Third Party & Independents Archives

Although the two main parties cannot define their platforms well, at least most voters who care about such things knows what each party stands for. With third parties, that is no so true…when taken in context some of these parties are diametrically opposed, and some muddle around the middle without definition. If they could combine, they might have a national showing, but they cannot combine for obvious reasons. It is difficult to take a third party seriously when it has but one plank in its platform. A reform party could probably make some headway, but their are as many ideas on reform as there are fish in the sea, so definition is again the problem.

I think you are right when you say a viable third party is unlikely in the forseeable future…

Posted by: Marysdude at December 6, 2008 07:53 AM

DR,

Kudos to the Green party for actually getting some of their candidates elected.

As for the 2 major parties making it hard for a 3rd party candidate to get elected, nobody said life was fair. It takes massive piles of money to even get considered for a national election.
If you can’t even get people to register with your party, how can you possibly expect to field a viable candidate?

Wow, the Libertarian Party was able to register almost 20,000 people to their cause in 9 months. At this rate they may have a viable presidential candidate running in about 200 years, assuming that nobody already registered to their party dies in the meantime. Bob Barr? Give me a break.

It seems that the alternate parties will have to work just a bit harder to get their message out.

Rocky

Posted by: Rocky Marks at December 6, 2008 08:58 AM

DR
To the contrary. Third parties have achieved yet another stunning national victory. They may well have prevented the Democrats from reaching the elusive 60 votes in the Senate by sucking off enough votes from Franken to return Coleman to the Senate. Thank God. Now its an uphill battle to achieve universal healthcare or workplace fairness.Its almost as important as your triumph of 2000 that gave us 8 years of GWB. Way to go guys.

Posted by: bills at December 6, 2008 09:32 AM

Aw, poor Bills feels put out that his party wasn’t handed the TOTALITARIAN control of the United States. Its called democracy BillS, you might want to study up on it a bit, it is all about factions creating majorities and minorities of influence. It was never intended to produce one party government anymore than it was intended to recreate the King totalitarian regime though, some of Alexander Hamilton’s ilk never quite grasped that.

Interesting that your comment bears some affinity with Hamilton’s view, being hero of Republicans as he is. Just goes to show that power has an equal effect on folks regardless of party, bemoaning not having total control and being forced to share power.

Posted by: David R. Remer at December 6, 2008 11:43 AM

In brief, the problem with third parties is ‘there is no there there’. I’ve looked over every one of the 3rd parties and for the most part I find their platforms/agendas appalling. They range from having no agenda, having a four sentence agenda, an agenda that could have been wrote by a twelve year old, most often targeting social issues, abortion, guns, etc. a hodge podge of issues that make little sense or hang together in any meaningful way, several are overly religious in their approach to politics, etc. Few play to main stream politics or voters. NONE, read my keyboard, NUN of them present a REAL reform agenda. Other than Ralph Nader wanting to abolish corporate personhood I know of no other party pushing a REAL reform issue. That’s issue #1, parties with little or no substance.
Issue #2: When voter’s look at the actions of the two major parties over the last several years why would they expect a third party to act or manage any differently. You can start out with a shiny virgin party with an all star list of candidates and maybe even pass a few reform laws. But, in two, or six or ten years you will have a party that exactly mirrors the duopoly of today. How could it not be that way? People understand that. So why should they be interested in supporting a third party?
Here is the conundrum. Money corrupts politics. Been going on since the Founder’s first put it in gear. Gotten way worse. Not in my lifetime has it been We The People. Today our government is under the complete control, little more than a pawn, of the moneyed interest. Call them what you will. Attach any label, oligarchy, klepto-plutocracy, corpocracy. Obama has captured $750M and still counting. People act like they are proud of that. Even though 80% of his donations came from other than the man on the street.
Issue #3: a third party can’t be successful because of issue #1 and # 2.

What then is the answer? Is there any way to return our government to We The People? (for those of you who have heard my rant you may want to skip to the next post) The answer is yes. The method is near mindless simple. You fight fire with fire.
1. Establish a countervailing force against the klepto-plutocracy.
2. Put accountability into the political equation
3. Set an agenda that targets reform of government

Bolt that together and it looks like this:
Establish a new third party, or parties, with a different political attitude, ‘they work for us.” Establish party rules that encourage elected politicians to work toward achieving the party’s agenda. If a politician member fails to pursue the party’s agenda in a significant way and enough member complaints are registered then members may be called upon to vote to sustain or reject the politicians party membership. You can’t fire an elected politician but with no party support that person is unlikely to be re-elected again.

That’s it! Now to generalize: The Internet can serve as a powerful communications tool if properly applied. Party members would register membership through the party’s website. Strong channels of communications would be provided between the politicians, grassroots members and party officials. A politician who wants to remain a politician, or venture into an area not defined in the party’s agenda, will want to communicate his/her plans to the membership and weigh their responses before proceeding. Whether it’s local, state or federal, handling complaints and voting on issues can easily be handled over the Internet.
The party’s agenda/platform should initially be directed solely at reform of government. Over the years many laws have been invoked, bought if you will, to serve the klepto-plutocracy at the expense of the taxpayer/voter. Wendy and Phil Gramm immediately come to mind, as does the Top Gun.
When carried to fruition the party’s agenda will have served to significantly reform government. Laws like Corporate Personhood and Money is Free Speech would be abolished. All campaign donations would be made directly to a reorganized FEC and distributed to candidates by the FEC. Through these few changes the moneyed influence is greatly, greatly diminished.
Other reforms would serve to reduce the cost of electing people to office and prevent the flagrant media bias against 3rd parties now being evidenced: (Joel Hirschhorn’s ‘Delusional Democracy’ offers some really good recommendations on revitalizing democracy and promoting citizen participation) Shorten the election cycle process to six months, hold primaries in all states on the same day, make election day a national holiday, registration must be completed two weeks in advance of election day, mandate voter participation in elections, ‘none of the above’ as a choice on all ballots. Reform of election law will strengthen the democratic process and remove MOST of the cost associated with campaigning. A good one to get into law is the ‘Our Democracy, Our Airwaves Act” whereby candidates are provided adequate exposure through the media to make themselves and their issues known to the public. Therefore, much of the moneyed influence over the election process is removed. Of course, there are many more issues surrounding elections, restore voting rights to felons who have fulfilled their penalties, etc.
Some say it is difficult to get a third party up and running. I believe it’s a self propelling process if you have the right stuff. ‘Build it and they will come.’ It should be a no-brainer when you look at the benefits provided by such a third party. I think once people understand that here is a party with a different attitude, one that offers a countering force to the moneyed interest, that promises REAL reform and encourages and supports the participation of the voter in the in the entire political process then they will enthusiastically support a third party.

You can check out a proposed reform agenda by visiting www.demreps.com. It’s a work in progress, subject to debate and change but it reflects a reform agenda that would serve to restore our Constitution, our sovereign nation and the democratic principles we used to live by. AND KEEP IT THAT WAY.

Is that the right answer David?

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at December 6, 2008 12:17 PM

Sort of a two edged Sword Because Hamilton’s distrust and opposition to fellow federalist president John Adams helped significantly to his defeat and Put his bitter Rival’s Jefferson and Burr In office,Hamilton had said Adams was unfit, This action by Hamilton also significantly lessened his Power and Control.

Posted by: Rodney Brown at December 6, 2008 12:26 PM

Money is the voice of American politics. It takes a lot of money to be heard in this country and the only time it usually occurs is when a wealthy individual like Ross Perot. He warned us about what was going to happen. If a majority had listened and voted him into office, the two parties would have been forced to unite against him to pass globalisation. He could have used the bully pulpit to do severe damage to the two parties and form a true third party movement.

Are you for the democrat and the republican globalizers and their masters who are selling our country out or you for America?

Posted by: jlw at December 6, 2008 12:42 PM

bills “Said,It’s almost as important as your triumph of 2000 that gave us 8 years of GWB. Way to go guys.” I’ll Never forget that night i was on my way home from work and was going to stop to vote and a local LA rock Station with over 4 million listeners said at about 5.30 pm Al Gore had won ,i was on my way to vote for gore and said Oh great never mind and drove home.

Posted by: Rodney Brown at December 6, 2008 12:46 PM

Thanks for that bit of joyful news, Rodney, and a Happy Holidays to you too…LOL

Posted by: Marysdude at December 6, 2008 01:23 PM

jlw wrote: Money is the voice of American politics.

Yep. 99.7% of all 200 Million eligible voters are vastly out-spent by a very tiny 0.3% of the wealthiest voters who make 83% of all donations of $200 or more.

As a result, we have a kleptocratic plutocracy.

Here’s an update on re-election rates and party-seat retention rates:

• Start __ End __ Congress _ Re-Election
• Year ___ Year ___ # _____ Rate
• 2003 ___ 2005 ___ 108th ___ 87.9% (65 of 535 incumbents ousted)
• 2005 ___ 2007 ___ 109th ___ 88.6% (61 of 535 incumbents ousted)
• 2007 ___ 2009 ___ 110th ___ 84.9% (81 of 535 incumbents ousted)
• 2009 ___ 2011 ___ 111th ___ 86.9% (70 of 535 incumbents ousted; a few seats left To Be Determined (TBD))

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 6, 2008 04:05 PM

Roy, you have everything assembled there except the main component. A willing electorate to take risk.

Our founders overthrew bad governance because they were willing to risk failure in the attempt. Americans today are so risk averse as to make even the creation of a competitive third party so radically different from the status quo as to pose an enormously threatening risk.

Americans are more afraid of change than keeping the status quo. Only when the electorate perceives the status quo as having utterly failed them in terms of livelihood, security, or their children’s liberty, will substantial change be worth the risk of failure.

That is why Democrats first priority in the new administration will be to shore up and strengthen the Middle Class. If the Middle Class is risk averse, the status quo system can remain flawed and favored at the same time (i.e. the duopoly control of government that shuts out dissenting voices and concerns regardless of their merit.)

Posted by: David R. Remer at December 6, 2008 10:13 PM

jlw, globalization was an economic evolution inevitable with the rise of industrial and technological specialization in third world nations. Globalization was never a political decision. There was a political response to it, but, there was no stopping globalization which was nothing more than the outgrowth of stable nations and specialization of labor competing for markets across borders; a consequence of instantaneous communications and data transfer as well international currency exchanges and contractual law enforcement capacity across borders.

The political response has been truly ludicrous! A throwing up of hands saying we cannot control international corporations so we should just get out of there way. Dumb! Very Dumb, resulting in literally granting global political power to these international economic organizations.

For a micro economic example, see the Mexican city across from El Paso where political control and government have been entirely surrendered to the criminal cartels smuggling drugs, trafficking in humans, and waging lethal war on ANY who would stand in their way, including the Mexican Federal Army and the President of Mexico.

That is where globalization is heading, but, it need not go that way if politicians could divorce themselves from the bribery, blackmail, and coercion by these corporate interests. Pres. Elect Obama is very intent in severing those connections to best of his ability upon taking office. It’s a good start. But, the Congress and most importantly, the American voters are going to need to get behind Obama if he is demonstrate to Pakistan, China, and other nations how this can be done without civil war or revolution and before conditions become as bad as Northern Mexico (50 people were killed in the war between authorities, rivals, and the crime lord cartels last month alone, along the Mexican-U.S. Border.)

Posted by: David R. Remer at December 6, 2008 10:29 PM

Rocky, with the possible exception of the newly founded Independence Party of America, third parties are ideologically founded and hence, represent the views of minority factions of the general electorate.

The dramatic growth in registered independent voters however, creates at least the potential for moderate, centrist, solutions based party rising in their midst and capturing half or more of those registered independent voter’s support, which would thrust that party into the contender ring with the duopoly party.

It is however, just a potential at this point in time. Many key ingredients must gel together at the appropriate time and under the right circumstances in order for such potential to ever become realized. But, the potential is there.

Posted by: David R. Remer at December 6, 2008 10:35 PM

BTW,

10,000 Nader Supporters just completed a survey of their primary agenda items: the top 5 were:

1. Adopt single payer health care — 18.68%

2. Full military and corporate withdrawal from Iraq and Afghanistan — 16.37%

3. Convert to a renewable energy economy — 12.53%

4. Others — 8.72%

5. End corporate welfare, subsidies and bailouts — 8.54%

Posted by: David R. Remer at December 6, 2008 10:37 PM

DR
Thank you for the Hamiliton comparison. No thank you for the promoting the arrogant disregard for political reality that has led to so much grief.Even a third party with the most brilliant,workable platform concievable that cannot ever put their platform into effect is irrelevant and only serves to be a spoiler for candidates that incline to support their ideas. You do not have to like it but that is the way it is.
Most often small parties take on the look and actual function of small theatre groups where everyone gets to play act. Its also gives an opportunity for for those that for some reason cannot pass a microphone without having something to spout about.They get to be the stars of whatever troupe has gotten together to delude themselves that what they are accomplising any but negative political influence. In other words its just an ego trip,at best diversionary.
The great pieces of progressive national legislation have almost all been enacted under Democratic administrations with Democratic congresses. To name a few: The Family Leave Act:nearly all the civil rights acts;Social Security;Medicare;The Wagner Act(legalizing unions);even womens suffrage. This proud list could go on and on and includes WClintons economic plan that helped lead to the longest expansion in US history. It passed without a single Rep vote. Have the Dems made mistakes? Yes,of course, sometimes great ones. A powerful political party is almost certain to in a two hundred year history. That is not a reason to abandon it but rather a reason to join it and become active in changing its course. For example, if the Peace and Freedom Party had become any active caucus within the Dem Party the VietNam tragedy may well have been shortened. Eventually that is more or less what did happen and the Dems are no longer the war party. It likely would have happened sooner had P&F stayed involved directly.
Becomming involved in a large party and making a difference is not easy but it is not impossible either. Large organization move slow. The interest of many factions must be taken into account. To make changes requires building coalitions. It requires cultivating contacts and building networks,joinning committees,attending conventions and proposeing platform changes. This is not the realm of those that are deeply offended when their own obvious brilliance is not instantly recognized and honored. For them there is always the Mill Valley Players or some such. For those that strive to make real political advances,real beneficial changes for the people they have a genuine pathway before them and much work to do.

Posted by: bills at December 7, 2008 12:59 AM

bills wrote: To name a few: The Family Leave Act:nearly all the civil rights acts;Social Security;Medicare;The Wagner Act(legalizing unions);even womens suffrage. This proud list could go on and on and includes WClintons economic plan that helped lead to the longest expansion in US history.

Speaking of reality … no partisan bias there, eh? That’s laughable, in view of actual reality.

Both Republicans and Democrats have been the IN-PARTY over the last 52 years, and Democrats have had the majority for 42 of those 52 years, and look at what we have today.

bills wrote: Have the Dems made mistakes? Yes

A few?

• $12.8 Trillion was borrowed and spent (by both Dems and Repubs) from Social Security, leaving it pay-as-you-go, with a 77 Million baby-boomer bubble approaching.
• Medicare has hundreds of billions of unfunded liabilities and billions lost to Medicare fraud;
• the wealthiest 1% have acquired 20% more of the nation’s wealth since 1976 (up from 20% in 1976 to 40% in 2008);
• Congress gave itself a raise 9 times between 1997 and 2007 while U.S. troops go without armor, adequate medical care, promised benefits, and do 2, 3, 4, or more tours in Iraq and Afghanistan: www.congresslink.org/print_basics_pay.htm
• median incomes have been falling for many years; especially when including regressive taxes, more workers per household, costly netlosses and burdens of illegal immigration, and the disappearing 40 hour work week;
• refusal to enforce existing laws, unfair trade, the despicable pitting of American citizens and illegal aliens against each other for votes and profits disguised as compassion, and many other manifestations of unchecked greed:
  • more Americans have been killed by illegal aliens in the last 3 years than all U.S. troops killed in 5 years: One-Simple-Idea.com/BorderSecurity.htm#Crime
  • Total U.S. prison population in 2004, 2005, 2006, and 2007 is about (hdrstats.undp.org/indicators/264.html) 2.2 million. The ratio of convicted criminal aliens to total prison population of 2.2 Million in year 2004 is (308,168 / 2.2 Million) about 14.0% , despite 12-to-20 Million illegal aliens being about 4.0-to-6.7% of the total 300 Million U.S. population (as of about year 2004). Therefore, the conviction rates and numbers of incarcarated appear to be significantly higher for illegal aliens. Also, bear in mind that first time trespass of our borders is only a misdemeanor, for which illegal aliens are not incarcerated. Often, what gets many illegal aliens in trouble is not merely trespassing our borders, but also violating several other laws by using fake documents; fake drivers’ licenses; fake or invalid Social Security numbers; driving without insurance; and receiving Medicaid, Medi-CAL, and/or welfare. Even many of those violations fail to land illegal aliens in jail much of the time, because they simply don’t show up for their court hearing, and even if arrested are not held in custody. In fact, in some instances, illegal aliens are released on bail after being arrested for serious crimes, including murder in some cases. Sources: www.the-two-malcontents.com/2008/11/17/illegal-aliens-out-on-bail-commit-another-crime-or-vanish-before-trial/ , www.ojjpac.org/memorial.asp , www.gopusa.com/theloft/wp-print.php?p=528 , www.dcexaminer.com/local/Home_invasion_murder_suspect_escaped_from_NY_police_in_2000_officials_say.html
  • In year 1995, there were 4,081 illegal aliens sentenced in federal district courts, 11% of the total of 37,100 sentenced (in federal district courts only), despite 12-to-20 Million illegal aliens being about 4.0-to-6.7% of the total 300 Million U.S. population (as of about year 2004).
  • As of year 2002, 29% of all incarcerated in federal prisons are illegal aliens.
  • As of 2003, there were 161,173 incarcerated in federal prisons (13% for violent crimes: Source: www.sentencingproject.org/Admin/Documents/publications/inc_federalprisonpop.pdf)
  • At yearend 2006 correctional facilities in the United States held an estimated 2,385,213 inmates in custody, including inmates in Federal and State prisons, territorial prisons, local jails, facilities operated by or exclusively for U.S. Immigration and Customs Enforcement (ICE), military facilities, jails in Indian country, and youth in juvenile facilities. During 2006 the total incarcerated population increased by 2.8%, or 64,579 inmates. Source: www.ojp.usdoj.gov/bjs/pub/ascii/p06.txt
  • From 2000 to 2006, … offenses by illegal aliens increased by 43% ; Source: www.ojp.usdoj.gov/bjs/pub/ascii/p06.txt
  • Detainees held by U.S. Immigration and Customs Enforcement (ICE) increased 41% from 2005 to 2006. Source: www.ojp.usdoj.gov/bjs/pub/ascii/p06.txt
  • At year end 2006, 27,634 detainees were under the jurisdiction of U.S. Immigration and Customs Enforcement (ICE). This represented a 41% increase (or 8,072 detainees) from yearend 2005.
  • Total federal prison population as of 27-NOV-2008: 202,771 ; Notice above that 46,063 convicted criminal aliens as of 27-DEC-2003 were in federal prisons (note: that 46,063 are not necessarily convicted in the year of 2003, but only the number of convicted currently incarcerated as of 27-DEC-2003); Provided the 46,063 of convicted criminal aliens incarcerated as of 27-DEC-2003 did not increase by year 2008, the ratio of convictions of illegal aliens to total incarcerated in federal prison is 22.7%. However GAO Report 05-337R states it was 27% for 3 years from the end of 2001, through to the end of 2004:
    • At the federal level, the number of criminal aliens incarcerated increased from about 42,000 at the end of calendar year 2001 to about 49,000 at the end of calendar year 2004—a 15 percent increase. The percentage of all federal prisoners who are criminal aliens has remained the same over the last 3 years—about 27 percent. The majority of criminal aliens incarcerated at the end of calendar year 2004 were identified as citizens of Mexico. We estimate the federal cost of incarcerating criminal aliens—BOP’s cost to incarcerate criminals and reimbursements to state and local governments under SCAAP—totaled approximately $5.8 billion for calendar years 2001 through 2004. BOP’s cost to incarcerate criminal aliens rose from about $950 million in 2001 to about $1.2 billion in 2004—a 14 percent increase.
  • As of JUN-2003, the National Institute of Corrections, Federal Bureau of Prisons, and the Fedaration For American Immigration Reform states that (www.fairus.org/site/PageServer?pagename=iic_immigrationissuecenters0b9c) 29% of all prisoners in our federal prisons are are illegal aliens.
  • Criminal aliens incarcerated in federal prisons increased from about 42,000 at year-end 2001 to about 49,000 at year-end 2004.
  • Fiscal year 2002-SCAAP reimbursed all 50 states for incarcerating about 77,000 criminal aliens.
  • A huge statistic is missed, that if quantified would increase the crime numbers and costs of illegal aliens is that many jurisdictions don’t determine the immigration status of a perpetrator of a crime (don’t even ask) and many others are sanctuary cities that are forbidden from asking the immigration status of crime perpetrators.
  • For fiscal year 2002—SCAAP reimbursed 752 local jurisdictions for incarcerating about 138,000 criminal aliens.
  • For fiscal year 2003—SCAAP reimbursed 698 local jurisdictions for about 147,000 criminal aliens.
  • Federal prisons include 112 prisons managed by the Bureau of Prisons (BOP), 10 privately managed facilities, and other contract facilities including community correction centers and short-term detention facilities. More than 1,300 state prisons operated by state correctional agencies in all 50 states, as of 2000. More than 3,300 local jails operated by cities, counties, and municipalities, as of 1999.
• eminent domain abuse; about 6 new cases per day of eminent domain abuse (an abuse that was upheld by the Supreme Court);
• federal government that is increasingly a kleptocratic plutocracy, where 99.7% of 200 Million eligible voters are vastly out-spent by a tiny 0.3% of the wealthiest voters who make 83% of all federal campaign donations of $200 or more: One-Simple-Idea.com/OpenSecrets_DonorDemographics.htm
• massive pork-barrel (One-Simple-Idea.com/Links1.htm), corporate welfare, tax breaks, subsidies, welfare for the wealthy, and rampant spending and waste: www.heritage.org/Research/Budget/bg1840.cfm
• massive bail-outs for the banks, corporations, insurance companies, and Wall Street; here is the break-down for bail-outs of upto $8.5 Trillion: www.latimes.com/news/printedition/front/la-113008-fi-pricetag-g,0,5292528.graphic
• rampant corruption: One-Simple-Idea.com/Links1.htm
• numerous constitutional violations, such as Section 4 of Article 4, Article 5, etc.: One-Simple-Idea.com/ConstitutionalViolations1.htm
• election problems; barriers to independents and 3rd party candidates; refusal to address common-sense campaign finance reforms; Gerrymandering; election fraud; an estimated 3% of votes by illegal aliens;
• 10,000 foreclosures per day (as of AUG-2008; the highest rate ever in U.S. history);
• 533,000 job losses for NOV-2008 (6.7% unemployment; highest in 34 years);
• $10.7 Trillion National Debt (up $1 Trillion in the last 2 months); $23.5 Trillion of National Debt, if including the $12.8 Trillion was borrowed and spent (by both Dems and Repubs) from Social Security, leaving it pay-as-you-go, with a 77 Million baby-boomer bubble approaching; the largest debt ever in size and as a percentage of the $13.86 Trillion GDP (of year 2007);
• $54-to-$67 Trillion nation-wide debt; up from 100% of GDP ($13.86 Trillion in 2007) in year 1956 to 483% of GDP in year 2008;
• a dishonest, usurious, incessantly inflationary monetary system that is nothing more than a mathematically doomed pyramid scheme; 95% of all U.S. money in existence is debt; the U.S. has had incessant positive inflation for 52 consecutive years (since 1956); a 1950 U.S. Dollar is now worth about 11 cents (or less);
• unnecessary and/or mismanaged wars: One-Simple-Idea.com/Transcript1.htm 373 (70%) of 535 Members of Congress voted Yes for authorization to invade Iraq; 110 (43%) of 256 Democrats of 535 Members of Congress voted Yes for authorization to invade Iraq; 263 (97%) of 271 Republicans of 535 Members of Congress voted Yes for authorization to invade Iraq;
• regressive taxation; The current federal income tax system is effectively REGRESSIVE due to numerous tax loop holes and ridiculous complexity which makes it ripe for abuse. This is why Warren Buffet, the 2nd wealthiest person in the U.S., pays a lower tax rate (e.g. 17.7% in federal taxes on $46 Million in year 2006), than his secretary (who paid 30% in federal taxes on $60,000 and paid in year 2006): One-Simple-Idea.com/DisparityTrend.htm#Taxes
• $3.2 Trillion to $8.5 Trillion (as of 30-NOV-2008) in bail-outs for banks, corporations, insurance companies and Wall Street risk hyper-inflation, which will possibly turn a bad recession into another Great Depression, by debauching the U.S. currency, destroying savings, pensions, and entitlements and benefits and other fixed incomes;
• declining quality and rising cost of education;
• declining quality and rising cost of health care; Too many middlemen and too much fraud is not only making healthcare increasingly unaffordable, but dangerous too! Pharmaceutical corporations and the FDA are becoming pill pushers that are killing hundreds of thousands in the U.S. (annually). That does not even include the huge number of patients that are irreversibly damaged and maimed. JAMA reported that over 2.2 million hospitalized patients in 1994 had serious Adverse Drug Reactions (ADRs) and 106,000 were fatal, making these drug reactions the 5th or 6th leading cause of death in the U.S.! JAMA’s conclusion was that “the incidence of serious and fatal ADRs in U.S. hospitals was found to be extremely high”. On 27-July-2004, HealthGrades.com reported that “An average of 195,000 people in the U.S. died due to potentially preventable, in-hospital medical errors in each of the years 2000, 2001 and 2002, according to a new study of 37 million patient records”. Once again, part of the problem is the growing corpocrisy, corporatism, and influence of government by corporations and some that abuse vast amounts of money to control government. Healthcare solutions are needed. While government is not responsible for providing universal healthcare, it is responsible for protecting consumers from some greedy corporations that will do anything for a buck. Also, illegal immigration is placing huge burdens on the healthcare system. Illegal aliens are over-running our ERs, hospitals, Medicaid, and welfare. That’s appalling. Since 1999, that is over 1.5 million people killed by preventable medical mistakes. That is more than all the U.S. troops killed in the the American Revolution (4,435), the War of 1812 (2,260), the Indian Wars (1,000), the Mexican War (1,733), the Civil War (462,000), the Spanish American War (385), WWI (53,402), WWII (291,557), Vietnam War (58,209), Korean War (36,574), the Iraq Gulf War (529), and the current Iraq war Mar-2003-present (3,963), combined!
• energy vulnerabilities;
• crumbling infrastructure (roads, bridges, tunnels, railways, ports, air ports, buildings, water treatment, etc.);
• 10+ major abuses for the last 30+ years, resulting in 17+ economic conditions that have never been worse ever, and/or since the Great Depression;

Yep! Those Democrats have been doin’ a wonderful job during the last 52 years (with the majority for 42 of the last 52 years)!

The majority of voters may believe that nonsense, but will they believe it 1, 2, 3, 4, or 8 years from now, when Do-Nothing Congress has justified its 9%-to-18% approval ratings?

Not likely. Not when that sort of self delusion finally becomes too painful.

bills wrote: That is not a reason to abandon it but rather a reason to join it [Democrat Party] and become active in changing its course.

The Democrat party had the majority for 42 of the last 52 years.

What did it accomplish?
Why have the nation’s most pressing problems grow worse in the last 50 years?
Why have all of those problems listed above become worse (not better), if the wonderful Democrats and Republicans are doing such a wonderful job?

bills wrote: The great pieces of progressive national legislation have almost all been enacted under Democratic administrations with Democratic congresses

If the vast (and growing list) above is an example of Congress’ “great” deeds, I’d hate to see the results of their less-than-great deeds.

If Congress is so great, why does it have such dismal 9%-to-18% approval ratings?
True, Congress enjoys 85%-to-90% re-election rates, but that is because most voters don’t understand how they are cleverly manipulated to repeatedly reward bad incumbent politicians with perpetual re-election, due to:

• (01) the No-Same-Party-Challenger(s) mechanism which works wonderfully to keep re-election rates high.


• (02) the fueling of the circular partisan warfare, which helps prevent voters from ever considering candidates in the OTHER party.


• (03) the fueling of the circular partisan warfare to distract voters from the truth, more important issues, the incumbent politicians’ own malfeasance, and keep voters partisan-centric instead of principle-centric.


• (04) the fueling of the circular partisan warfare to pit voters against each other on moral and unresolvable issues (abortion, gay marriage) that may never be resolved, while ignoring the more important and solvable issues.


• (05) the fueling of the circular partisan warfare to pit voters against each other so that a majority can never exist to oust incumbent politicians from office.


• (06) the straight-party-ticket button/lever which makes it easy for the lazy and blindly-partisan voters, which also works wonderfully to keep re-election rates high.


• (07) the pandering and bribing of voters with their own tax dollars, tax breaks (which turns out to make taxes more regressive), more cradle-to-grave entitlements, lies and more empty promises that can’t possibly be fulfilled with such massive debt of nightmare proportions, and pressing problems growing dangerously in number and severity.


• (08) incumbent politicians that despicably pit voters against each other for votes and profits, disguised as compassion for illegal aliens costing tax payers an estimated $70 Billion to $327 Billion per year in net losses ( One-Simple-Idea.com/BorderSecurity.htm#Burdens )


• (09) the numerous unfair incumbent advantages: One-Simple-Idea.com/FAQ.htm#UnfairAdvantages.


• (10) the 99.7% of voters are vastly out-spent by a very tiny 0.3% of all eligible voters who make 83% of all federal campaign donations of $200 or more: One-Simple-Idea.com/OpenSecrets_DonorDemographics.htm


• (11) the resistance any and all campaign finance reform; /li>
  
• (12) to the Gerrymandering.


• (13) to the clever over-complications to hide malfeasance, reduce transparency, and increase opportunities for self-gain (HHmmmm … about time for another raise, eh (like the 9 raises for Congress between 1997 and 2007, while U.S. troops went without armor, adequate medical care, and are forced into 2, 3, 4 or more tours in Iraq and Afghanistan)?).


• (14) to the selective enforcement/violation of the U.S. Constitution (e.g. ignore Article V of the U.S. Constitution so that Term-Limits, Campaign Finance, and other amendments can never be considered by the states).


• (15) to the hide and distortion of economic statistics (e.g. understating inflation to reduce the Social Security cost-of-living increases: One-Simple-Idea.com/DebtAndMoney.htm#Measurement ) to either paint a picture that is either rosier or worse than reality to make the IN-PARTY party look good, or to fuel the partisan warfare, all of which helps to cleverly increase incumbents re-election rates.

That is why incumbent politicians enjoy very high re-election rates.

Perhaps, when enough voters are less apathetic, complacent, and blindly partisan, and enough of the voters are deep in debt (one-simple-idea.com/DebtAndMoney.htm#53Trillion) , jobless (money.cnn.com/2008/06/06/news/economy/jobs_may/index.htm?section=money_topstories) , homeless (one-simple-idea.com/DisparityTrend.htm#Foreclosures) , and hungry (www.results.org/website/article.asp?id=350) as a result of these 10 abuses (one-simple-idea.com/DisparityTrend.htm) and these 17 deteriorating economic conditions (one-simple-idea.com/NeverWorse.htm), then perhaps enough voters will finally stop this (repeatedly rewarding bad incubent politicians with perpetual re-election)? …

• Start __ End __ Congress _ Re-Election


• Year ___ Year ___ # _____ Rate


• 2003 ___ 2005 ___ 108th ___ 87.9% (65 of 535 incumbents ousted)


• 2005 ___ 2007 ___ 109th ___ 88.6% (61 of 535 incumbents ousted)


• 2007 ___ 2009 ___ 110th ___ 84.9% (81 of 535 incumbents ousted)


• 2009 ___ 2011 ___ 111th ___ 86.7% (about 70 of 535 incumbents ousted)

… and do what voters did in 1927, 1929, 1931, and 1933 (in the Great Depression, even if too late to avoid many years of pain and misery) …

• Start __ End __ Congress _ Re-Election
• Year ___ Year ___ # _____ Rate
• 1927 ___ 1929 ___ 070st ___ 68.9% (165 incumbents ousted)
• 1929 ___ 1931 ___ 071st ___ 79.7% (108 incumbents ousted)
• 1931 ___ 1933 ___ 072nd ___ 76.8% (123 incumbents ousted)
• 1933 ___ 1935 ___ 073rd ___ 61.2% (206 of 531 incumbents ousted; 59 Dems, 147 Repubs)

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 7, 2008 11:13 AM

Personally, I think the main problem with most third-parties in America today is that they are so focused on grabbing the brass ring of the Presidency.

Nader is a decent example of this: he pops up every four years to run for president, but where is he in between? What is he doing to gain his party influence in every election from school board on up?

The Green Party seems like they are starting to wise up on this issue, but they’re not really there yet. They don’t even have active state parties in all 50 states yet.

For a viable third party, you need a grass roots movement. You need to build up support in all fifty states, work on building a real base of registered voters who are members of your party, and work on getting as many people elected to office as you possibly can. This is not a short-term process. It takes time and commitment.

But most third parties seem to want a short-cut through all that. They seem to think that if they can get themselves elected president then the rest will magically fall into place afterwards. They ignore the fact that the President does not even have the power to implement most of their platform by himself. But how much of a real push do we see on getting a third-party majority in the House and Senate?

Until third parties work on building themselves from the ground up—a true grass-roots movement starting primarily with a focus on state and local elections, and accumulating popular support—and moving from there into the federal sphere, no third party is ever going to be a viable challenger to our current two-party system.

Posted by: Jarandhel at December 7, 2008 11:39 AM

Jarandhel, Your points are cited often in debating the potential for third parties. While I tend to agree I think the most expeditious route to success is to target the federal system. The fed is way more visible, in the media more, deals with larger programs, etc. In days gone by I would agree that main street was the place to start a political movement. But, with the Internet you can reach a way greater population and faster using the larger issues of politics.
It seems most parties are formed around a celebrity or political star giving such a narrow stance to a political movement. I like the idea of building a party structure, targeted at reform and void of social issues, espousing a centrist position, etc. In other words, build a party that people would want to support and then work to attract candidates for elected office. I just think the best approach is focus on the larger issues of the fed rather than local/state issues. People realize that a Ross Perot, Ralph Nader figure does not bring the substance required to form a strong, long standing party.
And, of course, I do believe that a 3rd party has to offer something more than the standard 3rd party on the market now. A new 3rd party needs to be seen as different from other parties with the potential for REAL reform of government.

Bills, after Dan’s reply all I can say is ‘ditto’. It’s been rumored his data base uses 512bit wide data transfers. To most complex issues he has the answer before he can lift his pinkie from the ‘enter’ key.
Your last para: ” Becomming involved in a large party and making a difference is not easy but it is not impossible either. Large organization move slow. The interest of many factions must be taken into account. To make changes requires building coalitions. It requires cultivating contacts and building networks,joinning committees,attending conventions and proposeing platform changes. This is not the realm of those that are deeply offended when their own obvious brilliance is not instantly recognized and honored. For them there is always the Mill Valley Players or some such. For those that strive to make real political advances,real beneficial changes for the people they have a genuine pathway before them and much work to do.”
I was just witness to the government bailouts of the financial sector with little more than a handshake, excluding the $150B of pork, to seal the deal. Man, that really sets the bar high for government! I can recall no debate, public or government, on the issue of globalization. It was done in complete secrecy. Government officials used non-governmental funds to travel to SPP/NAU meetings to keep the press from tracking their participation. And yes, your beloved Democrats fully particpated in this treasonous act as well. People are not so misinformed that they can’t see through such klepto-plutocratic goings on. If it ain’t Ted Kennedy’s way then it’s the highway as far as health care and enforcement of immigration LAWS ON THE BOOKs. No need to continue - maybe just reread Dan’s post. I would be willing to provide some taxpayer dollars to provide free showers for the ‘smelly tourist’ that show up at the capitol visitor’s center. Maybe that would quieten Reid down a little.

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at December 7, 2008 02:24 PM

Bills: Women marching in the streets, beat down by billy clubs and dragged of by the hair of their heads had nothing to do with women getting the right to vote. It was the goodness of the democratic party that is responsible.

Workers marching and fighting for ther rights had nothing to do with legalization of unions. Democrat cooperation with Reagan had nothing to do with the begining of the end of unionization in this country did it? Wasn’t it Wilson who violated the Constitution by putting Eugene Debs in prison during WWI? Wasn’t it Truman who violated the Constitution by giving striking railroad workers an ultimatium, go back to work or get drafted into the Army?

Civil rights leaders being murdered, activists set on by dogs and firehoses had nothing to to with civil rights reform. It was the democrats. When the democrats were in control of the south, they were not responsible for Jim Crow and they were not responsible for dragging blacks through the streets, hanging them in trees and setting them on fire were they? It was the southern democrats out of the goodness of their hearts that ended all of that wasn’t it?

What is the name of the president that began the process of desegrating our schools? What party was he affiliated with?

Johnson would not have gotten civil legislation passed without cooperation from republicans.

W. Clintons economic plan helped Reaganonomics lead to the greatest expansion in U.S. history. It helped promote the corporate free market New World Order. It continued the deregulation of our economy began under Carter. It helped create the huge disparity between the haves and the have nots. It helped create our huge debt and helped get us to where our economy is today. It was a wonderful thing indeed.

You forgot to mention another great accomplishment of the democratic party. Rather than creating an economy that raised the poor out of poverty, they institutionalized poverty with the welfare system. Then Clinton reformed welfare just enough to create an increase in homelessness and poverty.

Nearly all the progressive legislation that has been passed in this country was forced on the government by circumstances created by citizens that government could no longer control.

Posted by: jlw at December 7, 2008 03:20 PM

amen

Posted by: Roy Ellis at December 7, 2008 04:06 PM

Roy Ellis wrote: I was just witness to the government bailouts of the financial sector with little more than a handshake, excluding the $150B of pork, to seal the deal.

True. What has it accomplished? What did we get for $3.2-to-$8.5 Trillion of more debt for bail-outs for the banks, corporations, insurance companies, and Wall Street?

Roy Ellis wrote: Man, that really sets the bar high for government!

Right. Just low enough for snakes to slither under.

Roy Ellis wrote: I can recall no debate, public or government, on the issue of globalization. It was done in complete secrecy. Government officials used non-governmental funds to travel to SPP/NAU meetings to keep the press from tracking their participation. And yes, your beloved Democrats fully particpated in this treasonous act as well.

You bet. Both Democrats and Republicans participated in the unfair trade, open borders, and ignoring existing illegal immigration laws.

Democrats politicians want votes.
Republicans politicians want profits.
Both despicably pit Americans citizens and illegal aliens against each other for votes and profits, disguised as compassion.
And unfortnately, most voters reward both for it with 85%-to-90% re-election rates.

Jarandhel wrote: Personally, I think the main problem with most third-parties in America today is that they are so focused on grabbing the brass ring of the Presidency.

That’s part of it.

The other part is their inability to appeal to a majority of the electorate.
That requires a party that will side with most Americans on the issues that are most important to most Americans.
Third parties and independent candidates and parties are still very important, because they force the two main parties to address issues that would otherwise go ignored.
Nader , the Libertarians, Greens, Constitution Party, Reform Party, America’s Independent Party, the Independence Party of America, etc. pull millions of votes away from the two main parties.
However, if any third parties ever want to get the majority of the votes, they will need to focus only on issues of major importance.
For example, a party that would address these 10 major abuses, contributing to these 17+ deteriorating economic conditions, may have a chance, if that party can convince 51%+ of the voters that those 10 abuses are at the root of many of their problems.

Those 10 abuses, all manifestations of unchecked greed, are largely what are hammering most middle-to-lower income Americans. And while I don’t like to fuel class warfare, since most of us would abuse wealth and power given the chance, many of the wealthy (not all) are screwing most other Americans. A prime example of it is our kleptocratic plutocracy, in which 99.7% of all 200 million eligible voters are vastly out-spent by a tiny 0.3% of the wealthiest voters who make 83% of all federal campaign donations of $200 or more. Government is FOR-SALE. Another disgusting example is the way most incumbent politicians and their big-money donors despicably pit American citizens and illegal aliens against each other for votes and profits. Those are only a few of numerous examples of how some of the wealthy have been screwing most Americans for many decades. Those 10 abuses are evidence of it.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 7, 2008 05:55 PM

David R.: If you examine my remarks posted on WatchBlog in the last several years you will see that they are almost always made in the context of corporate control of government and trade policy.

The corporations want nothing less than a world trade body that has the power to regulate trade between governments and deny governments the ability to make trade decisions. This would greatly reduce the corporations outlays to government officials around the world and allow them to buy the trade organization. Do you think Pres Elect Obama will support a world trade organization?

You mention some negative aspects of our open border, illegal immigration policy with Mexico. I and others have pointed this out repetedly. I pointed out the fact that the leaders of the primary drug cartel responsible for the co-opting of street gangs for cooperation in the drug trade, assinations, kidnapings and intimidation on both sides of the border are deserters from the paramilitary branch of the Mexican army and trained by the American army. That cartel is recruiting on both sides of the border and training their new recruits in paramilitary tactics.

Can you provide quotes by Pres Elect Obama where he has spoken out forcefully against these activities? Do you think his comprensive immigration reform and his noncommittal remarks about border security are going to end these practices?

I believe it was Roy Ellis who mentioned that a truck load of C-Meth was intercepted last week in this country. Our government admits that at best it interdicts 10 percent of the drugs coming into this country. That means that at least 9 trucks got through. How do we stop that if we are hell bent on having nonrestricted flow of commerce across that border. We will have to wait and see what Pres Elect Obama’s answer to that is.

If we crack down significantly on the drug cartels and street gangs might we expect terrorist responses from them? I am not saying that is going to happen and I hope it doesn’t but, are we prepared to deal with that if it happens.

The Bush Administration with help from coalition corporations has created one of the most corrupt governments on earth in Iraq. We are entering into an agreement to protect that government and the oil from the people of Iraq for at least three more years.

Not long after the Iraq elections, their government created a constitution which called for a Scandanavian type mixed economy with oil wealth being used to provide services for the people.

The Bush Administration completely rejected that constitution, demanded total private sector control of the economy of Iraq, demanded the free expatriation of oil wealth out of the country and backed it up with planes filled to capacity with U.S. taxpayer hundred dollar bills. We bought the government. I look foward to seeing President Obama’s response to that.

“Pres Elect Obama is very intent in severing those connections to the best of his ability upon taking office.” I have paid close attention to what Obama has said and I can’t recall him speaking out forcefully in reguard to corporate coercion other that his remarks about lobbyists and some of his cabinet appointments seems to have weakend that position.

A section of our anti-government corruption laws states that a member of Congress who votes for a pay raise for a cabinet office can not then hold that office. Hillary Clinton voted for a raise for Sec. of State and is now the Obama nominee to hold that position.

Pres Elect Obama has stated that he is very intent in strong regulation of aspects of our economy. His words would have carried more weight if he had appointed people to his cabinet who believe in regulation instead of people who have supported deregulation as the way to procede. He could have appointed qualified people who believe in regulation to those positions instead of Clinton cronies and he chose not to.

Every since Pres. Carter deregulated the airline industry, the trend has been towards centralization of our economy with fewer and larger corporations and less oversite. Every regulatory agency in our government, Interior, FTC, FDA, Environment, immigration, etc. has been gutted of funds and defanged. I look foward to seeing him push to refund and reempower those agencys.

When Pres. Elect Obama becomes President Obama and starts turning retoric into actions I will support him especially on bold actions rather than baby steps and I will demand that my representatives support him as well.

There are wealthy and powerful interests as well as not so powerful interests such as small investors who have much to lose and they will fight any changes that might reduce their ability to control the statis quo.

If President Obama takes these forces on boldly and asks for support from the people, I know that he will get that support from the blue collar middle class and the lower classes. Im not so sure about the upper class and the upper middle class support.

I don’t expect miracles but, I do want to see bold actions which in time will lead to less exploitation and a better society both here and abroad.

Posted by: jlw at December 7, 2008 06:17 PM

A section of our anti-government corruption laws states that a member of Congress who votes for a pay raise for a cabinet office can not then hold that office. Hillary Clinton voted for a raise for Sec. of State and is now the Obama nominee to hold that position.

Really? I didn’t know that? Yet another example of corruption, eh? Posted by: d.a.n at December 7, 2008 06:32 PM

jlw, all good points. The contract mechanism the Iraqui’s were pretty much forced to agree to is the Production Sharing Agreement (PSA), a favorite industry model because they give oil companies the right to explore for and produce oil under the ground. PSA’s have contract lives ten times longer than the most commonly used models: twenty to thirty years compared with two to three. PSA’s give the foreign company a far greater level of control, ownership, and profit.
Re the grab for oil:
Excerpt from a Yahoo news article: “WASHINGTON – Secretary of State Condoleezza Rice said Sunday she regrets the U.S. relied on flawed intelligence as the basis for going to war in Iraq and took partial responsibility for mismanaging the post-invasion occupation.
As eight years of the Bush administration come to a close, the president and now one of his longest-serving advisers are acknowledging mistakes in Iraq while steadfastly defending the war and Saddam Hussein’s overthrow.”

One more time! Ten days into the administration of G W administration officials, known as the Cheny Energy Task Force, met in the White House to devise a new national energy policy. Attendee’s were former and soon to be oil executives and lobbyists in the administration. Task force director was Andrew Lundquist and Undersec. of the Int. R. Stephen Griles, both who later left to form their own lobbying firm serving the nations largest oil and energy companies. Int. Sec. Gale Norton who left to work for Shell; Energy Sec. Spencer Abraham, who joint Occ. Oil Co in 2005 and formed a lobby specializing in international energy; FEMA Dir. Joe Allbaugh who left to form New Bridge Strategies set up to help post-invasion of Iraq; and Cheny, former CEO Halliburton.
Private attendee’s of the forty some different task force meetings included Ex’s and Rep’s of every major oil co. as well as coal, nuclear and other energy industries. The NSC was ordered to cooperate in the two ‘melding areas’ of policy: “the review of operational policies towards rogue states” and “actions regarding the capture of new and existing oil and gas fields.” Their final report argues the ME should be urged to open up areas of their energy sector to foreign investment. Specifically listed were Iran, Iraq and Libya. The task force reviewed detailed descriptions of all of Iraq’s oil fields, oil pipelines and refineries, and tanker terminsla. Two list of ‘foreign suitors’ listing more than sixty companies looking to do business in Iraq were reviewed. Three countries listed were holding the biggest contracts; China, Russia and France.
At the same time the task force was meeting with Cheny planning for the military invasion of Iraq was also under way. According to Paul O’Neill, Bush’s first Treas. Sec., regime change in Iraq was the number one item on the agenda at the very first meeting of the NSC Jan 30,2001. O’neill told CBS in 04 “From the very beginning, there was a conviction that Saddam Hussein was a bad person and that he needed to go,”
By Feb. the talk was mostly about logistics of the coming war.
The non-governmental committee Liberation of Iraq (CLI) was the unofficial PR firm for the invasion. Bruce Jackson left VP Lockheed to launch CLI. The CLI’s first Pres., Randy Scheunemann, is credited with writing the Iraq Liberation Act while working for Sen. Trent Lott. Scheunemann was the chief foreign policy adviser to Sen. John McCain in his 2008 Pres. bid. The CLI broadcast to the world that Saddam had WMD. This was complimented with a $200M propaganda campaign by the British and US that the war was necessary.
Excerpt from Meet the Press (2006): “President Bush would have ordered an invasion of Iraq even if the CIA had told him that Saddam Hussein had no weapons of mass destruction, Vice President Dick Cheney said Sunday.” “Cheney acknowledged that, “clearly, the intelligence that said he did (have WMD) was wrong.”

Posted by: Roy Ellis at December 7, 2008 07:17 PM

Dan: One of the news shows had someone on who covers the Supreme Court. He was asked about the possibility of the Court finding merit to here the case about Obama not being born in the U.S. He said that there was little chance of that but that the case against Clinton might be found to have merit because of the reasons that I mentioned. He went on to say that Clinton’s defence was that the payraise was resended making her eligible. He did not say who was responsible for it or why the raise was resended.

I haven’t found much on the internet about it but, Article I, Section 6 of the United States Constitution states “No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time; and no Person holding any Office under the United States, shall be a Member of either House during his Continuance in Office.”

Posted by: jlw at December 7, 2008 08:00 PM

Score one for the Indies!

The Iowa meat packing plant that was raided for having an illegal work force is now thinking about raising the wages of their employee’s.
Imagine that!

Posted by: Roy Ellis at December 7, 2008 08:08 PM

Article 1, Section 6 (www.law.cornell.edu/constitution/constitution.articlei.html#section6). The Senators and Representatives shall receive a compensation for their services, to be ascertained by law, and paid out of the treasury of the United States. They shall in all cases, except treason, felony and breach of the peace, be privileged from arrest during their attendance at the session of their respective Houses, and in going to and returning from the same; and for any speech or debate in either House, they shall not be questioned in any other place.

No Senator or Representative shall, during the time for which he was elected, be appointed to any civil office under the authority of the United States, which shall have been created, or the emoluments whereof shall have been increased during such time: and no person holding any office under the United States, shall be a member of either House during his continuance in office.

jlw, Thanks for that info. It appears there is no dispute that Hillary Clinton did indeed vote for the raise.

It’s yet one more example of corruption to add to the growing list on the web-page of examples of corruption.

Here are some links about Hillary voting for the pay raise:

• Judicial Watch (www.JudicialWatch.org), the public interest group that investigates and prosecutes government corruption, announced today that Senator Hillary Rodham Clinton is constitutionally ineligible to serve as Secretary of State in the Obama administration.


• Clinton’s Confirmation May Spark Constitutional Battle


• The U.S. Constitution clearly prohibits any U.S. Senator or U.S. Representative from being appointed to a federal post if the Senator or Representative voted to increase the pay of the federal post position.

Seems pretty damn clear, but it seems quite likely that I will be adding yet another Constitutional Violation to the growing list of Constitutional Violations: One-Simple-Idea.com/ConstitutionalViolations1.htm

But, why not let Hillary have the office, since Congress can give itself a raise every year if it wants, which it did 9 times between 1997 and 2007: www.congresslink.org/print_basics_pay.htm

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 7, 2008 09:38 PM

“[I]t is essential to liberty that the government in general should have a common interest with the people, so it is particularly essential that [Congress] should have an immediate dependence on, and an intimate sympathy with, the people.”

James Madison
Federalist #52

Posted by: Rodney Brown at December 7, 2008 10:05 PM

jlw
The legislation I was refering to was,of course, the government response to social pressure. The heroism of the suffragetts, workers and civil rights activist is something we should all be proud of and indeed the needed legal reforms took far to long to achieve. Womens suffrage was a 50 year struggle. This does not change the fact that final recognition and legislative remedy occured while both the Whitehouse and Congress were controlled by Democrats and that is something to be proud of. The Republican response was billyclubs and prison.BHO is facing problems similar to what FDR faced at the beginning of his term. FDR managed to get 15 major bills through a Dem congress in his first year. IMO these bills were vital in addressing the depression and are still helping Americans today.One of those bills is what allows certain commentors to comfortably collect their checks every month while having the liesure time to bitterly complain about it. A two year period of a solidly Dem congress is exactly what we need right now.

Posted by: bills at December 7, 2008 10:07 PM

A two year period of a solidly Dem congress is exactly what we need right now.

Nothin’ partisan about that, eh?

Don’t forget that Democrats were the IN-PARTY for 42 of the last 52 years, and mostly with a HUGE majority.

The fact is, there ain’t much difference between the two main parties on any issues of significant importance.

BOTH parties, and voters too, got us where we are today, and trying to blame anything and anyone else is more of the same which got us where we are today.

Fueling the partisan warfare serves no good purpose.

Gloat while you can, because it may be very short lived.
Voters 1, 2, 3, or 4 years from now may not be so understanding when more of them are broke, deep in debt, homeless, jobless , and hungry.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 7, 2008 10:34 PM

d.a.n, Roy, jlw, it does seem clear, until one introduces the fact that the increase was rescinded, and therefore nullifies any increase having taken place as a result of Clinton’s tenure as representative. Yes, this is splitting hairs. Yes, it is clear to common sense that her vote disqualifies her from Sec’y. of State office. But, we are not a nation of common sense. Purportedly, we are a nation of law, and the issue will rightfully be settled by contest in the courts, and therefore a ruling of law.

I understand that a petition is being made directly to Justice Thomas to bring this case before the high court. If that is true, it is more likely this case will be reviewed by the high court. Justice Souter refused to get behind bringing before the court. We shall see.

If the high court refuses the review, then the lower court ruling will stand. And that will become precedent in cases where a vote for a raise was nullified by rescinding the outcome of that vote. A rare circumstance to be sure. But, relegating the issue to small poatatoes to be debated amongst partisans forever more, as a distraction from the really important issues facing the nation and her people.

Posted by: David R. Remer at December 7, 2008 10:55 PM

d.a.n, your argument that the past is prologue to the future is contradicted by the many changes this nation has undergone since its inception. Democrats of the past are responsible for that past. But, that does not dictate that the Democrats of the next 4 years are going act in the same manner with the same agenda and without having learned anything from their past.

Obama is not a typical Democrat. And the Democratic Party has just emerged from its solitary confinement for having so recklessly managed the nation in the past. Whether or not the Democratic Party of today on balance helps this nation, or jeopardizes it further, is not at all clear if one puts one’s biases aside. There is potential for it to go either way and the variables too infinite to calculate.

What we can both agree upon with certainty however, is that this nation’s future does not rest on which party is in control, but on whether the voting public wrests control whichever party is in the majority by rewarding success and punishing failure at the ballot box. Seems pretty clear the American voters punished failure in the 2006 and 2008 elections.

I think an open mind has to be willing to accept the possibility that the Democratic Party of today may produce a better grade of governance than they have in the past given the constraints and limitations of inheriting a three front war, the gravest recession in decades, a global de-leveraging of forged balance sheets, and a national debt and deficits doubled in 8 years.

There is no magic wand to cure these ills besetting our nation. There are no perfect solutions, which themselves, will not be accompanied by heavy and dear costs to achieve resolution. But, there is a potential for this nation to address its problems and the costs of curing them squarely, and taking responsibility for acting with the best knowledge available in the most prudent fashion to insure that on balance we are better off tomorrow than we are today as a nation. Not a high hurdle, but, the path to that hurdle is not a straight line run, either.

To be sure, if the Democratic Party manages itself as it has in the past, our nation’s prospects will only worsen. But, people, which the parties are made up of, are capable of both learning and taking responsible action to that learning. We the people, can promote that hope and expectation, or we can revel in a defeatist self-fulfilling prophecy that insures the future cannot be as good or better than the past.

Posted by: David R. Remer at December 7, 2008 11:12 PM

DR
thanks. Well put. I am not surprised,but dis-heartened as the petty snipeing that is beginning at BHO. What bad habits we have fallen into. He has a year at most to push through some clearly needed but radical changes. Fortunately most of the carping is,at this point, just silly. My favorite so far is the elaborate rumor involving NASA’s secret discovery of a railroad tie sized piece of wood on Mars. Somehow BHO is implicated in the cover-up.
Dispite the little chiding you gave me, I do not regard the filibuster in the Senate rules as democratic at all. 50% plus one is a majority. I suspect the allowance of the filibuster was simply an oversite by the framers who were much more used to gentlemanly behavior.
DAN
I never claimed to be non-partisan.I am rather proud that the congresswoman representing my former US district was re-elected by a margin that would make Saddam jealous.

Posted by: bills at December 8, 2008 12:10 AM

Bills: Both parties have used billy clubs and worse on occasion. If you were to say that the democrats have done more for those who’s rights have been violated or those who have been exploited by our society I would agree wholeheartedly. I have been a democrat all my life. I just got sick and tired of their corruption.

Dan: According to Judicial Watch Hillary did not vote for the raise. It was done by Bush through the use of an executive order. But, according to the Constitution that doesn’t matter. I’m sure the democrats will say it is no big deal, just a technicality. If necessary the democrats can pass an unconstitutional Saxbyfix for her.

Considering how much corruption she has been involved in and how many people do not like her I would not be suprised if her nomination were challenged.

This is just one more reason to question Obama’s seriousness about stopping the corruption.

Rather than asking people to support Obama without just cause, his supporters should be holding his feet to the fire.

Posted by: jlw at December 8, 2008 12:11 AM

Bills Said , “I suspect the allowance of the filibuster was simply an oversite by the framers who were much more used to gentlemanly behavior.” Like Beating someone Almost to death with a cane and many being removed from the floor by force. Those were the good old day’s NOT!

Posted by: Rodney Brown at December 8, 2008 12:35 AM

A big club http://en.wikipedia.org/wiki/Preston_Brooks

Posted by: Rodney Brown at December 8, 2008 12:44 AM

RB
You mean to say that you do not consider caneing someone gentlemanly behavior? Pleeeeas!

Posted by: bills at December 8, 2008 01:18 AM

BTW The famous caneing occured in the 1850s, long after the time of the original framers, but perhaps its a practice we should bring back. Where is Newt,anyway?

Posted by: bills at December 8, 2008 05:17 AM

jlw, sounds to me like you want to convict Obama before he has even taken office. Let’s hold his feet to the fire after he becomes president and has officially performed a presidential act to critique, eh?

Posted by: David R. Remer at December 8, 2008 09:08 AM

Bills, you caused me to go seek the origins of the filibuster with your comment that it was an oversight. Turns out, the filibuster did arrive as an oversight according to Wikipedia on the subject:

n 1789, the first U.S. Senate adopted rules allowing the Senate “to move the previous question”, ending debate and proceeding to a vote. In 1806, Aaron Burr argued that the motion regarding the previous question was redundant, had only been exercised once in the preceding four years,[9] and should be eliminated. The Senate agreed, and thus the potential for a filibuster sprang into being. Because the Senate created no alternative mechanism for terminating debate, the filibuster became an option for delay and blocking of floor votes.

The filibuster remained a solely theoretical option until 1841, when the Democratic minority tried to block a bank bill favored by the Whig majority by using this political tactic. Senator Henry Clay, a promoter of the bill, threatened to change Senate rules to allow the majority to close debate. Missouri Senator Thomas Hart Benton rebuked Clay for trying to stifle the Senate’s right to unlimited debate and Clay was unsuccessful in eliminating the filibuster with a simple majority vote.

That said, since the middle of the 19th century, the filibuster has stood the test of time and Congressional interpretation, and thus survives as intended to this very day since it could have been eliminated anytime in the last 150 years.

Posted by: David R. Remer at December 8, 2008 09:22 AM

David R.: Sounds to me like you have the opposite problem. You proclaim great things from Obama without any evidence whatsoever. I personally think that if Hillary had won and put this cabinet together you would have plenty of negative things to say about it. But it is ok, I understand, you have a lot invested in this man.

There is only one thing we know with any sense of certainty about the first two years of Obama’s term and that is that this country will be several trillions of dollars further in debt.

Posted by: jlw at December 8, 2008 09:42 AM

jlw, I have his word which so far has not disappointed. He said he would have a bi-partisan cabinet, and he has made good. He said he would run his campaign to appeal the broad public, not just Democrats, and he made good on it.

He said he would run a civil campaign, he did.

Your comment is without merit. My assessment is not without evidence. Yours is, however.

You are right about the deficit spending, and the bulk of that 2 trillion will be committed BEFORE Obama ever takes office. So, you can’t lay that part on Obama, nor can you lay the FACT that deficit spending was necessitated by the lack of accountability and oversight of the government preceding Obama ever taking office. I expect 4 trillion to be added to the deficit before Obama’s first term is over, and NO OTHER PRESIDENT could have done any better given the circumstances Obama is elected into.

You voted for - supported the government that ruled the bulk of the last 8 years, didn’t you? I rest my case.

Posted by: David R. Remer at December 8, 2008 10:01 AM

A lot of people felt exactly the same about Pres. Elect Bush.

Posted by: jlw at December 8, 2008 10:07 AM

jlw, Thanks for the correction. But as you say, it makes no difference, according to Article 1, Section 6.

David R. Remer wrote: d.a.n, Roy, jlw, it does seem clear, until one introduces the fact that the increase was rescinded, and therefore nullifies any increase having taken place as a result of Clinton’s tenure as representative. Yes, this is splitting hairs. Yes, it is clear to common sense that her vote disqualifies her from Sec’y. of State office. But, we are not a nation of common sense. Purportedly, we are a nation of law, and the issue will rightfully be settled by contest in the courts, and therefore a ruling of law.

Article 1, Section 6… . No Senator or Representative shall, during the time for which he was elected, be appointed to any civil office under the authority of the United States, which shall have been created, or the emoluments whereof shall have been increased during such time: and no person holding any office under the United States, shall be a member of either House during his continuance in office.

The Constitution does not say anything about subsequent rescission of the raise.

At any rate, the odds are 99% in favor of another violation of the Constitution to allow Hillary Clinton to serve.
No doubt we’ll see another “Saxbe Fix”: www.google.com/search?q=saxbe+fix&rls=com.microsoft:en-us&ie=UTF-8&oe=UTF-8&startIndex=&startPage=1&rlz=1I7GPEA_enUS296

David R. Remer wrote: d.a.n, your argument that the past is prologue to the future is contradicted by the many changes this nation has undergone since its inception. Democrats of the past are responsible for that past.

True. In some instances.

However, history is important, and history (with a few variations) repeats itself more often than not.

And today, there is nothing yet that would lead me to believe history won’t repeat itself.
I have not seen any detailed reasons yet to make me believe

History (with a few variations) repeats itself more often than not.
Therefore, the following is more often true, than not: “the past is prolugue to the future”

In my opinion, I’m not at all encouraged, based on some appointments (such as Bill Richardson, Janet Napolitano, and Hillary Clinton), all of which who share Obama’s views and have similar voting records on things such as open-borders, another amnesty, increased immigration, unfair trade deals, bail-out mania, etc.

David R. Remer wrote: Obama is not a typical Democrat.

No? You certainly can’t tell it thus far. Especially based on illegal immigration; constitutional violations of convenience (Article 1, Section 6; Article 4, Section 4, Article 5; etc.); bail-out mania; rampant borrowing, spending, and creating money out of thin air and the resulting incessant inflation ; pork-barrel (i.e. over $100 Billion in the $700 Billion bail-out BILL); etc.

David R. Remer wrote: And the Democratic Party has just emerged from its solitary confinement for having so recklessly managed the nation in the past.

Solitary confinement?

How’s that, when during the Republicans’ very small (tiny actually) majority for 8 years (between 1992 and 2006), the Democrats only had a few less seats in Congress than the Republicans.
SENATE ____________________________________HOUSE_____________________________________________________
Congress_Years_Total_Dem._Rep._Other_Vacant__Total_Dem._Rep._Other_Vacant_Re-Election _and_Party-Seat-Retention Rates
102nd 1991–1993 100 _ 56 _ 44 __ 0 ___ 0 ______ 435 _267 _167 __ 1 ___ 0 _____ 87.7% _______ 98.3%
103rd 1993–1995 100 _ 57 _ 43 __ 0 ___ 0 ______ 435 _258 _176 __ 1 ___ 0 _____ 73.6% _______ 98.1%
104th 1995–1997 100 _ 48 _ 52 __ 0 ___ 0 ______ 435 _204 _230 __ 1 ___ 0 _____ 79.8% _______ 88.2%
105th 1997–1999 100 _ 45 _ 55 __ 0 ___ 0 ______ 435 _207 _226 __ 2 ___ 0 _____ 77.4% _______ 98.7%
106th 1999–2001 100 _ 45 _ 55 __ 0 ___ 0 ______ 435 _211 _223 __ 1 ___ 0 _____ 89.9% _______ 99.3%
107th 2001–2003 100 _ 50 _ 50 __ 0 ___ 0 ______ 435 _212 _221 __ 2 ___ 0 _____ 88.2% _______ 98.7%
108th 2003–2005 100 _ 48 _ 51 __ 1 ___ 0 ______ 435 _205 _229 __ 1 ___ 0 _____ 87.9% _______ 98.1%
109th 2005-2007 100 _ 44 _ 55 __ 1 ___ 0 ______ 435 _202 _231 __ 1 ___ 1 _____ 88.6% _______ 98.7%
110th 2007-2009 100 _ 49 _ 49 __ 2 ___ 0 ______ 435 _233 _202 __ 0 ___ 0 _____ 84.9% _______ 93.1%
111th 2009-2011 100 _ 56 _ 42 __ 1 ___ 0 ______ 435 _257 _177 __ 2 ___ 0 _____ 86.9% _______ 94.0%

The fact is, most Democrats went along with ALL of it.
And 86.9% of Congress was re-elected on 4-DEC-2008.

Therefore, how can a mere gain of 31 seats (a mere 5.8% of 535 seats) in Congress for Democrats lead to an end to ignoring pressing problems and continued deterioration of numerous economic conditions.

• Re-election rates and Party seat retention rates:
• 100.0% |RR————RRRRRRRR——
• 097.5% |—RRRR—RR———-R——
• 095.0% |——-R—R————-RRRR
• 092.5% |——-R—R——————-
• 090.0% |PP——RR—PPPPPPPP——
• 087.5% |—PP—RR—P———P—PP
• 085.0% |—-P——-P————PP—
• 082.5% |—-P——-P——————
• 080.0% |—-P—PP-P——————
• 077.5% |—-P—P-PP——————
• 075.0% |——PP————————
• 072.5% |——PP————————
• 070.0% |————————————YEAR
• _______ 1 1 1 1 1 2 2 2 2 2 2
• _______ 9 9 9 9 9 0 0 0 0 0 0
• _______ 9 9 9 9 9 0 0 0 0 0 1
• _______ 1 3 5 7 9 1 3 5 7 9 1
• Where:
• R = Re-Election Rate
• P = Party Seat Retention Rate

David R. Remer wrote: … the past is [not] prologue to the future …

That will be true this round only when we see an end to some of these 10 major abuses:

• (01) STOP the lawlessness, rampant corruption of the federal government, numerous constitutional violations (of which yet another violation will soon be added; the violation of Article 1, Seciton 6), etc.
• (02) STOP starting unnecessary wars (and stop the fear mongering and lies as an excuse to start wars);
• (03) STOP pork-barrel; graft; bloat; peddling influence; waste; bail-outs for the banks, corporations, insurance companies, and Wall Street ; and stop other abuses of power (e.g. such as Congress giving itself 9 raises between 1997 and 2007);
• (04) STOP illegal immigration which despicably pits American citizens and illegal aliens against each other for votes and profits, disguised as compassion, while costing tax payers an estimated $70 Billion to $327 Billion annually in net losses;
• (05) STOP election fraud, stop blocking access to ballots; Gerrymandering; implement common-sense election reforms, and give voters a printed verifiable receipt of their vote;
• (06) STOP the borrowing, spending, and growing the massive $10.7+ Trillion National Debt; stop plundering Social Security surpluses; reduce the size of the severely bloated federal government;
• (07) STOP regressive taxation;
• (08) STOP incessant inflation (of the last 52 consecutive years) and force the Federal Reserve and government to target ZERO inflation and stop excessive money-printing, which is the major cause of inflation;
• (09) STOP the misinformation and ignorance; an educated electorate is paramount; an ignorant electorate will be abused and exploited; stop the lies and misreporting of economic statistics;
• (10) STOP the unnecessary middle-men (i.e. government and insurance companies) and fraud in the health care systems; stop killing 195,000 per year by unnecessary and negligent medical mistakes and dangerous phamaceuticals; also, if the 9 problems above were adequately addressed, it would reduce the pressues on the health care systems; health care today is not only increasingly unaffordable, but dangerous too! HealthGrades.com reported (27-July-2004) that “An average of 195,000 people in the U.S. died due to potentially preventable, in-hospital medical errors in each of the years 2000, 2001 and 2002, according to a new study of 37 million patient records”. Since year 1999, that is over 1.5 million people killed by preventable medical mistakes. That is more than all the American soldiers killed in the American Revolution (4,435), the War of 1812 (2,260), the Indian Wars (1,000), the Mexican War (1,733), the Civil War (462,000), the Spanish American War (385), WWI (53,402), WWII (291,557), Vietnam War (58,209), Korean War (36,574), the Iraq Gulf War (529), and the current Iraq war Mar-2003-present (3,963), combined!

However, improvements in the following areas do not look encouraging:

• the appointments to date (one of which violates Article 1, Section 6), and others that look like more open-borders, another amnesty, and more unfair free trade;
• the bail-out mania and hundreds of billions of more pork-barrel (of which Obama also voted for);
• regressive taxation;
• illegal immigration and the annual net losses of $70 Billion to $327 Billion to U.S. tax payers: One-Simple-Idea.com/BorderSecurity.htm#Burdens
• lawlessness; especially with the probability of increases in both legal and illegal immigration, and the probable repeat of another amnesty (which was quintupled or sextupled by the amnesty of 1986;);
• downsizing the severely over-bloated federal government;

David R. Remer wrote: I think, hope, you will have to eat those words regarding open borders under an Obama administration.

I hope I’m wrong too.

But I don’t really see solid reasons yet for so much optimism, but see several reasons for concern; especially with the discouraging developments listed above.
It appears like we are being asked to be more optimistic without solid reasons to substantiate that optimism.
If there was any indication that there would be significant progress in only 5 of those 10 serious issues listed above, it might justify some reason for less skepticism.

jlw wrote: You proclaim great things from Obama without any evidence whatsoever.

That’s what confuses me too about all of this.

There appears to me to be a widespread suspension of skepticism of late.
All we have at the moment is some questionable appointments and voting records (e.g. One-Simple-Idea.com/VotingRecordsBarackObama.htm , OnTheIssues.org), and none of those are very encouraging.

At any rate, it is very interesting to see such a huge divide between those that are optimistic today, and those that are still skeptical (a healthy skepticism based on voting records, history, policy statements, and deeds, in my opinion).
It isn’t like jlw and Roy Ellis are not raising some very good points.
Yet, it appears to me as though their concerns (very valid concerns) are being discarded and dismissed due to ever present and powerful partisan loyalties.

David R. Remer wrote: To be sure, if the Democratic Party manages itself as it has in the past, our nation’s prospects will only worsen.

That’s what I’m talkin’ about.

That sort of realism and honesty gives me a little hope.
That’s a healthy and realistic skepticism.
We need that realistic sketpicism more than ever.
We should never under-estimate the dark-side of human tendencies … especially where there is concentrated power and opportunities galore.
That is, don’t be too surprised when the new IN-PARTY does what all IN-PARTY’s do.

Otherwise, some of those 10 abuses above (especially # (01), (03), (04), (06), (07), (08), (10)) will get worse.

bills wrote:d.a.n I never claimed to be non-partisan. I am rather proud that the congresswoman representing my former US district was re-elected by a margin that would make Saddam jealous.

And I never claimed you were.

You are far from alone.

That’s your choice.

Most Americans are no different, and most likely will remain strongly partisan biased for some time … at least until it becomes too painful, in which we will most likely see another repeat of history, in which voters oust bad incumbent politicians by the hundreds, as they did in years 1927-to-1933:

• Start __ End __ Congress _ Re-Election


• Year ___ Year ___ # _____ Rate


• 1927 ___ 1929 ___ 070st ___ 68.9% (165 incumbents ousted)


• 1929 ___ 1931 ___ 071st ___ 79.7% (108 incumbents ousted)


• 1931 ___ 1933 ___ 072nd ___ 76.8% (123 incumbents ousted)


• 1933 ___ 1935 ___ 073rd ___ 61.2% (206 of 531 incumbents ousted; 59 Dems, 147 Repubs)

That is the sort of repeat of history we need very badly, because that is most likely the only thing (if anything) that will get do-nothing Congress’ attention.

bills wrote:d.a.n , I am rather proud that the congresswoman representing my former US district was re-elected by a margin that would make Saddam jealous.

Whoever that may be? Have you looked at her voting record?

Time will tell.
We ALL want things to get better.
We will probably have to wait until next year to see if our skepticism and optimism is justified.
We will soon know.
However, while “Past is [not] prologue to the future” always, there is no doubt that history often repeats itself (with a few variations) over and over and over; including change that finally comes about because the status quo and the lack of change finally becomes too painful.
The lack of change is often the failure to end the long-time abuses (such as the 10 major abuses above), more than the failure to do new and different things.

One thing Obama is right about:

• … things “are going to get worse before they get better” …

Is it just me, or did it appear like most (if not all) in Congress were caught completely by surprise when Ben Bernanke (Federal Reserve) and Henry Paulsen (U.S. Treasury) appeared before a dumb-founded Congress asking for $700+ Billion in bail-outs for the banks, corporations, insurance companies, and Wall Street?

Just a few weeks before, all of the candidates for office were making all sorts of grandiose promises.
Now what do we see.
Seriously … does this not demonstrate the complete incompetence of Congress?
And that is despite numerous economists warnings.
That is, you didn’t have to be a rocket scientist or clairvoyant to see where so much National Debt, nation-wide debt, inscessant inflation, and, in-general, so much fiscal and moral bankruptcy was headed.

Now, only a few months later, it appears like Congress has egg all over its face.
Yet, despite dismal 9%-to-18% approval ratings, loyal voters stil rewarded 86.9% of Congress with re-election.
And people wonder why I believe that the majority of voters will most likely have to learn the hard way (again).
To me, many things are looking VERY similar to the Great Depression.
In several ways, certain conditions today are much worse.
We did not have the massive level of debt entering the Great Depression that we have today.
Today, we have a severely flawed monetary system, in which tiny reserves are used to create massive amounts of debt to (greedily) create interest.
95% of all U.S. money in existence is Principal debt, and no one really knows how the interest on that debt will be paid, much less how to reduce the Principal debt so that it stops growing ever larger.
And it is increasingly looking as though voters will repeat 1927-to-1933 too.
That is, we may have to wait a few years into the next Great Depression before pain and misery finally trumps blind partisan loyalties, and unhappy voters oust hundreds of incumbent politicians by the hundreds. Unfortunately, while better late than never, it will be too late (again).

David R. Remer wrote: jlw, I have his word which so far has not disappointed. He said he would have a bi-partisan cabinet, and he has made good. He said he would run his campaign to appeal the broad public, not just Democrats, and he made good on it. He said he would run a civil campaign, he did. Your comment is without merit. My assessment is not without evidence. Yours is, however.

You both made some valid points.

However, I’d have to side with jlw on the issue of substantive reasons for so much optimism.
Also, regarding the bail-outs, don’t forget that Obama voted for the $700 Billion bail-out, which included over $100 Billion of more pork-barrel (including a tax exemption for certain types of wooden arrows). Also, there’s Barack Obama’s voting record too: One-Simple-Idea.com/VotingRecordsBarackObama.htm
And there is very little doubt about what is about to happen with regard to borders , and immigration. Get ready for another shamnesty, despite MOST Americans that are opposed to it. How is that appealing to broad public support?

Again, it doesn’t look all that promising. All I can say is it is probably better than McCain would have done, and that ain’t much to celebrate, nor be very optimistic about.

David R. Remer wrote: I expect 4 trillion to be added to the deficit before Obama’s first term is over, …

David, in only 2 or 3 months, $3.2 Trillion has already been spent or lent, and there are $8.5 Trillion allocated.

I predict that the National Debt will be doubled in one year from $10.7 Trillion today to $22 Trillion (if not more).
Why?
Because 95% of all U.S. money in existence is Principal debt.
Therefore, to reduce the debt, the federal government and Federal Reserve will create (in fact, they’ve already started) tens of trillions out of thin air to merely keep up with the interest on the debt, and the Principal debt will continue to grow ever larger, as it has every year for the past 52 consecutive years. In this case, the past is prologue.
Where else will the money come from, if it is not borrowed or created out of thin air.
It is extremely unlikely that the federal government will cut spending to the levels needes As Soon As Possible.
We don’t lack solutions.
We lack the will … that is, until it becomes too painful.

David R. Remer wrote: …and NO OTHER PRESIDENT could have done any better given the circumstances Obama is elected into.

Maybe. Hard to say. There were other candidates that probably understand the seriousness of the massive debt pyramid more than Obama.

Obama seemed just as surprised as most (if not all) in do-nothing Congress, with Paulsen and Bernanke appearance before Congress warning of an economic melt-down. In my opinion, few in Congress showed much insight or leadership leading up to that. Only a very few politicians have been constantly and tirelessly (along with David Walker) been warning us of what was not really that hard to see coming. And we are now supposed to believe that has all changed to any significant degree?

But if I am wrong, which I hope I am, I will be one of the first to admit it.

I wish I could share in the optimism.
Perhaps you see something some of us don’t.
However, that’s going to take more time before any of us can be certain about it.

However, based on numerous factors to date; decades of deep seated corruption in Congress; 86.9% of Congress just rewarded with re-election; Obama’s obvious (messed up) position on illegal immigration and appointments that appear to support such concerns; Obama’s apparent lack of understanding of economics along with most (if not all) in Congress who were dumb-struck by the appearance of Paulsen and Bernanke begging for hundreds of billions of dollars; previous statements; and Obama’s and Congress’ voting records; it does not look very promising to me.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 8, 2008 12:31 PM

Another economist Said after the 8.5 trillion is Used, There is another 10 trillion that can be used. WOW!

Posted by: Rodney Brown at December 8, 2008 01:20 PM

Roy:

Jarandhel, Your points are cited often in debating the potential for third parties. While I tend to agree I think the most expeditious route to success is to target the federal system. The fed is way more visible, in the media more, deals with larger programs, etc. In days gone by I would agree that main street was the place to start a political movement. But, with the Internet you can reach a way greater population and faster using the larger issues of politics.

Thing is, if you try to start with the Presidency, there’s actually very little that you can change. Look at Nader’s campaign promises, for instance. From Impeachment of Bush to a single-payer national health insurance plan to the repeal Taft-Hartly union law, most of Nader’s campaign promises cannot be enacted without a majority in Congress. The president by himself just doesn’t have the power to do the things that Third Parties promise to do if they are elected. Republican and Democratic candidates can make these promises because they know they will have a broad base of support in Congress with which to implement their agendas. Third Party candidates make the promises anyway, but lack that base of support.

Now, you might say that they should focus on both the Presidency and Congress, then. But most people who enter Congress were first involved in state and local government. For the most part, people elect representatives with proven records working for them in state and local government to federal government.

Look at the Senate Leadership: Harry Reid, formerly a member of the Nevada State Assembly. Dick Durbin, formerly legal counsel for the Illinois Lieutenant Governor and the Illinois State Senate Judiciary Committee. Byron Dorgan, formerly North Dakota State Tax Comissioner. Patty Murray, formerly a member of the Washington State Senate. Chuck Schumer, former member of the New York State Assembly. Mitch McConnell, former Deputy Assistant Attorney General and Jefferson County Judge/Executive. Lamar Alexander, former Governor of Tenessee and US Secretary of Education. Kay Bailey Hutchinson, former member of the Texas House of Representatives and Texas State Treasurer. John Cornyn, former Texas Attorney General and member of the Texas Supreme Court. Of all the leadership, only Jon Kyl and John Ensign did not previously serve at lower levels of government. That’s less than a fifth.

Wouldn’t it be more sensible to work with the strategy that has gotten 82 percent of the congressional leadership in power, than to work with the strategy that has gotten 18 percent of them into power? That strategy is, clearly, working from the ground up.

Posted by: Jarandhel at December 8, 2008 01:23 PM

Jarandhel, you make some very good points. It’s a little like the chicken or the egg. It’s a slow process to try and start up a third party at the local level. On the other hand, you need a well established party to attract good candidates until. Seems there is more action at the rep/senate level. You are playing to a national audience and looking to gain from a broader media exposure. But, I fully agree that a single entity party like Nader’s or Baldwins’ is likely to be unsuccessful. The emphasis needs to be on the party and what it stands for every bit as much as what the candidate stands for. In the party I am proposing the candidate can follow his nose but must also be aligned with the party’s agenda. Requiring candidates to support the Party’s agenda brings focus to reform issues or issues that are important to the membership (voters). Certainly, you would grow your party as the opportunity presents. There seems to be little interest in a third party at present but I believe that will begin to change in six months or so.

Posted by: Roy Ellis at December 8, 2008 01:49 PM

d.a.n said: “There were other candidates that probably understand the seriousness of the massive debt pyramid more than Obama.”

I see no objective way to make such an assessment. Understanding the effects of debt and deficits DO NOT mitigate or eliminate the need for debt and deficit spending to save the nation from a depression brought on by government neglect, and rampant greed throughout the entire society.

The issue is this: We have a democratically elected system. The voters DO NOT want a depression. Failure to deficit spend at this time in a massive way would cause a domino effect in unemployment that would lead directly to a depression. There is no getting around this simple set of facts. So, whomever was elected would have had the same mandate to prevent a depression from occurring and the only way at this point in time to do that, is for the only entity with sufficient spending power to inject liquidity, and jobs, into the system.

Or would you eliminate Medicare and Soc. Sec., abrogate those contracts, in order to avoid deeper debt and deficit spending by sacrificing the elderly for the working class?

Those who rail against deficit spending and debt occurring at this time fall into two camps. The Sen. Shelby’s who seek mass poverty and unemployment by saying let the economy fail, it will be good for everyone, and those who don’t want to take Shelby’s side but haven’t any idea as to what alternative there is to massive government spending to prevent job losses.

Shelby and Sessions say let the Big 3 fail, they deserve it. And they don’t give a rat’s ass for the consequences to millions of other Americans who would become un or under employed and poor in America as a result of THESE politician’s ideological preferences, now that they have their millions securely socked away.

Posted by: David R. Remer at December 8, 2008 05:10 PM

d.a.n, yes, the numbers for the debt and deficits will be huge. But, those numbers would be huge if the government DID NOT spend to save the economy now. What does civil war or revolution cost a nation in deficit and debts? What does it cost a society to watch 10’s of millions of parents and grandparents suffer horrible agony and death due to lack of health care resulting from mass unemployment, absence of money circulating the economy due to wealth hoarding and no capital for small business loans, and government’s refusal to print money to aid them?

Still ends up costing the society and nation enormously, d.a.n, if not more than the results of debt and deficit spending, especially if as a result, our economy is able to continue to compete and consume and generate revenues with which to halt deficit spending, and perhaps even reduce the debt at a later point (just don’t elect Republicans who say debt doesn’t matter.)

An economy which cannot function generates deficits and debt, d.a.n, if it is a democratically elected government. There is no way around this. If government is democratically elected and the nation faces broad adversity, the people will demand of their government that money be spent to reduce and eliminate the adversity.

Do you have another form of government that would be preferable on balance?

Posted by: David R. Remer at December 8, 2008 05:20 PM

d.a.n, the nation was on the precipice of a financial institution meltdown that would have hit every credit union, local bank, and person seeking a loan for anything. The $700 billion decision STOPPED that meltdown in its tracks. Our financial institutions are now showing signs of rebounding and house sales are ticking upward.

That $700 billion was not prudently employed nor distributed, and likely could have been $500 billion or less and achieved the same result. But, lest you forget, time to act was of the essence, and timely action albeit flawed, did halt the meltdown. People have not run on the banks and credit unions removing trillions in savings which are now being used to keep economic activity going, albeit at recessionary levels.

Now we have to deal with the other shoe that dropped, the rapid falloff in consumer spending both domestic and foreign, which is causing unemployment to spiral upward. Stimulating the consumer spending in this economy is going to require efforts on the psychological as well as employment and economic fronts.

The difference between economic growth, recession, and depression is largely a matter of employment numbers and wages. This government has no choice but to use tax dollars to stimulate economic activity which puts the unemployed to work and preserves the existing employed their jobs. That will require deficit spending. No way around it, except to have had a surplus to begin with which current and previous politicians saw no need for going back decades.

Perhaps voters will put fiscal responsibility back on the table right after this recession is over. That of course would be the best of all possible outcomes. Which would mean paying more in taxes while at the same time keeping a stable or modest growth economy going for decades, as a means of generating fiscal surpluses with which to pay down this enormous national debt.

And debt does matter. It will matter most when we need to borrow again in the future and it matters enormously in opportunity cost of the billions paid in interest to foreign investors each year instead of circulating in our own economy to help keep taxes lower.

Posted by: David R. Remer at December 8, 2008 05:37 PM

d.a.n, Obama has been very shrewd in keeping most of his cards close to his vest, preventing his opponents from having advance planning time in undermining his efforts before he gets to them.

This is politics, and Obama’s mastery of them I find awesome. Additionally, prioritization requires a small limited agenda. As the highest priority items are removed from the list for action, others can become talking points. To spill an entire priority set in advance of even taking office, is to arm and munition one’s opponents and give them the high ground.

The border is not the highest priority to be addressed in the new term of office, hence, Obama has little to say where he will go on this when he gets to that priority. Wisely!

It does, as you say, leave little evidence to predicate hope that he will act on the issue and act responsibly to boot. But, I think we will find method in Obama’s processes that will on balance, not disappoint the majority of Americans hoping for a capable leader out of our most pressing difficulties.

There is no question that illegal immigration employment during a time of employment recession will not be last on the list of priorities. But, some time is needed. He is not even empowered yet to act as president.

Posted by: David R. Remer at December 8, 2008 05:46 PM

David R. Remer wrote:

d.a.n said: “There were other candidates that probably understand the seriousness of the massive debt pyramid more than Obama.”

I see no objective way to make such an assessment. Understanding the effects of debt and deficits DO NOT mitigate or eliminate the need for debt and deficit spending to save the nation from a depression brought on by government neglect, and rampant greed throughout the entire society.

I think Ron Paul was the ONLY person in Congress that:

• (a) understood that the Federal Reserve is running a massive pryamid-scheme, where the nation-wide debt can only do one thing: GROW !
• (b) and appeared prepared to tackle that problem, which is one of the biggest problems we have; the single-most cause of economic instability via incessant inflation;

As a result of that debt-pyramid-scheme, 95% of all U.S. money in existence is Principal Debt.
In year 1950, the M3 Money Supply was $135 Billion.
In year 2005, the M3 Money Supply was $10.15 Trillion (an increase of 7520%; about 136.7% per year).
In year Nov-2008, the M3 Money Supply was $14.1 Trillion (an increase of 39% in only 3 years; 13% per year).
Notice anything strange about that?
The growth of the M3 Money Supply has slowed from 136.7% per year to only 13% per year.
Why?
Because most Americans can not borrow any more money, because most Americans already owe more money than they can repay.
With 110 Million households, and $67 Trillion of nation-wide debt, that is $609,090 of debt per household (or $219,672 per person).

David R. Remer wrote: The issue is this: We have a democratically elected system. The voters DO NOT want a depression.

True. But from all of the polls I’ve seen, the majority of voters were against the bail-outs for the banks, financial corporations, insurance companies, and Wall Street.

The majority of polls also show the majority of voters (aobut 60%) are against a bail-out for the big-3 auto-makers.
Personally, I’d rather bail-out the auto-makers than bail-out banks, financial corporations, insurance companies, and Wall Street.

David R. Remer wrote: Failure to deficit spend at this time in a massive way would cause a domino effect in unemployment that would lead directly to a depression. There is no getting around this simple set of facts.

I don’t agree with that part.

In fact, I think a depression is unavoidable, unless more radical actions are taken (more about that below; see the solution), and trying to create money out of thin air will make it worse, by destroying the existing savings, pensions, and entitlements.
Voters do not want a depression, but that does not mean they want the currency debauched either.
Spending of tens of trillions of dollars will most likely debauch the currency, and make a bad situation worse.
The federal government receives $2.5 Trillion per year in revenues, and needs to cut all unnecessary waste in a very severely bloated federal government.
The banking system needs to stop the highly leveraged 9-to-1 debt-to-reserves fractional banking (a.k.a. debt-pyramid).
Why?
Obviously, when money is created as debt at a 9-to-1 ratio, a mere 10% correction in any market (in this case, real-estate), the banks’ reserves disappear with only 10% in reserves.
That ratio needs to change and the federal government needs to have control of it.
However, the federal government also needs the fiscal discipline to stop the incessant inflation that fuels the boom-to-bust bubbles and economic instability.

David R. Remer wrote: So, whomever was elected would have had the same mandate to prevent a depression from occurring and the only way at this point in time to do that, is for the only entity with sufficient spending power to inject liquidity, and jobs, into the system.

True. Whoever was elected, they would be expected to do what is best.

But again, from all of the polls I’ve seen, the majority of voters were against the bail-outs for the banks, financial corporations, insurance companies, and Wall Street.
And the majority of polls also show the majority of voters (aobut 60%) are against a bail-out for the big-3 auto-makers.

Also, it now may not be possible to avoid a depression, and trying to solve massive debt with more debt may be the last straw, and will most likely make a bad situation much worse, but also crashing the currency.

That is, what do you think will happen if we have hyper-inflation?
If we try to create the amount of money that would be required to deal with the $67 Trillion debt-pyramid, it will grow the debt larger, and/or debase the currency so badly, that it won’t matter how much money we create out of thin air.

Many nations have already tried this, and learned the hard way that simply creating money out of thin air does not work.
That’s where we are headed now.
Year to year inflation has been rising for the last several years, despite questionable fears of deflation:

• Year _ Inflation Rate


• 2002 __ 1.59%


• 2003 __ 2.27%


• 2004 __ 2.68%


• 2005 __ 3.39%


• 2006 __ 3.24%


• 2007 __ 2.85%


• 2008 __ 4.28% (estimated)

David R. Remer wrote: Or would you eliminate Medicare and Soc. Sec., abrogate those contracts, in order to avoid deeper debt and deficit spending by sacrificing the elderly for the working class?

No, but eligibile ages may need to be increased, and some entitlements may have to be reduded, along with a LOT of things.

David R. Remer wrote: Those who rail against deficit spending and debt occurring at this time fall into two camps.

You also used to rail against the debt too?

I guess it is too late now for that now?
I still do not see how we are going to spend our way out of massive debt, where 95% of all money in existence already is Principal debt.
The fact is, something much more drastic is needed.
That debt is going to default one way or another.
There is going to ge a nation-wide reset one way or another.
Creating massive amounts of new money out of thin air will not save us, but make it worse.
Inflation has already been rising, year-to-year, since year 2001, and the real inflation is probably more than the 4.28 (average) for year 2008 (more like 14% on average for 2008).

David R. Remer wrote: The Sen. Shelby’s who seek mass poverty and unemployment by saying let the economy fail, it will be good for everyone, and those who don’t want to take Shelby’s side but haven’t any idea as to what alternative there is to massive government spending to prevent job losses. Shelby and Sessions say let the Big 3 fail, they deserve it. And they don’t give a rat’s ass for the consequences to millions of other Americans who would become un or under employed and poor in America as a result of THESE politician’s ideological preferences, now that they have their millions securely socked away.

At this point, what’s another $34 Billion compared to $3.2 Trillion already spend/lent and $8.5 Trillion allocated for bail-outs and guarantees?

Atleast the auto companies build and create something.

David R. Remer wrote: d.a.n, yes, the numbers for the debt and deficits will be huge. But, those numbers would be huge if the government DID NOT spend to save the economy now.

Which will be worse?

• (a) a depression, but the currency is not totally debauched by hyperinflation?
• (b) or a depression in which the currency has destroyed everyone’s savings , pensions , and meager entitlements and beneifts?

David R. Remer wrote: What does civil war or revolution cost a nation in deficit and debts?

Which is most likely to trigger a civil war? (a) or (b) above?

I think most people are under-estimating the eventual effect of merely creating tens of trillons of new money out of thin air.

David R. Remer wrote: What does it cost a society to watch 10’s of millions of parents and grandparents suffer horrible agony and death due to lack of health care resulting from mass unemployment, absence of money circulating the economy due to wealth hoarding and no capital for small business loans, and government’s refusal to print money to aid them?

All the more reason to do the most logical and responsible thing.

But not be simply creating trillions of dollars out of thin air, because those seniors savings and entitlements will be destroyed by hyperinflation.
The money for all of this spending does not exist.

Also, we can’t borrow enough money.
No can lend the U.S. the $3.2-to-$8.5 Trillion spent/lent/allocated in only the last 90 days.

David R. Remer wrote: Do you have another form of government that would be preferable on balance?

Yes. One that has complete control of the monetary system.

The root of this problem is a mathematically flawed debt-pyramid that creates debt-to-reserves at a ratio of 9-to-1.
It has been doing it for decades.
In 1950, the nation-wide debt was 100% of GDP.
Today, the nation-wide debt is 483% of GDP.
That’s the problem.
The best analogy is playing the game of Monopoly , in which one player (i.e. the banks) can create all the money it wants out of thin air.
Before long, the banks own everything, and everyone else is broke and/or deep in debt, jobless, homeless, and hungry.
The federal government and the Federal Resreve has failed miserably.
Therefore, the solution is that the federal government should take over the banking system such that:

• The federal government controls the monetary system; creates the money it needs (interest free and debt free), and controls the money-supply.


• The federal government shall prohibit usury (interest) by government and member banks (under-cutting anyone else who lends money with interest). If a lot of interest is bad (i.e. usury is immoral), how can a little interest be good? If inflation is bad, how is a little inflation good?


• This creates a stable money supply with the flexibility for small fluctuations. If inflation is too high, some money in circulation can be removed. If there is deflation, or the population increases, the government can create and spend some money. If they do a bad job of it, the voters know exactly who to hold accountable. Currently, the Federal Reserve is a quasi-government controlled / privately owned bank, and the voters have little (if any) control over it. Why would people borrow from a bank (with interest) when they can borrow from the government, interest free? Thus, there would be little (if any) usury. Usury, predatory lending, and other manifestations of unchecked greed and the other numerous negative side effects would be greatly reduced. If properly managed, without profit and usury as a motive, the U.S. currency would become superior to any other world currency.


• Theoretically, if managed responsibly, with the central bank in control of the monetary policy (instead of a quasi-government controlled/privately owned bank system), there may be no need for any tax system. That is, inflation and deflation would affect everyone’s money an equal percentage. Of course, such a vast change in the monetary and tax systems would require new ways of thinking about money, interest, borrowing, taxation, and monetary policy, and there are many (e.g. politicians and bankers; a.k.a. puppets and puppeteers) that will resist such changes. Since this way of funding the federal government is unlikely any time soon, the least we can do now is to greatly simplify the current, ridiculously complex and regressive tax system (e.g. make it a more fair, flat 17% income tax on all types of income above the poverty level).

That may sound crazy to some people, but if we don’t do it, there will be a reset anyway (the hard way, with massive nation-wide foreclosures and defaults).
But, why should the Federal Reserve get to create money out of thin air, at a obscene 9-to-1 ratio of debt-to-reserves, and then receive interest on that debt? ! ?
Why should some middlemen (bankers) be getting rich by creating money out of thin air at a ratio of 9-to-1?

David R. Remer wrote: d.a.n, the nation was on the precipice of a financial institution meltdown that would have hit every credit union, local bank, and person seeking a loan for anything. The $700 billion decision STOPPED that meltdown in its tracks. Our financial institutions are now showing signs of rebounding and house sales are ticking upward.

No, the crisis has not gone aways, and the $700 Billion is actually $3.2 Trillion that has already spent/lent, and there’s $8.5 Trillion allocated, and it’s likely to get much, much larger.

I understand the seriousness of the problem, but it can’t be solved without a major reform of the banking system.
We essentially need a take over of the banking system.
Otherwise, we are headed for a collapse anyway, via hyperinflation.

Unfortunately, the U.S. owes a lot of money to foreign nations too.
That debt will never be repaid either if we go the way of hyperinflation.

David R. Remer wrote: That $700 billion was not prudently employed nor distributed, and likely could have been $500 billion or less and achieved the same result. But, lest you forget, time to act was of the essence, and timely action albeit flawed, did halt the meltdown.

No. I don’t think the melt-down is even remotely over.

Why?
95% of all money in existence is still Principal debt.
Nation-wide debt of $67 Trillion (if not more now) still exists.
National debt of $10.7 Trillion (if not more now) still exists.
The interest on all of that debt still exists.
All of the things that cause the crisis are not only still present, but now worse too!

David R. Remer wrote: People have not run on the banks and credit unions removing trillions in savings which are now being used to keep economic activity going, albeit at recessionary levels.

True. As long as they are FDIC insured. That guarantee is necessary, or a run on the banks would most certainly happen.

David R. Remer wrote: Now we have to deal with the other shoe that dropped, the rapid falloff in consumer spending both domestic and foreign, which is causing unemployment to spiral upward. Stimulating the consumer spending in this economy is going to require efforts on the psychological as well as employment and economic fronts.

Only jobs can do that.

The government can create jobs programs to rebuild the nation’s infrastructure.

David R. Remer wrote: The difference between economic growth, recession, and depression is largely a matter of employment numbers and wages. This government has no choice but to use tax dollars to stimulate economic activity which puts the unemployed to work and preserves the existing employed their jobs.

True.

But strangely, the federal government needs to cut spending and government bloat. That’s a waste.
We don’t need all of this bloated government …

(01) $57.3 Billion (year 2005; with 4,487 federal employees) for the Dept. of Education (Executive Branch)?

• (02) $371 Billion (year 2005; with 2 million federal employess) for the (www.defenselink.mil/sites/) Dept. of Defense (Executive Branch)?


• (03) $40 Billion (year 2005; with 180,000 federal employess) for the Dept. of Homeland Security (Executive Branch)?


• (04) $66.8 Billion (year 2005; with 67,000 federal employees) for the Dept. of Health and Human Services (includes Medicare and Medicaid) (Executive Branch)?


• (05) $Billions for subsidies for farms (some owned and operated by corporations) ?


• (06) $Billions for welfare for foreign nations ?


• (07) $Billions for the war on drugs?


• (08) $19.1 Billion (year 2005; with 109,832 federal employees) for the Dept. of Agriculture (Executive Branch)?


• (09) $5.8 Billion (year 2005; with 40,000 federal employees) for the Dept. of Commerce (Executive Branch)?


• (10) $31.3 Billion (year 2005; with 16,100 federal employees) for the Dept. of Energy (Executive Branch)?


• (11) $10.8 Billion (year 2005; with 71,436 federal employees) for the Dept. of the Interior (e.g. land management, Indian arts, park services, minerals, etc.) (Executive Branch)?


• (12) $22.0 Billion (year 2005; with 109,000 federal employees) for the Dept. of Justice (e.g. FBI, Attorney General, ATF, prisons, Tax Division, etc.) (Executive Branch)?


• (13) $11.9 Billion (year 2005; with 17,347 federal employees) for the Dept. of Labor (Executive Branch)?


• (14) $10.3 Billion (year 2005; with 30,266 federal employees) for the Dept. of State (Executive Branch)?


• (15) $61.6 Billion (year 2005; with 60,100 federal employees) for the Dept. of Transportation (Executive Branch)?


• (16) $10.8 Billion (year 2005; with 115,897 federal employees) for the Dept. of the Treasury (Executive Branch)?


• (17) $51.0 Billion (year 2005; with 219,000 federal employees) for the Dept. of Veteran Affairs (Executive Branch)?


• (18) $Billions for the dysfunctional Judicial Branch (e.g. Supreme Court, Courts, etc.)?


• (19) $Billions for the dysfunctional Legislative Branch (e.g. Senate, House of Representatives, President of the Senate, etc.) ?


• (20) $Billions for the hundreds of Independent Agencies (e.g. National Science Foundation, NASA, Federal Reserve System, etc.)?


• (21) $Billions for the dozens of quasi-official Agencies (e.g. Smithsonian, Technology Reinvestment Project, National Consortium for High Performance Computing, etc.) ?


• (22) $Billions for the dozens of Federal Boards, Commissions, and Committees (e.g. Appalachian Regional Commission, Commission of Fine Arts, U.S. Institute of Peace, etc.) ?


• (23) $Billions for the hundreds of Tangential Non-Government Agencies (e.g. Energetic Materials Research and Testing Center, The Food and Drug Law Institute, CSPAN, ) ?


• (24) $Billions for the for these (acuf.org/issues/issue35/050503gov.asp) top 10 ways the federal government wastes money?


• (25) $Billions for the hundreds of redundant programs:
  • 342 economic development programs;
    
  • 130 programs serving the disabled;
  
  
  • 130 programs serving at-risk youth;
  
  
  • 72 federal programs dedicated to assuring safe water;
  
  
  • 50 homeless assistance programs;
  
  
  • 45 federal agencies conducting federal criminal investigations.

David R. Remer wrote: That will require deficit spending. No way around it, except to have had a surplus to begin with which current and previous politicians saw no need for going back decades.

There are ways around it, but it requires major reforms to the banking system and the federal government.

The bloat and waste has to go now.

It’s nothing but bloat and waste.

The debt problem has to be attacked in a more radical way than merely creating new money out of thin air.
The federal government should NOT be paying $429 Billion per year to the Federal Reserve for interest on the National Debt.
The Federal Reserve has failed at its fiscal duties and therefore justifies the federal government to take over the banking system.
Remember, 95% of all U.S. money in existence is debt, of which most is owed to the banks!
The banks are strangling the nation with oppressive debt and an dishonest, usurious, inflationary pyramid scheme which is now on the verge of collapse.
$67 Trillion of nation-wide debt and $10.7 Trillion of National Debt is not going to go away, but merely grow ever larger.

Or perhaps you are onto something?
Let the debt pyramid collapse?
Then try to pick up the peices afterward?
That could be more painful, since it will essentially result in massive nation-wide foreclosures and defaults.

David R. Remer wrote: Perhaps voters will put fiscal responsibility back on the table right after this recession is over.

Not likely. Once the voters discover that they can vote themselves anything they want from the treasury, it’s only a matter of time before they all go bankrupt again. Better controls are needed. Pandering politicians will promise anthing to get elected. Voters are easily bribed with their own tax dollars.

David R. Remer wrote: That of course would be the best of all possible outcomes. Which would mean paying more in taxes while at the same time keeping a stable or modest growth economy going for decades, as a means of generating fiscal surpluses with which to pay down this enormous national debt.

HHHMmmmm … I think the debt is now too big to ever pay down.

For example, IF today, we had the discipline to start paying $1.32 Billion per day ($40.15 Billion per month = $481.2 Billion per year = amount required to prevent the total debt from growing ever larger) against the $10.7 Trillion National Debt, it would take 164 years and the total interest cost (at only 4.5%) would be: $79.179 TRILLION !

As another example, IF today, we had the discipline to start paying $7.337641222 Billion per day ($223.33334 Billion per month = $2.68 Trillion per year = the amount required to prevent the total debt from growing ever larger) against the nation-wide debt, it would take 443 years and the total interest cost (at ONLY 4.0%) would be: $1.162 QUADRILLION !

David R. Remer wrote: And debt does matter. It will matter most when we need to borrow again in the future and it matters enormously in opportunity cost of the billions paid in interest to foreign investors each year instead of circulating in our own economy to help keep taxes lower.

Yes, I agree. Debt does matter. Especially since the nation is being crushed by massive debt.

It appears quite likely, if something radical is not done to get control of the banking system, the massive nation-wide debt will still result in wide-spread foreclosures and defaults.

The federal government could help all Americans with jobs and stimulus, but that still does not solve the mathematical equation which dooms the current monetary system to collapse, because all of that would simply grow the debt larger and/or debauch the currency. Either way, it will lead to a total economic collapse. Something more creative is needed. Something honest and bold. The federal government should take over the banking system. Especially since the Federal Reserve has proved itself to be incompetent and complicit in this economic meltdown.

David R. Remer wrote: d.a.n, Obama has been very shrewd in keeping most of his cards close to his vest, preventing his opponents from having advance planning time in undermining his efforts before he gets to them. This is politics, and Obama’s mastery of them I find awesome. Additionally, prioritization requires a small limited agenda. As the highest priority items are removed from the list for action, others can become talking points. To spill an entire priority set in advance of even taking office, is to arm and munition one’s opponents and give them the high ground.

I agree that Obama is smart, but you must be seeing something more that I am not. I seriously don’t know if Obama, or anyone for that matter, is strong enough and smart enough to get us through this massive debt problem, and Obama is very likely to get plenty of bad advice too. Obama already appears to be on board with the creation of massive amounts of money to stave off the collapse of the debt-pyramid. Has Obama also fallen for the myth that we can spend our way to prosperity, and out of massive debt, by creating tens of trillions out of thin air?

David R. Remer wrote: … are so large as to be entirely out of reach in terms of a solution.

At what point is the debt so large that it can never be resolved?

It is interesting that people want to call this crisis a credit crunch, or a credit crisis, when it is actually a massive debt problem. More people would borrow money if they had the capacity to carry more debt. But few can. That sounds very much like the end stages of the debt pyramid. Especially with $67 Trillion nation-wide debt, and 95% of all U.S. money in existence is Principal debt.

I’d still like someone in the Treasury Department, or Congress, or somewhere to explain where the money will come from to merely pay the interest on the $10.7 Trillion National Debt, and the $67 Trillion nation-wide debt, much less the money to keep those Principal debts from growing larger, when that money does not yet exist?

David R. Remer wrote: The border is not the highest priority to be addressed in the new term of office, hence, Obama has little to say where he will go on this when he gets to that priority. Wisely!

The border / illegal immigration problem is more important than many realize, when you consider the estimated annual net losses of $70-to-$327 Billion per year. Border states are hit much harder. And any nationalized health care system will be gamed mercilessly by illegal aliens if that problem is not resolved first.

David R. Remer wrote: It does, as you say, leave little evidence to predicate hope that he will act on the issue and act responsibly to boot. But, I think we will find method in Obama’s processes that will on balance, not disappoint the majority of Americans hoping for a capable leader out of our most pressing difficulties. There is no question that illegal immigration employment during a time of employment recession will not be last on the list of priorities. But, some time is needed. He is not even empowered yet to act as president.

Yes, he may wait a while before dealing with the illegal immigration problem.

True, he’s not acting president yet.
However, based on previous statements and policies, voting records (One-Simple-Idea.com/VotingRecordsBarackObama.htm), and recent appointments, it appears very likely that we are looking at another amnesty and continued open borders.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 8, 2008 09:57 PM

DR
The filibuster survives because,and only because no side wants to lose the opportunity to use it themselves. That does not make it democratic or even particularly helpful.

D.A.N.

Speaking of filibuster!

Posted by: bills at December 8, 2008 10:23 PM

bills, Back Then,Since 2003, Senate Democrats have blocked at least 10 of the president’s nominees to powerful federal appeals courts by filibuster, and they are insisting on preserving the right to filibuster future judicial nominations, especially nominations to the U.S. Supreme Court. “Did you favor the Filibuster Then”.

Posted by: Rodney Brown at December 8, 2008 11:08 PM

David Remer: The hardship that you mention is terrible indeed. As bad as this may sound, it is the kind of hardship that brings about real change.

Riot conditions at the auto plants and other places, Gaunt faced children standing in soup lines, a run on the banks, etc. is the hardship that empowered Franklin Roosevelt and helped him get the New Deal legislation passed in Congress. Without that hardship the New Deal may never have happened, Social Security would have never passed.

If the government spending then could have turned the economy around in a couple of years, there would have been little desire for change, no desire for a New Deal. IMO, this country would not be better off without the New Deal.

I believe that those factory workers in Chicago are worth more than a hundred thousand internet users to Obama in his attempt to bring about change in this country.

Change is a wonderful word but, it is something that many people fear. The more pain that people can avoid, the quicker we can borrow our way out of this and get back to living normal lives without fear, the easier it is to avoid change in any significant way. That might mean that Congress will produce change which meets with the approval of those who have the most power and influence with our government amd millions of Americans might say that since we got that regulation thing fixed and the economy is back on the track it is good enough.

These are different times in America. I believe it may be possible to affect positive change in business as usual in America without the terrible hardship that occured in the Great Depression. I’m hoping like crazy that we can. But, if we go at it with a center-right attitude that we can regulate a little here, add a few programs there, tame capitalism down a little and it will provide all our needs, we will just head back up the track on the rollercoaster. Only this time we will be dragging a hell of a lot heavier load of debt and we may not be able to pull out at the bottom the next time we go over the top.

Most of my friends are white low income workers. Contrary to popular belief most of them are to busy just trying to make it to think about issues like guns, religion or most other issues like the causes of our current crisis.

They are concerned about jobs going overseas and illegal immigrants because it has hurt there ability to provide for their families. Many of them are less tollerant of race differences and those issues help enforce that attitude.

There are many in the black community with a similar attitude when it comes to those issues because it has affected their communities in similar ways.

It did not suprise me when many of my friends said they would not vote for Obama. What did suprise me was how many of them admitted that they changed their minds at the last minute and voted for him. Why? Because they listened to his message of change we can believe in, his message of share the wealth, and thought he was talking about them as well, and they put their faith in Obama.

That is about all Obama is going to get from them. By their very nature and their position in society, they are not going to go to Obama’s website and read the minutes, read the documents, give opinions. They are going to depend on Obama, the smart one, the one who knows how and in their minds has the power to get the changes that they can believe in done.

I believe that most of us who have a genuine interest in politics and the issues are the ones who are going to take the time to read the minutes, read the documents and voice our opinions. It seems to me that most who will get involved think that we have gone to far to the right and need to pull back towards the center.

IMO, that will not produce the kind of change that will significantly help the people at the bottom.

It is time for the liberal voters of the democratic party to stop making excuses for their Politicians. It is time to recognize that many of the democrat politicians are just as responsible for what has been going on in this country. It is time to recognize that politicians like Hillary Clinton, Chris Dodd, and Barney Frank are just as much involved in the corruption as those in the other party. If you continue to be unwilling to remove them from office you will never get the kinds of changes in our political system that will end the corruption.

Most importantly, at least as far as I am concerned, it is time for democrats to stop tucking their tails between their legs and running every time the republicans yell leftist. Believe it or not, it is possible to move this country a little to the left of center without marching to the tune of Lenin, Stalin and Mao.

The Constitution wasn’t a done deal. I was the foundation of a new begining that could be buiot upon. I feel exactly the same way about the New Deal.

Posted by: jlw at December 9, 2008 12:08 AM

“You voted for - supported the government that ruled the bulk of the last 8 years, didn’t you? I rest my case.”

David, as a matter of fact, yes I did. I voted for the democrats.

I have on more than one occasion said that I have been a lifelong democrat. I have told the truth, that I have never voted for a republican. I have said that in the past, I elected not to vote for third party candidates such as Nader and Perot because I thought it would help elect a republican.

I credited you as being an influential force in my decision to take a hard look at what the politicians of my party were doing. That is how I discovered that my parties politicians were just as involved in the corruption and influence peddling that has lead our country to where we are today.

All of the above is documented on WatchBlog.

Posted by: jlw at December 9, 2008 12:56 AM

d.a.n,

Ron Paul would have had us deep, deep into Depression as H. Hoover did and for many of the same reasons and policies.

There is a time for drastically cutting spending and increasing taxes, and that time is when the economy is going strong 3% or more growth per year. Build the surplus or pay down the debt as the case may be during the good times, so one is prepared for the opposite approach during the recessionary times.

d.a.n, you and I both know the poll results depend on the information level of the pollees and the manner in which the question is posed. I saw one research which showed if asked about bailout the financial corporations the response was near 70% against, but when asked if preventing a financial industry meltdown which would halt virtually all credit was worthy of tax dollars to prevent, more than 60% favored spending the taxes on that. The American people don’t want to bailout wealthy people, they do want themselves rescued from unemployment, inability to buy on credit, and losing their homes due to loss of income.

You really believe d.a.n, that following Sen. Shelby’s prescription of denying deficit spending at this time under these circumstances would have been the better course?

I can understand why Shelby believes that. But, when people in the Treasury (NOT Paulson), the FDIC, and Fed. Reserve, and CBO and GAO economists all agree with what I learned in economics: 1) Without credit the economy and business sector come to a grinding halt skyrocketing unemployment, and 2) employment and consumer spending determine the depth and length of a recession ultimately and whether a recession becomes a depression, I will go with their opinion.

“In fact, I think a depression is unavoidable” -

Well, there you go. That in a nutshell is a rationale for bringing it on, using Sen. Shelby’s (I am wealthy so I don’t care) argument that the government should let the markets self correct even if it costs 45 million people their jobs and homes, and our streets fill with soup kitchen lines and crime and poverty, and the old and young suffer horrible deaths as a result.

After all, why on earth justify any action with any cost associated with it, if a depression is inevitable. The logic lacks a degree of human compassion and courage, as far as I can see. Yet, fireman walk into hell to save a child in a burning building knowing they could be killed too, and many a poor person is heralded for their charity despite their knowing they will be even poorer as a result. What fools, eh, by the belief that the worse is inevitable so don’t even bother? Play it safe, keep as much as one can for oneself and don’t worry about what happens to others.

”, unless more radical actions are taken (more about that below; see the solution),”

Hyperinflation is definitely a risk when deficit spending in massive ways. No doubt about it d.a.n. And I agree with you on your measures to mitigate that risk, except to disagree that massive spending is NOW required to fend off the domino effect that plagued the 1930’s.

Voters do not want a depression, but that does not mean they want the currency debauched either.

Inflating the currency is the price of deficit spending. But, here’s the deal. If one has a job, and one’s wages are diminished to the point that one has to lower one’s spending and constrain one’s budget, one is still working and providing for oneself and one’s family during inflation. To be unemployed when the cost of living continues to rise is certain doom or welfare/charity recipient status. Inflation for the average American family is preferable to a depression and unemployment even in a deflationary period.

The suicide rate stats will be coming out soon, and rising as a result of the rise of unemployment. The suicide rate does not rise because working people have to pay a bit more or a lot more for gas at the pump provided they can still afford to get to work.

The toll of a depression is far worse than inflation, unless and until hyperinflation reaches the point of triggering a depression under its own weight as happened in Brazil before they got their act together.

“Spending of tens of trillions of dollars will most likely debauch the currency, and make a bad situation worse.”

We carried far greater debt during and after WWII as a percentage of GDP than we are currently poised to carry even at 16 or 18 Trillion dollars. Hyperinflation was not a problem even then, during our worst years of debt in our history. Though inflation was a problem that has remained with us to this day.

Yes, we are creating inflation going forward. But, like I said, working people if given a choice of rising prices and employment, or no employment and no federal outlays to rescue them from their poverty, they will choose employment and rising prices in a heartbeat.

“The federal government receives $2.5 Trillion per year in revenues, and needs to cut all unnecessary waste in a very severely bloated federal government.”

I agree! Obama agrees. Congress won’t agree, in large part, as pork spending is their meal ticket to their next election. Welcome to democratic elections amongst an electorate that doesn’t comprehend the long term cost of allowing Congress to continue acting that way.

I am however, confident that Obama is going to exercise his veto pen even against his own Party’s spending excesses. And there will be compromise between them that will moderate the pork spending. Unnecessary spending however cannot and will not be eradicated until the American voters are educated in the long term costs to them and their children of allowing it to continue on election day by voting for their incumbents. Still, that is no rationale for not fighting this recession and potential depression through economic stimulus and economic rescue spending that also brings with it the strings of reform, oversight, appropriate regulation and transparency in the private sector, whose greed continues to create these cycles of boom and bust.

The banking system needs to stop the highly leveraged 9-to-1 debt-to-reserves fractional banking (a.k.a. debt-pyramid).

I agree it should during economic growth periods. One does not choose to lose weight when fighting pneumonia - the combination of both can kill one. The time to lose weight is when one is otherwise healthy, since losing weight compromises the bodies health to some extent, but an affordable extent when healthy.

The time to shed the leveraging weight of the banking system is when the economy is back on its feet with declining unemployment, which many economists are now willing to advocate, both in government and the private sector, as of late. See Orzag, the loudest voice against the growth of national debt this last decade. He is to be one of Obama’s chief economic advisors. But even Orzag also understands that the time for severe cuts in government stimulative spending is NOT during the onset of a recession.

“Why? Obviously, when money is created as debt at a 9-to-1 ratio, a mere 10% correction in any market (in this case, real-estate), the banks’ reserves disappear with only 10% in reserves.”

I agree, and many economists like Peter Petersen agree also, but their knowledge is more finely honed than what you purport above. The risks worth taking during a recession in stimulative economic infusions are in the three main categories of interest rates (ease of money flow), credit (availablility of capital to maintain employment and business operations), and money supply circulation (consumerism whose demand keeps the economy functioning). These are the tools to mitigate recession and depression.

The use of these tools in a recession, and this is new under Obama and some Democrats, also provide an opportunity for greater reforms and legislation which can force compensatory action to correct the inflationary pressures of fighting the recession, after the recession has abated. And that is precisely what we are going to see. The entire industry of credit default swaps, leveraging and bundling of leveraged assets, rating of those assets, and hedge fund management are going to be reformed with the right hand of government while the left hand of government rescues the engines of the economy that are poised to fail.

In addition, the coming Congress and administration are going to insure that corporate and wealthy recipients receiving tax dollars do not personally profit from the rescue until after those tax dollars have been repaid. Also, legislation will be forthcoming to address the unfunded mandates of Medicare ($34 Trillion) and Social Security ($7 Trillion) which are the true threat to our economic future going forward.

We are going to come out of this recession. But, whether we go back into both recession and hyper inflation with the advent of the retiring baby boom generation depends on whether we NOW reform the entitlement programs, drive down the costs of health care, and expand opportunities for employment of our senior citizens in both the private and public sector. And that is just what the coming administration is committed to doing and have said so publicly though piecemeal through a number of the voices nominated for the coming administration.

I think d.a.n, if you listen to Obama’s appointees and what they have to say and who they cite as their references and what they have to say about what must take place going forward, you will hear much that is promising in the way of responsible action and reform to come.

The Biggest question is whether the Democratic Party in Congress will turn on its own president’s demands for reform and reconciliation that requires everyone to sacrifice some in order to insure everyone survives going forward, including the Congress persons themselves. If the Democratic Congress will follow Obama’s pursuit of the pragmatic and management of both short term need and long term necessity for fiscal recovery, we will be able to both recover from this recession and hold the line on deficits and debt after the economy is back on its feet, which now appears poised to occur in mid-2010. Look for a dramatic rise in the Stock Markets 6 months before, or at the end of 2009.

Posted by: David R. Remer at December 9, 2008 06:21 AM

jlw, like I said, you voted for and supported the government of the last 8 years.

You didn’t vote for an independent candidate. You didn’t vote for a third party championing social, constitutional, or fiscal responsibility. You voted for the duopoly Party which has brought this nation to its knees in all three areas.

Now comes a president who doesn’t run as a typical Democrat, who reaches out to Independents and third party Americans demanding adherence to law and Constitution, fiscal responsibility and social and environmental equity, and what is your response? Well, we have seen that, haven’t we?

Distrust and denigration before this new kind of president has even made one official decision. You are not alone however, in being afraid and mistrustful of change. Most people, most of the time, will cling to the suffering they are familiar with, rather than risk improvement, whose shape they are not and which comes with no iron clad guarantee. It is why we honor courageous heroes, they are not common place.

For myself, 6 months ago my anxiety level rose when I realized Obama was not a Democrat, but a pragmatist of enormous intellect using the Democratic Party to acquire the nation’s support for change they know they need. I kept waiting for some Democrat or another to denounce Obama in the media and seek his tarring and feathering. It never happened, thankfully for America.

And finally, America has a president who won’t be bought by the Party money machine, or ideological blackmail. For all intents and purposes, America has its first Independent president, and at a time when one is so very desperately needed.

Obama’s success in fund raising from the grass roots and through the internet instead of the Democratic Party machinery, was his ticket to the White House as America’s first independent and pragmatic president, I think. And I will be most pleased to remind you of this in 2 years and 4 years when the duopoly parties you support turn on him and solutions that favor the nation and the people instead of the Party. I doubt their turning on him will be successful, because he is going to maintain the people’s general support regardless of duopoly party talking heads and leadership being denied by Obama’s veto pen and his popular support.

Is this not a future for the Obama administration you can support and embrace and foster? If not, I understand. I just won’t agree with you insistence on the status quo and road to partisan ruin.

Posted by: David R. Remer at December 9, 2008 06:43 AM

DR
I must admit to getting a kick out of your dancing around the obvious. You actually strongly support the candidate from one of those mean old ugly parties. Dance as you will,fact is
Obama is a product of the Democratic Party and not just politically. Had it not been for the Dems he never would have had a chance to go to Harvard. Hell,his father and mother might have been arrested for interracial marriage. His first national platform was given him by thoses same nasty evil party leaders .
What you often miss is that the Dem Party evolves all the time. Its a much more dynamic institute than the GOP. Those millions that made small contributions
, thoses millions of newly registered voters, those thousands of kids that slept on floors to knock on doors in battleground states ARE the Democratic Party and there is room for you.

Posted by: bills at December 9, 2008 08:30 AM

bills, believe that if you will. But, the Democratic Party hitched onto Obama as much as Obama used the Democratic Party to position himself for a run as president.

And you comments don’t address his many positions that stand in stark contrast to historical Democratic Party positions, and his running his campaign to appeal and reach out to non-democrats toward a non-partisan government policy agenda of which he has spoken of often.

Posted by: David R. Remer at December 9, 2008 10:19 AM

bills, your party serves only one master, acquisition and maintenance of power. You can keep your Party. I will stick with leaders who put nation and people above party, like Barack Obama, and Sen. John Warner on foreign relations (Iraq excepted), Russ Feingold on political reform, and Al Gore on environmental responsibility.

Posted by: David R. Remer at December 9, 2008 10:23 AM

bills wrote:d.a.n I never claimed to be non-partisan. I am rather proud that the congresswoman representing my former US district was re-elected by a margin that would make Saddam jealous.

BOTH Democrat and Republican politicians contributed about equally to the nation’s problems.

Most voters also contributed by rewarding most incumbent politicians with 85%-to-90% re-election rates.

Wallowing in the partisan warfare only makes all of it worse. You may believe Democrats are somehow superior, but the malfeasance of incumbent politicians in BOTH parties would fill volumes (if not libraries). What fools a lot of voters is what incumbent politicians say; not what they do, since most voters never study voting records. 90% of all elections are won by the candidate that spends the most money (usually the incumbent). Most voters don’t even know who their politicians are, much less their voting records. 40%-to-50% of 200 million eligible voters don’t even bother to vote at all, and most of those that do merely pull the party lever. Few voters understand how they are manipulated to essentially pull the party lever, because of the clever “No-Same-Party-Challengers” mechanism. Few voters understand the myriad of mechanisms designed to keep the incumbent politicians re-election rates very high. It’s easier to blame the OTHER party and wallow in the partisan warfare, than face the fact that one’s own party is little (if any) better. Besides, how does one reconcile 9%-to-18% approval ratings and 85%-to-90% re-election rates?

The Democrats were the IN-PARTY by large majority for 42 of the last 52 years.
373 (70%) of 535 Members of Congress voted Yes for authorization to invade Iraq.
We did not get where we are today in only the last 8 years and not with the tiny majority that the Republicans had.
SENATE ____________________________________HOUSE_____________________________________________________
Congress_Years_Total_Dem._Rep._Other_Vacant__Total_Dem._Rep._Other_Vacant_Re-Election _and_Party-Seat-Retention Rates
102nd 1991–1993 100 _ 56 _ 44 __ 0 ___ 0 ______ 435 _267 _167 __ 1 ___ 0 _____ 87.7% _______ 98.3%
103rd 1993–1995 100 _ 57 _ 43 __ 0 ___ 0 ______ 435 _258 _176 __ 1 ___ 0 _____ 73.6% _______ 98.1%
104th 1995–1997 100 _ 48 _ 52 __ 0 ___ 0 ______ 435 _204 _230 __ 1 ___ 0 _____ 79.8% _______ 88.2%
105th 1997–1999 100 _ 45 _ 55 __ 0 ___ 0 ______ 435 _207 _226 __ 2 ___ 0 _____ 77.4% _______ 98.7%
106th 1999–2001 100 _ 45 _ 55 __ 0 ___ 0 ______ 435 _211 _223 __ 1 ___ 0 _____ 89.9% _______ 99.3%
107th 2001–2003 100 _ 50 _ 50 __ 0 ___ 0 ______ 435 _212 _221 __ 2 ___ 0 _____ 88.2% _______ 98.7%
108th 2003–2005 100 _ 48 _ 51 __ 1 ___ 0 ______ 435 _205 _229 __ 1 ___ 0 _____ 87.9% _______ 98.1%
109th 2005-2007 100 _ 44 _ 55 __ 1 ___ 0 ______ 435 _202 _231 __ 1 ___ 1 _____ 88.6% _______ 98.7%
110th 2007-2009 100 _ 49 _ 49 __ 2 ___ 0 ______ 435 _233 _202 __ 0 ___ 0 _____ 84.9% _______ 93.1%
111th 2009-2011 100 _ 56 _ 42 __ 1 ___ 0 ______ 435 _257 _177 __ 2 ___ 0 _____ 86.9% _______ 94.0%

It took about 5 decades to get here.
The wealth disparity took decades (which started decreasing about 1976).
The massive and ever-growing debt below is also a result of very bad monetary policy, which started becoming obvious over 5 decades ago.

• ____________ Nation-Wide Debt ________________


• $70.0T |——————————————


• $67.5T |—————————————-D (Debt=$67 T)


• $65.0T |—————————————-D


• $62.5T |—————————————-D


• $60.0T |—————————————-D


• $57.5T |—————————————D-


• $55.0T |—————————————D-


• $52.5T |—————————————D-


• $50.0T |—————————————D-


• $47.5T |—————————————D-


• $45.0T |—————————————D-


• $42.5T |—————————————D-


• $40.0T |————————————-D—


• $37.5T |————————————D—-


• $35.0T |———————————-D——


• $32.5T |———————————-D——


• $30.0T |———————————D——-


• $27.5T |——————————-D———


• $25.0T |——————————D———-


• $22.5T |—————————-D————


• $20.0T |—————————D————-


• $17.5T |————————-D—————


• $15.0T |————————D—————-


• $12.5T |———————D——————G (GDP=$13.9T year 2007)


• $10.0T |—————-D—————G——-


• $07.5T |———-D————G—————-


• $05.0T |-D——-G——————————


• $02.5T |-G—————————————


• $00.0T +(1956)————————- (2008)YEAR

The wealth disparity below did not occur in the last 8 years alone.
The reversal started around 1976 (over 32 years ago).

• 40% of weatlh in U.S. is owned by a tiny 1% of wealthiest of 305 Million U.S. Population:


• 045.0% +—————————————-


• 042.5% +—o————————————


• 040.0% +-o-o—————————-o-o-
(40% owned by 1% of wealthiest)

• 037.5% +o—-o————————o——-


• 035.0% +——-o———————o———


• 032.5% +———o——o—o——-o———


• 030.0% +———-o—o——o—-o———-


• 027.5% +————o———o—-o———-


• 025.0% +————————o—o———-


• 022.5% +————————o-o————


• 020.0% +————————-o————-


• 017.5% +—————————————-


• 015.0% +—————————————-


• ————1—1—1—1—1—1—1—1—2—2


• ————9—9—9—9—9—9—9—9—0—0


• ————2—3—4—5—6—7—8—9—0—1


• ————0—0—0—0—0—0—0—0—0—0 YEAR

The despicable pitting of American citizens and illegal aliens against each other for votes and profits started a long time ago (after the amnesty of 1986, which quintupled the problem).

• Medical Expenditures (2005):


• H = Hospitals


• D = Doctors


• P = Prescription drugs


• A = Illegal Aliens (health care, Medicaid, Medi-Cal)


• I = Insurance (private)


• $667B |——————————————————-


• $633B |——————————————————H ($167B)


• $600B |—————————————————-H-


• $567B |—————————————————H—


• $533B |————————————————-H—-


• $500B |————————————————H——


• $467B |———————————————-H——-D ($133B)


• $433B |———————————————H——-D


• $400B |——————————————-H——-D-


• $367B |——————————————H——-D—


• $333B |—————————————-H——-D—A ($100B)


• $300B |—————————————H——-D—A-


• $267B |————————————H———D—A—


• $233B |———————————H———-D—A—P ($100B)


• $200B |——————————H———-D—-A—P-


• $167B |—————————H———-D——A—P—


• $133B |———————-H———-D——-A—-P—I ($133B)


• $100B |——————H———-D——-A—-P—I—-


• $067B |————-H———D——A——-P—I———


• $033B |H————D——-A———P-I——————


• __ $0 |DPIA————————————————-


• _____ (1970)__________(1987)__________(2005)YEAR

Illegal immigration should be in the top 5 most important issues, since it is costing Americans annual net losses of $70-to-$327 Billion: One-Simple-Idea.com/BorderSecurity.htm#Burdens

As you can see below, the Democrats had the majority in BOTH The HOUSE and SENATE for 42 of the last 52 years (81%). Republicans ONLY has a tiny majority for about 10 of the last 12 years (between 1996 and 2006): One-Simple-Idea.com/CongressMakeUp_1855_2011.htm#Chart1:

• ______ House of Representatives (1921 to 2011) ______:


• 340 +———————————————————————-


• 330 +————-D——————————————————-


• 320 +————D———————————————————


• 310 +———-D———————————————————-


• 300 +-R——————————-D———————————-


• 290 +——————————————DD————————-


• 280 +——————————D————-D————————


• 270 +——-R——-D——————————D—-D—————


• 260 +—————D——D——-DD—-D———-DD-D———-D-


• 250 +—-R—————R————-D————D——————-


• 240 +R—-R————D—————-D-D—-D———————-


• 230 +—R——————-D-DD—————————RR—RRD—


• 220 +———R——-D——R———————————RR——-


• 210 +—D—-D——-R——D——————————-DDDD——


• 200 +——D—————-R-RR—————————D——DR—


• 190 +D——————RD————-RR-R—-R———————-


• 180 +—-D—————————R—-R———RRR-R———-R-


• 170 +—————R——R——-R—————R—-R—————


• 160 +——-D——-R—————————R————————


• 150 +——————————R—————————————


• 140 +———————————-R——RR————————-


• 130 +-D——————————————————————-


• 120 +———-R———————————————————-


• 100 +————R———————————————————


• 090 +————-R——————————————————-


• 080 +—————————————————————————YEAR


• ——1111111111111111111111111111111111111222222


• ——9999999999999999999999999999999999999000000


• ——2222233333444455555666677777888889999000001


• ——1357913579357913579357913579135793579135791

• ___________ Sanate (1921 to 2011) ___________________:
• 76 +————-D——————————————————-
• 74 +———————————————————————-
• 72 +———————————————————————-
• 70 +————D-D——————————————————
• 68 +———————————DD———————————-
• 66 +—————-D—————————————————-
• 64 +——————————DD—D———————————
• 62 +——————————————DD————————-
• 60 +-R——-D———————————————————-
• 58 +——————DD—————-D——D———D————-
• 56 +——-R——————————-D———DDD—RR—R—-
• 54 +—-R—————-D—————D——DRR—————-D-
• 52 +—R—————————————————-R—-R——
• 50 +———————R——D——————————-=—=—
• 48 +R—-R-R————-DRD—————————-D—-D——
• 46 +D—-D-D————-RDRR—————-RDD——————-
• 44 +———————D—————-R———-RRR—DD—D—-
• 42 +—D——————R————-R-R————-R———-R-
• 40 +—-D—————————————R————————
• 38 +-D—-D———RR———————-R————————-
• 36 +———-R——————-R—R—-R—————————
• 34 +——————————R—————————————
• 32 +———————————RR———————————-
• 30 +———————————————————————-
• 28 +—————-R—————————————————-
• 26 +———————————————————————-
• 24 +————R———————————————————
• 22 +—————R——————————————————
• 21 +———————————————————————-
• 20 +———————————————————————-
• 18 +———————————————————————-
• 16 +————-R——————————————————-
• 14 +———————————————————————-
• 12 +—————————————————————————YEAR
• —-1111111111111111111111111111111111111222222
• —-9999999999999999999999999999999999999000000
• —-2222233333444455555666677777888889999000001
• —-1357913579357913579357913579135793579135791

So, it’s safe to say, BOTH Republican and Democrat politicians are about equally irresponsible, FOR-SALE, incompetent, and/or corrupt, and BOTH are about equally responsible for this economic melt-down, which as many decades in the making, and largely due to very bad monetary policy, which grows debt larger and larger and LARGER … until it can’t grow any larger.

David R. Remer wrote: d.a.n, Ron Paul would have had us deep, deep into Depression as H. Hoover did and for many of the same reasons and policies.

Maybe, if he thinks a return to the Gold Standard is the solution, and since (as I said above), there is probably NO ONE that is strong enough and smart enough to get us out of this mess.

However, I think Ron Paul was possibly the only politician that thoroughly understood the problem with the existing monetary system, which can only do one thing: GROW DEBT !

David R. Remer wrote: There is a time for drastically cutting spending and increasing taxes, …

Now is the time to cut that massive bloat and waste in the federal government to fund jobs to rebuild the nation’s infrastructure.

David R. Remer wrote: … , and that time is when the economy is going strong 3% or more growth per year.

It is that strategy that creates bubble after bubble. They are ALWAYs unsustainable. What ever happened to sustainability and stability?

David R. Remer wrote: Build the surplus or pay down the debt as the case may be during the good times, so one is prepared for the opposite approach during the recessionary times.

Pay down the debt ? How? How, when 95% of all money in existence is Principal debt? How, when the $10.7+ Trillion National Debt (actually $23.5 Trillion including the $12.8 Trillion borrowed and spent from Social Security) is 77%-to-170% of GDP ($13.86 Trillion in year 2005)? How, when the $67+ Trillion nation-wide debt is 483% of GDP ($13.86 Trillion in year 2005)?

QUESTION: Where will the money come from?

It’s obvious why no one wants to try to answer that simple question.

David R. Remer wrote: d.a.n, you and I both know the poll results depend on the information level of the pollees and the manner in which the question is posed. I saw one research which showed if asked about bailout the financial corporations the response was near 70% against, but when asked if preventing a financial industry meltdown which would halt virtually all credit was worthy of tax dollars to prevent, more than 60% favored spending the taxes on that. The American people don’t want to bailout wealthy people, they do want themselves rescued from unemployment, inability to buy on credit, and losing their homes due to loss of income.

OK. I will concede on that issue. There is no doubt that ignorance reigns supreme.

David R. Remer wrote: You really believe d.a.n, that following Sen. Shelby’s prescription of denying deficit spending at this time under these circumstances would have been the better course?

No.

I have recommended the following:

• (01) stop these 10 abuses.


• (02) fix the severely flawed monetary system; otherwise, it won’t matter what we do;


• (03) cut all the massive bloat and waste in the federal government now;


• (04) get out of Iraq;


• (05) create jobs to rebuild the nation’s infrastructure;


• (06) create jobs to develop and implement better and renewable energy resources;


• (07) stop throughing money, subsidies, tax breaks, and welfare at failing banks, financial corporations, the wealthy, and Wall Street; stop rewarding failure;


• (08) increase and enforce more transparency and accountability;


• (09) uphold the Constitution; reduce lawlessness;


• (10) stop plundering Social Security surpluses;


• (11) eliminate regressive taxation;


• (12) and perhaps reduce or eliminate involvement in Afghanistan too and get more help from other nations; the terrorists are now in norther Pakistan;


• (13) … more …

David R. Remer wrote: I can understand why Shelby believes that. But, when people in the Treasury (NOT Paulson), the FDIC, and Fed. Reserve, and CBO and GAO economists all agree with what I learned in economics:

1) Without credit the economy and business sector come to a grinding halt skyrocketing unemployment, and

2) employment and consumer spending determine the depth and length of a recession ultimately and whether a recession becomes a depression, I will go with their opinion.

Some credit.

But not ALL credit, such that 95% of all U.S. money in existence is Principal debt !
Why is the nation now swimming in debt (over $67 Trillion nation-wide)?
How is more massive debt going to solve massive debt?
Sorry to keep asking such a dumb question, but it poses a simple math problem?
How does one get out of massive debt with more debt?
How does someone very, very deep in debt spend their way to prosperity?
Is hyperinflation later worth it?
Surely people realize that creating tens of trillions out of thin air (and/or borrowing it) is only making a huge problem HUGER ? ! ?
Especially when the debt is ALREADY so large that …

David R. Remer wrote: … so large as to be entirely out of reach in terms of a solution.

There are several reasons for that massive $10.7-to-$23.5 Trillion National Debt and massive $67 Trillion Nation-Wide debt (up from 100% in 1956 to 483% of GDP in 2008):

• Easy credit (too easy), motivated by a greedy banks and risky 9-to-1 fractional banking ratio for debt-to-reserves; risky, because a mere correction (e.g. real estate) in any major market leaves many banks insolvent; it must be nice to create new money at a 9-to-1 ratio of debt-to-reserves, and then receive interest on that new money; Cha-Ching!


• America is a debt-junkie; we also owe trillions to foreign nations:
  
  • Total Domestic Financial Sector Debt = $15.8 Trillion
  
  
  • Total Household Debt = $13.88 Trillion
  
  
  • Total Business Debt = $10.16 Trillion
  
  
  • Total Other Private Sector Foreign Debt = $1.8 Trillion
  
  
  • Total Federal Government National Debt = $10.3 Trillion
  
  
  • Total State and Local Government Debt = $2.2 Trillion
  
  
  • __________________________________________________
  
  
  • Total = $54 Trillion
  
  
  • Including the $12.8 Trillion borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 million baby boomer bubble approaching,
    the total is $67 Trillion ! (over $219K per person; that is 4.83 times the $13.86 Trillion GDP (of year 2007)!)


• incessant inflation for 52 consecutive years, creating multiple boom-to-bust bubbles and economic instability, as everyone runs all around like chickens with their head cut-off looking for someplace to put their money to protect it from the perpetual erosion due to inflation.


• the monetary system is a pyramid scheme (something you (David R. Remer) have already acknowledcged), in which the nation-wide debt can only do one thing: GROW the DEBT LARGER !


• massive fiscal irresponsibility by the federal government; rampant borrowing, spending, pork-barrel, waste, unnecessary wars, and corruption;


• regressive taxation;

David R. Remer wrote:

• d.a.n wrote: “In fact, I think a depression is unavoidable” -

Well, there you go. That in a nutshell is a rationale for bringing it on, using Sen. Shelby’s (I am wealthy so I don’t care) argument that the government should let the markets self correct even if it costs 45 million people their jobs and homes, and our streets fill with soup kitchen lines and crime and poverty, and the old and young suffer horrible deaths as a result.

Not true.

I provided a solution above. In addition:

• However you and I both know that ain’t likely, the banks are unlikely to allow it, and therefore, saying a depression is probably “unavoidable” is not far-fetched at all.


• Saying a depression is probably “unavoidable” does not mean I subscribe to Shelby’s methods.


• Saying a depression is probably “unavoidable” does not mean I have resigned to futility.


• Saying a depression is probably “unavoidable” does not equate to my solution, nor “a rationale for bringing it on”, which is quite a leap of logic actually.


• Especially when no one has yet explained where the money for all of this spending is going to come from, when it does not yet exist? ! ?


• Especially when 95% of all U.S. money in existence is Principal debt?


• Hyperinflation is very likely to result from the infusion of the trillions to even put a dent in the debt-pyramid, and it won’t be possible to reduce the money supply when that new money is ALSO created and exists as DEBT. So, it is also not realistic to believe tax-payers will ever recover those debts. This is not 1979 and the mere $1 Billion loaned to Chrysler, or the $153 Billion ($256 Billion in 2008 dollars) for the Savings and Loan bail-out in 1986-to-1995.

David R. Remer wrote: After all, why on earth justify any action with any cost associated with it, if a depression is inevitable. The logic lacks a degree of human compassion and courage, as far as I can see. Yet, fireman walk into hell to save a child in a burning building knowing they could be killed too, and many a poor person is heralded for their charity despite their knowing they will be even poorer as a result. What fools, eh, by the belief that the worse is inevitable so don’t even bother? Play it safe, keep as much as one can for oneself and don’t worry about what happens to others.

That’s not my logic.

There are many ways to deal with the problem, which I listed above.
I’m simply saying that trying to solve a massive debt problem and a flawed monetary system with more debt won’t work, and will make a bad situation worse.
Also, there’s another bad thing beginning to develop: a sense of entitlement.
Everyone and their dog now wants a bail-out too.
Where will it end?

David R. Remer wrote:

• d.a.n wrote: ”, unless more radical actions are taken (more about that below; see the solution),”

Hyperinflation is definitely a risk when deficit spending in massive ways. No doubt about it d.a.n. And I agree with you on your measures to mitigate that risk, except to disagree that massive spending is NOW required to fend off the domino effect that plagued the 1930’s.

How will you stop hyperinflation when money is created as debt at a huge 9-to-1 ratio of debt-to-reserves and/or simply created out of thin air?

When hyperinflation sets-in, how will you reduce money supply when 95% of all U.S. money in existence is Principal debt?

Where will the money come from, when it does not yet exist?
That’s why the call it a debt-pyramid.
It is mathematically flawed, and the debt-pyramid is now gargantuan (483%+ of GDP!).
And that is why the Treasury, federal government, and the Federal Reserve, and numerous economists are justifiably concerned.

David R. Remer wrote:

• Voters do not want a depression, but that does not mean they want the currency debauched either.

Inflating the currency is the price of deficit spending. But, here’s the deal. If one has a job, and one’s wages are diminished to the point that one has to lower one’s spending and constrain one’s budget, one is still working and providing for oneself and one’s family during inflation. To be unemployed when the cost of living continues to rise is certain doom or welfare/charity recipient status. Inflation for the average American family is preferable to a depression and unemployment even in a deflationary period.

Not when inflation is so bad that the U.S. Dollar is worthless, in which case, the failed currency has made the situation worse by also destroying all savings , pensions , and entitlements by rendering them worthless; a painful lesson that has already been learned the hard way in the following countries in the last 150 years:

• Weimar Republic of Germany 1920 – 1923 (1/466 billionth of starting value),
• Zimbabwe 2003 - present (6 quadrillionth of the starting value and continuing to fall),
• Former Soviet Union 1993 – 2002 (1/14th of starting value),
• Argentina 1975 – 1983 (1/1,000th of starting value),
• Austria 1921 – 1923 (about 1/4 of starting value),
• Bolivia 1984 - 1986 (1/1,000 of starting value);
• Bosnia-Herzegovina 1992 – 1993 (1/100,000th of starting value),
• Brazil 1960 – 1994 (1 trillionth of starting value), Chile 1971 – 1973 (1/3rd of starting value),
• China 1947 – 1955 (1/10,000th of starting value),
• Greece 1943 – 1953 (1/50 trillionth of starting value),
• Hungary 1945 – 1946 (100 quintillionth of the starting value),
• Hungary 1922 – 1923 (1/4 of starting value),
• Israel 1976 – 1986 (1/16th of starting value),
• Japan 1934 – 1951 (1/362nd of starting value),
• Poland 1990 – 94 (1/10,000th of starting value),
• U.S.A. (Confederate States of America) 1861 – 1865 (1/90th of starting value, and then, by the end of the Civil War, the Confederate Dollar depreciated to zero).
• It also happened in the ancient Roman Empire, when the silver and gold coinage of that day was progressively debased with base metals, in order to fund wars, giveaways to the Plebeians, and various other adventures. There are many additional examples that I have not bothered to cover here.

If the federal government and the Federal Reserve crash the currency, then you may need a wheelbarrow full of U.S. currency to merely buy a loaf of bread. There is a fairly strong possibility of this happening, because of a perfect storm of economic problems, and the motive to prevent defaulting on current debt by creating more money out of thin air (www.youtube.com/watch?v=4n3g5lUgkWk&feature=related).

David R. Remer wrote: The suicide rate stats will be coming out soon, and rising as a result of the rise of unemployment. The suicide rate does not rise because working people have to pay a bit more or a lot more for gas at the pump provided they can still afford to get to work.

All the more reason to not make a bad situation worse by destroying savings , pensions , and entitlements.

David R. Remer wrote: The toll of a depression is far worse than inflation, unless and until hyperinflation reaches the point of triggering a depression under its own weight as happened in Brazil before they got their act together.

Not true.

If the currency is debauched, it is worse than a depression in which the currency is not debauched.
Why?
Because savings , pensions , and entitlements are destroyed by hyperinflation.

David R. Remer wrote:

• d.a.n wrote: “Spending of tens of trillions of dollars will most likely debauch the currency, and make a bad situation worse.”

We carried far greater debt during and after WWII as a percentage of GDP than we are currently poised to carry even at 16 or 18 Trillion dollars.

False.

Federal debt today is really larger BOTH in size and as a percentage of GDP ($13.86 Trillion in 2007).
The total federal debt is actually $23.5 Trillion ($10.7 Trillion National Debt + $12.8 Trillioin borrowed from Social Security, leaving it pay-as-you-go, with a 77 Million baby-boomer bubble approaching), which is 170% of GDP ($13.86 Trillion in 2007).
After World War II, the maximum Debt-to-GDP was 116% of GDP.

To make matters worse, nation-wide debt in year 1950 was only 100% of GDP.
Today, the $67 Trillion nation-wide debt is 483% of GDP, and has been growing ever larger for 52+ consecutive years (see Nation-Wide-to-Debt chart above).

David R. Remer wrote: Hyperinflation was not a problem even then, during our worst years of debt in our history. Though inflation was a problem that has remained with us to this day.

Not true.

Again, total federal and nation-wide debt are worse today, and has never larger ever, both in size and as a percentage of GDP.

David R. Remer wrote: Yes, we are creating inflation going forward. But, like I said, working people if given a choice of rising prices and employment, or no employment and no federal outlays to rescue them from their poverty, they will choose employment and rising prices in a heartbeat.

Well, we’ll have to agree to disagree on this.

Year to year inflation is increasing, and it is most likely being understated too: www.shadowstats.com

David R. Remer wrote:

• d.a.n wrote:“The federal government receives $2.5 Trillion per year in revenues, and needs to cut all unnecessary waste in a very severely bloated federal government.”

I agree! Obama agrees. Congress won’t agree, in large part, as pork spending is their meal ticket to their next election. Welcome to democratic elections amongst an electorate that doesn’t comprehend the long term cost of allowing Congress to continue acting that way.

I’m not sure Obama agrees, because he does not have a voting record for being fiscally responsible.

Both Obama and McCain promised to reduce the bloated federal government.
I will beleive it when I see it.

David R. Remer wrote: I am however, confident that Obama is going to exercise his veto pen even against his own Party’s spending excesses.

Think so?

It’s going to take a LOT more than that.
Will Obama and Congress have the guts to cut the bloat and waste?
I seriously doubt it.
Even if Obama is as deteremined as you say, Congress will not go along.

David R. Remer wrote: And there will be compromise between them that will moderate the pork spending. Unnecessary spending however cannot and will not be eradicated until the American voters are educated in the long term costs to them and their children of allowing it to continue on election day by voting for their incumbents.

That’s right.

That’s why we will not see any significant reduction in massive bloat and waste. The money for that bloat and waste is badly needed now to create jobs and repair the nation’s infrastructure.

David R. Remer wrote: Still, that is no rationale for not fighting this recession and potential depression through economic stimulus and economic rescue spending that also brings with it the strings of reform, oversight, appropriate regulation and transparency in the private sector, whose greed continues to create these cycles of boom and bust.

True. How that happens is the dispute.

David R. Remer wrote:

• d.a.n wrote: The banking system needs to stop the highly leveraged 9-to-1 debt-to-reserves fractional banking (a.k.a. debt-pyramid).

I agree it should during economic growth periods. One does not choose to lose weight when fighting pneumonia - the combination of both can kill one. The time to lose weight is when one is otherwise healthy, since losing weight compromises the bodies health to some extent, but an affordable extent when healthy. The time to shed the leveraging weight of the banking system is when the economy is back on its feet with declining unemployment, which many economists are now willing to advocate, both in government and the private sector, as of late. See Orzag, the loudest voice against the growth of national debt this last decade. He is to be one of Obama’s chief economic advisors. But even Orzag also understands that the time for severe cuts in government stimulative spending is NOT during the onset of a recession.

The only many agree with more spending is because they have no other solution.

More job creation is a good, but it has to be accompanied by very significant cuts in bloat and waste in the federal government.

The money can’t all come from borrowing and creating new money out of thin air, because they will simply cause hyperinflation.
Since the federal government is very unlikely to have that much discipline, the money will most likely come from more borrowing and creation of new money from thin air.

David R. Remer wrote:

• d.a.n wrote: “Why? Obviously, when money is created as debt at a 9-to-1 ratio, a mere 10% correction in any market (in this case, real-estate), the banks’ reserves disappear with only 10% in reserves.”

I agree, and many economists like Peter Petersen agree also, but their knowledge is more finely honed than what you purport above. The risks worth taking during a recession in stimulative economic infusions are in the three main categories of interest rates (ease of money flow), credit (availablility of capital to maintain employment and business operations), and money supply circulation (consumerism whose demand keeps the economy functioning). These are the tools to mitigate recession and depression.

The risk of hyperinflation should not be under-estimated.

If that occurs, we will have made a bad situation worse.
Year-to-year Inflation has already been rising for several years (despite talk of deflation).

• ____INFLATION RATE_____


• 4.50%|———————-


• 4.25%|——————xxx (4.28% average for year 2008)


• 4.00%|——————x—


• 3.75%|——————x—


• 3.50%|——————x—


• 3.25%|————xxx-x—


• 3.00%|————x-xxx—


• 2.75%|——xxx-x———


• 2.50%|——x-xxx———


• 2.25%|—xxx—————


• 2.00%|—x——————


• 1.75%|—x——————


• 1.50%|xxx——————


• 1.25%|__________________YEAR


• _____ 2_2_2_2_2_2_2


• _____ 0_0_0_0_0_0_0


• _____ 0_0_0_0_0_0_0


• _____ 2_3_4_5_6_7_8

… and inflation is probably actually higher than that: www.ShadowStats.com

David R. Remer wrote: The use of these tools in a recession, and this is new under Obama and some Democrats, also provide an opportunity for greater reforms and legislation which can force compensatory action to correct the inflationary pressures of fighting the recession, after the recession has abated. And that is precisely what we are going to see. The entire industry of credit default swaps, leveraging and bundling of leveraged assets, rating of those assets, and hedge fund management are going to be reformed with the right hand of government while the left hand of government rescues the engines of the economy that are poised to fail. In addition, the coming Congress and administration are going to insure that corporate and wealthy recipients receiving tax dollars do not personally profit from the rescue until after those tax dollars have been repaid. Also, legislation will be forthcoming to address the unfunded mandates of Medicare ($34 Trillion) and Social Security ($7 Trillion) which are the true threat to our economic future going forward.

I wish I could be as optimistic.

50+ years of federal government that is FOR-SALE, irresponsible, incompetent, corrupt, and fiscally and morally bankrupt is not at all encouraging.
I think a lot of the optimism (or Obamism) is a bit too optimistic.
In fact, too much optimism appears to be overshadowing some healthy skepticism.

There are a lot of simple questions that no one will address.
The math simply doesn’t work, and there seems to be a wide-spread motivation to hide the gory details.
I don’t think Americans are being leveled with with regard to the potential risks of hyperinflation by trying to solve massive debt with more debt.
Since when did any nation deep in debt solve its massive debt problem with more debt and borrowing?
Since when did any nation, with massive debt, spend its way to prosperity?
Where will the money come from when it does not yet exist?
How can tens of trillions of dollars be thrown at $67+ Trillion of nation-wide debt, without risking hyperinflation?
How can a nation come up with enough money to solve its massive debt-pyramid, when 95% of all U.S money in existence is DEBT?
Hence, the debt is …

David R. Remer wrote: … so large as to be entirely out of reach in terms of a solution.

The debt pyramid is so large, it is extremely unlikely so much debt will ever be re-paid.
That means we are headed for wide-spread foreclosures and defaults.
And even if we create enough money out of thin air to deal with so much debt, it would result in hyperinflation, and possibly make things much worse.
Until someone can explain the math , and explain how so much debt can be dealt with, I am very skeptical of attempts to fight massive debt with more massive debt.
That is, it appears to me that the debt-pyramid is quite simply growing ever larger.

In fact, it appears very much like a debt-pyramid in the last stages of collapse, because:

• the growth of Money Supply has decreased in the last 3 years because most people are already tapped and deep in debt. That is, from year 1950 to 2005, the M3 Money Supply grew 7520% (about 136% per year on average). In the last 3 years, the M3 Money Supply grew about $3.95 Trillon (about 13% per year on average).


• the nation-wide debt has grown from 100% of GDP in year 1956 to 483% of GDP in year 2008.


• 95% of all U.S. money in existence is Principal Debt, because new money is created as debt at a 9-to-1 debt-to-reserve ratio (which explains why 89% (9/1) of the 95% of all money is debt, and the remaining 6% of the 95% of all money is money created out of thin air).


• year-to-year infaltion is rising; and it is also probably understated;


• GDP has been falling since early 2006: One-Simple-Idea.com/Recession2008.htm

David R. Remer wrote: We are going to come out of this recession. But, whether we go back into both recession and hyper inflation with the advent of the retiring baby boom generation depends on whether we NOW reform the entitlement programs, drive down the costs of health care, and expand opportunities for employment of our senior citizens in both the private and public sector. And that is just what the coming administration is committed to doing and have said so publicly though piecemeal through a number of the voices nominated for the coming administration.

I certainly hope so. However, it’s difficult to believe we will see the drastic reforms that are needed now, because we are running out of time to avoid a severe melt-down.

David R. Remer wrote: I think d.a.n, if you listen to Obama’s appointees and what they have to say and who they cite as their references and what they have to say about what must take place going forward, you will hear much that is promising in the way of responsible action and reform to come.

I’ve been listening to all of them.

That’s the reason for some concern.
Some of the appointments are reason for concern.
But the biggest battle will be getting control of the out-of-control Federal Reserve and the FOR-SALE, irresponsible, incompetent, and corrupt, spend-happy Congress (86.9% of which was just rewarded with re-election).

David R. Remer wrote: The Biggest question is whether the Democratic Party in Congress will turn on its own president’s demands for reform and reconciliation that requires everyone to sacrifice some in order to insure everyone survives going forward, including the Congress persons themselves. If the Democratic Congress will follow Obama’s pursuit of the pragmatic and management of both short term need and long term necessity for fiscal recovery, we will be able to both recover from this recession and hold the line on deficits and debt after the economy is back on its feet, which now appears poised to occur in mid-2010. Look for a dramatic rise in the Stock Markets 6 months before, or at the end of 2009.

Maybe.

There might be room for one more boom-to-bust bubble in the debt-pyramid. But I doubt it.

Here’s my prediction:

The National Debt will grow to $10.7-to-$18 Trillion,
and the nation-wide debt-pyramid will grow from $67 to $80 Trillion by year 2010 (from 483% to 571% of GDP),
and GDP will remain flat at about $13 to $14 Trillion ($13.86 Trillion in year 2007).

• ____________ Nation-Wide Debt ________________
• $80.0T |——————————————D (Debt=$90 T)
• $77.5T |——————————————D
• $75.0T |—————————————-D-
• $72.5T |—————————————-D-
• $70.0T |—————————————-D-
• $67.5T |—————————————-D-
• $65.0T |—————————————-D-
• $62.5T |—————————————-D-
• $60.0T |—————————————-D-
• $57.5T |—————————————D—
• $55.0T |—————————————D—
• $52.5T |—————————————D—
• $50.0T |—————————————D—
• $47.5T |—————————————D—
• $45.0T |—————————————D—
• $42.5T |—————————————D—
• $40.0T |————————————-D—-
• $37.5T |————————————D——
• $35.0T |———————————-D——-
• $32.5T |———————————-D——-
• $30.0T |———————————D———
• $27.5T |——————————-D———-
• $25.0T |——————————D————
• $22.5T |—————————-D————-
• $20.0T |—————————D—————
• $17.5T |————————-D—————-
• $15.0T |————————D——————
• $12.5T |———————D—————-GGG (GDP=$14 Trillion)
• $10.0T |—————-D—————G———
• $07.5T |———-D————G——————
• $05.0T |-D———G——————————
• $02.5T |-G—————————————-
• $00.0T +(1956)—————————— (2010)YEAR

I don’t see any way around a depression or a long and deep recession, until the massive debt problem is dealt with, or collapses, and a reset is somehow accomplished.
And it seems quite likely that the attempts to solve a massive debt problem with more debt will crash the currency.
We can call it a credit crisis, but it is a debt crisis, and more credit = more debt.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 9, 2008 01:44 PM

David, In 2000 I voted for Al Gore and incumbent Congressman Ted Strickland. Gore lost. Strickland won and has since left the Congress.

Since 2000 every candidate that I voted for was a challenger. Some were democrats and some were independent candidates. Only one of those candidates that I voted for won. In 2006 I voted for Sherrod Brown who defeated long time incumbent republican Senator Dewine. Brown is now battling to save the auto industry, going toe to toe with republican Senator Richard Shelby.

So, in the last 8 years I am guilty of supporting two candidates who served or now serve in Congress. Both have a long history of fighting for labor and the poor.

Perhaps your record of support is one or two less than mine.

Do you think that Obama supported and voted for Governor Rod Blagojevich who has a long history of corruption and who has indeed just been arrested on corruption charges including trying to sell Obama’s vacated Senate seat? Would that make Obama more guilty or less guilty of supporting corrupt politicians than me?

Isn’t Obama a product and protege of what is arguably the most corrupt political machine in the country, Chicago?

By the way, last month, I voted for the least corrupt candidate running, Ralph Nader. I finally did the right thing. Several times, I regretted not voting for him.

Posted by: jlw at December 9, 2008 02:06 PM

jlw, That’s good.
Sounds to me like you are looking very closely at the candidates, and not merely pulling the party lever.

Posted by: d.a.n at December 9, 2008 03:39 PM

Good on ye jlw! As far as I know no one has reported Nader as being involved in any type of corruption. Regarding politicians in general, silence often speaks louder than words. For instance, congress gave fast track trade authority to Bush and Bush gave us the NAU. Haven’t heard a peep from congress about the NAU. No debates, no inquiries. Silence. And what has congress done about the FDA, FTC, Consumer Affairs, etc. Absolutely nothing. The cowards are simply hiding behind the Executive and staying absolutely silent. If like witnessing a murder and remaining quiet about it.

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at December 9, 2008 04:47 PM

“As you can see below, the Democrats had the majority in BOTH The HOUSE and SENATE for 42 of the last 52 years (81%). Republicans ONLY has a tiny majority for about 10 of the last 12 years (between 1996 and 2006)”

If I am reading your chart correctly d.a.n the times when the republicans did hold the majority in Congress have been the times of the most significent economic damage to this Country. They seem to be able to wreck havoc upon the economy of this Country in a very minimal amount of time. It also seems to me that this is precisely when the most radical of republicans, economically speaking, are in control of the government. The only anomoly to this is when the WWII boom ended in the mid to late sixties and the resultant problems of the ‘70’s.

Posted by: j2t2 at December 9, 2008 11:35 PM

jlw, sounds like you have already found Blagojevich guilty. Can you explain for me why you think we need a Constitution at all, when guilt can be ascertained by nothing more than excerpts of conversations released by agents of the government?

And now you seem to be implying a guilty connection between the governor and Obama? Hell, I just can’t figure out from your comments why we need a Constitution at all, jlw.

On a more positive note, I respect your vote for Sherrod Brown. What I have seen so far of him speaks well of him. But, like I said, I vote for the candidate, not the party. We have much in common if that is also your criteria. It certainly did not appear to be from your previous comment defending yourself as a Democrat.

Posted by: David R. Remer at December 10, 2008 12:44 AM

d.a.n, your projections make no allowance for driving down health care costs and therefore the projected costs of Medicare. Your projections make no allowance reforms in the entitlements which will reduce current projections based on current law.

Again, the easiest way out of the responsibility for dealing with these issues is to simply say all is lost and doomed, it is too late, nothing can be done. I should think we should tackle and demand the reforms and then evaluate whether it was a wasted effort and that the time has come to just hand America over to the Chinese or not, don’t you?

Posted by: David R. Remer at December 10, 2008 12:52 AM

d.a.n,

Fed. Reserve Chairman Ben Bernanke is bluntly warning lawmakers that he (The Fed) can’t be counted on as a backstop if the auto loan package fails in Congress or if additional loans are needed to get through the first quarter of 2009. He cites doubts that the auto makers could meet the Fed Reserve’s strict collateral requirements to back FED Reserve loans, as have been required of Banking institution loans in accordance with the legal requirements of the Federal Reserve’s lending procedures.

Doesn’t sound like an out of control Federal Reserve Chairman to me. I think we will be hearing many similar stances from Bernanke going forward. He has warned Bush and Congress from his first days in office that there are limits to what the Fed can do with monetary policy and monetary policy cannot be forced to compensate for poor fiscal policy.

It’s one of the things I respect about Bernanke. His penchant for speaking truth to power with little care whether he remains Fed Chief or not. Of course, it is still a hurdle to forgive his monumental mistake and oversight in failing to recognize the domino effect of the mortgage valuation bubble bursting upon the financial industry’s unsustainably leveraged balance sheets.

No one’s perfect, and Bernanke was free to admit it applies to him like everyone else, at the same time he admitted to failing to see the relationship as being so rapid and deep as it unfolded.

Posted by: David R. Remer at December 10, 2008 01:33 AM

DR
What positions do you speak of? Obamas positions are very close to the Dem platform in most areas.

Posted by: bills at December 10, 2008 04:13 AM

bills:

Obama: said he will protect 2nd amendment gun rights.

Obama: said he will go after the pork and waste spenders which were the hallmark of the demise of the Democratic Party back in 1994 along with social liberal issues. Even today, this is not going to sit well with the Democratic Party which wants to rely on that wasteful spending to reelect their majority in 2010.

Obama: Everyone will need to sacrifice to restore the economic future. Absolutely contrarian position to Democratic dogma and rhetoric which says the poor and working class should not be asked to sacrifice for the errors of the wealthy class.

Obama: Bring foreign nation’s living standards up, instead of lowering ours. Democrats have been the champions of free trade agreements.

Obama: Border security and knowing who is coming into our country will be a priority in my administration. Contrarian position to Democratic leadership which rests future majorities on converting illegal aliens into Democratic voting citizens.

That’s just off the top of my head. If I researched a bit, I am sure I could triple the list.

Posted by: David R. Remer at December 10, 2008 08:14 AM

j2t2 wrote: If I am reading your chart correctly d.a.n the times when the republicans did hold the majority in Congress have been the times of the most significent economic damage to this Country. They seem to be able to wreck havoc upon the economy of this Country in a very minimal amount of time. It also seems to me that this is precisely when the most radical of republicans, economically speaking, are in control of the government. The only anomoly to this is when the WWII boom ended in the mid to late sixties and the resultant problems of the ‘70’s.

The damage we see today is not solely the fault of only Republicans.

Especially when the Republicans only had a tiny majority.
For so much damage to occur, many Democrats had to go along (which they did).
Also, we did not get here only in the last 8-to-10 years.
Democrats had a HUGE majority for 42 of the last 52 years.
The IN-PARTY is always a bit more corrupt, by virtue of the additional power to be abused.

Which party had the majority during the Vietnam War (1961-1975)?
Which party had the majority during the Korean War (1950-to-1953)?
Which party had the majority during the majority of the Great Depression (1931-to-1941)?
Which party had the majority during the double-digit inflation of the late 1970s and early 1980s?
Which party had a HUGE majority from 1955 to 1995 (40 years)?
Which party has had the majority in Congress all but 14 of the last 78 years (1931-to-2009)?
70% of Congress (43% of Democrats) voted YES for authorization to invade Iraq.

The examples of malfeasance , corruption , irresponsiblity , and incompetence in BOTH parties would fill volumes (if not entire libraries).
Therefore, it is difficult to prove any significant difference between either of the two main parties on any issues of major importance to Americans. BOTH parties consist of people. Why should either one be vastly different from the other. The fact is, the only significant differences between the two are on issues that are mostly of no importance, or indefinitely unresolvable (e.g. abortion, gay marraige, etc.) and only serve to divide and distract voters from more substantive issues and problems.

David R. Remer wrote: d.a.n, your projections make no allowance for driving down health care costs and therefore the projected costs of Medicare. Your projections make no allowance reforms in the entitlements which will reduce current projections based on current law.

No, I did not forget about that.

Those savings will be good (if ever realized via a non-profit, single-payer health insurance system), but that won’t even put a tiny dent in the current $10.7 Trillion National debt, or the $67 Trillion nation-wide debt. However, how will that ever come about without tax increases or massive federal spending cuts somewhere else?

However, Medicare has hundreds of billions of unfunded liabilities per year, which are being funded by more borrowing and debt.
It is not sustainable; especially with the approaching 77 million baby-boomer bubble.
Especially since $12.8 Trillion was also borrowed and spent from Social Security, leaving it pay-as-you-go, with an approaching 77 million baby-boomer bubble.
In year 2007, Medicare (16%) and Medicaid (7%) combined were 23% of the $2.7 Trillion federal budget:

• Year 2007: $432 Billion (16% of federal budget)


• Year 2006: $374 Billion (14% of federal budget)


• Year 2005: $333 Billion (13% of federal budget)


• Year 2000: $216 Billion (12% of federal budget)


• Year 1990: $107 Billion ( 9% of federal budget)


• Year 1980: $34 Billion ( 6% of federal budget)


• Year 1970: $7 Billion ( 4% of federal budget)

Also, don’t forget about:

• inflation (reported as about 4.28% for year 2008, but probably actually 13%-to-14% by previous measurement methods).


• we are now in a recession, and GDP is now reported to be negative since DEC-2007 (but probably actually negative since DEC-2006).


• Unemployment is at a 34 year high (6.7%) and climbing fast; projected to reach 9%; and that statistic is probably understated too; see: www.shadowstats.com/alternate_data


• 12+ to 20 Million illegal aliens will mercilessly game that health care system, costing American tax payers more than the estimated annual net losses of $70-to-$327 Billion.


• stagnant or falling incomes for several decades.


• … more …

David R. Remer wrote: Again, the easiest way out of the responsibility for dealing with these issues is to simply say all is lost and doomed, it is too late, nothing can be done. I should think we should tackle and demand the reforms and then evaluate whether it was a wasted effort and that the time has come to just hand America over to the Chinese or not, don’t you?

Whose recommending resignation to futility? I have recommended the following:

• (01) stop these 10 abuses (One-Simple-Idea.com/DisparityTrend.htm
• (02) fix the severely flawed monetary system; otherwise, it won’t matter what we do;
• (03) cut all the massive bloat and waste in the federal government now;
• (04) get out of Iraq;
• (05) create jobs to rebuild the nation’s infrastructure;
• (06) create jobs to develop and implement better and renewable energy resources;
• (07) stop throughing money, subsidies, tax breaks, and welfare at failing banks, financial corporations, the wealthy, and Wall Street; stop rewarding failure;
• (08) increase and enforce more transparency and accountability;
• (09) uphold the Constitution; reduce lawlessness;
• (10) stop plundering Social Security surpluses;
• (11) eliminate regressive taxation;
• (12) and perhaps reduce or eliminate involvement in Afghanistan too and get more help from other nations; the terrorists are now in norther Pakistan;
• (13) … more solutions …

It’s not all about complaining, but ALSO providing ideas and solutions. However, a problem has to be identified and analyzed in order to ever resolve it as best as possible.

David R. Remer wrote: Fed. Reserve Chairman Ben Bernanke is bluntly warning lawmakers that he (The Fed) can’t be counted on as a backstop if the auto loan package fails in Congress or if additional loans are needed to get through the first quarter of 2009. He cites doubts that the auto makers could meet the Fed Reserve’s strict collateral requirements to back FED Reserve loans, as have been required of Banking institution loans in accordance with the legal requirements of the Federal Reserve’s lending procedures.

Better late than never, eh?

I do not trust Ben Bernanke, Alan Greenspan, or Henry Paulsen, because they are all stooges for a heavily leveraged 9-to-1 debt-to-reserve fractional banking system that they must realize is mathematically flawed and doomed to eventual collapse, as evidenced by a nation that is swimming in debt, where 95% of all U.S. money in existence is Principal debt, and NONE of those 3 persons will answer the one simple question:

QUESTION: Where will the money come from to merely pay the INTEREST on the $10.7 Trillion National Debt and the $53t-to-$67 Trillion of nation-wide debt (One-Simple-Idea.com/DisparityTrend.htm#NationWideDebt) , much less the money to reduce the current PRINCIPAL debt to stop it from growing ever larger, when that money does not already exist? Especially when now, 80% (One-Simple-Idea.com/DisparityTrend.htm#WealthDistribution) of the U.S. population owns only 17% (or less) of all wealth, and 1% owns 40% of all wealth (up by 20% in 1076 to 40% in year 2008); a wealth disparity gap that has never been worse since the Great Depression?

David R. Remer wrote: Doesn’t sound like an out of control Federal Reserve Chairman to me. I think we will be hearing many similar stances from Bernanke going forward. He has warned Bush and Congress from his first days in office that there are limits to what the Fed can do with monetary policy and monetary policy cannot be forced to compensate for poor fiscal policy.

Too bad he won’t admit that the Federal Reserve is nothing more than a usurious, inflationary, pryamid-scheme which has created (in league with the federal government) incessant inflation for 52 consecutive years. As Chairman of the Federal Reserve, I seriously doubt he ever will. It’s not easy to admit you are part of a vast pyramid-scheme that creates money out of thin air at a 9-to-1 ratio of debt-to-reserves and receive interest on that money created out of thin air.

We have a serious problem with the monetary system.
Regardless of the ethical problems, the monetary system has a serious mathematical flaw due to a huge leveraging of debt-to-reserves at a 9-to1 ratio.
Evidence of it is hard to ignore:

• (1) Nation-wide debt steadily grew from 100% of GDP to 483% of GDP ($13.86 Trillion GDP in 2008).


• (2) The Federal Reserve has an obvious conflict of interest to lend as much money as possible at a 9-to-1 debt-to-reserve ratio, in order to receive more interest on money created out of thin air; and likewise with member banks.


• (3) 95% of all U.S. money in existence is Principal Debt. Where will the money come from to merely service the Interest, much less reduce the Principal debt?


• (4) A 1950 U.S. dollar is now worth about 11 cents (801.59% inflation from AUG-1950 to AUG-2008).


• (5) Economic statistics are being fudged to look less severe (see: www.ShadowStats.com), and reduce annual Social Security cost-of-living increases linked to the inflation rate.


• (6) Analogous to playing the game of Monopoly, in which one player (banks) can create all the money they want out of thin-air, before long, the banks own everything and everyone else is broke and/or deep in debt, homeless, jobless, and hungry.


• (7) Incessant inflation for 52 consecutive years fuels bubble after bubble and economic instability;


• (8) The incessant inflation and bubbles have gradually, but surely hammered the middle and lower income groups, such that 1% of the wealthiest Americans that owned 20% of all wealth in the U.S. in year 1976 now own 40% of all weatlh in the the U.S. Home ownership for middle income and lower income groups has been falling for many years; median incomes have stagnated or fallen for many years; and regressive taxation exacerbates the problem;


• (9) The federal government and the Federal Reserve also create money out of thin air. Since when did the Federal Reserve ever speak up to reject that practice? Why is the U.S. Comptroller (David Walker) one of the VERY few in the federal government that has the guts to speak up about the massive debt and future dangers?

David R. Remer wrote: It’s one of the things I respect about Bernanke. His penchant for speaking truth to power with little care whether he remains Fed Chief or not. Of course, it is still a hurdle to forgive his monumental mistake and oversight in failing to recognize the domino effect of the mortgage valuation bubble bursting upon the financial industry’s unsustainably leveraged balance sheets.

Truth? I’ve never heard Bernanke admit to any of the above.

David R. Remer wrote: No one’s perfect, and Bernanke was free to admit it applies to him like everyone else, at the same time he admitted to failing to see the relationship as being so rapid and deep as it unfolded.

One doesn’t have to be a rocket scientist or clairvoyant to see this economic melt-down approaching.

David Walker warned of it for many years.
I warned of it for many years.
Many have warned of it for many years.

David R. Remer wrote: No one’s perfect, and Bernanke was free to admit it applies to him like everyone else, at the same time he admitted to failing to see the relationship as being so rapid and deep as it unfolded.

It must be very difficult to admit you are part of what you, yourself called “a pyramid scheme”.

What is the end result, the mathematical certainty, for all pyramid schemes?

David Walker (former U.S. GAO Comptroller) deserves some respect for truly trying to sound the alarm.
But again, one does not have to be a rocket scientist or clairvoyant to see the economic melt-down approaching.
Nor to see where it is headed now.
Until the massive nation-wided debt is somehow retired, this economic crisis is headed for a hard (and painful) reset similar (or worse) than the Great Depression.
I’m no genius, but it doesn’t require a genius to see that the MASSIVE debt still exists.
It hasn’t gone away.
Even 10,000 foreclosures and not even put a dent in the nation-wide debt.
You haven’t seen anything yet, and we can not create money out of thin air, and spend our way to prosperity.
What’s going on now (massive bail-outs, rampant borrowing and creating money out of thin air, even giving masive amounts of money away to Americans) is not going to work, but will make it worse by creating hyperinflation (or a mixture of deflation and hyperinflation).

Thus, I don’t see any reason to praise anyone in the Federal Reserve or U.S. Treasury, nor many (if any) in Congress.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 10, 2008 11:40 AM

1974 inflation rate11.03 when he left office in less than three years the inflation rate was 5.75 without causing a huge recession J Ford. 1977 inflation Rate 6.50 and when he left office in four years the inflation rate was 13.58 J. Carter and a Huge recession to follow.

Posted by: Rodney Brown at December 10, 2008 12:18 PM

Rodney Brown,
Thanks for the stats.
Also, each party makes trouble for each.
Each new administration almost always inherits a mess.

Posted by: d.a.n at December 10, 2008 01:09 PM

David, I most definately want the Gov. to have his day in court. I want Bush to have his day in court and I think you do to. Would you like to go back and review some of your comments about Bush and see if some of them might suggest that you have already convicted Bush without his day in court. I know I have made comments that might be taken that way.

I would like to see 535 members of Congress get their day in court. I would like to see Mr. Bernanke get his day in court and see witness after witness document how they gave warning after warning about what was happening while Bernanke, Geithner and Congress ignored them and did nothing. How do we reward regulator Geithner for turning a blind eye to what was going on? We promote him to Sec. of Treasury.

Posted by: jlw at December 10, 2008 04:00 PM

Our Farmers and Dairy industry in upstate New york was about wiped out by $5.39 diesel fuel and feed and fertilizer costs this July and our just starting to recover and now they want to tax cow burps that would bury them, my good Friend is Thoughtful, knowledgeable, Pragmatic and very Wise , Mr.Schumer. http://www.pressrepublican.com/0100_news/local_story_345043028.html They were testing Garlic and had some good results ?

Posted by: Rodney Brown at December 10, 2008 04:49 PM

jlw, Bush’s actions violated our laws. That is an empirical statement that can objectively assessed. That is a different matter from establishing a person guilty of a crime. We often see courts vindicate persons who violate a law for a host of defensible reasons.

You won’t find in my comments any statements of Bush being guilty of criminal acts. That is a matter for our courts to decide. I can only assess by opinion that his actions violated our laws and treaties.

I see your vigilantism has already fallen into the trap of hanging an innocent out of fervor. Bernanke has not been in office long enough to have caused any of this mortgage bubble or financial crises, which began in 1999. In your rush to hang them all, you demonstrate the propensity of vigilantes to gather up innocents along with suspects for the multiple hangings.

Your comment stands as the best argument for rule of law, not of men, that I have seen in a very long time.

If you want to condemn Bernanke for something, condemn him for his honest confession when he said he failed to recognize the depth and rapidity with which the mortgage and credit failures would domino throughout the rest of the economy. He really should have seen that coming and confesses he didn’t, meaning allowing Lehman Bros. to default into bankruptcy was a big mistake.

Last I checked however, there is no law on the books for having human failings and making mistakes in the performance of one’s employment.

Posted by: David R. Remer at December 11, 2008 09:45 AM

David R. Remer wrote: Last I checked however, there is no law on the books for having human failings and making mistakes in the performance of one’s employment.

True.

Bush (43) can always blame it on bad intelligence or someone else.

And Ben Bernanke, Henry Paulson, and Greenspan (and many others in the federal governdment) may have committed no crimes for which they can be charged, but they are accomplices (whether knowingly or unknowingly) in a failed monetary system that is so flawed (which creates incessant inflation and grows nation-wide debt ever larger at a huge 9-to-1 ratio of debt-to-reserves), it is difficult to believe they do not understand or realize it.

Did it ever occur to Bernanke, Paulson, or Greenspan (or anyone in the Federal Reserve and the federal government) that they are accomplices in a mathematically doomed pyramid-scheme, that steadily grows debt ever larger, at a huge 9-to-1 debt-to-reserves ratio, eventually resulting in a nation-wide debt-pyramid where 95% of all U.S. money in existence is Principal debt, which has grown ever larger for every year during the past 52+ consecutive years?

How can they not know that?

It would be very interesting to hear what they TRULY believe about all of it.

After all, there are countless books, articles, and the internet is overflowing with web-sites and movies about the mathematical impossibility of such a fundamentally flawed monetary system.

Many people for many years have been raising red flags about the growing debt and the mathematical flaw in the highly leveraged 9-to-1 debt-to-reserve fractional banking system, because it doesn’t take much of a correction in the markets (e.g. stocks, real-estate, energy, etc., or 3 or more simultaneously) to make the banks insolvent.

Or perhaps they do not believe there’s anything wrong with the monetary system, despite numerous facts to the contrary:

• (a) Nation-wide debt growing for 52 consecutive years from 100% of GDP in 1956 to 483% of GDP in 2008 (GDP=$13.86 Trillion in 2007)


• (b) 95% of all U.S. money in existence is Principal debt (a result of 9-to-1 debt-to-reserve loans, and excessive additional creation of money out of thin air with ZERO reserves).


• (c) Total federal debt ($10.7 Trillion National Debt + $12.8 Trillion borrowed from Social Security) has never been larger, in size and as a percentage of GDP.


• (d) David Walker’s numerous warnings (he even helped make a movie (watch free 30 minute version here): www.IOUSAtheMovie.org); learn the truth about how $12.8+ Trillion of Social Security surpluse have already been spent.


• (e) And the inability to answer one simple question alone is ample cause for alarm:
  Where will the money come from to merely pay the enormous Interest alone on so much debt, much less the money to reduce the Principal debt, when that money does not yet exist? Especially when 80% of all Americans own only 17% of all wealth in the U.S.


• (f) Most nations around the world bought into the same fiat, funny-money system, and many of those nations are also experiencing the similar (worse in some cases) growing debt problems.


• (g) Incessant inflation for every consecutive for the last 52 years fuels boom-to-bust bubble-after-bubble and economic instability, which has steadily , but surely helped extract weatlh from the middle and lower income Americnas and route it to the weatlhy; evidenced by the 1% of the wealthiest that owned 20% of all wealth in 1975 which now own 40% of all wealth; stagnant and/or falling median household incomes; negative savings rates for many years; decreasing home ownership for middle and lower income Americans; cycles of foreclosures and bankruptcies now resulting in 10,000 foreclosures per day (AUG-2008); and now increased unemployment at a 34 year high; and the despicable pitting of Americans and illegal aliens and cheap foreign labor against each other for profits and votes;


• (h) GDP is now officially reported to be negative since DEC-2007 (actually, more likely since DEC-2006, when measured in non-2008 inflation adjusted dollars); and the dip in GDP is the largest decrease ever since 1900 (if not ever);

It was fascinating how dumbfounded Congress appeared when Bernanke and Paulson appeared before Congress on 23-SEP-2008 begging for $700+ Billion.

As predicted, it didn’t stop at $700 Billion.
As of 30-NOV-2008, $3.2 Trillion has been spent/lent, and upto $8.5 Trillion has been allocated: www.latimes.com/news/printedition/front/la-113008-fi-pricetag-g,0,5292528.graphic
Sure, we can create all the money we need out of thin air, but it won’t help because:

• (1) it will crash the currency, and make it worthless;


• (2) even if there was more money to borrow, too many Americans already have too much debt, and can’t afford the debt they already have now. It’s not possible to increase the M3 Money Supply when most people don’t have the capacity to carry more debt, even if the money is available to borrow. Hence, the reasoning and logic behind the massive stimulus packages to simply give money away.


• (3) even if the government gives away money, the amounts and time required to put a dent in the total nation-wide debt is too large, because 95% of all U.S. money currently in existence is Principal debt;


• (4) since 95% of all U.S. money in existence is Principal debt, where will the money come from to merely pay the Interest on the debt, when it does not yet exist?


• (5) we’ve already seen many times what happens when nations simply create money out of thin air.


• (6) it will create oscillating bouts of a mixture of infation and deflation (or both); then hyperinflation leaving the currency worthless, which will destroy any remaining savings, pensions, entitlements, and wages; and finally end in severe deflation (a depression).

The only way to avoid a servere economic melt-down will require levels of leadership and nation-wide cooperation that do not instill much confidence that we can avoid a serious economic melt-down.

Again, I’m not advocating we give up.

I’m advocating we get realistic and understand that drastic measures are needed to retire so much nation-wide debt: One-Simple-Idea.com/DebtAndMoney.htm#NationWideDebt

Otherwise, most (if not all) of that massive debt will be retired ANYWAY, the hard and painful way, via another Great Depression (or worse).
The debt must somehow be retired, but not through massive creation of money out of thin air, which will destroy all existing savings, pensions, entitlements, wages, and the economy.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 11, 2008 02:09 PM

“We often see courts vindicate persons who violate a law for a host of defensible reasons.”

“If the glove doesn’t fit you must acquit.”

The gov’s actions violated the laws of Illinois and the nation. That is an empirical statement that can objectively be assessed based on statements made by the gov. in excerpts of FBI wiretaps that have been released to the press. It is possible that the gov. can explain his statements in court in such a way that the jury finds acceptable as a defence.

The FBI has been listening to the gov. and others for quite a while, long before the Senate seat became an issue.

David, there is no difference in our positions concerning the rule of law or the premise that the accused have a right to a trial to evaluate the evidence to make a determination about wheither they are guilty or innocent and I don’t believe this argument is about that.

I believe that this argument is about the differences between those who believe that the election of Obama signals the dawn of a new age of change in American politics vs. those who say there is no real evidence to support that theory and that there is a growing body of evidence that at least suggests that theory is only wishful thinking. Well intended words from politicians are not evidence.

Posted by: jlw at December 11, 2008 05:03 PM

jlw, those who don’t see evidence of Obama being a different kind of politician working for positive changes Americans have been seeking are either ignorant of information made public, willfully ignorant of information made public, or will always refuse to accept any information made public which stands as evidence of Obama’s success or superior nature as an elected official.

One only need to refer to Obama’s record of legislation in the Illinois State Senate for evidence that Obama is a foe of the corruption of our political system. Many who come across such information refuse it on sight, as it does not comport with their desire to see Obama as a failed politician.

Obama has not violated a single campaign pledge in word or deed since Nov. 4, and while it will be impossible for him as a continuously learning person and president to avoid reversing himself from time to time, I think he has begun to establish credibility as the president who is going to work to his utmost for the positive changes most Americans seek from government. That is the most one can ask of a president. The rest is up to the people to demand similar from their Congressional representatives.

Posted by: David R. Remer at December 12, 2008 09:02 AM

d.a.n, Bernanke inherited the Federal Reserve System. He did not design it, nor create it, nor implement it. He was hired to wield the tools that Congress authorizes him to use. If I were hired to the same position, I could do no less. He wasn’t hired to dismantle the Federal Reserve which he has not the power to do anyway, nor was he hired to alter the Federal Reserve’s mission, which is handed to him by the American people via their Congressional representatives in Congress and elected Presidents.

Your comments continuously blame the Federal Reserve System for its existence and workings, though the Federal Reserve has no power to alter its existence, nor authority to reject its directions from the Congress and White House to fight inflation, fight deflation and recessionary unemployment trends, and promote liquidity in the banking system in order to assure the free flow of capital amongst all the various economic sectors doing business in and and with the United States.

I think your comments continuously aim at the wrong target. Greenspan’s contribution to extraordinary low interest rates and turning a blind eye to the looming mortgage leveraging bubble were a direct result of his following Pres. Bush’s “Ownership Society” legacy. You can blame Greenspan, but, only up to the point that he earned dismissal by Bush for launching warnings of impending economic doom regarding the growing federal deficits and debt and unfunded mandates. He finally spoke truth to the powerful Bush and was replaced.

Your target should be Congress and the White House, the people’s representatives, not those in the FED doing the bidding of their ultimate bosses, Congress and the White House.

Posted by: David R. Remer at December 12, 2008 09:14 AM

David R. Remer wrote: d.a.n, Bernanke inherited the Federal Reserve System. He did not design it, nor create it, nor implement it. He was hired to wield the tools that Congress authorizes him to use.

Of course Bernanke did not design or create the Federal Reserve, and never said he did.

However, he does indeed help to implement it.
Also, Congress does not have complete control of the Federal Reserve.

You, yourself, have already called the Federal Reserve a “pyramid scheme” in a previous discussion about the 9-to-1 debt-to-reserve ratio for the frational banking system.

So, how is the Federal Reserve and the chair of the Federal Reserve not culpable too?

Especially when Bernanke and Greenspan both admit to supporting bad monetary policies and both appeared surprised and distressed (along with Congress and the White House) at the rapid economic meltdown, partially resulting from their policies.

The housing bubble wasn’t a mere flaw. It was a predictable outcome of a system that rewarded smart people small fortunes for conjuring up ways to persuade people to borrow more than they could ever hope to pay back, creating a huge real-estate bubble, in which all of the profits were quickly taken off the table and repackaged and sold as AAA investments, leaving numerous gargantuan costs and losses now being paid by homeowners, shareholders, and the builders and the rest of society. And you don’t believe the Federal Reserve had anything to do with it? You’ve already acknowledged that they made mistakes, and they have admitted making mistakes. That’s the problem these days. Politicians, government, the Federal Reserve, and high-paid CEOs say “I am responsible”, but they really are not. Usually, worst case, they resign and still collect multi-million dollar pensions and compensation.

Greenspan’s book tries to blame a lot of things on G.W. Bush (43), but there were many in Congress (in BOTH parties) also behind the promotion of massive bad debt and deregulation.
The Federal Reserve chair (Greenspan) should have spoke up long ago, while in office, rather than place blame later in a book, trying to shift most of the blame to G.W. Bush.

After all, who was it that was promoting the Adjustable Rate Mortgages and some deregulation? Greenspan.

There is no credible way to defend Greenspan’s and the Federal Reserves policy decisions that went so horribly and obviously wrong due to a lending binge and a long period of ultra-low interest rates and hands-off regulation, that lead to a massive contamination of the system by a proliferation of deals lacking any economic rationale other than to produce fees for deal-makers and advisers, leaving companies ruined by debt, and to make incumbent politicians’ incumbencies more secure.

How can anyone even begin to argue that Greenspan and the Federal Reserve did the right thing?

And it was Bernanke who made that infamous speech in late 2002 extolling the virtues of “helicopter drops of money” and the Fed’s inexhaustible “printing press” (i.e. the Bernanke Doctrine). It was Bernanke who later gave speeches arguing for keeping interest rates at a very low 1% for a “considerable period” because, with there supposedly being so much “slack” in the economy, it would not lead to inflationary excesses. Now, year-to-year inflation is at 4.28% (on average for year 2008, and actually much higher by pre-1998 and pre-1983 inflation measurement methods), up from 1.59% in year 2002 (2002:1.59%, 2003:2.27%, 2004:2.68%, 2005:3.39%, 2006:3.24%, 2007:2.85%, 2004:4.28%).

David R. Remer wrote: If I were hired to the same position, I could do no less. He wasn’t hired to dismantle the Federal Reserve which he has not the power to do anyway, nor was he hired to alter the Federal Reserve’s mission, which is handed to him by the American people via their Congressional representatives in Congress and elected Presidents.

Hopefully, you would not make the same colossal mistakes both Greenspan and Bernanke made (easy credit, massive leveraging of debt, massive nation-wde debt, incessant inflation, deregulation, etc.), and be complicit in running a dishonest, usurious, inflationary system which you previously called a: “pyramid scheme” ?

And the incompetence of Congress and the White House can all be easily summed up by the dumbfounded looks on their faces when Bernanke and Paulson came begging for $700 Billion in bail-outs, which has now mushroomed to $3.2 Trillion spent/lent and a total of $8.5 Trillion allocated (as of 30-NOV-2008).

David R. Remer wrote: Your comments continuously blame the Federal Reserve System for its existence and workings, …

Yes, due to the many reasons above, along with Congress and the Executive Branch that created it, and perpetuate it. And ultimately, the voters are culpable too.

If any of those reasons are false, then you may have a case.

David R. Remer wrote: … though the Federal Reserve has no power to alter its existence, …

Of course it has the power, and its own negligence may eventually alter its own existence.

Something must be eventually be done about the steep leveraging of debt at a ratio of 9-to-1 of debt-to-reserves.
That system, where small reserves are highly leveraged to create 9 times more debt has got to change, or the economy will collapse under the weight of so much debt growing ever larger.
The problem is real and it is huge, but doesn’t get adequate attention:

• nation-wide debt grew every year for +52 consecutive years from 100% of GDP in 1956 to 483% of GDP in 2008.


• 95% of all U.S. money in existence is Principal Debt, which begs the question: Where will the money come from to merely pay the Interest, much less stop the Principal debt from growing ever larger, when that money does not yet exist?


• the M3 Money Supply increased by a factor of 75.2 from $135 Billion in year 1950 to $10.15 Trillion in year 2005.

David R. Remer wrote: … nor authority to reject its directions from the Congress and White House to fight inflation, fight deflation and recessionary unemployment trends, and promote liquidity in the banking system in order to assure the free flow of capital amongst all the various economic sectors doing business in and and with the United States.

I disagree.

The Federal Reserve does not have to take orders from the Congress or White House.
The federal government can appoint the Federal Reserve Chair person (who has a 4 year term). The President and Congress do not have a great deal of control over the Federal Reserve. Greenspan did not have to go along with G.W.Bush’s desires to make credit easier to get. For Greenspan to say, after the fact, that it is mostly Bush’s fault is hypocritical.

By the way, in year 1963, President John F. Kennedy wanted an end to the Federal Reserve System, which had a strangle-hold on the United States, growing the nation-wide debt ever larger (from 100% of GDP in 1950 to 483% of GDP in 2008). By a simple stroke of the pen, President Kennedy dismissed the Federal Resene System and ordered the U.S. governmcnt to restore its Constitutional-mandate of controlling the money. President Kennedy was dead three weeks later (no connection is implied here). When President Lyndon Johnson took office, he immediately rescinded John F. Kennedy’s order and the Federal Reserve won another round.

Therefore, if I see the Federal Reserve as a dishonest, usurious, inflationary “pyramid scheme”, I’m not alone, since:

• John F. Kennedy believed likewise, and tried to eliminate it.


• Woodrow Wilson regretted signing the Federal Reserve into existence in year 1913, in which he later said:
  “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. - Woodrow Wilson, President of the U.S. 1913-1921.


• “U.S.A.’s balance of payments deficits is so strong and irreversible, that we must accept that at some future date there will be a run against the U.S. Dollar. Probably the kind of disorderly run that precipitates a global financial crisis.” - Dr. Paul A. Samue lson, Nobel Prize Winner in Economics, year 2005.


• “The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the tax payers will be saved immense sums of interest. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. - Abraham Lincoln, assassinated President of the U.S.


• In 1993, Senator Bob Kerrey promised to support President Bill Clinton’s Budget Plan, if Clinton would appoint a Committee to study the condition of the American economy. The President established a 32-member bipartisan committee and in August, 1994, they issued their report. According to the committee’s findings, by the year 2012, unless drastic changes are made, we won’t even be able to pay the interest on the national debt. Knowing this, the federal government has allowed the trend to continue, almost as if they’re trying to run our economy into the ground. It seems obvious that the destruction of the American economy will eventually be a result of trying to keep people in deep debt, and financially enslaved.


• In a letter to Edward M. House (President Woodrow Wilson’s closest aide), dated November 23, 1933, Franklin D. Roosevelt said: “The real truth of the matter is, and you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson.”


• “I sincerely believe … that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” (Thomas Jefferson)


• “Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money.” (Daniel Webster)


• “All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.” (John Adams)


• “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” (Lord John Maynard Keynes (1883-1946), renowned British economist).


• “When the President signs this bill [converting to a fiat-money system], the invisible government of the monetary power will be legalized … the worst legislative crime of the ages is perpetrated by this banking and currency bill.” (Charles A. Lindbergh, Sr. 1913)


• “Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile … Once a nation parts with control of its credit, it matters not who makes the nation’s laws … Usury once in control will wreck any nation.” - William Lyon MacKenzie King, former Prime Minister of Canada (who also succeeded in nationalizing the Bank of Canada).


• “Ideologically, [sound money] belongs in same class with political constitutions and bills of rights.” In the name of civil liberty and civilization itself, the Fed should be abolished. (Ludwig von Mises).


• “Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when the speak in condemnation of it.” - Woodrow Wilson, President of the U.S. 1913-1921.

That’s just a few. Are you saying all of these people, economists, Congress persons, and U.S. Presidents are all wrong too?

David R. Remer wrote: … nor authority to reject its directions from the Congress and White House to fight inflation, fight deflation and recessionary unemployment trends, and promote liquidity in the banking system in order to assure the free flow of capital amongst all the various economic sectors doing business in and and with the United States.

Not true. The federal government only appoints the Federal Reserve chair person. Greenspan and G.W. Bush were all on board and in agreement until it all started to unravel. Then Greenspan and G.W. Bush started blaming each other. However, the Federal Reserve Chair person is not required to follow orders from the President or Congress.

David R. Remer wrote: I think your comments continuously aim at the wrong target. Greenspan’s contribution to extraordinary low interest rates and turning a blind eye to the looming mortgage leveraging bubble were a direct result of his following Pres. Bush’s “Ownership Society” legacy. You can blame Greenspan, but, only up to the point that he earned dismissal by Bush for launching warnings of impending economic doom regarding the growing federal deficits and debt and unfunded mandates. He finally spoke truth to the powerful Bush and was replaced.

Like I said above, Greenspan (or any Federal Reserve chairman and the Federal Reserve) is not required to follow the President’s or Congress’ orders. Especially if they believe they are disastrous. Greenspan is a hypocrite to later blame it all on G.W. Bush.

The Federal Reserve is a quasi government-controlled/private corporation.

The Chairman of the Federal Reserve is the head of the Board of Governors and thus the head of the Federal Reserve System as well. The Chairman directs monetary policy and sets the course the Federal Reserve activities. The Chairman is appointed to a 4-year term, using the Presidential appointment, Senate confirmation process. The Chairman is also one of the 7 governors serving a regular 14-year term. When the Federal Reserve System was created, the Chairman was little more than a figure head, who presided over Board meetings. The actual power rested with the President of the New York Federal Reserve Bank. However, the Chairman of the Federal Reserve is now one of the most powerful economic positions and the wishes and policies of the Chairman need not be approved by the rest of the Board of Federal Reserve Governors.

If Greenspan went along, it’s not because he was forced into it. It’s because he wanted to. The worst that the federal government can do is appoint a new Federal Reserve Chair person.

David R. Remer wrote: Your target should be Congress and the White House, the people’s representatives, not those in the FED doing the bidding of their ultimate bosses, Congress and the White House.

They are all complicit. And voters are ultimiately culpable too.

Regardless of who is most to blame for the debt pyramid, where will the money come from to merely pay the Interest on so much debt ($10.7 T National debt, $54-to-$67 Trillion nation-wide debt; federal liabilities for the next 30 years exceeding $53 Trillion), much less to keep the Principal debt from growing ever larger, when it does not yet exist, and 95% of all U.S. money in existence is Principal Debt?

Until someone can start answering some of these simple questions, we should consider Samual Adams advice …

“It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people’s minds.” - Samuel Adams

We can’t create enough money out of thin air to retire even a third of the $54-to-$67 Trillion of nation-wide debt without crashing the currency.
That is, the cure may become worse than the disease.

Have you seen Bernanke’s 7 point Doctrine:

The seven steps that the Federal Reserve needs to take are:

• (1) Increase the money supply (M1] and M2).
  “The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost.” “Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation.”


• (2) Ensure liquidity makes its way into the financial system through a variety of measures.
  “The U.S. government is not going to print money and distribute it willy-nilly …”although there are policies that approximate this behaviour.”


• (3) Lower interest rates - all the way down to 0% .

Bernanke observed that people have traditionally thought that, when the funds rate hits zero, the Federal Reserve will have run out of ammunition. However, by imposing yields paid by long-term Treasury bills, “a central bank should always be able to generate inflation, even when the short-term nominal interest rate is zero …[this] more direct method, which I personally prefer, would be for the Fed to announce ceilings for yields on all longer-maturity Treasury debt.”
He noted that Fed had successfully engaged in “bond-price pegging” following the Second World War.

• (4) Control the yield on corporate bonds and other privately issued securities.
  Although the Federal Reserve can’t legally buy these securities (thereby determining the yields); it can, however, simulate the necessary authority by lending dollars to banks at a fixed term of 0%, taking back from the banks corporate bonds as collateral.


• (5) Depreciate the U.S. dollar.
  Referring to U.S Monetary Policy in the 1930’s under Franklin Roosevelt, he states that: “This devaluation and the rapid increase in money supply … ended the U.S. deflation remarkably quickly.”


• (6) Execute a de facto depreciation by buying foreign currencies on a massive scale.
  “The Fed has the authority to buy foreign government debt … [t]his class of assets offers huge scope for Fed operations because the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.”


• (7) Buy industries throughout the U.S. economy with “newly created money”.
  In essence, the Federal Reserve acquires equity stakes in banks and financial institutions. In this “private-asset option,” the Treasury could issue trillions in debt and the Fed would acquire it - still using newly created money.

They don’t call him “Helicopter Ben” for nothin’ !

There’s just one problem with all of that.
It does not address the problem of so much massive nation-wide debt, in which most people can’t borrow more because they can’t handle more debt, and also are spending most of their money to service their current debt.
Eventually, it will lead to volatile swings of inflation and/or deflation, followed by unavoidable hyperinflation, and then followed by unavoidable deflation, accompanied by massive nation-wide foreclosures and defaults (i.e. another depression).
Bernanke’s Doctrine won’t stop it from happening.

A huge portion of the nation-wide debt must somehow be retired one way or another, or it will be retired the hard and painful way, with massive nation-wide foreclosures and defaults (which are already underway). But debauching the currency too will only make a bad situation worse.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 12, 2008 02:04 PM

d.a.n, Bernanke inherited the GLB Act. He inherited the Greenspan interest rate manipulations. He inherited an economy destined for recession. He inherited a 9 trillion national debt and service on that debt and was helpless to prevent it reaching 10.5 trillion during his term as FED Chief.

You cannot factually lay any of this at his feet. The Ponzi scheme existed long before Bernanke became FED chief. He hasn’t been there that long.

His failure was in not rushing to save Lehman Bros. which cascaded. But, then, no one I know could have predicted that Lehman Bros. bankruptcy would be THE trigger to bring this house of cards of down. Bernanke admits he, if anyone, should have seen this coming, but admits he didn’t and it was a major mistake on his part.

You lay far too much at Bernanke’s feet that he had no control over whatsoever. And you give him no credit for nearly single handedly rescuing the global financial systems from cascading when the first run on the Money Market funds began. In less than 12 hours he was on it, and in touch with major Central Banks around the globe with a plan to prevent a meltdown that was predicated on an unprecedented and historical simultaneous approach by nearly all the world’s central banks.

I think you need to take a more comprehensive factual context when judging Bernanke. I agree the FED’s structure granted to it by the Congress and White House, is one in which leveraging the U.S. Currency is risky, though the FED Reserve has not lost a single penny in its collateralized loan operations.

And it is not logical to state that Congress is not responsible for the Fed Reserve. The Congress has the power to cut the FED’s relationship with the Treasury Dept. thus virtually ending its existence as a government funded operation. The Fed Reserve exists by authority of the Congress. There is no getting around that simple historical fact. The Fed Reserve is influenced by White House policy. That is another fact that cannot be ignored. The President nominates the Fed Reserve governors if I am not mistaken. The Senate confirms.

Bernanke failed when it came to Lehman Bros. He has done an heroic job since then of rescuing the world from a financial meltdown. It was never in his power to eliminate the severe cost of deleveraging the inflated balance sheets of mortgage backed investments. But, he did prevent those costs from being incurred in a matter of weeks, instead of over a period of years. The suffering by billions of human beings around the globe has been prevented by his actions.

I can absorb x losses over the course of a couple years. I would be bankrupt if x losses were incurred over night. Bernanke literally saved the world and kept billions of people employed and consuming by his coordinated Central Bank response to the run on money market funds in Sept. of 2007 if I recall the timing correctly.

The piper still has to be paid. But, like any credit, spreading the payments over a long period of time makes the payments more endurable and less painful and possible for vastly more persons to pay, ergo preventing a meltdown due to no one being able to pay overnight the costs of deleveraging balance sheets globally.

Posted by: David R. Remer at December 12, 2008 04:08 PM

David, in other words, only an ignoramous or a willful ignoramous would not recognize that Obama is a uniquely different kind of politician. The only comment I have about that is mesmerization can be harmful for your health.

“One need only to refer to Obama’s record of legislation in the Illinois Senate for evidence that Obama is a foe of the corruption in our political system.”

I have read several accounts of Obama’s three terms in the Illinois Senate. According to those accounts he helped push one bill limiting gifts to politicians thru the legislature. That is good but, it is hardly a resounding endorsement of his desire to fight corruption.

“Many who come across such information refuse it on sight, as it does not comport with their desire to see Obama as a failed politician.”

Do you really believe that many people have a desire to see Obama fail as a politician? Perhaps this is true of the RNC but, I believe that the vast majority of the people want him to be very successful as a politician. I know this is true of myself and that is why I question some of his decisions. Will he be considered successful if the national debt doubles during his presidency? Would that be considered a failure that could pose dire consequences for the future of our nation?

“Obama has not violated a single campaign pledge in word or deed since Nov.4,”

In his own words, he has changed his position on troop withdraw from Iraq three times. One version for the primary, one for the general campaign and one for after the election. Before the election, it was shut down Guantanamo. After the election, it was the subject is more complicated. Before the election, no lobbyists. After the election , lobbyists in his cabinet. Between the primary and the general election, Obama did enough flip flopping to give John Kerry the nickname the rock.

You say this is because Obama is a quick study and therefore cannot help but reverse himself from time to time.

I say it is because Obama is an extremely astute politician, capable of mesmerizing large numbers of the electorate while moving from the left to the center right to enhance his electability. Even with a weak republican candidate, the election was in doubt until the fortuitous (for Obama) economic meltdown put him over the top.

“I think he has begun to establish credibility as the president who is going to work to his utmost for the positive changes most Americans seek from government.”

The adjective most often used to describe Obama is pragmatic. I believe Obama will work within the current political system to achieve some worthy goals.

“That is the most one can ask of a president. The rest is up to the people to demand similar from their Congressional representatives.”

Now we are getting down to the nitty-gritty.

I strongly disagree with both of these statements. If Obama is the man you claim him to be, the anti-corruption politician you claim him to be, he can do much more.

He could be an instrumental force in bringing about the changes in our political system that are so desperately needed. He can use the bully pulpit of his presidency. He can preempt the mind numbing tv programing. He can tell the American people in no uncertain terms, that their political system has been hijacked by the wealthy and their political patronage. He can tell the American people that they must hold their favorite incumbent politician responsible for changing the financial mechanism of our political system and rid themselves of the lobbyists of the privledged. He can tell the American people that if their favorite incumbent politicians, no matter which party they belong to, fails to work towards these goals, they must vote them out of office. This will be what determines wheither Obama is failed president, an effective president or a great president.

Posted by: jlw at December 13, 2008 02:06 AM

jlw asked the ridiculous question: “Do you really believe that many people have a desire to see Obama fail as a politician?”

According to polls, at least 22% do. They condemn his presidency before he has even taken office or enacted a single policy decision. I think you could easily find a correlation with the number of people who still hold hostile racial prejudice against a non-white president. In fact, I am sure of it. But, of course, you won’t research that. Like I said, it would not comport with your predetermined view and cherry picking of information to maintain that view.

That’s fine. It is your right to remain uninformed as an American citizen. I love it when you say acknowledge one legislative reform of Obama’s against corruption as a token, while demonstrating neither a desire to, nor acknowledgment of, the other reform bills his name was attached to. Selective ignorance, or just faulty logic, I haven’t seen it other evidence, therefore it doesn’t exist? How very convenient to avoid the research and conclude no other records exist.

There are many forms of corruption, not the least of which is permitting the wealthy and powerful to prey upon the unwealthy and unpowerful. Aside from first significant campaign finance reform law in Illinois in 25 years, he brought law enforcement groups around to back legislation requiring that homicide interrogations be taped and helped bring about passage of the state’s first racial-profiling law. He was a chief sponsor of a law enhancing tax credits for the working poor, played a central role in negotiations over welfare reform and successfully pushed for increasing child care subsidies.

Fighting against injustices and reforms, are there in his record, for those with an open and inquiring mind.

Posted by: David R. Remer at December 13, 2008 07:39 AM

jlw, I love the way you turn right around and grant Obama miraculous potential powers to make all things right for the nation with, or without, the cooperation of the Congress and the American people. Your tactics are confused, and intentions to insure in your own mind his failure, are truly remarkable. Your comments appear to cast you in that 22% in the polls who truly refuse to acknowledge any good in this person’s actions.

Thanks for putting a face on that statistic for me and insight as to how it is they remain in that polling statistic.

Posted by: David R. Remer at December 13, 2008 07:43 AM

David R. Remer wrote: d.a.n, Bernanke inherited the GLB Act. He inherited the Greenspan interest rate manipulations. He inherited an economy destined for [already in a] recession. He inherited a 9 trillion national debt and service on that debt and was helpless to prevent it reaching 10.5 $10.7 Trillion during his term as FED Chief.

True.

But the Gramm-Leach-Bliley (GLB) Act only contributed slightly to the problem.
It was not the major cause of the subprime bubble.
Phil Gramm definitely had a hand in some deregulation, but the GLB Act really only paved the way for mergers, and contained provisions for financial privacy.
According to federal lobbying disclosure records, Phil Gramm did lobby Congress, the Federal Reserve, and the U.S. Treasury Department about banking and mortgage issues in 2005 and 2006.
But there is no credible evidence that shows how GLB Act and mergers contributed to the subprime mortgage melt-down and bad lending practices.
And there were also other more major forces at work that helped create the problem.
The Commodities Futures Modernization Act of year 2000 had more to do with the debt problem than the GLB Act, which Bill Clinton and a Republican Congress jointly supported to deregulat the banking business (www.stroock.com/SiteFiles/Pub134.pdf), which set the stage for the rampant CDS (Credit Default Swap) market.
Both Democrats and Republicans contributed to the debt problem, and it took many years to get where we are today.

Still, those reasons and other factors do not relinquish Bernanke or Greenspan of all responsibility.
Bernanke’s writings reveal that he is a true, die-hard, fiat-money proponent.
Bernanke served as a member of the Board of Governors of the Federal Reserve System from 2002 to 2005, and was appointed to the Fed Chair in Feb. 2006.
Bernanke said on Milton Friedman’s ninetieth birthday, November 8, 2002:

“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”

Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively.

True, Bernanke inherited a bad situation, but he will make it worse if he tries do what numerous other nations tried to do (Weimar Republic of Germany 1920-to–1923, Zimbabwe 2003-present; former Soviet Union 1993–to-2002, Argentina 1975–1983, Austria 1921–1923, Bolivia 1984-to-1986, Bosnia-Herzegovina 1992–to-1993, Brazil 1960–to-1994, Chile 1971–to-1973, China 1947-to-1955, Greece 1943–to-1953, Hungary 1945–to-1946, Hungary 1922–to-1923, Israel 1976-to-1986, Japan 1934-to-1951, Poland 1990–to-1994, Confederate States of America 1861-to–1865, Roman Empire, etc.) by creating money out of thin air, and ignoring the creation of new money at a huge debt-to-reserve ratio (e.g. 9-to-1 for the Federal Reserve).

David R. Remer wrote: You cannot factually lay any of this at his feet. The Ponzi scheme existed long before Bernanke became FED chief. He hasn’t been there that long.

Does that make the participants any less culpable?

That’s sort of like a bank robber saying: “I only drove the getaway car”.

Of course it is difficult to come to grips that one is a participant in a system that is a “Ponzi scheme”.
It’s sort of like finally learning that one’s job is being a criminal; an enemy of society.

David R. Remer wrote: His failure was in not rushing to save Lehman Bros. which cascaded. But, then, no one I know could have predicted that Lehman Bros. bankruptcy would be THE trigger to bring this house of cards of down. Bernanke admits he, if anyone, should have seen this coming, but admits he didn’t and it was a major mistake on his part.

The failure of Lehman Brothers was not the real trigger.

The real trigger started a very long time ago (1913), in which debt was leveraged to create new money at a 9-to-1 ratio.
Excluding the WWII period, the nation-wide debt grew and grew ever larger as a percentage of GDP (from 100% to 483% today).

David R. Remer wrote: You lay far too much at Bernanke’s feet that he had no control over whatsoever.

It’s rooted in a philosophy of fiat money and a 9-to-1 debt-to-reserves fractional banking system, which Bernake subscribes to.

Again, to shirk responsibility for the flawed monetary policy is sort of like a bank robber saying: “I only drove the getaway car”.

We’ll simply have to agree to disagree on that.

David R. Remer wrote: And you give him no credit for nearly single handedly rescuing the global financial systems from cascading when the first run on the Money Market funds began. In less than 12 hours he was on it, and in touch with major Central Banks around the globe with a plan to prevent a meltdown that was predicated on an unprecedented and historical simultaneous approach by nearly all the world’s central banks.

Backing up the currency via a 1-to-1 guarantee for Money Market funds was a good step to avoid a run on the banks, but that doesn’t require a rocket scientist or clairvoyant to see that coming. I also don’t see how these actions are heroic, since no one in the banking system (including Bernanke and Greenspan) or Congress are prepared to deal with the root problem and truth of this world-wide pyramid (Ponzi) scheme we call a world-wide banking system. Heck, many foreign nations are in worse shape than the U.S., and now have far worse inflation (i.e. check out the drastic currencies shifts for the last 3 months), because they have higher debt-to-reserve ratios (9-to-1 in the U.S. , 13-to-1 and 21-to-1 in some other nations).

David R. Remer wrote: I think you need to take a more comprehensive factual context when judging Bernanke.

I can’t. Again, we’ll have to agree to disagree. As I said above, Bernanke subscribes to a philosophy of fiat money and a 9-to-1 debt-to-reserves fractional banking system.

David R. Remer wrote: I agree the FED’s structure granted to it by the Congress and White House, is one in which leveraging the U.S. Currency is risky, though the FED Reserve has not lost a single penny in its collateralized loan operations.

That’s exactly what I mean. How can you be part of something, but not part of something?

The thing is, Bernanke probably does not share your’s and my opinion that the creation of new money at a 9-to-1 ratio is a bad thing.
One thing is for sure now.
After the Federal Reserve has contributed to this huge nation-wide debt pyramid, it’s obvious that there’s not much the Federal Reserve can do now to fix it.
And we try to spend our way to prosperity, we’re going to re-learn another hard lesson (i.e. hyperinflation).

David R. Remer wrote: And it is not logical to state that Congress is not responsible for the Fed Reserve.

I never said Congress or the Executive Branch is not responsible for the Federal Reserve.

I said that the Federal Reserve chair person does not have to follow orders by the Congress or Federal Reserve while the Federal Reserve exists in its current state.
That is, the President and Congress can question the Federal Reserve, but neither Congress or the Executive Branch directly control the Federal Reserve chair person.

David R. Remer wrote: The Congress has the power to cut the FED’s relationship with the Treasury Dept. thus virtually ending its existence as a government funded operation. The Fed Reserve exists by authority of the Congress. There is no getting around that simple historical fact.

True, but I was not arguing that fact.

I was arguing that, as the Federal Reserve currently exists, neither Congress or the Executive Branch directly control the Federal Reserve chair person.
As the current Federal Reserve exists, the chair person does not take orders from the Congress or the Executive Branch.
That’s an important difference, with regard to control of the Federal Reserve.

David R. Remer wrote: The Fed Reserve is influenced by White House policy. That is another fact that cannot be ignored. The President nominates the Fed Reserve governors if I am not mistaken. The Senate confirms.

Influence does not equate to taking orders.

And there’s not much real influence if both are motiviated to create more money out of thin air.
Both have a conflict of interest.

David R. Remer wrote: It was never in his power to eliminate the severe cost of deleveraging the inflated balance sheets of mortgage backed investments.

Right. His job is to make sure credit is easy to get so that the debt pyramid doesn’t collapse.

Again, that’s sort of like a bank robber saying: “I only drove the getaway car”.
No one ever said Bernanke created the system.
No one ever said Bernanke created the entire debt problem which took decades to create.
Bernanke simply helped perpetuate a Ponzi scheme.
Bernanek simply participates in the Ponzi scheme.
Thus, Bernanke is no hero.

David R. Remer wrote: Bernanke failed when it came to Lehman Bros. He has done an heroic job since then of rescuing the world from a financial meltdown. It was never in his power to eliminate the severe cost of deleveraging the inflated balance sheets of mortgage backed investments. But, he did prevent those costs from being incurred in a matter of weeks, instead of over a period of years. The suffering by billions of human beings around the globe has been prevented by his actions.

It’s not nearly over.

The massive debt problem still exists (but worse).
The Federal Reserve can not do much to fix the problem now.
Guaranteeing money market funds and creating money out of thin air isn’t all the heroic.

David R. Remer wrote: I can absorb x losses over the course of a couple years. I would be bankrupt if x losses were incurred over night.

That point has merit, and completely agree with the steps to:

• (a) guarantee Money Market funds 1-to-1 on par with the U.S. Dollar
• (b) increasing FDIC limits
• (c) loans to banks

But I would not classify any of that as heroic.

David R. Remer wrote: Bernanke literally saved the world and kept billions of people employed and consuming by his coordinated Central Bank response to the run on money market funds in Sept. of 2007 if I recall the timing correctly.

Good. Some of those steps mitigated damages.

Some have made things worse.

It’s sort of like the saying “I’m sorry for accidentally shooting you in the leg, but I saved your life by calling an ambulance”.

Besides, creating money out of thin air is not a heroic act.
The bail-out mania is most likely making the problem worse.
The debt pyramid still exists, and it is getting MUCH bigger, MUCH faster.

David R. Remer wrote: The piper still has to be paid.

That’s right. However, have you done any rough calculations to know what it would take to solve the debt problem?

And that is excluding a $55 Trillion of Credit Default Swaps and other exotic investment vehicles (e.g CDSs, SIVs, ABSs, CDOs, subprime CDOs, squared CDOs, CPDOs, SPVs, VIEs, etc.).

David R. Remer wrote: But, like any credit, spreading the payments over a long period of time makes the payments more endurable and less painful and possible for vastly more persons to pay, ergo preventing a meltdown due to no one being able to pay overnight the costs of deleveraging balance sheets globally.

The question is:

Is it possible to repay so much debt (either way; slowly or quickly)?

That appears to be the crux of our disagreement.

That is why I keep asking a simple question:

QUESTION: Where will the money come from to merely pay the interest on all of the debt, much less the money to reduce the Principal debt, when that money does not yet exist, 95% of all money in existence is Principal debt, and nation-wide debt has grown steadily larger in size and as a percentage of GDP for 52+ consecutive years ? Especially when 80% of the U.S. population owns only 17% of all wealth in the U.S.?

Do you know how long it would take to pay down so much debt, even if we had the discipline to pay down so much debt?
Even at a mere 4.0% interest, it would take centuries to pay down the $10.7 National Debt.

For example, IF today, we had the discipline to start paying $1.32 Billion per day ($40.15 Billion per month = $481.2 Billion per year = amount required to prevent the National Debt from growing ever larger) against the $10.7 Trillion National Debt, at only a 4.5% interest rate, it would take 164 years and the total interest cost would be an additional: $79.179 Trillion : One-Simple-Idea.com/NationalDebt_10.7Trillion.jpg

IF today, we had the discipline to start paying $657,102,179 per day ($20.0 Billion per month = $240 Billion per year = the amount required to prevent the total debt from growing ever larger) against the $10.7 Trillion National Debt, at only a 1.0% interest rate, it would take 60 years and the total interest cost would be an additional: $14.2 Trillion !

IF today, we had the discipline to start paying $657,102,179 per day ($20.0 Billion per month = $240 Billion per year = the amount required to prevent the total debt from growing ever larger) against the $10.7 Trillion National Debt at a ZERO percent Interest rate, it would take 56 years to pay down the debt!

IF today, we had the discipline to start paying $7.337641222 Billion per day ($223.33334 Billion per month = $2.68 Trillion per year = the amount required to prevent the total debt from growing ever larger) against the $67 Trillion nation-wide debt, at only a 4.0% Interest rate, it would take 443 years and the total interest cost would be an additional: $1.162 QUADRILLION : One-Simple-Idea.com/67Trillion.gif

IF today, we had the discipline to start paying $1.1971306538 Billion per day ($60 Billion per month = $720 Billion per year = the amount required to prevent the total debt from growing ever larger) against the $67 Trillion nation-wide debt, at only a 1.0% percent Interest rate, it would take 266 years and the total interest cost would be an additional: $192 Trillion !

IF today, we had the discipline to start paying $1.1971306538 Billion per day ($60 Billion per month = $720 Billion per year = the amount required to prevent the total debt from growing ever larger) against the $67 Trillion nation-wide debt, at a ZERO percent Interest rate, it would take 93 years to pay down the debt !

Do you seriously think that is possible?
So much debt will most likely never be repaid.
It is unlikely even half of so much debt will ever be repaid.

That is why no one can answer that one simple question.
Where will the money come from?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 13, 2008 11:08 AM

David, you are getting rather good at attacking the messengers when you don’t like their message.

After all, a misinformed hick like me has no right to question the superior intellect of Obama (IQ 125).

Posted by: jlw at December 13, 2008 08:19 PM

jlw,

You have every right to question…but, others have just as much right to question the questioner, if the questions asked do so warrant.

Posted by: Marysdude at December 13, 2008 10:31 PM

d.a.n said: “But there is no credible evidence that shows how GLB Act and mergers contributed to the subprime mortgage melt-down and bad lending practices.”

Where is anyone making such a claim, d.a.n? The GLB Act is responsible for creating the situation in which the taxpayers are on the hook for trillions of dollars to arrest the failure of financial institutions grown too large and diverse to permit to fail, lest that take the economy and taxpayer’s jobs with them.

In other words, were it NOT for the GLB Act, Lehman, AIG, and other failed financial institutions could have filed chapter 11 bankruptcy, reorganized, merged, been bought out, without the national debt or tax payers being on the hook for a couple more trillion dollars to save them.

One item lost in a lot of this conversation is that NOT ALL financial institutions engaged in the kind of leveraging and purchasing of asset bundles regardless of AAA ratings. In fact, more did not engage in these unhealthy practices than did. The biggest did. The smaller didn’t. Hence, if the GLB Act had not passed, with few exceptions like CitiGroup which got a waiver under Glass-Steegle to merge banking and insurance, almost none of the failing institutions would have constituted a threat to the entire economy and global financial network.

Insurers like AIG would never have engaged in banking and therefore would not have bought and sold collateralized investment asset bundles, and hence, would not have required a bailout at this time, had the GLB Act not passed.

The GLB Act is not responsible for the failures of the rating agencies, nor the leveraging in the mortgage industry, nor the real estate valuation bubble. It is responsible for financial institutions having grown so diverse and tentacled into the fabric of the economy as to require tax payer bailout upon threat of failure.

No one but shareholders care if a financial institution fails, unless that institution’s failure threatens the entire economy of taxpayer’s jobs and credit availability if it does fail. The GLB Act is responsible for tax payers having to rescue the private financial sector.

Posted by: David R. Remer at December 14, 2008 01:04 PM

jlw,

Attack the messenger? No. Attack what the messenger wrote, yes.

I said: “jlw, I love the way you turn right around and grant Obama miraculous potential powers to make all things right for the nation with, or without, the cooperation of the Congress and the American people.”

This is a direct rephrasing of what you wrote. No attack on the messenger here, just their comment.

“Your tactics are confused, and intentions to insure in your own mind his failure, are truly remarkable.”

The tactics I refer to are those employed in your comment which I rephrased. As to my projection of your intentions, I apologize. I should rephrase that to read, “It appears from your comments that your intentions are…”

“Your comments appear to cast you in that 22% in the polls who truly refuse to acknowledge any good in this person’s actions.”

Again, a direct critique of your comments.

“Thanks for putting a face on that statistic for me and insight as to how it is they remain in that polling statistic.”

A thank you for the insight you provided as to who makes up that 22% of the polls and what their argument is, is hardly an attack of the messenger.

Perhaps a little thicker skin is required when debating with someone who disagrees with the points you make.

Posted by: David R. Remer at December 14, 2008 01:10 PM

d.a.n,

” David R. Remer wrote: You cannot factually lay any of this at his feet. The Ponzi scheme existed long before Bernanke became FED chief. He hasn’t been there that long.

Does that make the participants any less culpable?

That’s sort of like a bank robber saying: “I only drove the getaway car”.”

I don’t d.a.n, does the government hiring waste management personnel make them culpable for the waste problems in our nation? I don’t think so.

Bernanke was hired to manage a set of tools toward the end of fighting inflation and maintaining maximum employment potential. He inherited a crises that like the Titantic, could not be turned in time under his watch.

He is not saint, and as he confesses, he is capable of error, especially in this unprecedented economic circumstance set. But, your argument that he is culpable just because he took the job of attempting to manage what he was hired to manage, appears illogical to me. Your argument taken to its conclusion would hold culpable any and all who hire into the Federal Reserve System, and should everyone avoid hiring into the Federal Reserve System to avoid culpability, our entire nation’s economy would collapse.

Your remedy for crisis appears to be death, carried to the logical conclusion of your argument.

Posted by: David R. Remer at December 14, 2008 01:18 PM

d.a.n remarked: ” David R. Remer wrote: The Fed Reserve is influenced by White House policy. That is another fact that cannot be ignored. The President nominates the Fed Reserve governors if I am not mistaken. The Senate confirms.

Influence does not equate to taking orders.”

Well, this is a damned if you do, and damned if you don’t proposition. Bush’s White House influence upon Greenspan to hold interest rates at 1% for far longer than economic conditions and inflationary consequences warranted, to fulfill Bush’s “Ownership Society” legacy, harmed the nation. Whether the politicization of the Federal Reserve would improve performance over the Reserve remaining relatively independent of political influence, is a very, very difficult argument to make logically, as Bush’s influence over Greenspan highlights.

Posted by: David R. Remer at December 14, 2008 01:22 PM

d.a.n said: “It’s not nearly over.

The massive debt problem still exists (but worse).
The Federal Reserve can not do much to fix the problem now.”

True enough. Fiscal matters are not the province of the Federal Reserve. They are the province of the Congress and White House. Bernanke has intelligently been warning Congress and Bush on their fiscal mis-management since 2002 at least as far as I can tell from the internet info available. He has also said the absence of entitlement reform is the challenge that cannot wait for ill consequences to motivate resolve.

But, the politicians don’t have to heed Bernanke, they believe they have to heed the consequences of the voters, which is minimal at best. Therefore, they don’t take Bernanke’s warnings seriously as they are unlikely to be the incumbents seeking reelection when those dire negative consequences of inaction come home to plague the nation.

Posted by: David R. Remer at December 14, 2008 01:28 PM

David R. Remer wrote: d.a.n said: “But there is no credible evidence that shows how GLB Act and mergers contributed to the subprime mortgage melt-down and bad lending practices.”

Please see the following comment.

David R. Remer wrote: The GLB Act is responsible for creating the situation in which the taxpayers are on the hook for trillions of dollars to arrest the failure of financial institutions grown too large and diverse to permit to fail, lest that take the economy and taxpayer’s jobs with them.

The “too big to fail” theory is not well developed and exaggerated as a contributing factor.

Again, please see the link to Comment # 272028 above, about

David R. Remer wrote: In other words, were it NOT for the GLB Act, Lehman, AIG, and other failed financial institutions could have filed chapter 11 bankruptcy, reorganized, merged, been bought out, without the national debt or tax payers being on the hook for a couple more trillion dollars to save them.

It has not been sufficiently proven by a long shot that mergers and combined industries is the root cause of the problem, nor the cause of overall increased losses and failures.

If X + Y = Z and Z fails, it’s the same as X + Y failing, and the losses are still the same.
I have no respect for Phil Gramm (especially after his “whining” and “mental recession” comments), but the Commodities Futures Modernization Act of year 2000, also signed by Bill Clinton, was worse than the GLB Act, because it paved the way for the diverse, tentacled, exotic (by design), complex, and multi-layered derivatives (e.g CDSs, SIVs, ABSs, CDOs, subprime CDOs, squared CDOs, CPDOs, SPVs, VIEs, etc.), and other investment vehicles that vastly reduced transparency and left hurricane victims and other insurance claimants without the ability to identify who they are actually insured by.

David R. Remer wrote: One item lost in a lot of this conversation is that NOT ALL financial institutions engaged in the kind of leveraging and purchasing of asset bundles regardless of AAA ratings. In fact, more did not engage in these unhealthy practices than did. The biggest did.

So bigger isn’t better, eh? Again, that’s and interesting theory, but there’s not sufficient proof to explain away the math of losses:

If X + Y = Z and Z fails, it’s the same as X + Y failing, and the losses are still the same. The math just doesn’t support the larger losses and “too big to fail” theory.

David R. Remer wrote: The smaller didn’t. Hence, if the GLB Act had not passed, with few exceptions like CitiGroup which got a waiver under Glass-Steegle to merge banking and insurance, almost none of the failing institutions would have constituted a threat to the entire economy and global financial network.

Not true.

Many smaller banks, insurance companies, and corporations have failed too.
If a larger bank failed that was larger due to a merger and diversification of industries, it is really no different than if the separate and smaller merged banks and corporations failed individually.

Here’s the current Failed Bank List (between 2000 and 2008) with banks of many different sizes:

• Bank Name, Closing Date/ Updated Date


• Sanderson State Bank, Sanderson, TX


• En Español December 12, 2008 December 12, 2008


• Haven Trust Bank, Duluth, GA December 12, 2008 December 12, 2008


• First Georgia Community Bank, Jackson, GA December 5, 2008 December 5, 2008


• PFF Bank and Trust, Pomona, CA November 21, 2008 November 21, 2008


• Downey Savings and Loan, Newport Beach, CA November 21, 2008 November 21, 2008


• The Community Bank, Loganville, GA November 21, 2008 November 21, 2008


• Security Pacific Bank, Los Angeles, CA November 7, 2008 November 7, 2008


• Franklin Bank, SSB, Houston, TX November 7, 2008 November 7, 2008


• Freedom Bank, Bradenton, FL October 31, 2008 October 31, 2008


• Alpha Bank & Trust, Alpharetta, GA October 24, 2008 October 24, 2008


• Meridian Bank, Eldred, IL October 10, 2008 October 10, 2008


• Main Street Bank, Northville, MI October 10, 2008 October 10, 2008


• Washington Mutual Bank, Henderson, NV and Washington Mutual Bank FSB, Park City, UT September 25, 2008 October 20, 2008


• Ameribank, Northfork, WV September 19, 2008 October 20, 2008


• Silver State Bank, Henderson, NV


• En Español September 5, 2008 October 20, 2008


• Integrity Bank, Alpharetta, GA August 29, 2008 October 20, 2008


• The Columbian Bank and Trust, Topeka, KS August 22, 2008 October 20, 2008


• First Priority Bank, Bradenton, FL August 1, 2008 October 27, 2008


• First Heritage Bank, NA, Newport Beach, CA July 25, 2008 October 20, 2008


• First National Bank of Nevada, Reno, NV July 25, 2008 December 9, 2008


• IndyMac Bank, Pasadena, CA July 11, 2008 October 27, 2008


• First Integrity Bank, NA, Staples, MN May 30, 2008 October 20, 2008


• ANB Financial, NA, Bentonville, AR May 9, 2008 October 27, 2008


• Hume Bank, Hume, MO March 7, 2008 October 27, 2008


• Douglass National Bank, Kansas City, MO January 25, 2008 October 20, 2008


• Miami Valley Bank, Lakeview, OH October 4, 2007 October 20, 2008


• NetBank, Alpharetta, GA September 28, 2007 October 20, 2008


• Metropolitan Savings Bank, Pittsburgh, PA February 2, 2007 October 20, 2008


• Bank of Ephraim, Ephraim, UT June 25, 2004 April 9, 2008


• Reliance Bank, White Plains, NY March 19, 2004 April 9, 2008


• Guaranty National Bank of Tallahassee, Tallahassee, FL March 12, 2004 October 20, 2008


• Dollar Savings Bank, Newark, NJ February 14, 2004 April 9, 2008


• Pulaski Savings Bank, Philadelphia, PA November 14, 2003 July 22, 2005


• The First National Bank of Blanchardville,


• Blanchardville, WI May 9, 2003 October 20, 2008


• Southern Pacific Bank, Torrance, CA February 7, 2003 October 20, 2008


• The Farmers Bank of Cheneyville, Cheneyville, LA December 17, 2002 October 20, 2004


• The Bank of Alamo, Alamo, TN November 8, 2002 March 18, 2005


• AmTrade International Bank of Georgia, Atlanta, GA


• En Español September 30, 2002 September 11, 2006


• Universal Federal Savings Bank, Chicago, IL June 27, 2002 April 9, 2008


• Connecticut Bank of Commerce, Stamford, CT June 26, 2002 October 20, 2008


• New Century Bank, Shelby Township, MI March 28, 2002 March 18, 2005


• Net 1st National Bank, Boca Raton, FL March 1, 2002 April 9, 2008


• NextBank, N.A., Phoenix, AZ February 7, 2002 October 20, 2008


• Oakwood Deposit Bank Company, Oakwood, OH February 1, 2002 October 20, 2008


• Bank of Sierra Blanca, Sierra Blanca, TX January 18, 2002 November 6, 2003


• Hamilton Bank, N.A., Miami, FL


• En Español January 11, 2002 October 20, 2008


• Sinclair National Bank, Gravette, AR September 7, 2001 February 10, 2004


• Superior Bank, FSB, Hinsdale, IL July 27, 2001 October 20, 2008


• The Malta National Bank, Malta, OH May 3, 2001 November 18, 2002


• First Alliance Bank & Trust Company, Manchester, NH February 2, 2001 February 18, 2003


• National State Bank of Metropolis, Metropolis, IL December 14, 2000 March 17, 2005


• Bank of Honolulu, Honolulu, HI October 13, 2000 March 17, 2005

The fact is, one of the biggest reasons for the insolvency of so many banks of varying sizes is:

• the massive leveraging of debt-to-reserves, in which banks are only required to have 10% of all debt held in reserves. That’s a problem that started a long time ago, and has been growing ever larger (nation-wide). Nation-wide debt grew from 100% of GDP in year 1956 to 483% of GDP in 2007 (GDP=$13.86 Trillion in year 2007).

Also, not all of those banks above failed due to mergers or diversification of industries.

It’s also a world-wide problem, since the wide-spread adoption of fiat money systems over a century ago.
Some countries require even smaller reserves, and many of those countries with smaller reserve requirements are in more dire conditions.
For example, while the U.S. Dollar is falling in value, and average inflation in the U.S. is about 4.28% (average for year 2008), many of the currencies of the countries below with smaller reserve ratios are in much worse condition and falling faster than the U.S. Dollar (especially the British Pound, Euro, Australian Dollar, Canadian Dollar, Swiss Franc, Chilean Peso, Brazilian Real, Mexican Peso, Polish Zloty, Slovak Krona, etc.). See currency charts here: finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=1y

FRACTIONAL BANKING RESERVE RATIOs:

• Country ____________ Fractional Banking Reserve Ratio Requirement %


• Australia __________ 0.0% None


• Canada _____________ 0.0% None


• Mexico _____________ 0.0% None


• New Zealand ________ 0.0% None


• Sweden _____________ 0.0% None


• United Kingdom _____ 0.0% (previously, 20.5%(1968), 15.9%(1978), 5.0%(1988), 3.1%(1998))


• Euro _______________ 2.0%


• Slovakia ___________ 2.0%


• Switzerland ________ 2.5%


• Poland _____________ 3.5%


• Chile ______________ 4.5%


• Pakistan ___________ 7.0%


• Latvia _____________ 8.0%


• India ______________ 6.5% (as of 12-JUL-2008)


• China ______________ 7.0%


• Bulgaria ___________ 8.0%


• Burundi ____________ 8.5%


• Hungary ____________ 8.75%


• Ghana ______________ 9.0%


• Sri Lanka __________ 10.0%


• United States ______ 10.0% (previously, 12.3%(1968), 10.1%(1978), 8.5%(1988), 10.3%(1998))


• Germany ____________ 11.9% (previously, 19.0%(1968), 19.3%(1978), 17.2%(1988), 11.9%(1998))


• Estonia ____________ 15.0%


• Zambia _____________ 17.5%


• Hong Kong __________ 18.0%


• Turkey _____________ 18.0% (previously, 58.3%(1968), 62.7%(1978), 30.8%(1988), 18.0%(1998))


• Croatia ____________ 19.0%


• Tajikistan _________ 20.0%


• Suriname ___________ 35.0%


• Jordan _____________ 80.0%

If you look at the currencies of the countries with much larger rerserve requirements, you’ll see those currencies are experiencing less devaluation than the currencies of fractional banking systems of smaller reserve requirements.

The point is, bad monetary policies, highly leveraged debt and small reserve ratios, the ever-growing debt bubble (for 52+ consecutive years), and incessant inflation (for 52 consecutive years), is one of the biggest factors for economic destabilization, bubble-after-bubble, and growing wealth disparity.

David R. Remer wrote: Insurers like AIG would never have engaged in banking and therefore would not have bought and sold collateralized investment asset bundles, and hence, would not have required a bailout at this time, had the GLB Act not passed.

Maybe. Maybe not

I still think the lack of transparency and complex derivatives resulting from the Commodities Futures Modernization Act of year 2000 (also signed by Bill Clinton), was a much bigger contributing factor, because it helped paved the way for exotic investment vehicles and the repackaging of toxic debt and reselling it to the rest of the world.

Also, again, the sum of many smaller failures would probably still result in the same losses.
Phil Gramm made a fool of himself with his “whining” and “mental recession” remarks, but there also appears to be some piling-on and exaggeration of the size of his contribution to the economic mess, since the Gramm-Leach-Bliley Act which was indeed introduced by Phil Gramm, but passed by huge support in:

• (a) BOTH the Senate (90=90%=Yay, 8=Nay, 1=NoVote) and House (362=83%=Yay, 57=Nay, 15=NoVote),


• (b) which is a huge majority of BOTH Democrats and Republicans (i.e. bipartisan),


• (c) and this veto-proof and bipartisan GLB Act was then signed into law by President Bill Clinton on November 12, 1999.

David R. Remer wrote: The GLB Act is not responsible for the failures of the rating agencies, nor the leveraging in the mortgage industry, nor the real estate valuation bubble.

Right.

David R. Remer wrote: It is responsible for financial institutions having grown so diverse and tentacled into the fabric of the economy as to require tax payer bailout upon threat of failure.

Again, the mergers and diversity are not as major of a factor as being alleged, and much of it appears to be partisan motivated.

Again, the Commodities Futures Modernization Act of year 2000, signed by Bill Clinton, was worse than the GLB Act, because it paved the way for the diverse, tentacled, exotic (by design), complex, and multi-layered derivatives (e.g CDSs, SIVs, ABSs, CDOs, subprime CDOs, squared CDOs, CPDOs, SPVs, VIEs, etc.), and other investment vehicles that vastly reduced Transparency and left hurricane victims and other insurance claimants without the ability to identify who they are actually insured by, or who actually owned their mortgage.

David R. Remer wrote: No one but shareholders care if a financial institution fails, unless that institution’s failure threatens the entire economy of taxpayer’s jobs and credit availability if it does fail. The GLB Act is responsible for tax payers having to rescue the private financial sector.

The tax payers didn’t have to rescue all of these failed corporations to the degree we have seen.

Congress may have decided that against the wishes of most voters (based on numerous polls).

David R. Remer wrote:I don’t d.a.n, does the government hiring waste management personnel make them culpable for the waste problems in our nation? I don’t think so.

Bad analogy, since a waste management company is a secondary participant that did not contribute to creating the waste.

Bernanke is a primary participant, who subscibes to the philosophies of the Federal Reserve, and a fiat monetary system, and Bernanke and the Federal Reserve are primary contributors to the economic mess today, due to incessant inflation, low interest rates, Greenspan’s promotion of Adjustable Rate Mortgages, Greenspan’s forecasts that a nationwide collapse of home prices was unlikely, the Federal Reserve’s 9-to-1 leveraging of debt-to-reserves.

David R. Remer wrote: Bernanke was hired to manage a set of tools toward the end of fighting inflation and maintaining maximum employment potential. He inherited a crises that like the Titantic, could not be turned in time under his watch.

I already acknowledged that Bernanke inherited a mess, as did Barack Obama.

David R. Remer wrote: He is not saint, and as he confesses, he is capable of error, especially in this unprecedented economic circumstance set.

OK. But that is vastly different from HERO status …

David R. Remer wrote: He [Bernanke] has done an heroic job since then of rescuing the world from a financial meltdown… . The suffering by billions of human beings around the globe has been prevented by his actions.

David R. Remer wrote: But, your argument that he is culpable just because he took the job of attempting to manage what he was hired to manage, appears illogical to me.

No, it is not illogical.

Who made credit easy to get, while the real-estate bubble grew ever larger?
Who controls interest rates?
Who subscribes to the fiat monetary principles that contributed to the entire mess (also see Bernanke’s Doctrine below)?
Who contiues to loan money to the federal government at low interest rates, despite warnings of rising debt, and unfunded entitlement liabilities (like giving alcohol to an alcoholic)?
Who refuses to see the system for what it is: a Ponzi-scheme that is creating a huge Debt-Pyramid that is doomed to eventual collapse?
Who is making the same mistakes Greenspan made?
Who should be cognizant of the destabilizing effects of 52 consecutive years of incessant inflation?
Who subscribes to the philosophy that some inflation is a good thing?
Who refuses to come clean an explain the Ponzi-scheme to Americans; many who now appear to be catching on, based on a recent, prescedent setting protest of the Federal Reserve? See: aclu.meetup.com/139/boards/thread/5836163/

David R. Remer wrote: Your argument taken to its conclusion would hold culpable any and all who hire into the Federal Reserve System, and should everyone avoid hiring into the Federal Reserve System to avoid culpability, …

Only those who decide policy. Thousands of Federal Reserve employees probably do not understand the true “Ponzi-scheme” nature of the Federal Reserve.

But that most certainly applies to the governors of the Federal Reserve (much more culpable than the driver of the get-away-car).
Significant reforms must be made to stop the Ponzi-scheme, incessant inflation, and growing debt at a risky and highly leveraged 9-to-1 ratio of debt-to-reserves.
We don’t need a gold-based currency.
We merely need disciplined monetary policy that limits inflation.
Otherwise, we have the devastating effects of inflation, such as the 52 consectuve years of inflation in the U.S.

David R. Remer wrote: our entire nation’s economy would collapse.

What is the entire nation doing now? And why?

Major reforms are needed. Otherwise, the debt-pyramid will continue to grow bigger, and eventually become much dangerous and more painful later.

David R. Remer wrote: Your remedy for crisis appears to be death, carried to the logical conclusion of your argument.

Nonsense.

Continuing to do what doesn’t work, continuing to grow the debt problem ever bigger, is what is irrational and illogical.
We will not be able to spend our way to prosperity.
Much more bold and logical solutions are needed (and as soon as possible).
The nation is swimming in debt, 95% of all U.S. money in existence is debt, nation-wide debt as a percentage of GDP has quintupled since year 1956, the wealth disparity gap is growing, 80% of all Americans own only 17% of all wealth in the U.S., they debt-pyramid is growing fast, and all of those trends are getting worse.

The Federal Reserve needs major reforms, or the U.S. government needs to create its own Central Bank to replace or compete with the current dishonest, usurious, predatory, inflationary banking system, and set federal laws to manage it correctly:

• with the least inflation possible,


• which is not another dishonest Ponzi-scheme,


• which does not create another untenable debt-bubble (debt-pyramid) that grows ever larger for many decades, toward the eventual, inevitable, and painful collapse.


• which does not prey on debtors (such as 35% interest rates),


• which does not contain massive layers of complexity and exotic investment vehicles to reduce Transparency,


• which does not use incessant inflation to extract wealth from the majority of Americans (evidenced by the growing wealth disparity gag).

The current debt-pyramid which will collapse in a disorderly and painful fashion, unless government and/or the Federal Reserve don’t admit to the severity of the situation, the existence of a massive and untenable debt-pyramd, and try to find a way to renegotiate and prevent 3.0+ Million foreclosures per year, and millions more bankruptcies per year, and stop the incessant inflation that fuels economic instability and a growing wealth disparity. The monetary system is a Ponzi-scheme and badly-needed reforms (as soon as possible) are critical to avoiding another depression. The status quo won’t work. The reluctance to change something like the Federal Reserve is understandable, but it is necessary since it is a Ponzi-scheme that isn’t gettting better, and only exceeds at one thing:

• growing the nation-wide debt-pyramid ever larger.

David R. Remer wrote [regarding influence of federal government on Federal Reserve]:
Well, this is a damned if you do, and damned if you don’t proposition. Bush’s White House influence upon Greenspan to hold interest rates at 1% for far longer than economic conditions and inflationary consequences warranted, to fulfill Bush’s “Ownership Society” legacy, harmed the nation.

Greenspand did not have to do that.

Greenspan agreed to do that, with insufficient regard or concern for the consequences.
Greenspan shared the philosophy that over-estimated the power of the Federal Reserve to fix the problem later (if it developed), raising questions about how much understanding Greenspan and others in the Federal Reserve actually have of the monetary system and policies.
Thus, it’s a bit hypocritical for Greenspan to try to blame Bush for all of it.
If Greenspan disagreed, then Greenspan should have done his duty, and done what he thought was best.

David R. Remer wrote: Whether the politicization of the Federal Reserve would improve performance over the Reserve remaining relatively independent of political influence, is a very, very difficult argument to make logically, as Bush’s influence over Greenspan highlights.

If Greenspan did it merely to please G.W. Bush(43), then Greenspan was severely irresponsible.

However, I don’t think that is what happened.
I think Greenspan and many others in the Federal Reserve actually do not know what they are doing, and are essentially experimenting. Ironically, the Federal Reserve may be threatening its own existence.

Regarding influence of politicians on monetary policy, the authors of the 1913 legislation that set up the Federal Reserve System (signed into existence by Woodrow Wilson who later severely regretted doing) felt that it was vital to insulate monetary policy from pressure and influence by partisan politicians obsessed with their own short-range re-election prospects. The Federal Reserve was set up along the lines of an independent regulatory commission; not as just one more agency of the Executive Branch that would be under the direction of the President, nor supervised closely by Congress. The private banking community was also given a major role in the running of the Federal Reserve System that continues to give banks and banking interests privileged access to the process by which the U.S. government’s monetary policy is made.

David R. Remer wrote: The President nominates the Fed Reserve governors if I am not mistaken. The Senate confirms.

True, but that does not equate to control or excessive influence.

Members of the Federal Reserve’s Board of Governors are nominated for their positions by the President of the United States and then must be confirmed by a majority vote of the Senate before taking office.

However, the members of the Federal Reserve’s Board of Governors serve very long terms (14 years), and, once appointed and confirmed, they may not be removed from office by either President or Congress (except through a cumbersome process of impeachment by Congress for serious violations of the criminal law).

Therefore, the claims of political influence are most likely exaggerated.
Also, what some may perceive as influence may merely be analogous motives and flawed philosophies.

David R. Remer wrote:

d.a.n said: “It’s not nearly over. The massive debt problem still exists (but worse). The Federal Reserve can not do much to fix the problem now.

True enough. Fiscal matters are not the province of the Federal Reserve. They are the province of the Congress and White House.

HHHHMMMMMMMmmm … The Federal Reserve does directly (and indirectly) affect fiscal matters.

DEFINITION: fiscal

• Of or relating to government expenditures, revenues, and debt: a fiscal policy of incurring budget deficits to stimulate a weak economy.


• Of or relating to finance or finances.

The Federal Reserve controls credit (such as too much easy credit), setting interest rates, loaning the government money (with interest) despite increasingly huge deficits, controlling Money Supply, indirectly controlling corporate bond yields, depreciating the U.S. Dollar (i.e. creating inflation), buying industries in the U.S. with “newly created money”, and creating money as debt (at a 9-to-1 ratio), are not fiscal matters?

When the Federal Reserve loans money (with interest, at rates the Federal Reserve controls), it is definitely “Or or relating to finance or finances”, and government debt.

Also, remember Bernanke’s 7 point Doctrine:

The seven steps that the Federal Reserve needs to take are:

• (1) Increase the money supply (M1] and M2).
  “The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost.” “Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation.”


• (2) Ensure liquidity makes its way into the financial system through a variety of measures.
  “The U.S. government is not going to print money and distribute it willy-nilly …”although there are policies that approximate this behaviour.”


• (3) Lower interest rates - all the way down to 0% .

Bernanke observed that people have traditionally thought that, when the funds rate hits zero, the Federal Reserve will have run out of ammunition. However, by imposing yields paid by long-term Treasury bills, “a central bank should always be able to generate inflation, even when the short-term nominal interest rate is zero …[this] more direct method, which I personally prefer, would be for the Fed to announce ceilings for yields on all longer-maturity Treasury debt.”
He noted that Fed had successfully engaged in “bond-price pegging” following the Second World War.

• (4) Control the yield on corporate bonds and other privately issued securities.
  Although the Federal Reserve can’t legally buy these securities (thereby determining the yields); it can, however, simulate the necessary authority by lending dollars to banks at a fixed term of 0%, taking back from the banks corporate bonds as collateral.


• (5) Depreciate the U.S. dollar.
  Referring to U.S Monetary Policy in the 1930’s under Franklin Roosevelt, he states that: “This devaluation and the rapid increase in money supply … ended the U.S. deflation remarkably quickly.”


• (6) Execute a de facto depreciation by buying foreign currencies on a massive scale.
  “The Fed has the authority to buy foreign government debt … [t]his class of assets offers huge scope for Fed operations because the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.”


• (7) Buy industries throughout the U.S. economy with “newly created money”.
  In essence, the Federal Reserve acquires equity stakes in banks and financial institutions. In this “private-asset option,” the Treasury could issue trillions in debt and the Fed would acquire it - still using newly created money.

What was meant by …

d.a.n said: The Federal Reserve can not do much to fix the problem now.

… is that there will be no easy way to deal with the massive debt bubble, which the Federal Reserve is a major culprit for causing. That is, lower interest rates won’t accomplish much when most Americans are already so deep in debt that they have no more capacity for more debt.

David R. Remer wrote: Bernanke has intelligently been warning Congress and Bush on their fiscal mis-management since 2002 at least as far as I can tell from the internet info available. He has also said the absence of entitlement reform is the challenge that cannot wait for ill consequences to motivate resolve.

Well, he’s got a strange way of doing it.

I don’t think Bernanke cares much about inflation, based on his actions and the Bernanke 7 Point Doctrine (see above).

What good does it do to warn of deficits and inflation and then continue to loan money to the federal government at low interest rates (rates which the Federal Reserve controls)?
Is it working?
Seems to me like the Federal Reserve is enabling more debt; like giving alcohol to an alcoholic.
And based on Bernanke’s 7 Point Doctrine above, it is clear what he plans to do:

• create massive amounts of new money, inflation, and erode the U.S. Dollar.

David R. Remer wrote: But, the politicians don’t have to heed Bernanke, they believe they have to heed the consequences of the voters, which is minimal at best.

Yes, minimal, since voters repeatedly reward incumbent politicians in Congress with 85%-to-90% re-election rates, despite voters’ dismal 9%-to-18% approval ratings for Congress.

That’s not likely to change (if ever), until the voters’ negligence finally becomes too painful (which may not be too far away).

David R. Remer wrote: Therefore, they don’t take Bernanke’s warnings seriously as they are unlikely to be the incumbents seeking reelection when those dire negative consequences of inaction come home to plague the nation.

I do not recall STRONG warnings from Bernanke or Greenspan, until it was usually too late.

Their testimonies before Congress are often so cryptic, that one can read just about anything they want into their testimonies.
Perhaps it is because they also don’t want to cause a panic?
Well, perhaps some unavoidable panic is better than a complete melt-down.
Foreclosures climbed for years:

• By year 2005, foreclosures totaled: 846,000


• By year 2006, 1.2 Million foreclosures


• By year 2007: 2.0 Million foreclosures


• By year 2008: about 3.0 Million foreclosures (10,000 per day for AUG-2008)

It seems there should have been a dire warning 3 or 4 years ago that this bubble, combined with National Debt, Nation-wide debt, 2 wars, unfunded entitlements, etc., etc., etc., was a recipe for disaster?

David Walker (former GAO Comptroller) was the only person using STRONG language, and waring of another Great Depression, and he was ridiculed for it by many.

jlw wrote: David, you are getting rather good at attacking the messengers when you don’t like their message.

David R. Remer wrote:/b> jlw, Attack the messenger? No. Attack what the messenger wrote, yes.

Perhaps jlw was referring to these ? If so, it appears there is some substance to jlw’s assertion.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 15, 2008 10:46 AM

d.a.n, considering the number of banks and financial institutions in this country, your list is paltry and incredibly small to support the proposition that the Economic Stabilization Act failed to prevent a meltdown of the banking and financial industry.

You have to exclude the failed bank entries predating Lehman Bros. failing. They are not relevant to the current discussion. Every year witnesses a handful of bank failures, d.a.n, as part of the normal economy. Your list shrinks even more as a result, and in percentage to the total number in the U.S.

But, you probably won’t because you appear to be on a rant throwing out data indiscriminately as if it proves any point at all by volume. Data has to be relevant, d.a.n, which requires research and thought, not copying and pasting.

I am sure glad we agree on more than we disagree on. The volumes that you bring to a disagreement are somewhat overwhelming, and too time consuming to respond to item by item. You would make a formidable filibustering Senator. You would get my vote.

Posted by: David R. Remer at December 15, 2008 01:53 PM

David R. Remer wrote: d.a.n, considering the number of banks and financial institutions in this country, your list is paltry and incredibly small to support the proposition that the Economic Stabilization Act failed to prevent a meltdown of the banking and financial industry.

It has only slowed (delayed) the meltdown.

It’s far from over, because the debt-bubble only got a lot bigger.
The problem just got a lot bigger.

David R. Remer wrote: You have to exclude the failed bank entries predating Lehman Bros. failing. They are not relevant to the current discussion.

Lehman failed on 15-SEP-2008.

However, the list of failed banks was not provided to prove that the Economic Stabilization Act failed to slow the collapse.
The list was provided to demonstrate that banks of all sizes failed, and the losses by little failed banks add up to a lot of losses.
That is, the theory is:

• for a merger of X + Y = Z , if Z fails, the sum losses are the same as the smaller X + Y failing too.

David R. Remer wrote: Every year witnesses a handful of bank failures, d.a.n, as part of the normal economy. Your list shrinks even more as a result, and in percentage to the total number in the U.S.

Yes, some banks fail almost every year.

However, of late, most bank failures (between years 2000-to-2008) happened in late 2007 and throughout year 2008.
And yes, the list is puny compared to the 8,000+ banks and thousands of other financial organizations.
I never meant to imply that most banks were in trouble; only that the size of the banks that failed vary greatly in size, and that the “too big to fail” would instead be “too many to fail”, had the GLB not allowed mergers and combining industries. That is, I think the same total losses would have still occurred, due to the Commodities Futures Modernization Act of year 2000, that paved the way for a significant reduction in transparency and the diverse, tentacled, exotic (by design), complex, and multi-layered derivatives (e.g CDSs, SIVs, ABSs, CDOs, subprime CDOs, squared CDOs, CPDOs, SPVs, VIEs, etc.), and other investment vehicles that vastly reduced transparency and left hurricane victims and other insurance claimants without the ability to identify who they are actually insured by.

David R. Remer wrote: But, you probably won’t because you appear to be on a rant throwing out data indiscriminately as if it proves any point at all by volume. Data has to be relevant, d.a.n, which requires research and thought, not copying and pasting.

A rant?

• DEFINITION: rant
• To speak or write in a angry or violent manner; rave

I’m not angy.

I just think my position has merit, and don’t care to take such positions lightly, because I don’t like turning myself into a pretzel.
If a position is untenable, it’s best not to ever begin down that path.

David R. Remer wrote: … on a rant throwing out data indiscriminately as if it proves any point at all by volume. Data has to be relevant, d.a.n, which requires research and thought, not copying and pasting.

True. I believe the data above is irrelavant?

David R. Remer wrote: But, you probably won’t because you appear to be on a rant throwing out data indiscriminately as if it proves any point at all by volume. Data has to be relevant, d.a.n, which requires research and thought, not copying and pasting.

I don’t mind excluding the banks that failed before or after “Lehman Bros. failing”, since my only point to the list was that the size of the banks that failed vary greatly in size (with regard to the “too big to fail” theory versus the “X + Y = Z” theory in which losses are still about equal).

David R. Remer wrote: I am sure glad we agree on more than we disagree on.

: )

Me too.

David R. Remer wrote: The volumes that you bring to a disagreement are somewhat overwhelming, and too time consuming to respond to item by item.

Sorry, but sometimes it is necessary. Not to overwhelm, but to substantiate a position.

David R. Remer wrote: You would make a formidable filibustering Senator. You would get my vote.

Well, that ain’t gonna happen. I’m not incompetent enough to serve in the U.S. Congress.

David R. Remer wrote: You would get my vote.

Thanks! (I think).

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 15, 2008 06:20 PM

d.a.n said: “It’s far from over, because the debt-bubble only got a lot bigger.
The problem just got a lot bigger.”

There you go with those grand generalizations that are neither relevant nor accurate. Fact, the long term debt problem is getting a whole lot bigger. The short term financial meltdown potential got a whole lot smaller, and is very nearly no longer a threat at all.

Had the financial sector meltdown been allowed to melt down (thereby shaving a couple trillion off the national debt), the long term debt problem would have been made extremely worse by an economy in depression without the means to generate the revenue to support jobs, government operations, home ownership, or even means of transportation for 10’s of millions more formerly middle class Americans newly unemployed.

Your proposed solution of preventing bailouts (increasing national debt) would have brought on the very debt crushing scenario you purport to prevent. Our debt can crush us in the long term by growing too large to support with economic activity generated government revenues, or it can crush us today, by failing to generate the economic activity to make current debt and servicing viable to our creditors.

What we are witnessing is a threading of the needle between immediate foreclosure on the United States government due to the nation plunging into a depression in the immediate term and failing to generate confidence in its lenders to float our debt needs further, and the longer term potential of increasing national debt to the extent that taxpayers can no longer afford to service it.

There are no magic wands to this mess. Every option for reconciling it is going to bear a high price. Budgeting present and future needs to keep the economy from defaulting into depression now, and preventing debt from overrunning future economic capacity to service that debt, is the only route out of this mess.

You may not believe there is a route out of this. But, if your belief is wrong, and America did not try all its options including one or more that would have succeeded, the tragedy would by mythical in proportion. Best to act as if there is a solution than to act suicidally as if there were none.

Obama has spoken a number of times now to the issue of the long term debt accumulation and its dangers going forward and that dealing with it will never cease to be a priority. That is why, as he said yesterday, his plan for the economy is to insure that after Jan. 20, 2009, every effort to shore up the short term economic difficulties must have a long term economic plus side component as well. Not like the Paulson/Bush 700 billion bailout of the financial sector which addressed the short term run on money market funds but squandered future economic return in return for those bailouts.

So far, I have not heard any protests by Democrats in the Congress of Obama’s plan and intentions to infuse liquidity into the current economy to shore up economic activity and consumer activity BY putting people to work building the energy, transportation, and health care infrastructure for a future where the costs of all these will be dramatically lower for consumers because of the investments in the future infrastructure and designs to lower long term costs. Obama is committed as he says to creating manufacturing jobs in America again but, not based on 20th century products, but on 21st century needed products like individual and regional and national energy production from free, and low cost renewable energy sources, and exporting those products and some of that technology in support of jobs creation in America. If his plans succeed in lowering health care costs, energy costs, and increasing American based manufacturing of globally demanded products, we will increase the taxation capacity of the American consumers to service the this newly grown debt and perhaps even reduce the principal in time. It is a plan that has the potential of succeeding. It is a plan heads above anything anyone else has proposed in the halls of our government or the throngs of our politicians. Perhaps that is why he was elected.

His reasoning is sound, rational, and logical. It remains to be seen whether the makeup of the new Congress can, and will, implement such sound, rational, and logical economic planning to deal with short and long term economic conditions including the growth of the national debt.

I say give his plan the enthusiastic support it deserves until a better plan is brought forward. But, that’s me. To go forward without a plan is certain disaster, I think even you would agree.

Posted by: David R. Remer at December 16, 2008 11:44 AM

d.a.n, post script, we agree on the dire circumstances facing our nation. I think we are faced at this moment, with a government out of control and without any plan whatsoever, how to deal with the reality of untenable present and future economic realities.

I guess the only difference between us is in the level of hope that the Obama plan and the new Congressional makeup will bring to the potential of making the Obama plan, or a better one if presented, work. I think there is general agreement that few people in this country have any understanding of how to proceed. Obama does in theory. That is always an excellent place to begin when confronting a challenging situation. Develop a plan with at least the potential of succeeding, and then implement the plan faithfully but retaining agility to adjust and modify as changing and unanticipated conditions and circumstances warrant.

I concede the possibility that our American goose is already cooked. But, only the future, yet unrevealed, can state with any certainty that that is the case. I won’t relinquish the belief that other possibilities could potentially allow us to escape the flames with no more than charred tail feathers. And there is no doubt whatsoever that everyone in America is feeling the proximity of our goose to the fire. There is real potential in this shared experience.

Posted by: David R. Remer at December 16, 2008 11:56 AM

David, some times it may seem like it but, I don’t feel ill will towards those who have hope that Obama can bring about significant change. I just can’t share that hope. I’ve seen to many broken promises, to many lies, to much bad government, to much government for the wealthy to have hope that one man can change that in any significant way.

Our goose isn’t cooked yet but, it is cooking. We can continue on the economic roller coaster through a few more peaks and valleys before our goose is well done.

Change that we can believe in is not the change that could save us. It’s the change we don’t want to believe in, the change that we are fearful of doing that might save us.

I believe that we must challenge and change the capitalist premis that eternal growth through increased population and mass consumptiom or, not just us, but the entire human race is going to be in serious trouble soon.

I know that we are spoiled, I know that this lifestyle has been very good to us and I know that we don’t want to change it but, the warning signs are begining to pile up and if we keep ignoring them, we and the rest of the world are going to be in serious trouble.

This doesn’t mean that we will be doing without or living in poverty. It just means that we have to be a little frugal and build a sustainable economy instead of our roller coaster boom and bust mass consumption economy.

Perhaps Obama would be committing political suicide if he tried to convince us to change our lifestyles. Perhaps that is the kind of political leadership we need.

When corporations are to big to fail, that’s our sign that it is time to break not bail. Because if we don’t break and instead bail, they will own us, lock, stock and barrel.

I participate in discussions not to convince but, only to express myself. I know that I am in the backwater out of the mainstream.

Posted by: jlw at December 17, 2008 07:54 PM

David R. Remer wrote:

• d.a.n said: “It’s far from over, because the debt-bubble only got a lot bigger. The problem just got a lot bigger.”

There you go with those grand generalizations that are neither relevant nor accurate. Fact, the long term debt problem is getting a whole lot bigger. The short term financial meltdown potential got a whole lot smaller, and is very nearly no longer a threat at all.

That’s what I meant.

The long-term debt got bigger. Maybe too big? That remains to be seen, and the math is looking bad (with 95% of all U.S. money in existence being Principal debt).

David R. Remer wrote: Had the financial sector meltdown been allowed to melt down …

Some of the steps were fine (e.g. guaranteeing money market funds, guaranteeing depositors don’t lose money, FDIC, etc.). I’d even gamble on the Big 3 Auto-manufacturers (for national security reasons) if they change management and their products, which lose more market share every year.

David R. Remer wrote: Your proposed solution of preventing bailouts (increasing national debt) would have brought on the very debt crushing scenario you purport to prevent.

I never proposed preventing all bail-outs.

Not all of the measures were bad.

Keeping the banks and money market funds solvent was necessary.

Increasing FDIC limits was OK.

But, is it necessary to bail-out all divisions of these corporations?
Is it necessary to bail-out hedge funds?
Is it necessary to bail-out financial services corporations?
Is it necessary to save some big-money managers from well-deserved oblivion (many still gettting fact salaries and bonuses)?
Is it necessary to keep paying bonuses and multi-million dollar salaries and bonuses to extremely negligent (if not criminal) executive management?
Is it necessary to pay for the bad bets of the so-called experts and wizards of Wall Street?
Will paying for their bad bets make them more brazen in the future since they know that the tax payers is there to bail them out again and again?

The problem is that many of the bail-outs have little (or no) oversight or strings attached, accounting & tracking, and the bail-out mania got out of control, racked up an obscene total of $3.2 Trillion already spent/lent, and an even more obscene total of $8.5 Trillion allocated, and it really appears as though the Treasure, Congress, and Federal Reserve have no clue (evidenced by the surprised, angry, and incredulous looks on their faces when Henry Pauslon and Ben Bernanke came asking for $700 Billion, which was only the tip of the iceberg, as many predicted), precious Trillions were wasted, and its doubtful much of it will ever be recovered by tax payers.
Also, while the federal budget ballooned to $1 Trillion, much more money must have been created out of thin air to pay for $3.2 Trillion (of $8.5 Trillion allocated) already spent/lent.

David R. Remer wrote: What we are witnessing is a threading of the needle …

True. A very tiny needle and a very fat thread.

The worst danger is trying to solve a massive debt problem with more debt, and risking another economic terror: hyperinflation.
They’re going to have to get a lot more creative; something drastic that will stop foreclosures (over 3.0 Million in 2008; 10,000 per day in AUG-2008) and bankruptcies, by letting debtors renegotiate their loans.
If banks will not do it voluntarily, and we can’t force them into it, which not only violates some free market philosophies, but possibly the constitution too, the banks will end up with much worse.
Aside from dishonest loan operators, rampant greed by banks caused a lot of this too.
For example, many home loans became unaffordable due interest rates being jacked by the banks; up so high that monthly payment doubled (or more).
That greed did not result in more profits, but more losses.
Home prices fell 8.4% ($1.9 Trillion of $22.6 Trillion) for year 2008.

I heard a report yesterday that a bank was offerred $650K for a foreclosed home originally bought via a loan for $900K.
The bank didn’t take the 1st offer of $650K, and later ended up selling the house for $450K.
Yikes! ! !
That’s a 50% loss! ! !
They reported that has happened, and still happens a lot, because the bank is too understaffed to attend all of the offers on foreclosures.
Any way, this reveals the obvious flaw of highly leveraged debt-to-reserve ratios (those small reserves disappear with a market correction of only a few percent).
Also, in year 2004, the SEC reduced the leverage constraints of the largest investment banks and which required Bear Stearns or other Wall Street firms to require only a mere 3.3% in reserves!
That’s crazy!
That sort of leveraging is why 95% of all U.S. money in existence is Principal debt.
And all of the debt originated from leveraging of debt -to- 10% reserves from the Federal Reserve.

David R. Remer wrote: Not like the Paulson/Bush 700 billion bailout of the financial sector which addressed the short term run on money market funds but squandered future economic return in return for those bailouts.

Wasn’t Bernake supporting that too? Too much short-term thinking may sabotage long-term solutions.

David R. Remer wrote: … infuse liquidity into the current economy to shore up economic activity and consumer activity BY putting people to work building the energy, transportation, and health care infrastructure for a future where the costs of all these will be dramatically lower for consumers because of the investments in the future infrastructure and designs to lower long term costs.

Those are good ideas, that produce benefits and savings. We need renewable energy, and non-profit health care insurance.

However, we need HUGE cuts in federal government bloat and waste too, to help fund these new programs.
Especially with a $1 Trillion federal deficit.
By the way, GDP has fallen by over $1 Trillion in 2005 Dollars.
It’s important to also look at costs is to also look at it in terms of inflation adjusted dollars (i.e. not only current dollars, which may be signifantly devalued by inflation).
In fact, a dip in GDP of the current magnitude has never occurred since year 1900 (if ever).

David R. Remer wrote: His [Obama] reasoning is sound, rational, and logical. It remains to be seen whether the makeup of the new Congress can, and will, implement such sound, rational, and logical economic planning to deal with short and long term economic conditions including the growth of the national debt.

Maybe. However, Obama said he wasn’t going to second guess the Federal Reserve. Someone needs to question the debt -to- 10% reserve leveraging Ponzi-scheme that got us here.

David R. Remer wrote: I say give his plan the enthusiastic support it deserves until a better plan is brought forward. But, that’s me. To go forward without a plan is certain disaster, I think even you would agree.

There are lots of plans that might mitigate damages and losses, and there are plans that can make a bad situation much worse.

One plan that history has already been proven to not work is trying to spend our way to prosperity.

Federal spending (i.e. many hundreds of billions of tax revenues ($2.5 Trillion in 2007, but lower now)) must be reorganized to cut massive waste and bloat to fund jobs and development that produce benefits, savings, and efficiency.
Government is the biggest employer in the U.S.
That’s a huge problem, and all of that bloat produces little (if anything).
Also, all of the leveraging of tiny reserves has got to stop, which is obvious when considering that 95% of all U.S. money in existence is Principal debt, and still begs the question:

• QUESTION: Where will the money come from to merely pay the Interest on $10.7 Trillion National Debt and $67 Trillion nation-wide Principal debt, much less the money to stop the Principal debt from growing ever larger, when that money does not yet exist as non-debt money?

Do you know how long it would take to pay down so much debt, even if we had the discipline to pay down so much debt?

For example, IF today, with only 1.0% Interest, we had the discipline to start paying $1 Trillion per year on the $67 Trillion of nation-wide debt, it would take 108 years to pay down with an accumulative total Interest cost of an additional: $44 Trillion (in 2008 Dollars). That’s only the Interest, which is over 4 times the $10.15 Trillion M3 Money Supply of year 2005.!

Even at ZERO percent interest, it would take 66 years to pay down the $67 Trillion nation-wide debt.

And none of that even considers the unfunded liabilities of about $53 Trillion for Medicare and Social Security (both now pay-as-you-go; there is no surplus).

That is, something much more drastic is required to stop the debt from growing ever larger, and stop the creation of more debt and risky investments at a high debt-to-reserves ratio.

David R. Remer wrote: d.a.n, post script, we agree on the dire circumstances facing our nation.

Well, I’m not sure.

Do you believe so much debt is really tenable?
I was very doubtful before, but now I’m about 99% certain it is not tenable, without vast changes in the way we create money, debt, jobs, and stop growing the size of government to nightmare proportions.

David R. Remer wrote: I think we are faced at this moment, with a government out of control and without any plan whatsoever, how to deal with the reality of untenable present and future economic realities.

No doubt about that, based on the surprised and dumbfounded looks on the Congress persons’ faces when Paulson and Bernanke were asking for $700 Billion to mitigate a complete economic meltdown (which is only a temporary bandaid).

David R. Remer wrote: I guess the only difference between us is in the level of hope that the Obama plan and the new Congressional makeup will bring to the potential of making the Obama plan, or a better one if presented, work.

I hope too.

But there’s not much to go on yet to justify much optimism, and several things that are concerning.
It seems like Obama or his tentative administration (thus far):

• don’t really understand the math of the debt-bubble, and may try to spend our way to prosperity, which won’t work.


• won’t second guess the Federal Reserve.


• don’t realize the Ponzi-scheme nature of the Federal Reserve and highly leveraged ratio of debt -to- 10% reserves.


• wont’ stop 52 consecutive years of deficit spending.


• may grow the federal government ever larger (of which Obama helped grow with pork-barrel), which isn’t instilling much hope that any significant bloat, overlap, redundancy, and waste will be sufficiently eliminated.


• may abandon leaving Iraq in 18 months?


• may escalate the war in Afghanistan, when many of the terrorists are now in northern Pakistan?


• may delay or abandon reforms of the regressive tax system?


• may ignore history and pass another amnesty (first), like the 1986 shamnesty, which quadrupled the problem from 3-to-4 Million to 12-to-20 Million illegal aliens?

David R. Remer wrote: I concede the possibility that our American goose is already cooked.

Do the math.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

jwl, Thank you for a centric viewpoint!

Posted by: d.a.n at December 17, 2008 08:56 PM

… a principle centric viewpoint.

Posted by: d.a.n at December 17, 2008 09:00 PM

d.a.n, I have done the math and compared it to history. There is a way out of this economic mess without first undergoing an economic collapse. Our national debt ratio to GDP is not yet near as high as that at the end of and post WWII.

Now, we don’t have the untapped capital and human resources today that lay before the nation at the end of WWII, but, then we aren’t yet carrying the the debt load to GDP that we carried at the end of WWII either.

We are, in preventing an economic meltdown today, creating a hyperinflation potential which will begin to threaten our economy at the end of 2009 to mid 2010. But, we are acutely, and the people responsible for fighting that inflation are acutely aware of that consequence to current remedies. Which means than can and will likely move to mitigate those consequences in a balanced fashion which preserves the gains in fighting the recession while mitigating the cost of the inflation to come.

The fact that this is a global circumstance and all competitive nations will be dealing with the same scenario, has a silver lining. Our international competitors will not be able to take as easy advantage of our raising interest rates and increasing wages to fight inflation, because they very likely have to take the same measures in concert with us. This alleviates the pressure on our government to oppose wage increases in order to maintain export competitive positioning, when the economy begins to grow again.

The new administration is committed to lowering the cost of health care, the single largest inflationary threat to our future both in the near and long term future. To the extent we are successful in that area, we can ameliorate the inflationary pressures coming. The coming administration is committed to building an energy infrastructure that in the longer term will be both cheaper to consumers and environmentally more friendly, which too will ameliorate inflationary pressures. The Federal Reserve is poised to NOT maximize and prolong recession fighting measures, instead implementing inflation fighting measures that will slow economic growth recovery, in exchange for preempting some of the inflation consequences of current measures.

I truly believe there is a way through this. I also truly believe that those who will be in power the next couple years are also ACUTELY aware of the challenges and the very narrow path that must be kept to in order to navigate our way through this.

There is no question higher unemployment is going to be with us for years. There is no question that growing numbers will be without homeownership for many, many years to come. There is no question taxes will have to be raised on those who won’t be bankrupted by them. There is no question inflation is going to make workers poorer in terms of purchasing power per dollar earned for at least the next decade.

But, if we are able to fend off years of recession, and prevent hyperinflation from forcing workers to quit their jobs and shutting down the entrepreneurial innovation that will be key to keeping our economy going and competitive in the global marketplace, then we will have been successful as a nation in threading our way out of the current economic crises. And I think such a scenario is entirely plausible and the right people to do this job by and large, are coming into position with a clear understanding of where we are, where we must go, and the extremely limited options for getting there.

The public relations component of this path should not be underestimated. Our president, more than any other spokesperson for the nation, will be charged with the responsibility of keeping hope alive, keeping Americans optimistic that we will succeed in traversing these difficult and belt tightening times, and come out the other side, stronger, more responsible, more accountable, more solidly footed and poised for a far more stable mix of liberty, prosperity, and security than we have experience in the last 8 years and currently.

You may disagree, but, I have for quite some time now, viewed Obama as the person with the communication abilities to carry that public relations responsibility better than any other candidate that considered running in this last election.

Posted by: David R. Remer at December 18, 2008 10:03 AM

d.a.n said: “don’t really understand the math of the debt-bubble, and may try to spend our way to prosperity, which won’t work.”

I disagree. I think they understand it acutely. I think they also understand the reality that if we DO NOT save the economy today, there is no economy to work with tomorrow. Hence, this massive deficit spending to save the economy today, is absolutely warranted. Without it, we as a nation default on our debts TODAY, making moot any discussion of how to deal with the growing national debt several years out.

Killing the patient today to prevent cancer from eating away at the patient tomorrow, is not good medicine, d.a.n. If we were to HOLD the line and not spend one more deficit dollar next year, we would not have any economic future Americans would want to live in. There is no remedying the damage done these last few years without making enormous sacrifices.

Deleveraging, by definition, means everyone who thought they were fairly well off due to the leveraging, must now accept the fact that they are not well off as all the phony wealth is removed from our accounts, and everyone must now learn to accept the fact that they will make less and pay more than they did during the bubble building. There is no getting around this. But, this is far preferable to just allowing the whole economy to default and fail now in the absence of deficit spending.

Your point that this deficit spending portends a threat to our economy down the road is made moot by the fact that if we don’t deficit spend, our economy fails today, nullifying any worthwhile economic future for decades to come.

The attempts made today must be geared to keeping our economy viable going forward (consumption and small businesses and the banking and financial engines that underwrite consumption and small businesses) while making all manner of changes geared to mitigating and lessening the unavoidable inflationary consequences of preventing economic default today.

It ain’t a pretty picture. And we are all going to be rendered less wealthy by it. But, that is no reason to throw up our hands and give up on the effort to keep our economy moving forward supporting a middle class work force and their families while preparing to spend years and decades paying for the costs of the hubris and arrogance of the last 6 years in our financial marketplace.

If every attempt is made to insure that every deficit dollar spent to save the economy from default today, is ALSO a dollar invested in lowering the cost of living, or strengthening our economic infrastructure of the future, and paving the way for new industries and jobs in the future, then I thing Obama is right that this is the way to get through this intact as a nation and as an economically important and capable nation in the future global marketplace.

Posted by: David R. Remer at December 18, 2008 10:23 AM

David R. Remer wrote: d.a.n, I have done the math and compared it to history. There is a way out of this economic mess without first undergoing an economic collapse. Our national debt ratio to GDP is not yet near as high as that at the end of and post WWII. Now, we don’t have the untapped capital and human resources today that lay before the nation at the end of WWII, but, then we aren’t yet carrying the the debt load to GDP that we carried at the end of WWII either.

Actually, the National Debt (usually reported to be about $10.7 Trillion) is larger than ever before, if you include the $12.8 Trillion borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 Million baby-boomer bubble approaching). There is no Interest due on that $12.8 Trillion, but that puts total federal debt up to $23.5 Trillion, which is the largest federal debt ever, both in magnitude and as a percentage of GDP (GDP=$13.86 Trillion in 2007, but will be less in 2008).

Here’s a question.
If the Debt is almost (if not already) too big to ever be tenable, what should we do?
Which is worse:

• a long, deep recession (which is most likely already unavoidable)?


• or a total economic collapse caused by hyperinflation, destroying all savings, pensions, wages, and entitlements, and then followed by a depression?

That’s the two choices I see.

So, regarding the math, do you think enough money can be borrowed and/or created out of thin air to put a dent in that much debt?

Posted by: d.a.n at December 18, 2008 06:09 PM

d.a.n, you can’t compare apples to oranges. Inflating our, this moment, national debt with future unfunded obligations makes an assumption that will likely not be true: Namely that those obligations will be met, or that they won’t be curtailed and reduced in some fashion. The National Debt at the end of WWII did not include future unfunded obligations either.

If you are going to talk debt past and present, you must insure that you are comparing apples and apples. Not apples to oranges.

I agree with you that IF there is no alteration of either revenues or benefits for entitlements going forward, our economy will implode. This is not news. We have known this for more than 20 years now. Which is precisely why such a future course is so unlikely to be followed.

There will be reductions in the obligations. The benefit retirement age is very likely going to rise. The premiums for plan participation are going to rise almost certainly. Attempts to lower the cost of health care delivery and therefore reduce the projected costs of benefits for Medicare or some incarnation which replaces it are on the drawing board of the Obama administration.

This deleveraging process we are now undertaking is going to eventually result in increasing the debt carrying capacity of American citizens beginning in a decade or so, provided the economy avoids collapse between now and 2012 or 2013, the timeline for the full benefits of the stimulus effect of current deficit spending to begin to be felt.

Much will depend upon relative currency valuation, foreign investor confidence, export potential, and driving down the cost of living (and paring back on excessive discretionary spending at the consumer level as well as State and Federal levels.) These are perilous times precisely because the future variables cannot all be known, nor the success of efforts guaranteed.

But if one sees an imminent collision with a mack truck on a slippery highway, one would do well to risk swerving rather than give in to any sense of inevitability regarding certain death by the head on collision.

Decades ago, a friend was working on the brakes of his VW Bug in his backyard after a rain the day before. We were drinking beer and chatting as he worked under neat the rear axle with tire removed. Suddenly the VW’s opposite rear tire began sliding into a depression in the yard tilting the jack with my friend under the brake drum and axle. I took two quick steps to the left and grabbed the bumper and held the VW up high enough for my friend to scramble out from underneath the axle and wheel.

About a year later I tried lifting a rear corner of another VW Bug, and I couldn’t do it. The lesson being, one cannot know what one is capable until one tries, and necessity mandates succeeding in the effort. I remain hopeful that America’s adrenaline is pumping and the emergency nature of our current economic crises will permit Americans to willingly lift and carry their share of the load going forward so that we may all succeed in rescuing ourselves from the arrogance and hubris of our greed filled past.

If the UAW and House Republicans are any indication, we may just be ready to make the needed sacrifices and succeed in this effort. Time will tell!

Posted by: David R. Remer at December 18, 2008 07:57 PM

OK, let’s look at the math a little closer, and omit the $12.8 Trillion borrowed from Social Security.
The U.S. didn’t have the myriad of annual liabilities in 1945 that it has today (see over $3 Trillion of FEDERAL SPENDING: below).
Nation-wide-debt was less than 100% of GDP in year 1950.
Today, nation-wide-debt of $54 Trillion (excluding $12.8 Trillion borrowed from Social Security) is 390% of GDP.

Consider the following …

• [01] Nation-wide debt has never been worse, and has grown from 100% of GDP in year 1956 to 483% of GDP in 2008 (see graph below).


• Total Domestic Financial Sector Debt = $15.8 Trillion


• Total Household Debt = $13.88 Trillion


• Total Business Debt = $10.16 Trillion


• Total Other Private Sector Foreign Debt = $1.8 Trillion


• Total Federal Government National Debt = $10.3 Trillion


• Total State and Local Government Debt = $2.2 Trillion


• __________________________________________________


• Total = $54 Trillion


• Including the $12.8 Trillion borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 million baby boomer bubble approaching,
  the total is $67 Trillion !)


• [02] The nation-wide debt was only 100% of GDP after World War II. Today, the $67 Trillion nation-wide debt is 483% of GDP ($13.86 in 2007).


• [03] 95% of all U.S. money in existence today is Principal Debt. How will we pay the interest on the debt, when the money doesn’t exist?


• [04] The M3 Money Supply grew 7520% from $135 Billion in year 1950 to $10.15 Trillion in year 2005, fueling incessant inflation for 52 consecutive years.


• [05] How can more people more loans be carried when most people are already deep in debt and many are unable to repay the loans they already have?


• [06] How can more loans be carried when most people are already deep in debt and many are unable to repay the loans they already have?


• [07] How can money be removed from ciculation when most of it exists as debt?


• [08] How can people spend more when the U.S. economy is 70% consumer driven.


• [09] The real-estate bubble still exists, with a record 3.0 Million foreclosures in 2008 (up from 2.0 Million in 2007, and 1.2 Million in 2006).


• [10] The decrease in GDP, measured in inflation-adjusted 2005 or 1950 dollars, has never been larger ever since 1900 (or ever?).


• [11] The “10% reserves -to- debt” fractional banking must change, because such steep leveraging help create this huge debt bubble where 95% of all U.S. money in existence is Principal debt. Also, the loan sharking (rates as high as 35%) by the credit card companies has got to stop too.


• [12] The most obvious question which no one seems able or willing to answer is this:
  Where will the money come from to merely pay the Interest on $10.7 Trillion National Debt and $67 Trillion nation-wide Principal debt, much less the money to stop the Principal debt from growing ever larger, when that money does not yet exist? Do you really think we can create and/or borrow enough money to stop the debt bubble from continuing to approach its inevitable collapse? If you’ve done the math, and you understand the Ponzi-scheme / Pyramid-scheme nature of the monetary system, then what makes you believe a massive debt problem can be solved with more debt?

David R. Remer wrote: We are, in preventing an economic meltdown today, creating a hyperinflation potential which will begin to threaten our economy at the end of 2009 to mid 2010.

How do we fight inflation? How do we fight hyperinflation?

How much new money can be created out of thin air without causing hyperinflation?
$5 Trillion?
$10 Trillion?
$20 Trillion?
$30 Trillion?
$54 Trillion?
Ironically, the more money we create, the more worthless each dollar becomes.
It appears $3.2 Trillion of new money has already been created, spent, and lent (in the last 90 days) to banks, coroprations, and Wall Street (equivalent which is $10,491 per person for every one o fthe 305 Million people in the U.S.).
And it may possibly become $8.5 Trillion if all of the money already allocated is spent (which is $27,869 per person).
If the federal government gives everyone $10,000 , it would cost 3.05 Trillion.
Will that save the economy?
I don’t think so.
Why?
Because the average debt per person in the U.S. is $177,049 per person, and the Interest (at only 6.0% interest) per year is $3.24 Trillion per year ($10,623 per person).
With 111,162,259 households (2007 estimate), that’s, on average, $29,146 per household for Interest alone).
The median income (for 2006) was $48,201 (and probably smaller for 2007 and 2008).
What do you think would happen if the federal governemt simply gives every household $10,623 (costing $3.24 Trillion) to merely pay the interest on their debt?
Do you think that would solve the problem, or only delay the inevitable for a while?
Of course, that money would have to be created out of thin air, since no one is likely to loan us $3.24 Trillion (30% more then total annual federal tax revenues in 2007).
Do you think that would cause hyperinflation?

David R. Remer wrote: The fact that this is a global circumstance and all competitive nations will be dealing with the same scenario, has a silver lining. Our international competitors will not be able to take as easy advantage of our raising interest rates and increasing wages to fight inflation, because they very likely have to take the same measures in concert with us. This alleviates the pressure on our government to oppose wage increases in order to maintain export competitive positioning, when the economy begins to grow again.

Many of the other nations are now in worse shape, and much of it is linked to debt pyramids of their own, that started many decades ago. It is interesting that currencies of several nations with larger reserve-to-debt are growing stronger than the U.S. Dollar.

Yes, it is a world-wide problem, since the wide-spread adoption of fiat money systems over a century ago.
If you look at the currencies of the countries with much larger rerserve-to-debt requirements, you’ll see that most of those currencies are experiencing less devaluation than the currencies of fractional banking systems of smaller reserve requirements. This ought to be telling all of us about fractional banking and growing debt bubbles that are unsustainable.

David R. Remer wrote: The new administration is committed to lowering the cost of health care, the single largest inflationary threat to our future both in the near and long term future. To the extent we are successful in that area, we can ameliorate the inflationary pressures coming. The coming administration is committed to building an energy infrastructure that in the longer term will be both cheaper to consumers and environmentally more friendly, which too will ameliorate inflationary pressures. The Federal Reserve is poised to NOT maximize and prolong recession fighting measures, instead implementing inflation fighting measures that will slow economic growth recovery, in exchange for preempting some of the inflation consequences of current measures.

That’s all good, but that won’t be enough.

The nation-wide debt bubble (see below) has to be deflated some way, and we can do it all by creating new money or more borrowing and debt.
How that debt-bubble is unwound is the key to diffusing the debt bubble.
Therefore, making it bigger is NOT the solution.
The federal government is NOT without revenue (i.e. $2.5 Trillion in 2007).
The severely bloated federal government must eliminate waste, spend smarter, and produce more benefits.
That’s going to require cutting all wasteful spending.
The federal government spends a LOT of money that not only produces no benefits, but only losses.
Also, the Federal Reserves 10% reserves-to-debt leveraging has to stop growing the debt bubble ever larger.

David R. Remer wrote: I truly believe there is a way through this.

Me too. However, it doesn’t look like its going to happen if the administration thinks it can spend its way to prosperity.

It had better be thinking about cutting all unnecessary federal spending too, and create useful jobs that create real value.
We can’t all work for the government, and what jobs the government funds need to produce real value and benefits.
Also, the regressive tax system must be changed to make sure the wealthy are (at the very least) paying an equal percentage of total federal taxes as the majority of Americans on gross income.

David R. Remer wrote: I also truly believe that those who will be in power the next couple years are also ACUTELY aware of the challenges and the very narrow path that must be kept to in order to navigate our way through this.

I’m not very optimistic about that.

Even in late 2006, newly appointed Fed Chairman Ben Bernanke professed not to be preoccupied by the housing bubble, saying that high prices were only a reflection of a strong economy.
History will record that the Fed and the SEC did little (or nothing) to prevent the debt-pyramid from reaching the dangerous levels it has now reached and which is now crushing the economy.

When looking at numerous graphs, they show the importance of total nation-wide debt (corporate, financial, government, plus personal) in relation to the economy. In the late 1970s to early 1980s, total nation-wide debt by the fact that this ratio stayed around 1.2 times GDP for decades. Then, something big happened around the late 1970s to early 1980s, and the ratio of Debt-to-GDP started to rise very fast.

• __________ Nation-Wide Debt _____________
• $57.5T |——————————————-
• $55.0T |—————————————-D-(Debt=$54 T)
• $52.5T |—————————————-D-
• $50.0T |—————————————D—
• $47.5T |—————————————D—
• $45.0T |—————————————D—
• $42.5T |————————————-D—-
• $40.0T |————————————-D—-
• $37.5T |————————————D——
• $35.0T |———————————-D——-
• $32.5T |———————————-D——-
• $30.0T |———————————D———
• $27.5T |——————————-D———-
• $25.0T |——————————D————
• $22.5T |—————————-D————-
• $20.0T |—————————D—————
• $17.5T |————————-D—————-
• $15.0T |————————D——————
• $12.5T |——————D:-D—————GGG (GDP=$13.86 Trillion in 2007)
• $10.0T |—————D—:————-G——-
• $07.5T |———-D——-:—-G—————-
• $05.0T |-D———G——:———————-
• $02.5T |-G—————-:———————-
• $00.0T (1956)———-(1982)————(2008) YEAR

That $54 Trillion above does not even include the $12.8 Trillion borrowed from Social Security.

The thing is, until the government understands that the debt-pyramid is doomed if it grows much larger and untenable, it will collapse.
That crushing debt above can’t only stop growing larger, but must be reduced significantly.
This is not like any previous recession.
This is the end stages of a massive nation-wide debt pyramid.
More debt, rampant spending, and more new money created out of thin air won’t fix it, because the amount of money to merely pay the Interest on so much debt is prohibitive. Besides, that much money does not yet exist either, and there’s only one way to get it, which is to borrow and/or create it from thin air, which is a recipe for hyperinflation that will be unavoidable if the new money is also created as debt which merely grows the debt-pyramid bigger.

Greenspan said: “This is increasingly looking as though it is a once in 100 year phenomonon”.
HMMmmmmmmm … Looking at the debt bubble growing above, how could anyone not see it coming a long time ago?
Why didn’t anyone see this coming (with the exception of David Walker)?

David R. Remer wrote: There is no question higher unemployment is going to be with us for years. There is no question that growing numbers will be without homeownership for many, many years to come. There is no question taxes will have to be raised on those who won’t be bankrupted by them. There is no question inflation is going to make workers poorer in terms of purchasing power per dollar earned for at least the next decade.

No doubt about that.

David R. Remer wrote: But, if we are able to fend off years of recession, …

It is very unlikely we will avoid a deep recession that lasts several years.

There will most likely be a deep recession even if we do everything right.
If we grow the debt pyramid above larger, the inevitiable collapse will be much worse and much sooner.

David R. Remer wrote: But, if we are able to fend off years of recession, and prevent hyperinflation from forcing workers to quit their jobs and shutting down the entrepreneurial innovation that will be key to keeping our economy going and competitive in the global marketplace, then we will have been successful as a nation in threading our way out of the current economic crises. And I think such a scenario is entirely plausible and the right people to do this job by and large, are coming into position with a clear understanding of where we are, where we must go, and the extremely limited options for getting there.

Well, I say there’s a 50%/50% chance we’ll make it worse by believing the massive debt bubble problem can be solved by making it bigger (and possibly untenable).

David R. Remer wrote: You may disagree, but, I have for quite some time now, viewed Obama as the person with the communication abilities to carry that public relations responsibility better than any other candidate that considered running in this last election.

No, I don’t disagree with his communication and speaking skills. He’s good at that. No doubt about it.

David R. Remer wrote:

• d.a.n said: “don’t really understand the math of the debt-bubble, and may try to spend our way to prosperity, which won’t work.”

I disagree. I think they understand it acutely. I think they also understand the reality that if we DO NOT save the economy today, there is no economy to work with tomorrow. Hence, this massive deficit spending to save the economy today, is absolutely warranted. Without it, we as a nation default on our debts TODAY, making moot any discussion of how to deal with the growing national debt several years out.

If we try to spend our way to properity, it will fail miserably.

That may have been the prescription for past recessions, but not this one, which will make the debt untenable.
The U.S. has already been deficit spending for 52 consecutive years.

The federal government must drastically change how it spends, so that it can produce more benefits and productive jobs.
There is massive dead-weight and bloat in the federal government that must go, to make way for more productive programs.
If the majority of spending comes from new money created from thin air, or more borrowing, it will make the debt pyramid bigger.
Remember, much of the federal governments $2.5 Trillion is already allocated (which some may require cuts).

________________FEDERAL SPENDING:_____________________
Here’s only a portion of the spending for year 2008 …

$700 Billion for Health and Human Services (including $432 Billion for Medicare)

$660 Billion for Social Security

$640 Billion for Department of Defense

$100 Billion for Department of Education

$100 Billion for Department of Agriculture

$85 Billion for Veteran Affairs

$75 Billion for Homeland Security

$56 Billion for Department of Transporation

$50 Billion for Housing and Urban Development (HUD)

$60 Billion for Office of Personnel Management

$550 Billion for Treasury Department (including $430 Billion for Interest on the National Debt).

____________________________________________________________________
$3.074 Trillion ($574 Billion over total revenues of $2.5 Trillion)

And we now know that the 2008 spending created a $1.0 Trillion deficit!

Anyway, I don’t think anyone yet appreciates the severity of the debt-bubble (both federal and nation-wide).
That is, there is a point where the debt is so large, that creates pressure for more borrowing and creation of new money, which finally creates unavoidable hyperinflation, and brings about a total economic collapse. That is, once hyperinflation talks hold, there may be no stopping it.

David R. Remer wrote: Killing the patient today to prevent cancer from eating away at the patient tomorrow, is not good medicine, d.a.n. If we were to HOLD the line and not spend one more deficit dollar next year, we would not have any economic future Americans would want to live in. There is no remedying the damage done these last few years without making enormous sacrifices.

Changing burnt-out light bulbs while the ship is sinking is even worse, which risks drowning and killing everyone.

The seriousness of the debt is so bad, growing it any bigger is a very BAD idea.
The federal government ALREADY receives $2.5 Trillion (i.e. 2007) in tax revenues, and needs to quickly start spending it MUCH more wisely.
Also, banking reform is badly needed, because too much money exists as debt, which is a scheme that is doomed to fail, and grows the debt bubble ever larger.
And the SEC is a joke; especially when some crook (Bernard Madoff) can run a $50 Billion dollar Ponzi-scheme for almost a decade.
Madoff’s name (pronounced Made-Off) is very apropos, seeing how he made-off with $50 Billion, of which $10 Million was used to post bail.

David R. Remer wrote: Deleveraging, by definition, means everyone who thought they were fairly well off due to the leveraging, must now accept the fact that they are not well off as all the phony wealth is removed from our accounts, and everyone must now learn to accept the fact that they will make less and pay more than they did during the bubble building. There is no getting around this. But, this is far preferable to just allowing the whole economy to default and fail now in the absence of deficit spending.

I can and should be done without deficit spending, because the debt is already near (if not already totally) untenable.

David R. Remer wrote: Your point that this deficit spending portends a threat to our economy down the road is made moot by the fact that if we don’t deficit spend, our economy fails today, nullifying any worthwhile economic future for decades to come.

It’s not a moot point, if the additional debt makes the debt untenable, and leads to a much worse economic collapse.

What happens when we can’t even service the Interest on the debt?
We are already borrowing and creating new money to merely pay the $432 Billion in Interest on the $10.7 Trillion National Debt.
What do you think the Interest is per year on $54-to-$67 Trillion of nation-wide debt?

This is what I mean by not understanding the magnitude of the debt problem.
There is a point where it is SO big, it becomes untenable.

David R. Remer wrote: The attempts made today must be geared to keeping our economy viable going forward (consumption and small businesses and the banking and financial engines that underwrite consumption and small businesses) while making all manner of changes geared to mitigating and lessening the unavoidable inflationary consequences of preventing economic default today.

I agree, and growing the debt bigger is not a good idea, and only so much new money can be created out of thin air to fuel an economy that is 70% consumer driven.

David R. Remer wrote: It ain’t a pretty picture. And we are all going to be rendered less wealthy by it. But, that is no reason to throw up our hands and give up on the effort to keep our economy moving forward supporting a middle class work force and their families while preparing to spend years and decades paying for the costs of the hubris and arrogance of the last 6 [30+] years in our financial marketplace.

I do not recommended giving up.

I simply do not believe creating new money or more debt will do anything but make the problem worse.
More responsible federal spending and not growing the debt pyramid is not giving up.
There was a time when some people considered that to be fiscally responsible.

David R. Remer wrote: If every attempt is made to insure that every deficit dollar spent to save the economy from default today, is ALSO a dollar invested in lowering the cost of living, or strengthening our economic infrastructure of the future, and paving the way for new industries and jobs in the future, then I thing Obama is right that this is the way to get through this intact as a nation and as an economically important and capable nation in the future global marketplace.

I think more deficit spending will guarantee the collapse of the debt pyramid.

Shifts in spending are needed to spend $2.5 Trillion of total annual federal revenues smarter.
Deficit spending may have worked at one time, but there is a point where it makes things worse.
I think the debt is already too big to grow any bigger, and remain tenable, without becoming more dangerous than a deep recession, because:

• The economic situation is still worsening, and will get much worse, depending on what we do.


• The U.S. credit markets are still somewhat frozen, and some of that may be a good thing; however, part of the problem is too many people already deep in debt;


• Leading economic indicators for the U.S. economy are falling;


• Consumer confidence sentiment is falling as mortgage equity withdrawals are drying up;


• Unemployment numbers are rising;


• The January 2008 report on the U.S. service economy indicates that it contracted early in the year for the first time in 58 months;


• There are still about 10,000 foreclosures per day;


• The decrease in GDP (in 2005 and 1950 inflation adjusted dollars) is the largest since 1900 (if not ever);


• Banks have to place larger and larger subprime losses on their balance sheets, thus undermining their capital bases and bringing many of them to the brink of insolvency;


• The credit-ratings agencies are questionable;


• Bond guarantee insurance companies are in the process of loosing their triple-A ratings and some are on the brink of bankruptcy;


• The $2.6 trillion municipal bond market is about to take a nose dive;


• The more than a Trillion dollar market for mortgage- and debt-backed securities could collapse completely if the largest American mortgage insurers continue to suffer crippling losses;


• Large hedge funds are losing money on a high scale and they are suffering from a run on their assets;


• In the U.S., total debt as a percentage of GDP is at record 483%;


• The U.S. economy is 70% consumer driven, and most Americans are tapped out, and 95% of all U.S. money in existence is Principal Debt;


• The worldwide Hundreds+ Trillion dollar derivatives market could implode anytime, if too many financial institutions go under during the coming months.

Therefore, I think trying to prop up the debt pyramid with more borrowing, more deficit spending, and creating more new money will make a bad situation much worse.

We know the money being spent now can not all be borrowed, and much of it is being created out of thin air.
The same goes for plans for new spending which will be in the trillions (or tens of trillions).
The fact remains, the amount of money simply required to pay the Interest is crushing us, and the amount of money to put a dent in it would most certainly cause hyperinflation, which is a worse economic terror than a recession.
The entire nation needs to think in terms of sustainability and reducing debt, creating jobs that produce real value, savings, and efficiency.
Millions of do-nothing jobs in the severely bloated government (the biggest employer in the nation) need to be replaced with jobs that produce real value, savings, and efficiency.
We also need to leave and/or scale down operations in Iraq and Afghanistan.
There are many things that need to be done (or stopped).
Will Congress and the next administration have the discipline and strength do them?
Otherwise, much of the nation-wide debt will reset the hard way with massive nation-wide foreclosures and bankruptcies.

Of course, we will probably still disagree, but the math about does not make me believe that a massive debt problem can be solved with more debt and new money created out of thin air.
No one deep in debt has ever spent their way to prosperity.
Especially when the money being spent continues to be spent so foolishly.
And even though the government can create new money from thin air, history has already proven that doesn’t work either, because ever new dollar created decreases the value of all existing dollars.
More inflation only leads to more economic instability.
More inflation leads to more spending, because no one wants to hold on to money that will be worth less tomorrow.
Voo-doo economics and magic money printing machines not only doesn’t work, but makes things worse.

I don’t recommend giving up.
However, there is good reason to be skeptical about whether Congress and the administration get it, and will be disciplined enough to do what needs to be done as soon as possible.
Obviously, the current 110th Congress and the current administration have demonstrated they haven’t a clue nor the discipline needed, because one didn’t have to be clairvoyant to see this economic mess approaching.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 19, 2008 01:09 PM

d.a.n said: “Nation-wide-debt was less than 100% of GDP in year 1950.
Today, nation-wide-debt of $54 Trillion (excluding $12.8 Trillion borrowed from Social Security) is 390% of GDP.”

Irrelevant, d.a.n. Including future obligations which can be reversed, reformed, modified, etc. is irrelevant in assessing the past to the present. Because the past future obligations are known by history, but, today’s future obligations have not been met, reversed, modified, etc. and therefore, remain an unknown. Apples and apples are the only way to compare past and present.

You cannot rationally compare past and future with any reliability because the future is malleable, unreliable, and very often unpredictable.

The Social Security unfunded mandate is largely taken care of by two potential acts of government, raising the eligibility age, and eliminating the caps on income to which contributions apply. Suddenly, with those two measures the shortfall on S.S. is cut 3/4. The other 4th can be taken care of by a very small increase in SS payroll deductions, hardly noticeable on a month to month basis.

Medicare is the great unfunded mandate that poses the greatest threat to future debt crushing our economic future. And yes, we agree with had vast untapped labor and innovative resources then, and not so now in our future. That and the finding ways to lower the overall cost of health care and remove the uncompetitive disadvantage to our businesses now underwriting employee health care, are the challenges to be hurdled.

Obama is putting in place a path toward reliving business of their health care obligations which in turn can and will make our businesses more globally competitive and improve our export market share and attending job creation, thus offsetting government health care costs with rising productivity and economic activity resulting from business being relieved of the health care costs in their operating expenses.

There are other avenues to take to lower health care costs, which I have mentioned before like the government affording preferences to non-profit health care deliverers, incentivizing more for profits to become non-profit. I don’t know if that is on the Obama agenda, but, I am sure comparable parallel thinking will be forthcoming from the Obama administration.

Absolutely right this past Congress and president hadn’t a clue, despite the fact a great many were throwing warnings at them left and right. They simply were tin eared to information that may dampen their agenda of rewarding their campaign contributors and special interest lobbyists.

We have reason to hope that will not continue as much going forward.

Posted by: David R. Remer at December 19, 2008 05:46 PM

Irrelevant, d.a.n. Including future obligations which can be reversed, reformed, modified, etc. is irrelevant in assessing the past to the present.

“future obligations”?

The $54 Trillion nation-wide debt (see below) is CURRENT Principal debt; Not “future” debt or an unfunded liabilities.

The “future” debt includes Interest too, which could be several times more than the original $54 Trillion of nation-wide debt.

The $12.8 Trillion Trillion borrowed from Social Security is actually CURRENT debt too, but there is no direct Interest on it (unless more borrowing and Interest is indirectly resulting from the missing $12.8 Trillion borrowed from Social Security), and the money will have to come from somewhere.

The $54 Trillion of nation-wide debt includes all nation-wide debt (government debt, private debt, debt owed to foreign nations), except the $12.8 Trillion borrowed from Social Security over the last 50+ years:

• Nation-wide debt of $54 Trillion has never been worse, and has grown from 100% of GDP in year 1956 to 390% of the 2007 GDP of 13.86 Trillion.


• Total Domestic Financial Sector Debt = $15.8 Trillion


• Total Household Debt = $13.88 Trillion


• Total Business Debt = $10.16 Trillion


• Total Other Private Sector Foreign Debt = $1.8 Trillion


• Total Federal Government National Debt = $10.7 Trillion


• Total State and Local Government Debt = $2.2 Trillion


• __________________________________________________


• Total = $54 Trillion


• Including the $12.8 Trillion borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 million baby boomer bubble approaching, the total is $67 Trillion!)

CURRENT $54 Trillion nation-wide debt is relevant when it would cost at least $2.6 Trillion per year at only an average 4.0% interest rate ($8,525 per year per person only for Interest alone on the current $54 Trillion nation-wide debt).

CURRENT $10.7 Trillion National Debt is relevant when it is costing $430 Billion per year (17.2% of all $2.5 Trillion in tax revenues for 2007).

I don’t think we can afford to create more debt or new money without debauching the currency with double or triple digit inflation, because:

• No one yet has yet revealed where the money will come from to merely pay the Interest on so much debt, much less the money to stop the Principal from growing larger, when that money does not yet exist.


• 95% of all U.S. money in existence is debt, and the $54-to-$67 Trillion nation-wide debt has grown from 100% of GDP in 1956 to 390%-to-483% of the $13.86 Trillion GDP (of year 2007), and if the Ponzi-scheme monetary system isn’t reformed, futile attempts to stop the collapse of the debt pyramid will make things worse, and easy-credit and the massive debt bubble will continue to grow out-of-control.


• No one and no nation so deep in debt has ever spent or borrowed their way to prosperity, but many have tried it and totally crashed their economies, and it appears we are going to do it again.


• No one has explained how deficit spending can continue (e.g. federal spending for 2008), with total federal tax revenues of about $2.5 Trillion (or less with rising unemployment), and the total nation’s GDP (which GDP was $13.86 Trillion for year 2007, but is falling), and demonstrate in any credible way how we can (a)borrow and/or (b)create new money to stop the massive debt bubble from growing ever.


• This much debt is not tenable, when the Interest alone is untenable, and the debt problem is not only $10.7 Trillion federal debt, but $43.3 Trillion of massive non-federal debt, and $12.8 Trillion borrowed from Social Security ($67 Trillion combined; a average of $219,672 per person for all 305 Million Americans).


• For the total CURRENT federal National Debt is $10.7 Trillion National Debt, the Interest on it (at only a 4.0% Interest rate) is over $430 Billion ($429.98 Billion for year 2007), which would take 117 years to pay down the $10.7 Trillion if we paid at least $36 Billion per month ($432 Billion per year) to stop the Principal $10.7 Trillion National Debt from growing ever larger.


• There is no direct Interest on the $12.8 Trillion borrowed from Social Security, which left Social Security pay-as-you-go, but since it is pay-as-you-go, it currently costs $660 Billion for Social Security per year. That is also exacerbated by an approaching 77 Million baby boomer bubble that is growing larger every day.


• Medicare costs over $432 Billion per year, and other Health and Human Services cost another $268 Billion per year (for a total of $700 Billion per year).


• The future obligations for the next few decades, according to I.O.U.S.A - The movie (with David Walker, former GAO Comptroller: www.iousathemovie.com), is another $53 Trillion for ONLY the federal obligations. That also does not mean the obligations end or that the debt is gone after a few decades.


• Look carefully at the total nation-wide debt. The future obligations for total the $54 Trillion nation-wide debt is estimated to be $170.2 Trillion ($558,032 per person for 305 Million U.S. population). But that $170.2 Trillion is a VERY conservative estimate, because even at a mere 1.0% Interest, it would take 220 years of $50 Billion monthly payments ($600 Billion per year) and $84 Trillion in Interest alone to pay off $54 Trillion of nation-wide debt (for a combined future cost of $138 Trillion dollars over 220 years).


• Even if Social Security ($660 Billion) and Medicare ($432) were totally eliminated, it means the government would have still have to borrow or create new money new to meet 2008 spending of over $3.5+ Trillion (with a $1 Trillion deficit for 2008, and tax revenues are falling sharply in 2008 and probaby will also fall in year 2009, and perhaps longer).


• The “future” federal government debt is relevant; especially when $1.79 Trillion is already used for Social Security, Medicare, Medicaid, welfare, other Human and Health Services, and Interest on the $10.7 Trillion debt (which is 72% of all $2.5 Trillion federal tax revenues, only leaving $710 Billion for everything else), and cuts in spending won’t be easy or painless (if even possible, in view of 52 consecutive years of deficit spending).


• If the federal government and Federal Reserve try to borrow and create tens of trillions of new money out of thin air, it will almost certainly result in hyperinflation, because other nations have already tried that and it not only does not work, but makes everything worse.


• A non-profit national health insurance system is a good idea (if not mismanaged or turned into another Ponzi-scheme like the Social Security system), but it won’t put but a tiny dent in the debt problem, and it is not likely to come about anytime soon.


• Federal tax revenues are falling as unemployment rises, personal savings have been negative since year 2005, and foreclosures are still at record levels (10,000 per day in AUG-2008), there’s about $900 Billion of credit card debt (about $8000 per household), and GDP has decreased by a historic amount since JAN-2007, when measured in 2005 or 1950 inflation adjusted dollars: One-Simple-Idea.com/Recession2008.htm


• Federal debt is still rising to record levels and velocity, with a record $1+ Trillion federal deficit for 2008; in the last 90 days, $3.2 Trillion of $8.5 Trillion of more debt and/or new money allocated for bail-outs has already been spent or lent: www.latimes.com/news/printedition/front/la-113008-fi-pricetag-g,0,5292528.graphic?


• Unavoidable hyperinflation followed by deflation and another depression is highly probable, unless there is also wide-spread cuts of ALL unnecessary federal spending, and steps are not taken that create fair taxation, leave Iraq, leave Afghanistan, and produce productive and efficient jobs that produce real value, cost benefits, and stop the deficit spending now, which is costing $430 Billion per year in interest alone.

And the massive bail-outs thus far are only bought a short reprieve.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 20, 2008 03:56 PM