No one is more sensitive to the purchasing power of the dollar than a foreign creditor..
America is not Greece, Portugal, Spain or Ireland, at least not yet, but the fiscal state of these nations are not all that different from that of America, with one glaring exception – America can print money at a moments notice with which to pay its debts. But as we have seen, that only means that when the U.S. government’s funding crisis does come to America, it could make what’s happening to these countries look like child’s play.
So, back to the original question, what’s keeping the U.S. government’s inflation engine in the yard? The answer, foreign creditors. And when they say it’s time to exit, it won’t be long before our politician friends will have no other choice but to either come clean with Paul, and cut spending, or, and pardon the vernacular, tax the crap out of Peter via the Federal Reserve’s printing press.
CHARLES TO SPEAK AT MISES CIRCLE IN PHOENIX IN APRIL!
"THE INFLATIONARY PATH TO DESPOTISM"
April 10, 2010
Phoenix, AZ, Hilton Airport
From Ancient Rome through modern-day America, money inflation has been the means by which the state extracts wealth without recourse to taxation. Such a monetary policy leads to gutting savings, punishing investment, and the launching of economic cycles and even soaring prices and banking disasters. But perhaps the greatest cost is in human liberty itself. The intellectual tragedy here is that few make the connection between the quality of money and the rise of despostism.
This Mises Circle is devoted to exploring the relationship and providing a path toward permanent freedom.
Charles will speak on THE COMMAND ECONOMY. Other topics and distinguised speakers include:
Great actors often model their performances after public figures. It would have been difficult to miss William F. Buckley’s idiosyncrasies so well captured by Dustin Hoffman in his 1991 film portrayal of Captain Hook. For his role in Pirates of the Caribbean, Johnny Depp modeled Captain Jack Sparrow on the Rolling Stone’s Keith Richards. The characterization was so effective that Richards himself was cast as the pirate’s father in a sequel. We’ll have to wait for the March release of Tim Burton’s Alice in Wonderland to see, but some modern-day pirates could have provided excellent models for Depp’s portrayal of The Mad Hatter.
If not mad, there was certainly something maddening in the doubletalk of former Federal Reserve chairman Alan Greenspan. In an era that needs nothing so much as clarity, Depp could have created an unforgettable anti-hero emulating Greenspan’s mumbled ambiguities. Another Fed alumnus provides equally rich material for characterization. Bewildered by TurboTax and befuddled by AIG, Treasury secretary Timothy Geithner’s earnest perplexity has enough madness to it that it provoked laughter among university students in Beijing.
But not every performance has to be over the top. In the hands of a skilled performer the understated mannerisms of Fed chairman Ben Bernanke could become the stuff of movie performance legend. Imagine a motion picture character who matches Bernanke’s record for getting everything – everything – wrong, coupled with resulting widespread destruction such as the economy has suffered. As chairman of Bush’s Council of Economic Advisors in October 2005, Bernanke told Congress that he wasn’t concerned about a housing bubble. A year and a half later, in March 2007, he testified as Federal Reserve Chairman that problems in the subprime market were "contained." But never mind the chairman’s inability to see the bubble as he helped froth it up. After the fact, there is something especially chilling in the chairman’s blank look of incomprehension about his role in the debacle. For when the deluge hit exactly as Congressman Ron Paul and others employing Austrian-school analysis had forewarned, the brazenness of Bernanke’s wide-eyed denial of Fed complicity in the real estate bubble was simply breathtaking.
After all, considering the scale of destruction on his watch, wouldn’t anyone with healthy human consciousness at a bare minimum seek out the views of those who had warned of the calamity? Doesn’t the magnitude of the losses cry out for examination without prejudice? Not by our role model. Bernanke has to exonerate the Fed, because acknowledging the role of interest rate manipulation in the housing bubble is also an indictment of current Fed policy and an advance admission of authorship for the dollar meltdown to come.
Even Bernanke’s desire to be reconfirmed for another four years testifies to the persistence of his failed Keynesian dogma and his cluelessness about his hand in the creation of the coming currency crisis. As the Fed persists in its folly and one Fed bubble begets another, the motion picture Groundhog Day comes to mind. But Bill Murray’s protagonist in that film was eventually able to show some growth. It was that growth that made him, in the end, sympathetic. It is only by the madness of clinging to failed dogma and persisting in error that one becomes a true and unforgettable anti-hero.
The monetary system will continue to bleed the U.S. economy dry even if the faces of the authorities change. Still, there must be accountability. Therefore, I invite you to join Mish, who wants to...
Dump Bernanke!
How You Can Help!
Opposition to the reappointment of Bernanke is mounting every day. Senator Barbara Boxer Senator (D- California) and Russ Feingold (D-Wisconsin) are is the latest to hop on the Dump Bernanke bandwagon.
How You Can Help!Here is the Online Directory For The 111th Congress .Whether they are in your state or not, please call all 5 undecided senators.Concentrate on the senate. The house has no say on this.
What To Say: Make it simple so as to not tie up the lines ... "I am opposed to the reappointment of Bernanke [give your personal reason] and I think we should start all over on health care [or whatever you think about that issue]."
Next call your senators with the same message.
Look up the phone numbers in the online directory.
Send A MessageRemember it takes 60 votes for confirmation. All it takes to send Bernanke flying is a change in a handful of undecided senators!
It began with a George W. Bush led government that decided that a few big stimulus packages, a war on Iraq and Afghanistan and a generally more gentle conservatism (meaning mega new safety nets like prescription drugs), not to mention a bailout of the financial industry, were must haves; and it was put into hyper-drive by an Obama administration and a supportive Congress that seem to think that every economic and social issue can be solved by the government.
Indeed, since 2000, government spending has been growing at an annual rate of about 8.5%, more than double the rate seen in the 1990s, and a trend that has taken government spending from about 18% of GDP in 2000 to today’s 26%, an increase of 44%.
L: Doug, I saw a Wall Street Journal headline a few days ago that boldly proclaimed, "Car Makers May Hire Soon." Be still, my trembling heart! It’s hard to believe the WSJ would stoop to such a meaningless headline, but I guess they are just trying to give their desperate customers what they want: some hope, whether valid or not. What do you make of the unemployment situation?
Doug: Well, they say that during the depression of the 1930s, unemployment went as high as 25%. That’s interesting, in that at the time, half the people in the country were still farmers. They knew how to make the things they used in daily life with their own hands, and how to grow their own food. There was less specialization in the economy, and people were more self-sufficient. That made them better able to cope with an economic depression.
So it seems to me that that depression wasn’t anywhere near as bad as this one is going to be. It was caused by the inflation of the currency in the 1920s, by the Federal Reserve, and was prolonged by the actions that Hoover took, which were in exactly the same vein as those Roosevelt took later. Hoover was quite a dirigiste – I mean, Roosevelt applauded all the things Hoover did, but Hoover didn’t have the panache and good PR that Roosevelt did. But everything these two did – and both were disasters, lengthening and deepening the depression – was trivial by comparison to what’s being done today.
The government today is making things far worse than in the 1920s and 1930s. Everything the government is doing is not just the wrong thing; it’s exactly the opposite of the right thing. But more importantly, as far as unemployment is concerned, this inflationary boom has gone on much longer than that of the ’20s. Not only does that call for a bigger correction, but unsustainable patterns of production and consumption have become far more ingrained... Read the rest... Doug Casey
The U.S. government has NO money. It takes money from Peter to spend it on Paul. It takes money from Peter, whether Peter likes it or not, whether Peter receives something of value from the exchange or not. It’s called a tax. And the simple fact is government spending ALWAYS means government taxes.
Tell me something I don’t know, you say. Well, yes and no, for here’s where it gets a bit tricky.
Besides the ever constant cry for more government spending in support of Paul, it’s the way in which the government taxes Peter that allows the government to spend so much on Paul. Lay the bill bare and its likely Peter throws a fit. But mask Paul’s true cost and maybe Peter will be, shall we say, more willing to support the government’s desire to spend money on Paul.
The U.S. government taxes Peter in 3 different ways:
- Tax Peter now - Tax Peter later - Tax Peter don’t tell him
The Financial Crisis Commission Didn't Call A Single Person Who Understood The Problem
Last week, the Financial Crisis Inquiry Commission kicked off their first round of hearings on the causes of the economic meltdown on Wall Street. Texas Straight Talk from Congressman Ron Paul:
"If this panel was serious about understanding the root of the problem, as they claim to be, they would have people testify who understand the crisis and saw it coming. To my knowledge, none of them have received a phone call. The problem is those people would say too many things the government panel would find inconvenient. They would point fingers at too many of the state’s anointed."
LAST CHANCE BOOK-SIGNING! And your free, customized likeness drawn by a world famous artist!
Charles Goyette will speak about the economy and developing currency crisis at Borders Bookstore in Phoenix, 24th and Camelback Road, Thursday evening, January 14th at 7:00 pm.
It's the last scheduled opportunity to get an autographed copy of The Dollar Meltdown in the Phoenix area. And as an added attraction, Pulitzer-prize winning editorial cartoonist Steve Benson from the Arizona Republic will be on hand to provide one of his famous customized carictures for everyone who buys a copy of the book at the event.
You'll profit from The Dollar Meltdown during the turbulent years ahead, and your family will treasure your personalized drawing, signed by Steve Benson, for years and years!
Fannie and Freddie are now full wards of the state, departments of the U.S. government.
And their obligations are now the obligations of the American taxpayer.
That’s right, Fannie and Freddie’s obligations are not just implicitly guaranteed by the U.S. Treasury, as they were before Fannie and Freddie were taken into conservatorship by the U.S. government in September of 2008, nor are they just temporarily guaranteed, with a $400 billion cap, as they were under conservatorship.
Now, Fannie and Freddie’s obligations are explicitly guaranteed, without limit by the U.S. Treasury for 3 years, and as needed thereafter.
Who made this decision? The Obama administration. When did it happen? Interestingly, on December 24th, after everyone had gone home for Christmas. Even more interestingly, by playing Santa before the New Years’ ball was dropped, the Obama administration dodged the need to bring the decision to Congress...
