Economics 301

Let’s review together the status of the economic catastrophe in America. I wrote this in frustration, off the top of my head, so go ahead and point out any disagreements. Even if it is just a one liner…no problem. We won’t get anywhere if we all just wring our hands, isolate ourselves from these problems and let this keep going like this. We all need to get informed about what is going on and do things to regain control of our country.

America was the country of the people, by the people and for the people. That is ancient history with these boondoggles going on.

Where is Ben Bernanke, alleged student of the great depression of 1929 – 1933?

Give me a break. His Federal Reserve guarantees that we will not have another depression by the very design of the Federal Reserve. Did you also know that the Great Depression was in large part caused by massive crop failures, not the economy per se? I could run the Fed and prevent a Depression, but I wouldn’t be working on that so much. First, I would count up the gold at Ft. Knox, etc. and go get it all that is missing, or misplaced shall we say. Then I would reestablish a monetary standard. Inflation from overprinting currency that is no longer based on any standard is killing us. It soothes the short term pain and causes a real bad day of reckoning. To think that Bozo Bernanke actually printed up another $.8B or so to fight DEFLATION should land him in jail. That is truly criminally evil, and only an insanity plea would keep him out of jail. Of course, he would end up in an asylum. I can’t believe he got away with that one!

The Fed

The Fed (Federal Reserve) is a group of bankers, who are never named. I wonder why we do not know who the bankers are who ran off with all our gold in the recovery from the Great Depression? I suspect that you will find Rockefellers, Morgans, Rothchilds, Mellons, and their buddies there.

Why have we had no depression since 1933?

Just for emphasis, the Fed can print money at will. If they print more, you get more. Then you can spend more which gets into someone else’s hands to spend more, etc. That is one of two parts of how you end or prevent a depression or recession. Previously, American manufacturers could manufacture our way out of a recession, and that second part is no longer available to us. The government got the credit for GE and GM ending prior downturns. All we have now is gee whiz…

So, why is all this so bad?

There are three horrors in the American economy – inflation, underemployment and no significant manufacturing.

Inflation is far worse than the numbers would show. The reason is that it is always cumulative and getting worse. Take 5% a year for just 30 years. What does it yield? If you think your retirement needs are $500,000, thirty years later, your needs are $2,058,068. A dollar loaf of bread costs $4.12 in 30 years at 5% inflation. A ton of deflation is just what the country needs, and Bernanke goes and fights against it.

Employment lies, called the unemployment reports

Fifty-four percent of employed Americans plan to look for a new job once the economy rebounds, according to a survey from Adecco Group North America. Add that to the 9.8% unemployment rate. The sentiment is even stronger among younger workers. Of those ages 18-29, 71% say they are likely to look for new jobs once the economy turns around, the survey said.

Over 1.5 million Americans are no longer counted as unemployed, because they got so frustrated that they just quit looking for a job. I’d say that about 200,000 people are added to the employed number in the monthly reports due to “statistical sampling”.

Part time workers have doubled to nearly 10 million. Yeah, they are really happy, huh?

• Companies are asking employees to take unpaid leave.
• Part-time employment has doubled to 9 million.
• The work week is almost an hour shorter than when the recession began.
• The number of long-term unemployed (4.4 million) is at an all-time high.
• There were no wage gains in almost e4very monthly report during this depression.
• The goods-producing sector loses about 200,000 jobs a month.
• When business picks up, businesses will just add hours to existing workers, rather than create new jobs.

So why is manufacturing so important?

High level manufacturing workers were our biggest spenders before America lost those jobs. They spent at places where those workers are some big spenders, too. Therein lies one of many reasons the “bailouts” were a scam. Do you think the Wall St. fat cats, who benefitted, spend like Sarah Pallin’s Joe Lunchbucket or was it Joe Sixpack? Give me a break, was that really the highlight of the presidential race. I’m afraid so. We might as well elect Sarah. At least, she does not try to look “presidential”. Obama was a “shoe in” from the onset. The Republicans had blown any chance of credibility (even with its own constituents) by out of control spending during Bush’s entire administration.

It is the economic multiplier of money that is used by economists to put tough times behind us. Do not ever feed the fat cats, but that is sadly always who gets fed by the government. They just save it in their IRAs, 401Ks and tax shelters. Sadly, feeding the poor is also not as beneficial to the economy as giving to the middle class. We have manufactured our way out of every major recession for decades. Sadly, a war is the best way to end a recession economically; and that is more true now than ever, since we no longer have companies manufacturing here. That is the opposite of what I feel needs to be done, but this is a macro economics article, not a note on the ethics of war. Please don’t tell me that you really feel that we are fighting in the middle east to protect us…oh go ahead. That would make an interesting discussion, I guess.

The mortgage bubble myth

This one just blows my mind. Is it really possible that the American people did not know that this was coming? Did people really not see that loans were given too freely and housing prices were escalating too fast? This was all over the news for the past two years before the bubble burst. Passing around the loss of the Wall St. biggies is hardly helping anyone who is behind on their mortgage or already defaulted. That is the real crime in this, that banks just took their $780B bailout funds and invested them in Wall St, not Main St.

Loans actually became much harder to get after the bailout as you know, and many people lost everything. If people had been vigilant to the insanity of the housing bubble and the market bubble, they could be saving that to buy when they were really ready. That is an oversimplification, but again, we are talking macroeconomics, so these are the big picture items, not someone or another’s individual circumstances.

Oh, and then there is the deficit problem, too

Pelosi and Co. DEFICIT spent $10,429 per person in the 111th Congress (2009 – 2010). Wow, no progress occurred. Unemployment did not drop (9.7% to start/9.8% to end). Foreclosures did not lessen. The wars only escalated in number. Obviously, if they just gave every American that $10K+, the economy would have come roaring back. Now, every American owes $45,000 in total government induced debt. They think you are stupid.

During the Rep. Nancy Pelosi’s (D-Calif.) tenure as speaker, which commenced on Jan. 4, 2007, the federal government ran up $5.177 trillion in new debt. That is about equal to the total debt the federal government accumulated in the first 220 years of the nation’s existence.

In her inaugural address as speaker, Pelosi vowed that Congress would engage in no new deficit spending. “After years of historic deficits, this 110th Congress will commit itself to a higher standard: Pay as you go, no new deficit spending,” she said in an address from the speaker’s podium. “Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt.”

Were the Republicans or the Democrats at fault?

Both, but… you and I are really at fault. We did not listen to our forefathers. They told us to distrust government. Ron Paul was the man for the job this four years and he would be best for the next term. Now, we must really redouble our efforts to get our country back. The efforts we put forth to crush the bailouts were right on, but the government gave us the finger and stole more from our grandchildren anyway. A Senator from Michigan said that 99% of the calls she got were against the bailout. We got screwed.

What played the biggest part in this happening?

We have lost our ability to work our way out of this tough time. We have always manufactured our way out, but we have cheerfully given those jobs away. Isolation policies do not work, especially when you owe so much money to other countries, like China.

We bought foreign products when it was to our collective detriment. If you bought a foreign car in the 70s and 80’s, you are a cause of this. Did you know your Toyota was cheaper here than in Japan, as was your Honda or your Mazda or your Datsun (now Nissan)? So, I am wrong that you were just making a smart decision, huh? I agree, but you still are a cause of this. The balance of trade was absurd. We bought their goods that they heavily subsidized, and they put tariffs on ours. Our parents and grandparents knew better. They bought American cars.

How could that happen? How could they build a car there, ship it all the way over here, and it was cheaper? The Japanese government subsidized the prices with government money (money taken from their people through taxes) to take over the largest markets in the world, all American markets. They probably did the same in computers, but I do not know for sure like I do with cars. Either way, they took over the electronics market in America. Japan attacked us, remember – Pearl Harbor? We rebuilt them, and they beat us in a cold war. Thousands of really great jobs are gone. Those were the best manufacturing jobs in the world. They are not so great abroad, since government and unions regulated the daylights out of those jobs here. American companies manufacture abroad, now too. Businesses are not fools. They will cut costs, no problem for them if we just sit idly by.

What will happen now?

Things may look like they are getting better with this status quo for a short while. Remember that after the Great Depression, things looked like they were getting better the next year in 1930. Then, three more bad years ensued. A decade of pain followed. There is no comparison between how much worse we are doing today than we were doing then. That $14T debt must get paid, sooner or later. Like any other debt, it is best to make every effort to pay it off ASAP.

Left as the status quo, we will not be able to remain the #1 country in the world. There are several reasons.

First, we will run out of oil with “drill baby, drill”. We do not have much oil comparatively. Iran and Russia have it. We are the #1 consumer of oil by far. If we use ours up with Biden’s “drill, drill, drill”, we will have no military. I am told that it will not be feasible to run heavy military machinery on hydrogen. Can you see us plugging in our stealth bombers for a run? I hate war, but I am totally in favor of self defense, by the way.

Second, our leaders are not economists – quite the opposite. They rely on their gut instincts, often called selfish corruption. Maybe you want your doctor to just be some politician who goes by gut feel, operating on your gut – but not me. Our economists work for the Fed, and they are the organization that took all our gold and won’t tell us how much we have left. Do you really know what they are doing? Unless your last name is Rockefeller or a buddy, I guarantee you that your answer is “no”. Do you think they share all the information with you that you need? We need to demand all the answers, and some of us are now waking up and doing just that. This is actually 100 years late, but there is no better time than now.

Third, the government wields immense power today. There is too much money spent on things that produce only regulation. OK, businessmen, does even one person think your industry gains anything from all the regulation? Does it help your bottom line, your products or your customers? We have been sold a bill of goods, pretending that big brother is here to help us. The government just pays themselves and their buddies. They do not produce a thing. That is selling us down the drain. They barely make a blip in our gross domestic product, and they sure reduce GDP in our manufacturing industries. They chased all the jobs overseas where they produce often inferior goods for us.

What should we do now?

As a country? Cut back government now. Cut out tax breaks for the richest people. Everyone needs to pay their fair share. We do not need more oversight and regulation, though. We sure do not need more programs to help us. We can’t have tax breaks and bigger government spending. You know that old saying “I am from the government, and I am here to help you.”

As individuals? Stop being ignorant, learn and act. Especially those that say that God ordained all our leaders, and we should just go with them. That is pure garbage, and it is just a cowardly cop out. We are Americans, and our founding fathers fought bloody battles to get us here.

No I am not talking about Iraq. Get out of Iraq now. It may be a good thing (and it may not), but we cannot afford it. What are they going to do, refuse to sell us oil? Come on, the price of oil would fall to $30 a barrel. Oh, and get out of every other country that we police now, especially all of them in the middle east like Afghanistan.

We need to push for alternative energy. We should have spent the $5T in bailouts, etc. on windmills and solar collectors. We could have completely eliminated the need for electricity from gas and coal for our entire country, and had some left over. That also fixes another of my concerns, doesn’t it? We could be a manufacturing nation again, building windmills and solar towers which are in huge international demand. Instead the good ole boys are happy campers. America has been the world leader for decades, and now we are in really big trouble.

I think we need to collaborate to regain control over the government decisions. I think we need to reestablish the government that our Constitution allowed, not this monarchy.

What do you think we should do? I am confident that you know way better than them.

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