Some needs to take an x-ray of John Boehner’s back because I think he is missing a crucial component of his skeletal structure.
Ever since the Tea Party deviated from their grassroots libertarian origin and re-branded themselves as radical neoconservatives lunatics, I’ve lost a humongous amount of respect for their movement. However, at least one of these lunatics is still intelligent enough to articulate their position on the debt ceiling “crisis” by presenting a solid and logical argument, and not just repeating the same old anti-government rhetoric. Its a damn good article that I think every American should read.
So last night at approximately 9pm my viewing of Two and a Half Men was rudely interrupted by two of the biggest idiots in Washington. Obama came on television to appeal to the American public to pressure their congressmen to vote on the Democrats’ debt ceiling bill that would raise taxes today and promise to cut spending somewhere down the line (they promised to cut spending last time, and the time before that, yet we are in this situation now). Obama warned about how America would default on debt obligations on 12:01 AM August 3, 2011 if we don’t raise the debt ceiling. Markets would go into chaos, the economy will collapse, social security checks wouldn’t get mailed out and all hell would break lose thanks to Republicans. This is of course a blatant lie that I addressed in my previous post here.
John Boehner’s address came shortly after Obama’s and it wasn’t any different from the President’s. He also played the same blame game insisting that a bill (Cut, Cap & Balance Act) was already passed in House and Senate Democrats are delaying the process. He claimed that the President wanted a blank check six months ago and he still wants one today (which is true to be honest).
However neither Obama nor Boehner touched the real issue underlying the debate ceiling debate, and that’s whether America should default on debt today or delay it until tomorrow. We have known for years that social security is going bankrupt yet neither party has taken any serious steps to address the issue. The problem with trying to reform Social Security is that such a large portion of the voting population has grown so dependent on entitlements that to even suggest any form of spending cuts to Social Security would be political suicide. With the debt-to-GDP ratio currently at 98.6% and continuing to rise at some point we have to accept that America is insolvent. If we continue down this road of a society financed by debt and wars default is inevitable. So the real question behind this debt ceiling debate is whether to raise the ceiling and default on debt tomorrow, or not raise the ceiling and default on debt today. I say its time we address our problems and stop putting them off until tomorrow.
Yet the media keeps telling us lies about how Republicans are playing a dangerous game and America is going to explode on August 2 if we dont sink ourselves deeper in debt.
Interesting chart complied by our good friend Jay Cost at The Weekly Standard.
For those of you not blessed with the mathematical insight to comprehend what this chart is saying there is a simplified version down below.
However we do live in a democracy, so I suppose the needs of the many outweighs the needs of the few. Carry on folks!
I don’t understand why environmentalists, animal rights groups and other Karl Marx quoting tree-hugging liberals aren’t protesting outside the Federal Reserve.
Ever since the Nixion shock, money supply has been steadily increasing over the years. Right before the Great Recession began the monetary base was hovering just over the $800 billion mark. However, since the recession the Fed has pursued an aggressive expansionary monetary policy which has brought the total monetary base to just under $2800 billion. That’s approximately a 300% increase in money supply (minus international reserves) all in the space of 3 years. Do you have any idea how many trees they have to chop down to print all this money?! Think of how many squirrels and birds are now homeless because of the Fed’s blatant disregard for wild life! #EndTheFed
So this morning I was going about my daily morning routine which involves me waking up to post-workout muscle sores and having to stomach 12 oz of protein shake while searching the web for unbiased news and I came across something extremely startling, the US dollar index declined! Well to be honest it wasn’t exactly startling since the Fed just got done pumping $600 billion into the economy a week ago via quantitative easing (sounds fancy huh? Its actually French for printing press), and we all know the age old law of demand and supply. In any case, inflation doesn’t matter since our good friend William Phillips demonstrated that there was an inverse relationship between inflation and unemployment. However…alas! Unemployment also spiked during the same period! How can this be? The Fed had predicted that unemployment would decrease!
Lets take a quick look at these charts to understand our predicament.
Like any good economist, let me “adjust” for those pesky outliers that threaten to undermine my theory and credibility.
As we can see, during 2009-2010 there was actually an inverse relationship between inflation and unemployment (ignoring one or two momentary spikes and focusing on the overall trend), however since the start of 2011 both inflation and unemployment has been on the rise. This brings us back to the glory days of the wise Milton Friedman who demonstrated that the trade-off between inflation and unemployment was merely a short-term phenomena and in the long run you if you continue an expansionary monetary policy with the goal of targeting full employment we are all f*cked. Even though Bernanke’s second round of quantitative easing (aka QE2) just ended last week the latest statistics have already triggered speculation of a possible QE3. This is absolutely utter madness. The interest rates have been at 0% for almost 3 years and The Fed has already reached their Treasury Bond debt limit and its become obvious that their expansionary policy is not working. The Fed isn’t targeting full employment, their goal is simply to re-inflate the asset bubble and bring back the illusion of prosperity long enough for Obummer to get re-elected. In other words they are just repeating what got us into this mess in the first place. One might point out that a contraction in the money supply would be disastrous as we have seen it happen with Paul Volcker buts lets be honest with ourselves, savings are down, we have a trade deficit, kids are going to college and graduating with degrees in Philosophy and Gender Studies (hence lack of production), a recession is inevitable. Its time we confront our problems now instead of delaying them for the next generation.