I saw the following two quotes in a Patrick J. Buchanan piece. Now I’m not much of a Buchanan person by any stretch, but the quotes resonated with me and I found myself agreeing with much of what Buchanan said.
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” –Ernest Hemingway
Hemingway wasn’t an economist, but there are plenty out there consider John Maynard Keynes a fairly good one, even now. And he said much the same thing about the economic side of the Hemingway quote:
“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
Right now, in lieu of dollars, our Federal Reserve is in the midst of printing trillions of “Bernanke Bucks”. I hesitate to call them dollars, even though they’re similar in their look and feel. But in essence they are worth little more than the paper they’re printed on. And although you can’t tell them from the dollars circulating out there, their presence makes the those dollars worth less. The more BB’s there are out there, the less the remaining dollars are worth.
It is called “monetizing the debt”.
Or to pick up on Keyne’s point, we’re right in the middle of debauching our currency.
Now, there are several reasons for doing what is being done, and you may or may not agree with them. But it really doesn’t matter. Whether you agree or disagree, printing money for the right reasons or the wrong reasons still has the same effect.
If you think taxation is theft, inflation is no less than that. And in this case it is a calculated theft. Those printing the “Bernanke Bucks” know precisely what the effect on your net worth will be.
Buchanan concludes his piece pointing out what we’ve talked about here for months – this is all about the belief we can avoid the pain:
Yet one senses that we are doing again exactly what we have done before in this generation. Rather than endure the pain and accept the sacrifices to cure us of our addiction, we are going back to the heroin. And this time, with Dr. Bernanke handling the needle, we may just overdose.
The road to hyper-inflation is paved with good, but seriously misguided intentions.
This is becoming funny:
The Teleprompter Of The United States (TOTUS) has released the following excerpts of what it will be providing for the POTUS to read tonight:
Obama will tell Americans: “[W]e’ve put in place a comprehensive strategy designed to attack this crisis on all fronts. It’s a strategy to create jobs, to help responsible homeowners, to re-start lending, and to grow our economy over the long-term. And we are beginning to see signs of progress.”
“The budget I submitted to Congress will build our economic recovery on a stronger foundation, so that we do not face another crisis like this ten or twenty years from now. We invest in the renewable sources of energy that will lead to new jobs, new businesses, and less dependence on foreign oil. We invest in our schools and our teachers so that our children have the skills they need to compete with any workers in the world. We invest in reform that will bring down the cost of health care for families, businesses, and our government. And in this budget, we have made the tough choices necessary to cut our deficit in half by the end of my first term – even under the most pessimistic estimates.
“At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led to a narrow prosperity and massive debt. It’s with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest.
“That’s what clean energy jobs and businesses will do. That’s what a highly-skilled workforce will do. That’s what an efficient health care system that controls costs and entitlements like Medicare and Medicaid will do. That’s why this budget is inseparable from this recovery – because it is what lays the foundation for a secure and lasting prosperity.
“We will recover from this recession. But it will take time, it will take patience, and it will take an understanding that when we all work together; when each of us looks beyond our own short-term interests to the wider set of obligations we have to each other – that’s when we succeed. That’s when we prosper. And that’s what is needed right now. So let us look toward the future with a renewed sense of common purpose, a renewed determination, and most importantly, a renewed confidence that a better day will come.”
That’s pretty much the propaganda nut of it.
You’re excused if you’d rather spend your time doing useful things and wait until TOTUS releases the script. Frankly, rather than watching Obama, I’d much rather be watching Steve Wosniak on “Dancing With The Stars” or, better yet, getting a root canal.
If you ever had to put a picture next to the term “unprincipled political hack”, I think Arlen Specter’s would be a good choice. Read the following carefully. It’s not that Specter is against the union card check legislation itself (i.e. he accepts the premise that the right of a secret ballot should be denied American workers), he’s just is against it now. Of course many on the right are celebrating his decision, but in reality it’s a decision based in unprincipled and nonsensical reasoning (but, given the source, not at all surprising). He’s hedged the hell out of it. It’s his weasly way of placating those on the right who’re still mad at him about the “stimulus bill” vote by appearing to be against something they are against while really not being against it at all. Is your head spinning a little bit?
Senator Specter ended speculation on where he would come down on the Employee Free Choice Act by declaring, on the Senate floor, that he would oppose the legislation until the economy improves.
“The problems of a recession make this a particularly bad time to enact Employee’s choice legislation,” he said. “Employers understandably complain that adding a burden would result in further job losses. If efforts are unsuccessful to give labor sufficient bargaining power through amendments to the [National Labor Relations Act] then I would be willing to reconsider Employees choice legislation when the economy returns to normalcy. I am announcing my decision now because I have consulted with a very large number of interested parties on both sides and I have made up my mind.”
So, per his statement, the premise is fully accepted as valid by Specter. But for reasons of political expediencey, he claims that the “burden” it would impose on businesses now would “result it further job losses” which makes it unacceptable at this time. But apparently when the economy returns to “normalcy” those “burdens” and “job losses” will then be considered acceptable, as will the denial of the secret ballot to workers.
Hey, he said it, not me. Ask him how the hell he explains the apparent contradictions or why he accepts the premise workers should be denied the secret ballot at some point in the future.
A week or so ago, I mentioned the fact that Russia was lobbying for a new international currency to replace the dollar and opined that it most likely wouldn’t have any legs. By itself, Russia just didn’t have enough clout to bring about such a change. But apparently Russia was only the beginning. Later that same week, the UN came out in favor of a new currency option:
A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
“It is a good moment to move to a shared reserve currency,” he said.
But does the UN have enough leverage to push something like this through? Probably not without some fairly powerful backers of the idea. And speaking strictly of the UN, any such proposal would have to pass through the Security Council, and it’s unlikely the US would sanction such a change.
Today, though, China came out in favor of doing exactly what Russia and the UN recommend:
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
As was noted last week, China has some concerns about the US economy:
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.
And that’s a valid concern. With the Fed pumping out trillions of freshly printed dollars, inflation is almost assured.
In case you haven’t noticed, Russia and China are two of the four countries known as BRIC (Brazil, Russia, India, China). These emerging economies feel they deserve more clout than they now enjoy. And they’re meeting in advance of the upcoming G20 meeting in April of this year:
Finance ministers and central bankers from Brazil, Russia, India and China will convene ahead of the Group of 20 finance chiefs’ meeting in London on Friday, a Russian delegation source told Reuters on Thursday.
The source said the four will discuss the reform of international financial organizations such as the International Monetary Fund and the Financial Stability Forum, anti-crisis policies and preparations for the G20 summit in April.
Take a look again at China’s proposal for basing the international reserve currency in the IMF and the topic of their upcoming meeting in advance of the G20. Suddenly Russia’s proposal has some legs.
What clout does BRIC bring to the proposal? Well they are the holders of vast portions of the currency reserves around the world:
China runs the world’s biggest reserves, Russia comes 3rd, India 4th and Brazil 7th, as of last autumn.
Keep an eye out for Brazil and India weighing in on this. Should they come out in favor of such a change, as has China, it could portend some fireworks at the G20.
In the meantime, read this by Mikkel Fishman. It will explain some of the deeper and less evident problems we face. Then take a moment to look around and reflect. In my estimation, this truly is the calm before the storm.
Michael Goodwin at the NY Daily News gives this assessment of Obama in a recent column:
He is the most radical President of our times, far outside the mainstream of our political philosophy.
He is not a reformer who fixes things. He fancies himself “transformative,” a man who reshapes and reorders. It apparently begins with smashing the existing order under the pretext of managing the crisis he inherited.
During the campaign, a fellow journalist confided that “I know Obama is a Manchurian candidate, I just can’t figure out what for.”
I laughed then, but no more. Obama represents a secular religion that believes, no matter the malady, Washington is the antidote. More government is the chicken soup of his tribe.
In those four sentences, Goodwin capsulizes the essence of Obama and the “secular religion” he heads. Apparently we finally have a theocracy in place.
A closer look at the recent problem with Mexico – when the Obama administration, without consultation ended the NAFTA agreement which allowed Mexican trucks the ability to deliver in the US – reveals the answer to the question in the title:
We speak of the Democratic Congress’s recent approval of a law, signed by Mr. Obama, that killed any chance that long-haul freight trucks from Mexico could operate in the United States, as had been promised under the North American Free Trade Agreement. Giving U.S. and Mexican trucks reciprocal access to each other’s markets would save fuel and money. An international arbitration panel has also found that the United States is legally required to let Mexican trucks in.
Yet the Teamsters union bitterly resisted, claiming that poorly regulated trucks from south of the border would be menaces on U.S. highways.
To meet legitimate safety concerns and this country’s legal obligations, the Bush administration promoted a pilot project under which Mexican trucks, screened by U.S. personnel, could operate freely within the United States. The Mexican trucks compiled a safety record comparable to that of American rigs. Almost everyone was happy with the deal — except the Teamsters, for whom economic turf rather than safety has always been paramount.
So we now know that it was a payoff to the Teamsters for their help during the election. Mexican trucks had met the safety concerns of the critics and compiled an excellent safety record in the US. Given that, how else do you explain a move which may end up costing us billions of dollars in agricultural exports to one of our major trading partners for no apparent legitimate reason?
It certainly seems to me that at least in this particular situation, political payback took precedence over what was best for America.
Hope and change.
Here’s an item which, in the midst of the financial crisis, will probably be overlooked and underreported. However, it has the potential to destroy any economic recovery should we ever get one rolling.
The Environmental Protection Agency sent a proposal to the White House on Friday finding that global warming is endangering the public’s health and welfare, according to several sources, a move that could have far-reaching implications for the nation’s economy and environment.
The proposal — which comes in response to a 2007 Supreme Court decision ordering EPA to consider whether carbon dioxide and other greenhouse gases should be regulated under the Clean Air Act — could lay the groundwork for nationwide measures to limit such emissions. It reverses one of the Bush administration’s landmark environmental decisions: In July 2008 then-EPA administrator Stephen Johnson rejected his scientific and technical staff’s recommendation and announced the agency would seek months of further public comment on the threat posed by global warming pollution.
“This is historic news,” said Frank O’Donnell, who heads the public watchdog group Clean Air Watch. “It will set the stage for the first-ever national limits on global warming pollution. And it is likely to help light a fire under Congress to get moving.”
Actually I prefer to think of it as the excuse the Democratic Congress has been looking for to implement cap-and-trade. “The Court has required the EPA to consider whether CO2 is a pollutant and the EPA has so declared – our hands are tied!” And in such a convenient way. Al Gore thanks you.
Naturally business interests are not at all happy with the development.
In December 2007 EPA submitted a written recommendation to the White House urging the Bush administration to allow EPA to state officially that global warming is a threat to human welfare. But senior White House officials refused to open the document and urged Johnson to reconsider, saying such a finding would trigger sweeping regulatory requirements under the 45-year-old Clean Air Act. An EPA analysis had found the move would cost utilities, automakers and others billions of dollars while also bringing benefits to other economic sectors.
Any guess as to which “economic sectors” EPA’s analysis says will “benefit” from sweeping regulatory requirements costing the utilities and automakers billions? My guess is they really don’t exist in any major form at this moment, and what does exist is chasing vaporware. But those millions of “green collar jobs” have to be funded somehow, don’t they?
But can you guess what else is lurking out there?
Our old friend, the “Law of Unintended Consequences”. Not only would every business in our land be effected, so would every “stimulus” project aimed at improving the infrastructure:
“This will mean that all infrastructure projects, including those under the president’s stimulus initiative, will be subject to environmental review for greenhouse gases. Since not one of the projects has been subjected to that review, it is possible that the projects under the stimulus initiative will cease. This will be devastating to the economy.”
Some of the defenders of all of this will try to wave it away by claiming the administration will make exceptions for various industries and it will certainly do so for the infrastructure projects.
But Bill Kovacs, vice president of environment, technology and regulatory affairs at the U.S. Chamber of Commerce knows how this process will end up working, having witnessed similar scenarios over the years:
“Specifically, once the finding is made, no matter how limited, some environmental groups will sue to make sure it is applied to all aspects of the Clean Air Act.
That’s not a threat – that’s a promise. It is precisely how environmental groups have leveraged every environmental ruling and finding in the past. Of course, those who don’t learn from history are doomed to repeat it. And here we go …
Australian and acknowledged counter-insurgency expert David Kilcullen answering a question about the Iraqi surge in an interview with the Washington Post:
Our biggest problem during the surge was a hostile American Congress.
Of course the very same people in Congress who were the “biggest problem during the surge” are all about peace, love and getting along together now.
On April 3-4, President Obama will attend a summit in Strasbourg, France and meet NATO leaders for the first time. One of the promises he made during his campaign for the presidency is he’d improve relations between the US and other countries around the globe. One would assume that means those who we are friendly with as well. Yet since taking office he has managed to humiliate the Brits, piss off the Mexicans (who’ve now applied tariffs on over 2 billion dollars worth of our agricultural exports), see us embarrassed in front of the Russians, and now, treated NATO like a bastard step-child.
On Wednesday afternoon, e-mails circulating between Brussels and Berlin suggesting that, within the course of the day, Washington would name General James N. Mattis as the Supreme Allied Commander in Europe. The commander is in charge of all US troops in Europe as well as NATO deployments, including the ISAF security force in Afghanistan.
Traditionally, the United States appoints the supreme commander and the Europeans pick the NATO secretary general. The decision to appoint Mattis appeared to be a logical one. He has long carried the title “Supreme Allied Commander Transformation.”
In the end, though, Mattis didn’t get the appointment. Instead, Defense Minister Robert Gates announced that Admiral James Stavridis would be nominated for the highly prestigious position. The US Senate and the NATO Council must approve his nomination, but it appears likely he will get through. Gates said Stavridis was “probably one of the best senior military officers” in the US.
In Brussels, though, many felt bluffed. “America treats this like it’s purely an American matter — and they didn’t even give any hints about the appointment,” one NATO employee said. “The conspiratorial manner of the personnel search was almost reminiscent of the way the pope is selected,” Stefani Weiss, a NATO expert at the Bertelsmann Stiftung foundation in Brussels, told SPIEGEL ONLINE.
Not exactly the way NATO should be treated on the eve of a meeting in which it is clear that Obama is going to ask NATO nations to contribute more to the Afghanistan effort. As Ed Morrisey at Hot Air points out:
Democrats accused the Bush administration of “arrogance” in diplomatic efforts, mostly because we chose to bypass the UN and finish the Iraq War with our own coalition of partners. I doubt that Donald Rumsfeld, with all his New/Old Europe talk, would have appointed a Supreme Allied Commander without at least consulting the major partners in NATO. Obama’s decision to do that speaks to his own arrogance and a certain level of disdain for the Western military alliance.
Obama has spoken constantly during the past two years about the critical nature of the fight in Afghanistan, and how the Bush administration allowed themselves to get distracted by Iraq. He also criticized the damage Bush supposedly did to our alliances that hurt the Afghanistan effort. This snub looks a lot more direct and a lot more damaging than anything Bush did.
So, we’ll see what help NATO’s nations decide to offer in early April after this move.
And speaking of Afghanistan, the Obama administration is getting ready to present its strategy for our fight there. One of the first things expressed by Obama is the need for an exit strategy. Naturally that being the first thing mentioned by the new CiC bothers me. Although obviously true, I’m reminded that his “exit strategy” for Iraq was “get out, get out now and that will force the Iraqis to stand up and take charge.” I can’t help but wonder if that’s not going to be something reflected in his “new” Afghanistan strategy.
Then there’s this very strange report:
The US and its European allies are preparing to plant a high-profile figure in the heart of the Kabul government in a direct challenge to the Afghan president, Hamid Karzai, the Guardian has learned.
The creation of a new chief executive or prime ministerial role is aimed at bypassing Karzai. In a further dilution of his power, it is proposed that money be diverted from the Kabul government to the provinces. Many US and European officials have become disillusioned with the extent of the corruption and incompetence in the Karzai government, but most now believe there are no credible alternatives, and predict the Afghan president will win re-election in August.
Now Hamid Karzai may not be the leader of choice in Afghanistan for most of the West, and he may essentially be the “mayor of Kabul” in a real sense. But, like it or not, he is the duly elected president of Afghanistan. What is being talked about here is technically a coup.
The proposal for an alternative chief executive, which originated with the US, is backed by Europeans. “There needs to be a deconcentration of power,” said one senior European official. “We need someone next to Karzai, a sort of chief executive, who can get things done, who will be reliable for us and accountable to the Afghan people.”
Really? And how do these people think those who voted in Karzai will greet such interference in the internal affairs of Afghanistan? Do they suppose this is going to make the fight we have there easier? This is exactly what the Soviets did. Are they freakin’ nuts?
The risk for the US is that the imposition of a technocrat alongside Karzai would be viewed as colonialism, even though that figure would be an Afghan. Karzai declared his intention last week to resist a dilution of his power. Last week he accused an unnamed foreign government of trying to weaken central government in Kabul.
“That is not their job,” the Afghan president said. “Afghanistan will never be a puppet state.”
Can anyone think of a better way to create another class of enemy within the state of Afghanistan than to essentially depose their leader? Can you imagine the propaganda value of such a move to the Taliban who will surely say “we told you so?”
I’m getting a very bad feeling about all of this.