Tuesday, November 3, 2009
Half of U.S. kids will get food stamps!
This is a sad, sad, commentary on how a belief system is killing the greatest economic power the world has ever seen. America is dying...becoming impoverished as a result of ignorance and superstition.
Because our president, our policymakers, the media and most of the American electorate do not understand our monetary system (they think we're out of money), we are not able to make the investment necessary to sustain jobs and output and the creation of wealth. So kids go hungry.
And if the government does try to do anything of the sort, there is an outcry over meaningless deficits, while half the children in America literally have to beg for food handouts.
What is even more outrageous is that the government spent 100 times more on Tarp last year to bail out firms like Goldman Sachs than it did on food stamps! (That's right! Total food stamp outlays were $4 billion, while spending on Tarp was $400 billion!!)
The Deficit Terrorists who rule our policy with the ignorance are wrong when they say that we are passing along a legacy of debt to our children and grandkids. The REAL heritage we are leaving them is poverty...and for no good reason!
We have all the means at our disposal to create wealth and prosperity for the current and future generations, but we choose not to do it because of silly labels and a belief system that is completely mired in ignorance and fallacy.
Like I have said in the past...dangerous belief systems are like infections in a body. If they are not eradicated they will kill the body. We are killing the body America.
(Read food stamp article here.)
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14 comments:
Stimulus Food Stamps For A Stronger Middle Class? Creating jobs and helping the small american farmer....
Can we get some of that Chinese government determination to increase the standard of living of their people so we don't need food stamps? Increases in consumption and savings and incomes all at the same time?
Yes, how pathetic...we need to learn a lesson from the Chinese.
I've had people tell me we're going broke with record decifits and levels of debt that will produce a dollar crisis, fedral bankruptcy, and possibly a revolution. When I point out that debt as a percentage of GDP was about 201% after WWII, compared to around 60% now, it doesn't phase them. I also mention that the rate of increase in debt was much, much higher during WWII. This still doesn't move them. They go back to stated(incorrectly) absolute figures. Then, some of them go on to say that we can't solve a problem of looming insolvency by spending more money and that fiscal stimulus doesn't work anyway. So I ask them, "What brought us out of the Great Depression then, if not for the massive stimulus vis-a-vis the US military?" They then just repeat themselves.
This is typical and is also typical of a long standing problem in this country. Our people are very ignorant, can't think critically, and can't even do basic math. They don't even know the difference between absolute and relative figures. It may be too late to try to play catch up now.
Mike -
It's not just Americans. Europe has shackled itself to a monetary system that has produced upwards of 10% unemployment in GOOD years, as well as impoverishing their people by sending all their wealth abroad while getting nothing in return.
Idiocy knows no borders.
How did WWII get the US out of the Great Depression when at the end of the war unemployment skyrocketed (all those extra soldiers were out of a job)? You fail to understand that it wasn't the war that saved the US, it was all the savings of people buying government bonds during the war. Goods were rationed such that some goods weren't available for private consumption so people had to save. What got the US out of the Great Depression was all the real savings and wealth left over after the war, not the destructive and inflationary money printing. You economic quacks just don't understand what real wealth and economic value is. You could have learned more about true economics from a cracker jack box...
Sylvan,
You are making Mike's point and dont even know it.
You state that the American people bought US bonds during the war and that was the savings that powered a post WW2 economy. Mike is saying that the Govt currently should not be afraid to deficit spend (fiscal transfer) and issue more US bonds that by identitiy will add to the wealth of the non-govt sector (that's us!). We will get the same result now as we did back then...by your own logic.
PS stay off the Cracker Jack it will rot your teeth! Instead, keep reading this blog for objective economic analysis.
Neither your crack pot economics nor your word/logic games can change the facts. The Fed Gov is trying to get people to spend more, NOT SAVE, to "stimulate" the economy. Evidence all the "stimulus" money and stupid plans transferring money around. Perhaps you don't really understand the broken window fallacy? Maybe FritoLay should print that on the outside of their Cracker Jack boxes...
The money going into Gov bonds is not from US citizens (like it was in WWII), but foreign and US banks who are taking freshly digitally "printed" funny money at 0% interest and turning around and buying US bonds at 1-3% yield. Free money, right! NO! This is NOT real wealth, it's fake funny money fuzzy math based on fallacious gov economics. All this does is transfer money (via stealth inflation taxation) from the people holding dollars to banks, people, and corporations with political connections.
Perhaps the thing you are missing is what real money is. Pieces of paper that are printed every year so the Fed Gov can spend more than the real money they collect in taxes is not real money. Taking $100 of capital and selling it for more than $100 is creating real wealth. Selling your labor to fulfill demand for a wage is producing real wealth. Printing a few extra hundred billion dollars so you don't have to be fiscally responsible is NOT REAL MONRY OR WEALTH, even if you give it to the "non-gov" sector.
Why do you think past nations didn't just use rocks as money? Because if you can just find it lying around anywhere, or "print" it anytime you want more, it's NOT REAL MONEY because it doesn't represent REAL WEALTH.
These theories of Gov money printing cannot lead to REAL WEALTH. It can and will only lead to inflation, which destroys the value of our dollar and makes it nearly impossible for us to retire financially independent from the Fed Gov. This stealth tax inflation deficit spending policy strengthens the dependency of the people on the banks (because they are perpetually in debt) and on the Gov (they have to have Gov plans because their devalued dollars can't take care of them anymore). Do you want MORE PEOPLE dependent on Gov in the future, or less?
Just because it takes 5, 10, or 15 years for this inflation to manifest itself doesn't change the facts. Look at Bush's spending and the 25% inflation it created in the last 10 years. Can you say we are any better off today than we were 10 years ago? Unemployment is higher, everyone has even more debt (gov and "non-gov"), and deficits are even higher this time. Do you really believe doing the same thing Bush did, but BIGGER, will have a different outcome? Doesn't believing doing the same thing and expecting a different outcome partly define insanity?
Um...okay...keep reading your Cracker Jack boxes and don't forget to check in with us on a regular basis with your views. My readers love humor!
Sylvin, Let's look at your statement:
"Taking $100 of capital and selling it for more than $100 is creating real wealth. Selling your labor to fulfill demand for a wage is producing real wealth."
Ill assume that you are advocating that our monetary authorities just create a fixed amount of money in the system, and then leave it alone (dont "print" anymore to avoid "debasing" the money). Lets say they put in $100,000, and then do as you say, refuse to "print" or put any more in so they dont "debase".
Now there is a tree farmer, a lumber mill and you (you are a homebuilder for your living and want to build a home this year
for re-sale out of wood). The $100,000 that the monetary authorities put in last year seemed to work just fine...everybody had enough money and all was well in the economy. So you go to your lumber yard this year with the money you made last year $5,000 (rest of the economy has $95,000) and order lumber. Lumber yard wants to be paid up front so you give him the $5,000, he gives $2500 to the tree farmer to buy the trees, mills them down and for this he keeps the rest ($2500), now you have no money, tree farmer has 2500, lumber yard has 2500, and the rest of the economy has 95,000 (again your preferred $100k total is fixed).
You take delivery of the lumber and thru your hard work build a beautiful house. You want to sell it for 10,000, as you paid 5,000 for the lumber and need to make money to eat this year. You put a sign in the yard and a newlywed (they have little/no money) couple is interested, you tell them to go to the bank and get a loan. They come back and tell you that the bank said they have no money to lend as there is only 100,000 in the whole country and it is already allocated to everyone else who already have a place to live...now what are you going to do? Just to rub it in, the tree farmer and the lumber guy partner and offer you your original $5,000 take it or leave it...
Dont you see that the monetary authorities have to be constantly expanding the money in the system to account for newly created assets?
Please don’t misrepresent what I said. When I explained turning $100 of capital into more than $100 is real wealth and real economic growth I wasn’t calling for an end to the fractional reserve system. I’m not saying we need to get rid of loans or that banks should have 100% reserves. That $100 of capital does not have to be physical cash; it certainly can be money from loans within the fractional reserve system as we have today. We need loans for businesses so they can use those loans to increase their ability meet customers needs and to turn a profit. That’s what loans should be for; loaning money when that loan increases the ability for the business to pay it back through profitable ventures.
I’m arguing that we DON’T need or WANT the Gov or the Fed constantly expanding the money supply. This is the definition of inflation (though most people don’t understand this) and we don’t need inflation. Inflation is not economic growth! It’s a stealth tax on savers that rewards poor financial decisions and allows Gov to bloat its size and spending without fiscal responsibility which allows Gov to bribe more constituents for votes through income distribution schemes (90% of all Gov programs). This does not help economic growth; it only increases true inflation (which is hidden by measuring inflation as only the increase in the price of most goods, not as the persistent rise in general prices related to an increase in the volume of money).
What we need is the Gov to get out of the way of a recovery so that businesses that want to can borrow money for profitable ventures. Banks loaning money in a fractional reserve system is all the money expansion we need. We don’t need the Fed digitally “printing” dollars out of thin air to allow the Gov to prevent people from doing what they should be doing, which is repairing their balance sheets by saving. But the Fed is forcing people into riskier assets by killing the yield on safe assets while allowing banks to take our money and park it at the Fed for an easy 2 or 3% yield. This is theft enabled by the Fed to prop up banks that couldn’t and still can’t find efficient use for resources, but actually destroyed billions in economic value over the last decade after taking their cut.
To say that the Fed cannot be insolvent is NUTS! They DON’T have ANY MONEY or WEALTH! It’s all fake funny money created out of thin air. To say that we need more fake funny money just doesn’t make economic sense because all it guarantees is inflation. If you take away all the GDP growth that came from inflation and home equity spending the last 8 years our average growth rate was what, under 2%? We see now what Bush did didn’t fix anything, it just moved the bubble into housing. Now with all the extra money floating around, stealing from the savers (by killing their yield) to prop up the banks, it’s creating another bubble in stocks and allowing politicians to steer money to their campaign contributors.
The Fed policies praised on this blog simply propagate the totally corrupt political system we have today and only increases the power Gov has over the people. What’s more, these Fed policies only prolong the pain by preventing people and businesses from making the tough, smart financial choices in their own best interest because now they are waiting to be bailed out with more fake funny money from the Gov. So instead of letting failures fail and have people and businesses make the right choices we bail the failures out and punish the responsible people and businesses. Just like how Bush prolonged the pain in the last recession, we are doing it again. To do the same thing but expect a different outcome is stupid and crazy.
The idea that Fed policy can fix these problems through money printing and interest rates is to believe in central economic planning, which has never worked for long in the history of the world. Perhaps this is why we haven’t really had any real positive economic growth in the last decade and the DOW isn’t any higher than it was in 1999. How much value has the dollar lost since the inception of the Fed? 95% of its value since 1913! Central bank economic planning doesn’t work except for banks, politicians, and the politically connected.
Sylvin, Sorry I didnt see your comments sooner and I hope you see this.
I sense your frustration with the current situation and Im right there with you.
All money is the same in the US. There is no "good money" and bad money. It is all accounted for at the Fed. Banks cannot take our money and "park it at the Fed" What do you mean by that? Also we dont have a fractional reserve banking system per se.
I dont fault the Fed in how they have come around after they sat there doing nothing last year while critical US banks needed funding, their buying Govt securities this year is probably providing lower mortgage rates than otherwise and that is a good thing.
I think the real culprits are the congress and treasury who have decided to make the focus of their efforts to support the past institutional structure at the expense of we joe six packs. they could have done a massive tax cut instead.
Suggest you read Warren Mosler's white paper here Titled "Soft Currency Economics" for a start and work through some of the other "Mandatory Readings" on his website to understand modern money systems.
Thanks for referring me to that soft money article. I'd say it was interesting but it was actually quite a bore. There is no other way to say it; the guy is dead wrong. Are all soft money economists this confused about what real money is?
Gov doesn't have real money or real wealth, nor can they create it out of thin air. Who know the biggest counterfeiter of them all was the Fed? Unfortunately few people know this and this is the only reason the Fed and the Gov get away with it. The Gov doesn't produce anything of value on its own, it's just a host that feeds off the private sector. To say otherwise is to completely ignore history. 95% of the value of the dollar gone since the Fed's inception. Proof you can't refute.
From what I can tell soft money economics relies on the ignorance of the masses and further contributes to that ignorance. It’s equivalent to using rocks as money, but only rocks that are picked up by Gov officials. All you have to do is keep the masses ignorant of what is really happening to keep the charade going. Soft money economics is just that, a charade; an economic dream world fallacy.
The scariest part is one of two things: 1) either you don’t understand the immense power this gives Gov over the people to steal their livelihood and eventually their rights, or 2) you are complicit in the theft. I hope it’s #1 because you can at least learn to understand that you are wrong. If its number two then God help us, for then you are just more Hitler enablers who will go along for the ride to suit your own interest at the expense of us all.
There is only one outcome with soft money economics – the loss of individual freedoms as the masses’ financial future is destroyed and their dependence is heaped upon Gov officials. If you can’t see that from this soft money experiment of the last few decades I’m not sure what to say. I can only wonder if it’s a product of our poor education system that not only fails to teach us how to think, but also fails to teach correct fundamental principles.
If you truly understood economics and believed in freedom you would understand nobody can create real economic value out of this air – it’s impossible. To believe otherwise is to believe gathering rocks and handing them out to people adds value to the economy and helps people put food on the table. Gathering rocks will never feed people; digitally “printing” new money out of thin air will never lead to real economic growth. It can and will only lead to inflation, reliance, and tyranny.
I’m glad I found this blog; it’s been very interesting discussing these things with you guys. I hope you’ll think about some of the things I’ve written here. Most importantly, without a real store of value (which the dollar isn’t when the Fed is printing them) we cannot even dream of retiring without being dependent on the Gov unless we amass millions of dollars. If you really are for the common man and not for the rich, powerful, and politically connected you will reject these dream world soft money theories and join the side of freedom and real economic progress. Central planning is NOT economic progress – it has never and will NEVER work. Real economic progress is teaching people the skills they need to take care of themselves and being responsible for themselves so that they WON’T have to rely on the Gov. We are not doing this today.
We must stop enslaving the common man by saddling him with Gov debt, then teaching him he will be taken care of if he will just support more and more social spending programs. This path has only one end – power for the politically connected and misery for everyone else.
Thought this might help some people understand the dangers of money printing:
In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations – all of which were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government’s deficit exceeds 40% of its expenditures. Guess what? The U.S. will hit the 40% mark in 2009.”
Is now the time to continue these soft money crack pot theories while looking over the clift at potential hyperinflation?
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