Fed Head Leading by Example: Just Say No to Bonds

Americans got an unprecedented peek at the wealth of the Federal Reserve’s top ranks this week, when the central bank released nearly 600 pages of financial disclosure documents from its current regional presidents.

If the dollar is stable and the Federal Reserve is creating positive economic changes, why does Richard Fisher, the president of the Dallas Fed, own 7,000 acres of farmland and a million dollars worth of gold? If the heads of the Federal Reserve banks believed that our financial system is the best thing since sliced bread, then why would they not buy government bonds instead?


Because the dollar is constantly reducing in value (although it is fiat and has no intrinsic value) through the actions of the Fed. The dollar has not risen in value in our lifetime. The only way the banking cartel can continue to monetize debt (fractional reserve banking) is to devalue the currency already in circulation (which in essence steals from those holding dollars in savings). At least Bernanke invested in the system to some extent to foster confidence, though that public confidence is in constant retreat.

The following table shows the minimum and maximum value of the assets reported by each Fed president. (Chart courtesy of economix)

More


Maybe this is why even Fisher believes that buying bonds is risky, and he has put so much of his wealth into tangible assets like precious metals and the technology industry. Sounds like he is recommending that others reduce or limit bond investments. While I support the right for investors to get rich in  private markets, it speaks volumes when they do so while recommending not to invest in public investments like treasury bonds. Might this be foreshadowing or a sign of things to come? I only wish those running the banking cartel that controls the Fed and the treasury would also recognize reality.
Why buy a treasury bond that returns 3.5% when that barely matches the  inflation of the dollar by the Fed? Maybe that's why the Fed is  increasing the frequency and volume of bond purchases to make up for  reduced demand by private buyers...

Minimum Wage Laws Cause Unemployment

The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act of 1938 to ensure workers a minimally adequate standard of living. In 2007, the minimum wage according to federal law was $5.15 per hour, and it was scheduled to increase to $7.25 by 2010.

Minimum wage laws are basically price floors paid to workers, which creates a shortage of available jobs, and a surplus of willing workers, or unemployment. As with most state intervention, the needs or wants of a smaller portion of a population are met at a cost to the entire population, even when the goal on the surface is to promote some policy that benefits those who are disproportionally neglected.

If the minimum wage is above the equilibrium level, as it is here, the quantity of labor supplied exceeds the quantity demanded. The result is unemployment. Thus, the minimum wage raises the incomes of those workers who have jobs, but it lowers the incomes of workers who cannot find jobs.

In reality, this type of price floor actually causes the problem that wage mandates are touted to resolve. Funny how that tends to work out so often when the state initiates market mandates that fail consistently in the face of basic economics.

The minimum wage has its greatest impact on the market for teenage labor. The equilibrium wages of teenagers are low because teenagers are among the least skilled and least experienced members of the labor force. In addition, teenagers are often willing to accept a lower wage in exchange for on-the-job training.

Want to end unemployment? Repeal state-mandated minimum wage laws. 


Rent control is another example of a failure to promote fair market prices and an equilibrium supply/demand rate through state mandates. The result is lower costs, but also a lower supply of available rental properties, as well as a generally lower quality of available rental units. What motivation to landlords have to maintain properties when there is a fixed market price?

In free markets, landlords try to keep their buildings clean and safe because desirable apartments command higher prices. By contrast, when rent control creates shortages and waiting lists, landlords lose their incentive to respond to tenants’ concerns. Why should a landlord spend money to maintain and improve the property when people are waiting to get in as it is? In the end, tenants get lower rents, but they also get lower-quality housing.

Policymakers often react to the effects of rent control by imposing additional regulations. For example, there are laws that make racial discrimination in housing illegal and require landlords to provide minimally adequate living conditions. These laws, however, are difficult and costly to enforce. By contrast, when rent control is eliminated and a market for housing is regulated by the forces of competition, such laws are less necessary. In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Ah, free markets. It seems that politicians and those unwilling to work for their needs and wants are the only ones truly benefiting from these sort of measures. In the end, these sort of market restrictions are akin to taxation, as they manipulate the market in a negative way, increasing inefficiency and costs while creating little collective benefit.

As I say, taxation is theft, which is a form of violence against another, something that I can not in good conscience defend. Whether it be rent control, import tariffs, wage laws, or other market controls, the society overall suffers the burden and gains no true benefit.

Source: Mankiw, N. G. (2007). Principles of microeconomics. (5th Edition ed.). Mason, OH: South-Western Cengage Learning.

Nazi Banksters' Crimes Ripple Effect

Released: 5th of November, 2011. Muad'Dib's latest hard-hitting documentary about the innumerable crimes of the Ashke-Nazi Banksters.
From their historical origins down to their planned genocidal future, Muad'Dib tracks who THEY* are, how THEY operate, and most importantly, how to get rid of them once and for all.
It is time for millions of us, to take full responsibility for our actions & circumstances, unite and peacefully gather at the Houses of Parliament in London, England -- on the 5th of November 2012 -- to support Muad'Dib in declaring a Year of Jubilee, to cancel all debts and end the corruption and treason, making this a day that present and future generations will never forget.
After being wrongfully arrested and falsely and maliciously imprisoned for making His "7/7 Ripple Effect" film and defending innocent people, Muad'Dib is back with no mercy for those who've shown none to others.
Cutting to the root of the problem, with the only solution. Come and be part of it.

Arlo Sings Bailouts

Only days after the president declared, "No more bailouts, no more handouts," I see that Arlo Guthrie is touring the South in February and March. What's the connection? If you have the good fortune to see him, be sure to ask for "I'm Changing My Name to Fannie Mae." That 2008 song was itself a new version of Tom Paxton's classic song "I'm Changing My Name to Chrysler," sung here by Arlo: "When they hand a million grand out, I'll be standing with my hand out….If you're a corporate titanic and your failure is gigantic, Down in Congress there's a safety net for you."

The 2008 version is sung here by Arlo and here by Paxton. Besides the name of the company, they had to make a few other changes in the lyrics, like "When they hand a trillion grand out, I'll be standing with my hand out."
But that was October 2008. By the end of December, I was noting that it was a Merry Christmas for GMAC, which learned on Christmas Eve that the Federal Reserve had approved its application to become a bank holding company. That gave GMAC "access to new sources of funding, including a potential infusion of taxpayer dollars from the Treasury Department and loans from the Fed itself," as the Washington Post explained. GMAC wasn't the only company that suddenly became a "bank holding company" in order to cash in on the $700 billion financial bailout. Late one night in November, American Express was granted the same privilege, along with Morgan Stanley, Goldman Sachs, and CIT. Which was why I suggested then that Tom and Arlo needed a new version: "I'm Changing My Name to Bank Holding Company."

Original Page: http://www.cato-at-liberty.org/arlo-sings-bailouts/#utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Cato-at-liberty+%28Cato+at+Liberty%29

How to Fix the Housing Crisis

The foreclosure crisis has crawled on for going on four years now with no end in sight. The S&P/Case-Shiller index for August fell 3.8 percent from a year ago. The index includes home prices for 20 US cities.

"Continued house price declines could lead to even more defaults, foreclosures and distress sales, undermining wealth, confidence and spending," William Dudley, president of the Federal Reserve Bank of New York said. "Breaking this vicious cycle is one of the most pressing issues facing policy makers."

Every one of the Republican presidential candidates is being asked how they would handle the slow-motion housing wreck. Long shot Newt Gingrich says he would rewrite the rules to make it profitable for banks to renegotiate loan principal amounts.

"He disagrees with his Republican colleagues that the free market will find a fair way to let the banks and homeowners work things out," writes Karoun Demirjian for the Las Vegas Sun.

President Obama has jumped in to adjust Fannie Mae and Freddie Mac rules to allow refinances for loans exceeding 125 percent loan to value(!).

The president says this will save underwater homeowners thousands of dollars a year.

Princeton professor Alan Blinder penned an op-ed for the Wall Street Journal proposing forced principal reductions with the cost to be shared by banks and taxpayers — with the proviso that government be given an equity kicker when housing prices go back up.

Blinder also thinks the Federal Reserve and Treasury should provide cheap financing to developers who will use the money to buy up properties with the intention of renting the properties out.

[...]

More: How to Fix the Housing Crisis - Doug French - Mises Daily

Austrians on the Environment

You need to dig a bit deeper into economics to understand that while it may appear that we are spending more on economic needs through taxation by government, the manipulative ability of a fiat currency allows it to be inflated and deflated at the whim of those who represent us, without the will or approval of the people. 

Since the Gold Standard was abandoned in the US, the dollar has devalued to about 4% of it's strength, during which time the wealth gap has increased to a point never before seen. I believe we still have potential to see environmental needs met, but only if we can prevent complete corruption by having a large portion of the population concerned and active in the ecology that sustains our lives. 

Austrian economics and free market theories always attract my attention for the way they deter corruption by preventing government from becoming so great that it consumes such a large portion of the spoils of labor. More from Mises;

Fundamentally, “sustainable development” is a notion of… disciplining our current consumption. This sense of “intergenerational responsibility” is a new political principle, a virtue that must now guide economic growth. The industrial world has already used so much of the planet’s ecological capital that the sustainability of the future is in doubt. That can’t continue.

The concepts of valuation, capital, and income only take on valid or coherent meaning in the context of individual action, private property and market exchange… The critical goal of legitimate sustainability is to establish an expanded system of private property rights that allows the owners to manage resources as capital assets. (p. 21)

…the ethics underlying the acquisition of private property is not even acknowledged in the economics of intergenerational sustainability. The entire resource base of the world’s society is implicitly under the control of some government making allocative decisions. (p. 22)

Without private property, monetary exchange, and capital accounting, no rational economics of asset maintenance could exist… The extent that individual business plans may conflict and be incapable of mutual success creates a barrier to aggregation or “macro-reckoning.” Hence, society or a government as its agent has no aggregated measure of capital for which it can legitimately presume to make decisions. (pp. 28,29)

…public control of resources in the name of “sustainability” is not only contradictory but also self-defeating. (p. 41)

Austrians on the Environment - Mises Economics Blog - Ludwig von Mises

More on the Higher Education Bubble and Coming Collapse

Source: Great Higher Education Bubble Infographic

Parents of children born today should be prepared to pay a hefty price for college tuition, if current trends in tuition costs don’t change. According to new analysis by The Daily, the class of 2034 will pay an average of $288,000 in 2011 dollars at a four-year private school and $123,000 at an average public school.


That’s an increase of 111 percent and 167 percent, respectively, from the average class of 2012 tuition:

New moms and dads with visions of Ivy League degrees dancing in their heads should be prepared to face a bill of $422,320 in today’s dollars if Junior heads off to one the country’s priciest colleges as a member of the class of 2034.


If college costs keep rising as they have for the last three decades, the inflation-adjusted price of four years of tuition alone will more than double at private colleges and nearly triple at public universities by the time a baby born this year is ready to enroll, an analysis by The Daily shows.

Read more: Skyrocketing Tuition: College Costs Could Reach $422K For Children Born Today

With the Iowa caucus under our belt, the 2012 election year is in full swing and one issue being raised across the country is student debt. So far, it seems that a number of candidates propose to address this issue through their plans to "improve the economy." They don't seem to understand the educational debt crisis very well.


We certainly recognize the dire need for more jobs, but we think the issue of educational debt demands a more direct solution. We're taking this opportunity to raise some issues that warrant candidates' attention and to clarify the magnitude of what students and graduates are facing.


Student debt is already greater than credit card debt (that happened in 2010) and will soon pass $1 trillion. According to expert Mark Kantrowitz, total student loan debt is increasing at a rate of about $2,853.88 per second. Two thirds of the undergraduate class of 2010 graduated with student debt, at an average of more than $25,000 per student.

Read more: Student Debt Crisis Isn’t Just About Economy

Persistent unemployment, shrinking job prospects, home foreclosures and gas prices predicted at $5 a gallon by summer, have the middle class hope ‘n changers of ’08 vexed.
Here’s an alarming factoid. In 1993 fewer than half of those who received bachelor’s degrees in the U.S. left school carrying student loan debt, according to The New York Times. Today, two-thirds leave college deep in debt, carrying student loans averaging $24,000. College loans stand at $1 trillion, nationally.


Unemployment, about 9 percent nationwide, is only 4.5 percent among college graduates.

Read more: Biden bypasses the college bubble

US Debt Nearly Surpassing Economy

The soaring national debt has reached a symbolic tipping point: It's now as big as the entire U.S. economy.

The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.

Those creditors include the US taxpayers and those collecting retirement, social security and other entitlements.

That's roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December — a level the debt is likely to surpass this month.

"The 100% mark means that your entire debt is as big as everything you're producing in your country," says Steve Bell of the Bipartisan Policy Center, which has proposed cutting nearly $6 trillion in red ink over 10 years. "Clearly, that can't continue."

That's a very Libertarian direction, well worth considering, since nations that apply Austrian economics tend to maintain economic stability, something we fail to do in the US.

Long-term projections suggest the debt will continue to grow faster than the economy, which would have to expand by at least 6% a year to keep pace.

President Obama's 2012 budget shows the debt soaring past $26 trillion a decade from now. Last summer's deficit reduction deal could reduce that to $24 trillion.

Gee, who else saw this coming during last year's debt ceiling debates?

Many economists, such as the Brookings Institution's William Gale, say a better measure of the nation's debt is how much the government owes creditors, not counting $4.7 trillion owed to future Social Security recipients and other government beneficiaries. By that measure, the debt is roughly a third less: $10.5 trillion, or nearly 70% the size of the economy.

That is still high by historic standards. The total national debt topped the size of the economy for three years during and after World War II. It dropped to 32.5% of the economy by 1981, then began a steady climb under President Reagan, doubling over the next 12 years. The combination of recession and stimulus spending caused it to soar again under Obama.

During WWI, the economy didn't collapse to this point because government spending was at a significantly lower level, and individual liberty was much higher. Also consider that there was no income tax during that time. As government increases it's scope and appetite, taxation increases.

Among advanced economies, only Greece, Iceland, Ireland, Italy, Japan and Portugal have debts larger than their economies. Greece, Ireland, Portugal and Italy are at the root of the European debt crisis. The first three needed bailouts from European central banks; Italy's books are monitored by the International Monetary Fund.

The White House and Congress agreed in August to cut about $1 trillion from federal agencies over 10 years. An additional $1.2 trillion in automatic spending cuts looms beginning next year if lawmakers can't agree on a better way to do it.

Economist Mark Zandi of Moody's Analytics says reaching the 100% mark shows "the grave need to address our long-term fiscal problems."

US Debt Is Now Equal to Economy

Trillions of dollars are difficult for many to wrap their heads around. To put it into perspective, just hack off the extra zeroes;

Income; $15,170
Debt; $15,230

Now think of it as household income and debt. What are the chances that our nation can get out from under that debt without cutting unnecessary spending, like military and entitlements? Would a household be able to sustain that level of debt indefinitely? Can we realistically believe our nation can?

I don't expect to see any significant growth in our economy as long as the bloated government siphons off an ever-increasing amount...

U.S. Universities Feast on Federal Student Aid

The public is in a foul mood over increasing college costs and student debt burdens. Talk of a “higher education bubble” is common on the contrarian right, while the Occupy Wall Street crowd is calling for a strike in which in which ex-students refuse to pay off their loans.

This week, President Barack Obama held a summit with a dozen higher-education leaders “to discuss rising college costs and strategies to reduce these costs while improving quality.” The administration plans to introduce some policy proposals in the run-up to the presidential campaign.

Any serious policy reform has to start by considering a heretical idea: Federal subsidies intended to make college more affordable may have encouraged rapidly rising tuitions.

It’s not as crazy as it might sound.

As veteran education-policy consultant Arthur M. Hauptman notes in a recent essay: “There is a strong correlation over time between student and parent loan availability and rapidly rising tuitions. Common sense suggests that growing availability of student loans at reasonable rates has made it easier for many institutions to raise their prices, just as the mortgage interest deduction contributes to higher housing prices.”

It’s a phenomenon familiar to economists. If you offer people a subsidy to pursue some activity requiring an input that’s in more-or-less fixed supply, the price of that input goes up. Much of the value of the subsidy will go not to the intended recipients but to whoever owns the input. The classic example is farm subsidies, which increase the price of farmland.

[...]

U.S. Universities Feast on Federal Student Aid: Postrel - Bloomberg

Obama to Ask for Debt Target Hike

WASHINGTON (Reuters) - The White House plans to ask Congress by the end of the week for an increase in the government's debt ceiling target to allow the United States to pay its bills on time, according to a senior Treasury Department official on Tuesday.

The approval is expected to go through without a challenge, given that Congress is in recess until later in January and the request is in line with an agreement to keep the U.S. government funded into 2013.

The debt is projected to fall within $100 billion of the current cap by December 30, when the United States has $82 billion in interest on its debt and payments such as Social Security coming due. President Barack Obama is expected to ask for authority to increase the borrowing limit by $1.2 trillion, part of the spending authority that was negotiated between Congress and the White House this summer.

Under the agreement struck in August during the showdown over the government's debt limit, the cap is automatically raised unless Congress votes to block the debt-ceiling extension. Lawmakers have 15 days within receiving the request to vote, which is largely symbolic because the president can veto it and Congress would be unlikely to muster the two-thirds majority to override it. Moreover, the U.S. House of Representatives also is in recess until January 17.

The deal called for raising the debt ceiling by $2.1 trillion to serve the nation's borrowing needs into 2013 and also included mandatory cuts to the federal budget deficit. Since then, the extension has been increased twice by a total of $900 billion.

And we wonder why the national debt is so high. Scary to think of that kind of money being tossed around and I have a hard time paying the federal taxes as they already are. When we keep raising these limits, we have to pay it back sometime, and it's your federal tax dollars and mine that will be paying this debt. It means our federal taxes are going to increase even more. I already know they are going up. Let's quit with borrowing more and do with what we have. There is so much waste that could be cut away within the federal government itself WITHOUT cutting social programs!

Unfortunately, with the voting record of most politicians, I imagine they will give Obama more than 1.2 trillion. We the People must end the madness within our government by throwing out most of the scummy politicians in D.C. and State capitols. Ron Paul will cut one trillion dollars, end five federal departments, and bring sanity back to this nation.

http://news.yahoo.com/obama-ask-debt-limit-hike-treasury-official-152416457.html

Don't forget that our currency is inflating and devaluating in the meantime...

Higher Education Bubble: A Simple Case Of Inflation

“This is a simple case of inflation: When you artificially pump up the supply of something (whether it’s currency or diplomas), the value drops. The reason why a bachelor’s degree on its own no longer conveys intelligence and capability is that the government decided that as many people as possible should have bachelor’s degrees.

There’s something of a pattern here. The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle class people.

But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay in, the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them. One might as well try to promote basketball skills by distributing expensive sneakers.

Professional basketball players have expensive sneakers, but — TV commercials notwithstanding — it’s not the shoes that make them good at dunking. If the government really wants to encourage people to achieve, and maintain, middle-class status, it should be encouraging things like self-discipline and the ability to defer gratification. But that’s not how politics works.”

Higher Education Bubble: A Simple Case Of Inflation

Decade from Hell will Get Worse in 2012

    Fasten your seat belts: 2011 was far worse than expected. Our earlier predictions for America's Worst Decade just got worse.

    As financial historian Niall Ferguson writes in Newsweek: "Double-Dip Depression … We forget that the Great Depression was like a soccer match, there were two halves." The 1929 crash kicked off the first half. But what "made the depression truly 'great' …began with the European banking crisis of 1931." Sound familiar?

    Yes, huge warnings: But America's deaf. In denial. When we predicted the 2011-2020 "decade from hell" we didn't see the big macro events dead ahead: Arab Spring virus that's now Occupy Wall Street, promising to explode into an even more powerful force in 2012 … war on the middle class … widening inequality gap. … Washington gridlock … the Super Rich's blind resistance to all new taxes.

    As Ferguson puts it: "To understand what has been happening in our own borderline depression, you need to know this history. But hardly anyone does." Get it? America's already in a "borderline depression," and virtually nobody gets it. American leaders are dummies about history. Worse, nobody may be able to stop our depression from turning "great."

    Investors beware: Please, protect your assets: "Those who don't remember history are doomed to repeat it." We've already forgotten the lessons of the 2008 disaster. No wonder we're doomed to repeat the mistakes of the 1930's triggering the Second Great Depression. Soccer anyone?

Few seem capable of accepting that our situation is one on dire straits. 

http://www.garynull.com/home/paul-b-farrell-our-decade-from-hell-will-get-worse-in-2012.html

Eurozone Defaults On Their Way

For some time I have taken the view that rescuing eurozone governments from their financial crises was too big a job for the European Central Bank, which should stick to keeping the banking system going. The only hope was that individual governments would be forced to face up to the reality of cutting government spending hard and quickly. They have failed to even begin to address this fundamental problem. As a consequence, it is now impossible for them to roll over their maturing debt, let alone raise new money. Instead there is now a scramble into cash as banks and hedge funds prepare themselves for sovereign defaults.

Posturing over geared stability funds, financial transaction taxes, installing unelected governments, putative treaty changes and finally enhanced fiscal supervision proposals have finally convinced markets that the only outcome is widespread government defaults. There is now no alternative and the fallout will have to be managed.

The inept handling of this crisis has weakened the eurozone’s banks to the point that they are unable to subscribe for more debt. Furthermore, the ECB cannot afford to see the liquidity it provides to European banks disappear into new government bonds that will default anyway. Therefore, it is now in the ECB’s interest to see sovereign defaults occur as soon as possible, unless the International Monetary Fund can come to the rescue, which is looking less likely by the day.

There is growing evidence that there is insufficient support for an IMF bailout from its member governments. The IMF’s charter is as an intergovernmental lender of last resort, not a supporter of government profligacy. Following the failure of the G20 meeting in mid-October there has been no substantive attempt to rescue the eurozone. The telephones might be buzzing, but there is no urgent meeting, suggesting that events must take their course.

[...]

Eurozone Defaults On Their Way | Before It's News

When will America Collapse?

Double dip recessions, falling home prices, mortgage foreclosures, high unemployment, tight oil supply and rising sovereign debt are today's news. What does tomorrow hold for us? By examining today's news we can look at one possible scenario and the future isn't pretty.

The Failures of Supply-Side Economics

The trouble with the perception by Left media is that they vilify the Right as supporting complete deregulation as a bad thing, while the Left supports failed Keynesian economic theory, which presents more spending and planning (contributing to an even larger government) as a practical solution to economic instability. We can't prop up our failing industries with taxpayer-backed subsidies for products that the market no longer demands. Those sort of bailouts are part of the reason we are heading toward an economic depression. Increasing the marginal tax rate only allows government to grow bigger and spend more of the individual's income on things which rarely benefit the general population. As the individual retains less of their earned income, their ability to contribute to the economy in a positive manner is reduced.

The term “supply-side economics” is used in two different but related ways. Some use the term to refer to the fact that production (supply) underlies consumption and living standards. In the long run, our income levels reflect our ability to produce goods and services that people value. Higher income levels and living standards cannot be achieved without expansion in output. Virtually all economists accept this proposition and therefore are “supply siders.”

“Supply-side economics” is also used to describe how changes in marginal tax rates influence economic activity. Supply-side economists believe that high marginal tax rates strongly discourage income, output, and the efficiency of resource use. In recent years, this latter use of the term has become the more common of the two and is thus the focus of this article.
The marginal tax rate is crucial because it affects the incentive to earn. The marginal tax rate reveals how much of one’s additional income must be turned over to the tax collector as well as how much is retained by the individual. For example, when the marginal rate is 40 percent, forty of every one hundred dollars of additional earnings must be paid in taxes, and the individual is permitted to keep only sixty dollars of his or her additional income. As marginal tax rates increase, people get to keep less of what they earn.

An increase in marginal tax rates adversely affects the output of an economy in two ways. First, the higher marginal rates reduce the payoff people derive from work and from other taxable productive activities. When people are prohibited from reaping much of what they sow, they will sow more sparingly. Thus, when marginal tax rates rise, some people—those with working spouses, for example—will opt out of the labor force. Others will decide to take more vacation time, retire earlier, or forgo overtime opportunities. Still others will decide to forgo promising but risky business opportunities. In some cases, high tax rates will even drive highly productive citizens to other countries where taxes are lower. These adjustments and others like them will shrink the effective supply of resources, and therefore will shrink output.

[...]

Supply-Side Economics: The Concise Encyclopedia of Economics | Library of Economics and Liberty

Too Big To Fail? by Dick Clark

"One of the most baffling phenomena of fascism is the almost incredible collaboration between men of the extreme Right and the extreme Left in its creation. The explanation lies at this point. Both Right and Left joined in this urge for regulation. The motives, the arguments, and the forms of expression were different but all drove in the same direction. And this was that the economic system must be controlled in its essential functions and this control must be exercised by the producing groups."

While the fanatics from the Left have been calling all comers either "racist" or "child-hater" over whether or not people should be forced to buy a product they don't want, their opposition is divided into two oil-and-water camps.

In the first camp are the stereotypical partisan naysayers of the political Right. Think of the football fans who spill their beer tele-heckling the referee every time the call on the field hurts "their" team. They all voted for Bush the Lesser despite his theretofore-unprecedented prescription drug entitlement program and expensive and murderous imperial campaigns, and now they don't even see the obvious hypocrisy of their newly vivified, newly vocalized small-government, slash-the-budget convictions. And of course, don't take away the Department of Education, Social Security, Medicare, or the minimum wage – what do you think this is, the Old Right? Those guys who swore to fight those New Deal and Great Society abominations to the death, well, they did. And heaven forbid that we jettison the DEA and the CIA! Who would protect us from third-world peasants and their dangerous plants and headgear?

No, this is compassionate Jack Bauer neoconservatism! We need our kids lined up every morning feeling their hearts beat in pace with the rhythm of that glorious denial of the individual conscience, the Pledge of Allegiance, and we need them doing it in a public school while sipping on subsidized milk! Just don't tell us where to shop for our gallbladder surgery – not while you are holding that blue campaign sign anyway.

In the second camp is every sensible human being in the United States who has ever balanced a checkbook and who has not been convinced by state apologists that math somehow functions differently when numbers get really, really big. This camp contains the people who realize that the problem with Johnny's credit card debt is not that the credit card companies refuse to expand his credit line anymore. The folks who have the free time to stand around and wave signs in DC's barren wasteland of sterile bureaucracies and cold monuments to war criminals probably aren't going to be representative samples of this population. Regardless, even these people know that more indebtedness now means more pain later.

More: Too Big To Fail? by Dick Clark

The Left-Right paradigm is one of false division of the populace, with each side fighting for control, not for the benefit of the populace but of those in control.

How would you feel about a 94% tax rate?

By Jeff Haden, CBSNews.com

Today is the 70th anniversary of the bombing of Pearl Harbor. One day later the U.S. declared war on Japan, and four days later declared war on Germany and Italy.

Declaring war was one thing, paying for the war another. World War II had massive worldwide consequences, but it also changed forever the way Americans — and American businesses — are taxed.

I asked William T. Zumwalt, a CPA from Tulsa, Okla., to describe the impact of World War II on taxes, both then and now: If you think a 35% tax rate is high, try 94%.

The consequences of the attack on Pearl Harbor still reverberate today, in dozens of unseen ways — including how Americans pay the taxes that support the national security apparatus that works to prevent such an attack from happening again.

The Roosevelt administration had been gearing up to support the war effort long before the actual attack. When bombers struck on December 7, 1941, taxes were already high by historical standards. There were a dizzying 32 different tax brackets, starting at 10% and topping out at 79% on incomes over $1 million, 80% on incomes over $2 million, and 81% on income over $5 million.

In April 1942, just a few short months after the attack, President Roosevelt proposed a 100% top rate. At a time of "grave national danger," he argued, "no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year." (That's roughly $300,000 in today's dollars).

To read more, visit:  http://www.cbsnews.com/8301-505143_162-57338266/how-would-you-feel-about-a-94-tax-rate/

http://www.reteaparty.com/2011/12/07/how-would-you-feel-about-a-94-tax-rate/

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Too-Big-To-Fail Banks Back on Senate Agenda

By Bradley Keoun and Bob Ivry, Bloomberg.com

Too-big-to-fail banks are back on the U.S. Senate's agenda.

Senator Sherrod Brown, an Ohio Democrat who co-wrote a proposal last year to limit the size of banks, plans to hold a hearing today on "new oversight authority to shield Main Street from Wall Street megabank risk," according to a statement from his office. Former Federal Deposit Insurance Corp. Chairman Sheila Bair, who has said that governments around the world are propping up a bloated financial system, will be a witness.

Last year's Dodd-Frank Act gave the FDIC authority to close large failing financial firms, and Federal Reserve officials say new rules will force the biggest banks to boost capital, making failure less likely.

"For too long, Wall Street has been permitted to operate in the dark, putting our economy at risk and leaving taxpayers on the hook," Brown said yesterday in an e-mailed statement.

The hearing will be held by the Senate Subcommittee on Financial Institutions and Consumer Protection, which Brown heads. Other witnesses include Phillip Swagel, a former assistant secretary at the U.S. Treasury Department who's now a professor at the University of Maryland, and Simon Johnson, a former chief economist at the International Monetary Fund, according to Brown's office.

Brown said the Fed failed to answer questions he posed in August about Berkshire Hathaway Inc. (BRK/A)'s $5 billion investment in Charlotte, North Carolina-based Bank of America Corp. (BAC) The Fed responded last week, saying it couldn't provide "confidential supervisory information," according to Brown.

To read more, visit:  http://www.bloomberg.com/news/2011-12-07/too-big-to-fail-is-back-on-senate-agenda-with-megabank-hearing.html

http://www.reteaparty.com/2011/12/07/too-big-to-fail-banks-back-on-senate-agenda/

What’s YOUR Budget These Days? « THE WAKING GIANT

I love it when complex things are simplified so that most people can understand.

• United States Tax revenue: $2,170,000,000,000

• Fed budget: $3,820,000,000,000

• New debt: $ 1,650,000,000,000

• National debt: $14,271,000,000,000

• Recent budget cut: $ 38,500,000,000

Now, remove 8 zeros and pretend it’s a household budget.

• Annual family income: $21,700

• Money the family spent: $38,200

• New debt on the credit card: $16,500

• Outstanding balance on credit card: $142,710

• Total budget cuts which some politicians are proud about: $385

What’s YOUR Budget These Days? « THE WAKING GIANT

Obama Wants USA To Bail Out Europe

The Greek bailout has the potential to put the global economy into a recession. Some critics say that Greece isn't getting bailed out but the actual banks that own the Greek debt are. Many say the banking establishment needs to go and shouldn't be bailed out as a risky deal goes bad. Lew Rockwell, chairman at the Ludwig Von Mises Institute, gives us his thoughts on the Eurozone debt crisis.

Lew Rockwell: The Euro and the EU were a mistake

As the European debt crisis continues to escalate, President Obama urged European Union leaders today to act quickly to resolve the eurozone crisis, saying that “the United States stands ready to do our part to help them resolve this issue.

“This is of huge importance to our own economy. If Europe is contracting or if Europe is having difficulties, then it’s much more difficult for us to create good jobs here at home because we send so many of our products and services to Europe; it is such an important trading partner for us,” the president said following an annual meeting between U.S. and EU officials. “We’ve got a stake in their success, and we will continue to work in a constructive way to try to resolve this issue in the near future.”

While Obama did not say what kind of assistance the U.S. would be willing to provide, earlier today the White House ruled out any financial contributions from U.S. taxpayers. “We do not in any way believe that additional resources are required from the United States or from American taxpayers,” White House Press Secretary Jay Carney told reporters.

“This is a European issue, that Europe has the resources and capacity to deal with it and that they need to act decisively and conclusively to resolve this problem,” Carney said.

Obama Says US 'Stands Ready to Do Our Part' for Eurozone Crisis

President Barack Obama said resolving the European debt crisis is of “huge importance” to the U.S. and his administration is “ready to do our part” in stabilizing the global economy.

Obama said a “large part” of the annual U.S.-European Union summit was spent on the impact of the crisis in the euro- zone. He spoke at the White House after meeting with European Council President Herman Van Rompuy and European Commission President José Manuel Barroso.

Van Rompuy said the U.S. and EU “both need to take strong action” to maintain the economic recovery. Barroso said he has “full confidence” that Europe will deal with the sovereign debt issue.

Iran’s nuclear program, strengthening exports and investments, Middle East peace prospects, terrorism and cyber crime also were on the agenda for annual meeting.

The summit comes as European finance chiefs are set to meet this week to discuss a rescue plan, and days ahead of a Dec. 2 report by the U.S. Labor Department on the nation’s unemployment rate for November. The rate for October was 9.0 percent.

About $4.6 trillion was wiped from the value of global equities this month on mounting concern that Europe’s debt crisis is spreading.

Obama Says Solving Euro Crisis of 'Huge Importance' to US

http://www.zerohedge.com/news/uncle-sam-wants-you-bail-out-europe

Officially it never was called an "Emergency summit." But with the European currency only days from collapse according to many economists, it was clear that European leaders came to beg the American president for help.

A closed-door conversation today between US President Barack Obama and European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso dealt with, among other things, the ongoing crisis that is spreading out of the Eurozone and into the United States.

And according to statements courtesy of Obama, the time of American intervention could be coming soon, and at a monumental cost to the American public.

The European debt crisis, says the president, is of “huge importance” to the United States, and the Obama administration is “ready to do our part” in keeping the economy overseas afloat.

As Obama attempts to postpone the impeding crumbling of the American economy — and his own administration — the president could propose a bailout to the countries of the European Union that could cost taxpayers upwards of trillions. Given that RT reported earlier today on the massive bailout extended from the Federal Reserve to the biggest banks in the country between 2008 and 2010, an offering of trillions couldn’t be out of the question.

Obama to bail out Europe? — RT

It's hard to actually write a cogent critique of this as this is just such a horrible idea, it practically renders me speechless. What exactly is our part? Are we part of the Euro? Wasn't the Euro created in part to be a competitor to the supremacy of the US Dollar? So isn't it partly in our interest, in order to keep the US Dollar the world's reserve currency, to see the Euro fail horribly? And one more question. The money will come from where exactly? Aren't we ourselves faced with a debt/GDP ratio of 100% with an annual deficit equal to 11% of GDP? Where exactly are we going to find the hundreds of billions, if not trillions, of dollars necessary to stem this crisis? There was a rumor this weekend that the IMF was readying a bailout of just Italy which could have totaled $800 billion, so if you add Spain, Portugal and Greece to the mix (and potentially France) the numbers get very serious very fast (of course the rumor was swiftly denied, I guess it was too early to mention that discussion point). Even if Obama is simply referring to the bailout of Europe via the IMF, our "quota" is almost 18% of the funding so for Italy alone this could cost the American taxpayer $144 billion. And chances are it would be much higher as Italy's quota is over 3% and all the countries smaller than Venezuela contribute 28% (how exactly do you ask third world countries to bailout out a lazy first world country?) so my guess is some IMF participants simply won't participate. Try getting that through Congress. Senate Democrats can't even pass a budget. 


The Federal Reserve option just isn't much better. So we are going to print money to buy European bonds now? Our monetary base is $2.6 trillion right now so printing of the magnitude that would be required could have severe a severe inflationary impact, hurting American consumers as commodity prices will undoubtedly skyrocket. As an extra kick in the face, the Euro will actually get even stronger as we will be printing massively at the same time the ECB isn't. Just brilliant. 


For once, it might be a good thing that Team Obama is in campaign mode 24/7. As soon as they see their poll numbers dropping (and they will, like a rock), they will probably chicken out of any actual bailout and do nothing but the usual handwaving. Unless they want to get to the point where even Ron Paul can beat them in the general election. 

Is Obama Going to Bail Out Europe?