Message to Egypt

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. --That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."


Form a new government that recognizes your rights to life, liberty, property and happiness and you can put this turmoil behind you.  You don't need to choose between law and order and making the government live by the rule of law.

A More Possible Balanced Budget Amendment

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‎"Government ought to be as much open to improvement as anything which appertains to man, instead of which it has been monopolized from age to age, by the most ignorant and vicious of the human race. Need we any other proof of their wretched management, than the excess of debts and taxes with which every nation groans, and the quarrels into which they have precipitated the world?" -- Thomas Paine


I'm in favor of a constitutional amendment that requires any new borrowing by government to be coupled with an immediate tax that pays off the new debt within ten years. 


That discipline will allow for emergencies but still force Congress to pay the bills.  I understand many would prefer an amendment that allowed for no borrowing at all, but that is considerably harder to get.  Let's not let the perfect be the enemy of the good.

Related articles

• GOP senators prep balanced budget amendment (thehill.com)
• Rethinking a balanced-budget amendment (politico.com)
• Senator DeMint's Balanced Budget Amendment (dakotavoice.com)
• Senator Max Baucus Introduces Constitutional Amendment to Reverse Citizens United | People For the American Way Blog (allthingsreform.org)

The Fed Has Loaned Banks Trillions

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According to this Christian Science Monitor article, the Federal Reserve has loaned banks trillions of dollars.  More than $9 trillion from a single program.  And, yes, Goldman Sachs was one of the happy recipients.

How can anyone look at this mess with a straight face and still think the Fed should continue to exist.

Its easy money policies blew up a bubble in the market for the most expensive thing most Americans will ever own, their homes.  And in a country where homes were already heavily subsidized by interest deductions, capital gains exclusion, first-time buyer loans and grants, Fanny and Freddy nothing-down loans and probably a half dozen other things.

One can argue that all this was necessary to keep depositors from losing their money.  But aren't they going to be losing it anyway by the time we have a full accounting of all of these swindles?

How much better things would be if people knew they could lose their deposits when they put them into the bank.  Most would not unless a bank proved to a reputable rating firm that it wasn't investing recklessly.  We'd have individual institutions failing when they got into trouble, not the entire system going down in secret until the day arrives when our leaders tell us "no one could have seen it coming."

Related articles

• Federal Reserve's 'astounding' report: We loaned banks trillions - Christian Science Monitor (news.google.com)
• Fed Fund Data: Millions, Billions, Trillions (blogs.wsj.com)
• Wall Street Pledged $1.3T In Junk As Collateral For Fed's Overnight Loans (huffingtonpost.com)

Equal Treatment Under the Law

Image via WikipediaAll people who fly should be treated equally under the law. If you're a fat cat celebrity, businessman or politician flying in private jets, you ought to have the same groping or ionization options as the rest of us.

Maybe then the government would stop this nonsense.

Don't Worry: It's Free!

Image by infomatique via FlickrThe pattern with the government is the same from situation to situation.

1) They make something free

2) The market for private delivery of the same thing dries up. Those few that still want to pay must pay much more than they would have before the government started giving it away for free because the market has shrunk so much

3) The same thing happens to alternatives to the thing they made free

4) Decisions are now made by those delivering the process instead of the person choosing between the alternatives. Costs and benefits are no longer weighed together or by the person that cares about the outcome the most. Considerations easily described in resumes and sound bites become uber important

5) The corporations and unions move in and start influencing the decision makers, carving out expensive niches for themselves

6) Things that truly matter but aren't profitable for the politically connected fall by the wayside

7) People getting something free put up with it because ditching the free thing for same thing done right is now a super expensive alternative

8) Delivering the free thing grows more expensive, much faster than the rate of inflation

9) Eventually the tax payers fight back and the costs of delivering the thing are slashed, along with quality. The corporations and unions have to spend and/or threaten more to hang on to their protected positions.

10) Those getting the service for free now have to spend all their time at rallies and fine tuning the stories about how badly they're being treated.

Happens with health care. Happens with roads. Education. City services. Anything they give away for free or heavily subsidized.

Obama Warns Asian Countries on Exports

Image via WikipediaIn a speech today, Obama urged the Asian countries to buy more US products. "One of the important lessons the economic crisis taught us is the limits of depending primarily on American consumers and Asian exports to drive economic growth."

As if its the selling of products to Americans that's the problem and not the massive borrowing the US has been doing.

All the speeches in the world will not resolve US trade imbalances. Imports will ALWAYS be greater than exports when a country consumes MORE than it produces. When you borrow trillions and subsidize consumer borrowing by keeping interest rates abnormally low, imports HAVE to go way up. You're borrowing the LABOR of others; it has to be delivered somehow. That means someone in some other country is working to produce something. Borrowing creates jobs alright. Just not for the borrower.

Related articles

• Obama seeks more Asian market access (cbc.ca)
• You: Obama Suggests a Global Economy Less Dependent on U.S. (nytimes.com)

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If dollars are created in order to stimulate, everybody pays higher prices because of inflation. Demand has merely been moved, a little from everybody in random amounts, depending on what they by and where the stimulus is spent, becomes a lot for whoever is handed the stimulus first.

There's no magic. Nothing is created. Those very small amounts are very difficult to measure. The constant small changes happening in markets hide the tiny losses the stimulus creates via price changes.

If you were the person handed those stimulus dollars and you decide to burn them instead, no one is affected. The creation and the dollars balance each other out.

But there are real effects of stimulus. There is the loss of the labor of those who would have had to work to produce the free stuff they're getting because of stimulus. There's a real decline in the total amount of capital when capital is invested in unproductive things that people are not willing to pay for and that do not result in the capital being paid back and even increased.

If you don't spend the dollar bills you have, they don't compete with other dollars and prices are slightly lower for everyone. Which is actually what's happened since the housing bubble collapsed and everybody's reduced their spending. They are getting a lot more for their money whenever they spend.