took on August 15, 1971 the Nixon Shock.  The Keynesians were thrilled.  Because they now had no restraint in printing new money.

The reason Keynesians were happy to be able to print more money was because that was their cure for unemployment.  Inflation.  When the economy goes into recession it was just a simple matter of expanding the money supply.  Which lowers interest rates.  Which makes businesses who had no intention to expand their businesses borrow money to expand their businesses.  So to pull the economy out of recession they inflated the money supply.  And did it work?  No.  Of course it didn’t.  It just raised prices.  Increasing the cost of business.  As well as leaving consumers with less real income.  So, no, the economy didn’t improve.  It just stagnated.  The average unemployment rate during the Seventies was 6.21%.  While the average inflation rate was 7.08%.  Also, the top marginal tax rate of 70%.  Which didn’t help the anti-business environment.

The Subprime Mortgage Crisis and the Great Recession were Direct Consequences of Bad Monetary Policy

So the Keynesians failed.  Again.  Their inflationary monetary policy only made things worse during the Seventies.  All of that inflation just kept pushing prices ever higher.  Ensuring that the inevitable recession to correct those prices would be long and painful.  Which it was.  In the early Eighties.  Then Paul Volcker rang out all of that inflation.  And Ronald Reagan began bringing the top marginal tax rate down until it was at 28% by the end of the decade.  Making a more favorable business environment.  So business grew.  And began to hire new workers.  Teaching an economic lesson some in government refused to learn.  Keynesian inflationary monetary policies did not work.

During the Nineties the Keynesians were back.  Inflating the money supply slowly but surely to continue an economic expansion.  Making money available to borrow.  And borrow it people did.  Creating a long and sustained housing boom that would last for about 2 decades.  That expansionary monetary policy gave us cheap mortgages.  Making it very easy to buy a house.  Housing prices rose.  And continued to rise during those two decades.  Then President Clinton had his Justice Department tell banks to lower their standards for approving mortgages for the unqualified.  So everyone could buy a house.  Even if they couldn’t afford to pay for it.  Ushering in the subprime mortgage industry.  Further increasing the demand for houses.  And further driving up housing prices.  Making the inevitable correction a long and painful one.

Meanwhile, there was something new in the market place in the Nineties.  The Internet.  And new Internet start-ups (dot-coms) flooded the market.  Investors poured money into them.  Even though they didn’t have a product to sell.  And had no earnings.  But investors were exuberant.  And irrational.  Kids flooded into universities to get degrees in computer science.  To staff all of those Internet start-ups.  Companies went public.  Creating a stock market bubble as investors scrambled to buy their stock.  They raised a boatload of money from those IPOs.  And spent it all.  Many without producing anything to sell.  And when that money ran out they went bankrupt.  Bursting that stock market bubble.  And throwing a lot of computer scientists out of a job.  Causing a painful recession in the early 2000s that George Bush helped mitigate with tax cuts.

And low interest rates.  People were back buying houses.  But this time they were buying McMansions.  Because that easy monetary policy gave us cheap mortgage rates.  And subprime, no-documentation, zero down loans, etc., made it easier than ever to buy a house.  Housing prices soared.  And builders flooded the market with more McMansions.  Pushing prices ever higher.  Fannie Mae and Freddie Mac were buying those toxic subprime mortgages from banks to encourage them to approve more toxic subprime mortgages.  Pushing the inevitable correction further and further out.  Running up prices so high that their fall would be a long and painful one.  Which it was when the subprime mortgage crisis hit.  As well as the Great Recession.  Direct consequences of bad monetary policy.  And the government’s interference into market forces.

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