Don’t Blame Me, I’m Just the President

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President Barack Obama

News item:

WASHINGTON (Reuters) - President Barack Obama said on Monday he inherited many of the country's problems with high debt and deficits when he entered the White House, sounding a theme likely to dominate his 2012 re-election campaign.

* * *

President Barack Obama would have us believe that he’s doing, and has done, his dead-level best to get America’s economy back to where it should be. But he’s been obstructed by everyone else, especially those Tea-Partiers, GOP leaders, and European problems, not to mention the Japanese tsunami, and probably global warming.

There are numerous issues on which Obama and Company are so wrong that the U.S. economy is being wrecked, or, as Ben Stein mentioned a year or two ago, they’re standing on the economic oxygen hose and the patient is getting worse.

“A Theme Likely To Dominate His 2012 Re-election Campaign”

In 2008, Mr. Obama campaigned as one who seemed to have the answers, knew the best strategies, and, while criticizing the Bush Administration, offered no hint of thinking that they had created any problems that he couldn’t overcome. Yet now, Bush is going to be blamed as Obama runs for a second term? He’s going to have to spend eight years undoing Bush’s damage? Seems that will be his message, according to Reuters.

“Tea Party Downgrade”

A recent Democrat talking points memo had David Axelrod, John Kerry, and others putting forth the phrase “Tea Party Downgrade,” as though the intransigence of the Tea Party is what resulted in the credit rating downgrade of U.S. securities by Standard and Poor’s. The agency followed up on Monday, August 8, 2011, with downgrading Fannie Mae and Freddie Mac and other federal institutions. The explanation for blaming the Tea Party for any of this is the ludicrous claim that they refused to “compromise,” and that, as Axelrod stated, the ratings agency was looking for revenues. Standard and Poor’s explicitly said that they weren’t addressing that aspect, but they were concerned with the increasing debt, and the lack of any viable efforts to get it under control.

I suppose it’s George W. Bush’s fault that the Democrats in Congress have not passed a budget in over two years, and that the budget Obama submitted would have accelerated spending and the deficit. Congress could not support it. Nor could they support a bill to increase the debt ceiling without regard to the deficit or spending cuts. Republicans, meanwhile, have submitted actual plans, Paul Ryan’s, and the Cut, Cap and Balance proposals, for instance. All of which were said to be DOA in the Senate and/or on the President’s desk. Tea Partiers were trying to do what they were elected to do, and in the end were influenced by Speaker John Boehner’s fear of allowing a default, and got into line to vote for the insipid plan that finally passed. But at least they held the line on taxes, a not-insignificant thing.

“The Grand Plan”

Obama wanted a “grand plan.” That way, he could put off any cuts until two years down the road (slowed acceleration of spending being regarded as a “cut”), get significant tax increases quickly, and spend several hundred billions more in “stimulus.” But of course he bears no responsibility for the credit rating downgrade. If you believe that he doesn’t, perhaps you’d be interested in a bridge for sale in Brooklyn. But even the “grand plan,” never saw the form of an actual proposal written down on paper. So of course the President couldn’t be held to anything he might have said.

If you listen to the president and his helpers, you get the idea that our economic problems would be solved if only those corporate jet owners and the “rich” would pay their fair share. Not mentioned is the fact that the top percentiles of earners pay the overwhelming majority of income taxes, and about 47 percent of American workers pay no income tax. But the problem is not taxes. The problem is spending. You can be sure that if taxes were increased today, Obama would quickly find ways to spend every cent of any increased revenue (and not toward retiring the debt), and soon revenues would actually be lower because the economy would shrink even more.  Liberals will never reduce spending and they will always want higher taxes. This should be axiomatic by now. Promises of future reductions are made, but never fulfilled.

So far, there have been no spending cuts, and the Democrats are calling for more spending. Somewhere, John Maynard Keynes is probably smiling. But most of us are not.

Thoughts on the Federal Reserve and the Banking Cartel (OK, a Rant)

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Mayer Amschel Rothschild

“Give me control of a nation's money and I care not who makes her laws.”   – Mayer Amschel Rothschild (1744-1812), “founder of the Rothschild family international banking dynasty….”

The well-known formula for making money, “buy cheap and sell high,” is practiced to the extreme by the Federal Reserve, which has monopoly control of the nation’s currency. They literally “make,” i.e., create, money out of nothing, and then loan it out at interest. As Ron Paul has reminded us, the U.S. owes $1.6 trillion to the Fed (a “debt” which he has introduced a bill to cancel). A nice business to be in, and the private banks that own the Federal Reserve system likely wouldn’t trade it for anything. The big banks are able to rely on the Federal Reserve for bailouts, if needed, allowing them to keep their earnings privatized, but socializing their losses, i.e., charging them to the taxpayers, if they get into trouble from, say, high-risk transactions.

And the Fed and the Treasury Department are all too ready to come to the rescue if needed, as they did in 2008. They even forced some banks to take money whether they wanted to or not. That way, they could keep secret the identities of banks that were actually in big trouble. The bailouts also included some foreign banks. One can’t help wondering why Lehman Brothers was allowed to fail, but others were not.

Well, that’s water under the bridge now, I suppose, except it really isn’t. Nothing prevents further bailouts, and there are still entities “too big to fail.” It must be nice being part of a cartel where profits are assured, and if for some reason they don’t happen, government, or the Federal Reserve, or both, step in to save the day. Within months, the situation is well in hand, and executives who drove the organizations to near-bankruptcy are (with some exceptions) back to receiving their large bonuses, and waiting for the next bubble to burst.

With the government’s gracious assistance, the Fed has to its credit numerous booms and busts, the Great Depression, the abolishment of the gold standard (and therefore, the end of sound money), the confiscation of citizens’ gold, the dollar’s continuing shrinkage in value, the meltdown of 2008, big bailouts, the dollar’s currently threatened status as the world’s reserve currency, and the current sour economy that shows very little sign of improving much any time soon. Yet the computers of the Fed continue to create whatever quantity of money might be desired, often with the stated hope of creating inflation. The ideal level of inflation is zero. Anything above that steals purchasing power from everyone who holds dollars. The ideal interest rate is that set by the free market. The artificially low rates rob savers of any appropriate return on savings, yet retains high-interest costs of commercial bank credit, e.g., credit cards, etc.

It seems the government wants everyone in a state of fear or anxiety over what government fiscal and domestic policy is going to turn out to be, leading to the likely conclusion that the government authorities are perfectly OK with the economic and social turmoil they create, as long as it helps increase and bolster government control of the economy, and expands citizen dependence upon government. I have about given up on thinking that either the Fed or the Obama Administration is really interested in improving the economy, and am inclined to think that they are accomplishing what they set out to do, that is, impoverish and control people more and more. If this is not the case, they must be hopelessly inept. But they are very willing to cooperate and plan things together, things which now threaten to topple our currency and our economy.

I am optimistic that, with strong and sustained effort, this trend can be reversed; but there will be no cooperation from the Fed or the current administration, and success is far from assured. It’s either staying optimistic or studying those conspiracy theories more.

Related articles

• GAO Audit Finds Fed Loaned Trillions Secretly to Banks (lonerangersilver.wordpress.com)
• Rep. Paul introduces bill to cancel $1.6T in debt held by Federal Reserve (gunnyg.wordpress.com)
• Money Still Owed In Federal Bailout: $1.5 Trillion Still Owed to Treasury, Federal Reserve (politicore.wordpress.com)

Is This the Best We Can Do on Debt Right Now?

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President Obama and Fed Chairman Ben Bernanke

The debt-limit deal appears to be about par for the course of the incumbent federal government:

     1. Cuts that border on being meaningless
     2. Debt-limit increase that will encourage Democrats to demand more spending
     3. Creation of a “super committee” to recommend cuts. Remember Obama’s debt commission?
     4. Postponing actual cuts until after the 2012 elections
     5. Does nothing to make America’s credit rating look any better. If ratings agencies continue their AAA rating for U. S. debt, it just makes the agencies look like they’re in the pocket of the government.
     6. There is very little to encourage the financial markets, outside of forestalling an immediate, formal default – but for how long?

The only Tea Party victory seems to be that there were no new taxes in the measure, and this seriously offends leftists. President Obama says, not to worry, he’ll still demand tax increases, especially on those awful corporate jet owners and those “rich” people earning $250,000 or more per year. This is one area where the House GOP can put its foot down, if it has the will to do so.

The deal, in essence a kick-the-can strategy, is perhaps the best that could be expected with the current Administration in power. As long as liberals are in power, there can be no actual meaningful spending cuts, and there will always be strong pressure for higher taxes. They must fund their beloved projects and keep introducing new ones.

Meanwhile, the “non-political” (but really very political) Federal Reserve continues its secretive strategy of creating from thin air trillions of dollars to eventually bring us hyperinflation. Neither the Obama Administration nor the Fed cares a whit about “transparency,” as they feel their operations are beyond the understanding of the public, who aren’t interested anyway. But that view is becoming less and less justified.

Note the video via The Daily Bail, in which it is pointed out that presidential candidate Obama lied seven times in under two minutes:





Sure, no more secrecy.

Via the same site, a video with some input about the secrecy of the Fed, whose so-called Inspector General seems to know little to nothing about what the agency has been doing, months after the fact of some multi-trillion-dollar transactions. Or if she knows, she’s not talking about it.




Senate Minority Leader Mitch McConnell is correct in saying that the budget/debt/deficit problem will not be solved while Barack Obama is in office.

The only real opportunity to fix this extremely serious problem will happen when Republicans take control of not only the House, as now, but also the Senate and the White House. Even then it will remain to be seen what actual steps will be taken that are more effective than letting the situation fester until we see a currency collapse. But with liberals in charge, such an eventual collapse appears inevitable.

Whoever the GOP nominee turns out to be, he or she ought to listen to Ron Paul and the Austrian School economists on these issues. We have some promising candidates who were not on board with debt limit increase, and who have knowledge of what needs to be done. Michele Bachmann and, of course, Ron Paul himself, come to mind. Either of them would operate within the Constitution far more than the does the current regime. It will take an extremely tough and forthright conservative campaign to drive home the extreme danger of four more years of Obama, and an unfettered Federal Reserve, to the American people.

If the GOP fails, we are in for four more years of massive unemployment, higher prices, out-of-control spending, higher taxes, and an economy that will likely take two or more steps backward for every small step forward, with collapse hanging over America’s head like the sword of Damocles. Also more regulation of everything, more endless wars we don’t win, far less personal liberty, and even further lowered standing in the world.

Other than that, everything would be fine.

Related articles

• Ron Paul Issues Statement on Debt Ceiling Deal (ephraiyim.wordpress.com)
• The Republicans only look like they won - which may be all that matters (theglobeandmail.com)

The Debt Dilemma Is Only a Symptom of the Real Problem

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Rep. Ron Paul (R-Texas)

Why do politicians believe they can finance anything they may choose to, welfare, war, or whatever may come to mind, regardless of the cost? The availability of easy money created out of thin air is just too tempting, and the power associated with the ability to create money this way is also too tempting, for those in power to resist for long. Thus we have the Federal Reserve masterminding all sorts of crony-benefiting bailouts, highly secret deals with foreign central banks, and deluding the public (and themselves?) that they are providing a valuable service to the public, when in fact they are mainly protecting powerful banks, corporations, and politicians.

Therefore, we experience constant inflation, prolonged booms and busts, and illusions of prosperity, resulting in bad investments, minimal savings, and the transfer of wealth from the poor and middle classes to the wealthy. Ron Paul’s excellent book End the Fed [1] describes and documents these phenomena plainly and convincingly. As Paul points out, there is a growing movement to transition away from the Federal Reserve and their power to create money and control interest rates.

A degree of secrecy far more than found in any government agency prevails at the Fed, and no one breaks their barrier or forces any transparency. Congress has the authority to control the Fed, but up to now, little will to do so. There are several aspects which Ron Paul and others have noted about the disadvantages and dangers of the Fed, showing that their (the Fed's) work creates tremendous danger to the country. The Fed was the main factor in causing the Great Depression, which the Federal Government wasted no time in prolonging and deepening through bad, and often ridiculous, economic policies. The Fed is also the main culprit behind today’s economic crisis, which is being made far worse by the economic policies of the Obama Administration.

Austrian School economists predicted the housing bust and described the dangers of the Fed’s actions:

As adherents to Austrian economics know, the Federal Reserve-induced economic boom must turn to bust. People who have lived high, yet have truly earned nothing, will not fare well in the coming bust. Such cash-strapped and indebted families will head toward financial collapse and thus will turn to the state for welfare and credit relief. As to welfare, parent and child become virtual wards of the state….

The loan markets are profoundly distorted due to the nature of fiat money machinations. Because of this intervention, lending is now dramatically different. It is no longer necessary to know your borrowers. The bank – sustained by its cat-and-mouse scheme of fractional-reserve banking — has a huge incentive to fund the loan, and then sell the loan off to intermediaries who package the loans into mortgage-backed securities. In turn, this toxic junk is sold to mutual funds, insurance companies and other institutions starved for yield. The debt-o-rama grabs hold, and as for the borrowers, there is no longer a fear of debt….

Is it possible that the two-thousandaire is merely a precursor to the "new man" (a pliant, unthinking being) Mao and Lenin attempted to socially engineer via central planning? It would seem that the communists had it backwards thinking that banning money was integral to transforming mankind. For it certainly appears that easy money and credit do the trick in eroding the human spirit, morality, and basic decency, along with intellectual and financial independence. [2]

Constant Inflation

The monetarists argue that a top-down central bank guarantees monetary stability. Well, sure if your definition of stability is a grinding erosion of value through incessant inflation: today's dollar is worth $0.19 in 1971 dollars (the year the United States officially dropped any pretense of abiding by a gold standard) and worth only a nickel in 1913 dollars (the year the Federal Reserve was voted into existence). [3]

Moral Hazard
As has frequently been pointed out, numerous large bailouts have brought attention to moral hazard, that is, knowing that if a bank or company is considered “too big to fail,” it will be bailed out if it gets into trouble; therefore their management will likely be less cautious and willing to take more risks than would otherwise be the case. The other moral hazard, or more properly, moral failure, is that a monopoly on money, along with the unlimited power to create it at will, must lead to abuse and serious economic trouble and finally, collapse.

Political Connections
While the Fed is often thought of as non-political, it has usually tried to help the incumbent president politically. Ben Bernanke risked criticism by supporting (concocting?) President Barack Obama’s (and Treasury Secretary Timothy Geithner’s) politically unpopular auto bailouts and the Bush TARP bailouts which Obama also supported.

Tom Dilorenzo gives another example in this paragraph from a 2000 article:

As long as [President Bill] Clinton was fearful of impeachment, [Fed Chairman Alan] Greenspan kept the monetary spigots wide open, even while voicing "concern" about an "irrationally exuberant" economy. With Clinton out of the woods and the presidential race in full swing, Greenspan is attempting to reverse the irreversible economic forces that he set in motion over the past two and a half years. [4]

There is no easy answer to the current crisis. Even after something passes and everyone breathes a sigh of relief, we will still have this enormous debt and the longer-term problem unsolved. The conservative consensus, which I have supported, is that the Republicans must avoid caving to the Democrats in this situation, which, I think, could be politically damaging to the GOP. But if politics would allow it, Ron Paul offers, perhaps, the best approach, and that involves not paying the debt of the U.S. to the Fed (via Tulsa Change):



Over the years, the Fed has forestalled quick recoveries by preventing the corrections from taking place at times when the least amount of damage could have been sustained. Eliminating the Fed would put a lot of currency and economic troubles behind us, and ultimately lead to increased personal liberty and national prosperity.


[1] Ron Paul, End the Fed, New York: Grand Central Publishing, 2009. This is important reading for anyone interested in the U.S. economy and the Federal Reserve. I highly recommend it.

[2] Karen De Coster and Eric Englund, “Will the Federal Reserve Create the New Socialist Man?” 06/26/2006, Mises.org.


[3] Stephen Mauzy, “Don’t Blame the Federal Reserve,” 12/15/2009, Mises.org.


[4] Tom Dilorenzo, “The Federal Reserve and Political Corruption,” May 2000, Mises.org.

Related articles

• The Morality of Gold (lewrockwell.com)
• Debt Ceiling Debate Bolsters Ron Paul and the Gold Standard (usnews.com)
• Ron Paul: Default Now, Or Suffer A More Expensive Crisis Later. Start by canceling out the debt held by the Federal Reserve. (politicalmetals.com)

Time for a Tea Party: the most fiscally irresponsible President in history blasts Congress, saying it 'should be responsible and do its job'

Time for a Tea Party: the most fiscally irresponsible President in history blasts Congress, saying it 'should be responsible and do its job'
(Link to Doug Ross @ Journal, showing the arrogance and incompetence of the regime)

Krauthammer On Target about 2012 Budget Cuts; Will Obama Allow Default?

U.S. Treasury Dept. building (Dreamstime.com)

Where are we on the debt-ceiling negotiations? Do we need to raise the debt ceiling? What if there is a default? Will the military get paid? Will Social Security and disability checks, and veterans’ benefit checks go out?

We are faced with a weird combination of actual danger and fear mongering. There are some facts to be considered when following the “negotiations,” which increasingly look like a stalemated process, but which, as August 2 nears, are likely to end in some kind of agreement to raise the debt ceiling. Conservatives can only hope that the GOP leaders can manage to assert their House majority power and hold firm on (1) real cuts and (2) no tax increases.

One way of addressing this is the “cut, cap and balance” legislation the House Republicans are uniting behind. It addresses the issues of the day and offers a mechanism to bring spending under control for the longer term.

I think GOP should consider the advice of Charles Krauthammer, and require substantial cuts in the 2012 fiscal year. The president wants everything to happen after the 2012 elections, giving him an election-year pass on these issues. Also, Mr. Krauthammer suggests, wisely, I think, that the GOP should point out the president’s way of framing all his arguments, that only he is the one trying to resolve the issue, while his opponents are only seeking to help billionaires and special interests, and further their own political interests. If the president is so serious about budget cuts, where was he in the last two years? Along with the congressional Democrats, who presented no budget at all, he was very busy not presenting a budget that might cut spending, knowing full well that a serious, extended agreement on the debt ceiling was needed. Now, he’s suddenly the hero of the hour?


Social Security checks’ status in the event of default represents a curious issue. Mr. Obama, cynically using seniors’ and veterans’ checks as a bargaining chip in the negotiations, says August checks may not go out if default happens. This contradicts his Office of Management and Budget Director’s statement that the Social Security Trust Fund is solvent through 2037, so no discussion is needed. However, this is untrue. As pointed out, again by Charles Krauthammer, as well as others (Gary North, for example), the Social Security Trust Fund has no tangible assets. It has been raided and spent by the politicians for decades. What it has are non-negotiable government bonds (IOU’s). It’s not only not solvent through 2037, it’s barely, if at all, solvent now.

In fact, the big three programs, Social Security, Medicare, and Medicaid, are a ticking financial time bomb, representing unfunded obligations of tens of trillions of dollars. Yet the Democrats have no desire to deal with this.

It has been said that military and Social Security checks, etc. for August will go out unless either President Obama or Treasury Secretary Timothy Geithner issues orders to stop them. If there is any real possibility of them not going out, then the Administration needs to get its priorities in order. And they ought to apologize for lying to us about the solvency of the Social Security Trust Fund. Rep. Allen West views Obama’s threat as “sad, pathetic, and fear mongering” (video via CNS News):



Of course there are other consequences if default happens: Markets will respond negatively, America’s creditors may be ready to cash in, etc. The world’s safest investments, U.S. Treasury bonds, may be seen as not so safe after all. Anyway, a default would be bad. How bad, we’ll have to wait and see, if it happens.

A few points to remember:

1. Even though G. W. Bush over-spent, his deficits pale in comparison to what the Obama regime has added to our debt.


2. Obama has never been serious, and is not now serious about spending cuts. He still wants a trillion-dollar tax increase (in addition to what we’re scheduled to get under Obamacare). He wants any spending cuts that are agreed to, to happen in the out years, well past election day.


3. He constantly says the Republicans are only interested in political posturing, when what they are trying to do is the thing they were elected to do. Obama is the one who wants smooth sailing into the 2012 elections. He wants to blame the GOP for anything that goes wrong, and he steadfastly refuses to show actual leadership on anything to do with the debt or budget. He threatens to veto “cut, cap and balance” if the Congress passes it. His strategy is to stir up class warfare.


4. As has been pointed out numerous times, even if Obama could take all the money from all the rich, it wouldn’t even begin to solve the problem.

If “cut, cap, and balance” somehow passes both houses of Congress and lands on Obama’s desk, the GOP should not offer any further deals. In fact, they shouldn’t anyway. Let Obama deal with the default. It will be his choice. Sen. Mitch McConnell is right about one thing: these problems cannot be adequately dealt with while Obama is still in office. But Republicans need to stand strong if they are serious about spending cuts. Otherwise, it’s just more of the same tax-and-spend and the Republicans will be weakened as a result of caving.

Related articles

• Social Security benefits, the trust fund and why the federal budget and deficit matter (quinnscommentary.com)
• Obama officially threatens to veto 'Cut, Cap and Balance' (thehill.com)
• Call Obama's bluff? YES! (thedaleygator.wordpress.com)

Unemployment Up! What a Surprise! But Why Is It Surprising?

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Economists were reportedly taken by surprise when the June unemployment figures showed 9.2 per cent unemployment, with only 18,000 jobs added. May’s figures were revised downward from 54,000 jobs added to only 25,000. Bureau of Labor Statistics figures show 14.1 million people unemployed, including 6.3 million unemployed for 27 weeks or more, and 982,000 discouraged workers among 2.7 million “marginally attached” to the labor force, people who wanted and were available for work, but not counted as unemployed because they had not looked for work in the 4 weeks preceding the BLS survey. Another 8.6 million were working part time when they would prefer to work full-time.


For an article on comparatively rosy expectations, see this.


The New York Times reports as follows:

Economists were stunned. They had been expecting job growth to strengthen in June as oil prices eased and supply disruptions caused by the Japanese tsunami and earthquake receded. Instead, the government’s monthly snapshot of the labor market showed that several industries, including construction, finance and temporary services, shrank. At the same time, leading indicators like wages and the length of the average workweek, which tend to grow before employers begin adding more jobs, actually contracted. [1]

Of course, these days, analysts always seem surprised at unfavorable economic news, perhaps still waiting for good results from Obama’s “stimulus,” and when the results don’t come, some complain that it’s because the stimulus was too small. Anyway, they don’t want us to cut spending any time soon.

The reasons for the unfavorable unemployment picture and its continuation are not that difficult to understand. The Heritage Foundation’s Morning Bell blog article of July 8 sums it pretty well. Mike Brownfield explains that in order to keep up with population growth, 100,000 to 125,000 new jobs are needed each month. Also, he quotes Rep. Paul Ryan and comments as follows:

“Investors and businesses make decisions on a forward-looking basis. They know that today’s large debt levels are simply tomorrow’s tax hikes, interest rate increases, or inflation – and they act accordingly.” [– Ryan]

It is this “debt overhang,” and the President’s threatened tax hikes, Obamacare, his incessant meddling in business (whether through the EPA or the NLRB) and the uncertainty those actions generate that are weighing on U.S. growth, investment and job creation today. [2]

The article contains some interesting insights, and I recommend reading the whole piece.

At best, business is risky, and when government adds threats of higher taxes, publishes new and invasive, costly regulations, and takes on ever-increasing debt, these things add to the already substantial market risks and can hardly help but slow things down. Everything we buy has been produced and sold by businesses, who have seen to it that we have stores (or website warehouses) filled with merchandise. Merchants are trying to put on the market the things that people want, in spite of all government’s efforts to stop innovation, competition, and profitability, and punish success. We should appreciate the fact that in order to have job growth, there must be profits and expansion. For some good information on the nature of business, see this.


The result of Obama’s economic activities will be to further slow or reverse economic growth unless serious changes are made. The Administration shows no inclination toward a pro-growth approach, but instead wants more spending and more taxes.


[1] Motoko Rich, “Job Growth Falters Badly, Clouding Hope for Recovery,” 07/08/2011, The New York Times.


[2] Mike Brownfield, “Morning Bell: An Economy in Panic,” 07/08/2011, The Foundry blog at The Heritage Foundation.

Related articles

• Job Growth Dismal, Unemployment Hits 9.2 Percent in June (usnews.com)
• More Than 25 Million Americans Are Unemployed Or Can't Find Full Time Work (npr.org)
• The Great Jobs Drought (growthology.org)