Monopoly Money

In case you haven’t heard, the hundreds of billions of dollars we have printed and borrowed to bail out our own banks and businesses that are “too big to fail” has now reached a whole new level of insanity. Our freshly printed dollars are now leaving our own shores to bail out the banks of Europe and their investments in the failed welfare states of Europe. Yes, “Helicopter Ben” Bernanke is now working with European central banks to infuse liquidity and prop up European banks that are heavily invested in bonds from Portugal, Ireland, Italy, Greece and Spain, affectionately known in the investment community as the “PIIGS.” No doubt pig slop is worth more than bonds from these bankrupt countries.

So without any input from you or I or our elected representatives, the gods at the Fed are going to send hundred of billions or trillions of our dollars to Europe in an attempt to forestall the inevitable collapse of their failed socialism, an experiment made possible by our military welfare. Our dollars are going to ensure the generous pension checks, free health care and the salaries of all those bureaucrats necessary to keep their nanny states running and the eternal adolescents from rioting. And we can’t forget the generous welfare benefits given to a those Muslim immigrants so that instead of working they can sit around and plan jihad against the self-loathing and deteriorating European states and culture. With all our own economic problems and mountains of debt, is this really where our money should be going?

Of course, the Obama administration doesn’t engage in any activity for altruistic reasons. It does so either for ideological reasons or to help or pay back supporters. In this case, one of the companies which will experience devastating losses if European banks and countries start defaulting is Obama’s favorite American company, General Electric. GE’s balance sheet looks much like America’s, way too much debt and not enough cash. It has a lot of exposure to credit cards and mortgages in Europe and losses of tens of billions in those markets will put it on the verge of bankruptcy. Of course it won’t fail, we the people have generously guaranteed its debt through 2012 and another bailout would not be hard to get. The only reason Jeff and Co. can run GE like this is because they know they have friends in high places and they are only interested in getting the highest compensation they can while they can as their business model dooms an American icon. Its the Solyndra model writ large.

It is important to understand that there is no real wealth available to bail these banks out. Europe is broke. Now that we have joined the European economic club of anemic growth, we don’t have trillions of dollars in wealth lying around either. That means only one thing. The money for these bailouts is brand new off the printing presses. To understand why this is not only horrible economically but just plain immoral, I have reprinted the following excerpt from the Fed section of “Leave Me Alone; A Patriot’s Plan for Restoring Pride and Prosperity in America” available at www.leavemealonenow.webs.com

"There is a very simple reason why we intuitively know we are being screwed by this system, a system that benefits those at the top, or the insiders, and leaves the rest of us holding a bag of excrement. To understand why this wholesale printing of money benefits the government and their friends in the banking industry and hurts the rest of us, we need to look at it honestly for what it is-legalized counterfeiting. Counterfeiting is illegal for you and I and for good reason. It erodes confidence in, and the value of, the currency. Remember one of the primary premises of this work, what is wrong/bad/immoral for the individual is wrong/bad/immoral for the government. When the government, through the Fed, prints money, the effects are the same. The currency loses value and eventually, people lose confidence in it.

The question is, who benefits from counterfeiting? Obviously, the counterfeiter does because he goes out and exchanges his fake money for goods and services at their current value, based on the amount of money in circulation. Think of it in a closed neighborhood. In that neighborhood there was one million dollars in circulation and all goods and services were based on that amount of money. The counterfeiter prints another million. He goes out and spends it all, buying a new house, a car and whatever else he wants. He buys everything at current prices based on the one million dollars in circulation. However, he has now doubled the money supply which means money becomes cheaper and goods become twice as expensive. Each time that fake money changes hands, it loses buying power and the average people in the neighborhood suffer from inflation. The crook got his stuff when the currency had twice as much value but everyone else had their purchasing power cut in half.

Now elevate it to the national level. The Fed prints two trillion dollars and trades it for treasuries so the Federal Government now has an extra two trillion dollars to spend. Who gets that money first? Obviously, anyone who works in government receives that money before anyone else. After that, it goes out to all those who have lobbied for and received government contracts and benefits. It goes to bailouts to those whose friendship with Washington has “merited” them such treatment. The banks receive that money as deposits that they use to lend to their friends and clients. They all get to spend that “new” money at current values. However, as that money makes its way through the system, as those union workers and contractors spend it and banks loan it, money becomes cheaper because there is more of it. The rest of us who receive it last find our dollars buy less than they did last year, last month or even last week. It is redistribution of income from the middle class and the poor to the rich and connected.

Of course, the way all that happens in practice is not so simple. Tim Geithner doesn’t walk over to the Fed and hand Ben Bernanke a suitcase full of treasuries and leave with a suitcase fill of freshly printed hundred dollar bills. The Federal Reserve buys and sells treasures on the open market through a broker, or a series of brokers like Goldman Sachs, not from the treasury directly. These brokers compete with one another under the New York Fed through an auction process, keeping the whole process neatly confined among the Wall Street elite.

The fact is this, wherever power is concentrated, corruption is rampant. The bigger the government, the more corruption. With the amount of money flying around and out of Washington, a process only made possible by the Fed, corruption is precipitated on an unheard of scale where billions of dollars are paid out to those with the best paid lobbyists and more intimate connections. It is a system that is based on an immoral premise, counterfeiting, and therefore it breeds immorality. The only way we are going to even begin to change Washington is to eliminate the very foundation for this perverse and wicked edifice."

“Lenin is said to have declared that the best way to destroy the capitalist system to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis for society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes

President Obama's America

All you really needed to know about President Obama’s understanding of America was found in one of the introductory lines of his "jobs" speech. Obama’s America is one in which "everyone gets a fair shake and does their fair share." This is nothing more than slang for the core principle of communism as explained by Karl Marx; "From each according to his ability, to each according to his need." Obama’s vision is Marx’s vision and everything in this speech is explained by this statement.

To bring about the communist ideal where private property is abolished and everyone is made "equal", an all powerful government needs to be established to equitably redistribute the property the greedy capitalists have stolen from the poor working man. Obama repeated his call for a war on the successful, vowing to take even more from those who actually create wealth and prosperity. He brought up his favorite billionaire, Warren Buffet, again. He said even Warren agrees that he doesn’t pay enough taxes and that Warren said that government should take more of his money. Warren should shut up. If he wants to "contribute" more, no one’s stopping him. He should put his money where his mouth is instead of shielding as much of his income and wealth as he can from taxes and fighting the IRS to keep from paying the taxes he already owes. But Warren is a prime example for Obama’s belief that all rich people are really stingy, cruel, immoral people who are incapable of compassion and therefore must have it forcibly extracted from them. If poor Warren, who has so much more than he needs, won’t give even when he says he should, then it is obvious that the only way the rich are going to help those "less fortunate" is if the government shows up with a gun and takes it.

In Obama’s understanding of America, we became a great nation because of government and only government intervention and expansion can make us great again. It was when we abandoned the "rigid idea of what government could and could not do" , i.e. the Constitution, and passed the great "entitlement" programs that America became a nation worthy of greatness. It is obvious that our form of government as described in the Constitution is an impediment to Obama’s communist vision. For Obama, government should be able to confiscate, redistribute, regulate and control without restraint. To that end he must work to bring down the structure of government that exists within the constraints of the Constitution and replace it with an autocratic form much more conducive to implementing his vision. He has already shown himself to be more dictatorial than any other president. He rules by fiat whenever he can get away with it. He ignores the rules or makes them up as he goes along. If congress can’t or won’t act, it is his prerogative to do so.

But to really achieve his goal, he must collapse the current system. This explains his push for a larger and larger payroll tax reduction. No statist ever wants to reduce taxes but this has been a theme in the Obama administration for a while. Why? Because all the spending and borrowing is meant to collapse the system. We all know Social Security is a Ponzi scheme we have been forced to contribute to and is, therefore, by definition, unsustainable. The dates for its demise under the current structure vary but there is no question that if Social Security and Medicare/Medicaid continue as they are, they will break the bank, a bank that is already broke. Obamacare is accelerating that day for the heath care side of the equation. If we suddenly cut in half the amount of money we are contributing to the Social Security "trust fund", will it not break sooner? The crisis these bankrupt entitlements create will be just the excuse a statist will need to step in and take even more wealth and control; and the majority of Americans will ask for it. We want our "free" health care and our pensions and if we are convinced after many years of liberal indoctrination that Obama is right, the Constitution is an impediment to our happiness, we will allow the autocrats to ignore or scrap it and accept whatever keeps the goodies flowing.
In Obama’s America we are not allowed to be on our own, or write our own rules. No, we must take care of each other and government exists to make sure we do. Without this bill children will not be educated, roads will not be repaired, veterans will not get jobs, teen-agers will spend their summers playing video games and America will never out build or out innovate the rest of the world. If government doesn’t spend a half trillion dollars, America is finished. Of course he never said where that money was coming from, only that it was "paid for." By whom? The rich? If you confiscated all the wealth of the rich, it would fund the government for a period of weeks, at most. Savings elsewhere? Laughable. This president and even the Republicans in congress haven't shown any ability to cut anything substantial from a federal budget for which "bloated" seems an inadequate description anymore and suddenly they are going to come up with a half trillion dollars of savings this year? No, we will all pay, we and our children and grandchildren and great grandchildren through debt and inflation. All to ensure jobs for government employees and union members.

President Obama, your vision of America is most un-American. America is not a place where everyone gets a fair shake and does their fair share. Life is not fair. The circumstances of everyone’s birth are different and very unequal. Some are born poor, others rich. Some are born on the mean streets of the inner city, others on expansive farms. Some have parents that spoil them, other have parents that neglect them. In most places in the world and throughout history, birth determines opportunity. Once a serf, slave or peasant, always a serf, slave or peasant. That is "unfair" and unjust. America was the first to reject this idea. Every man is equal in his capacity for success and in America, no matter what a man’s previous circumstances were, he had the opportunity to try to make what he could of himself. He owned what he acquired through his hard work, no one else could claim it. Some accumulated more than others because they were smarter or harder working or even "luckier" but the whole world benefited from the innovations and wealth produced by truly free men.

President Obama, government did not make America successful. America was successful because its government took little and did little. America did not become compassionate because of government. America was, and is, the most compassionate nation on earth because of our religious heritage. If, as you said in your conclusion, you really want to see America great once again, cure her ills, and restore hope and prosperity to all her people, you need not spend another dime. Just give us opportunity. Opportunity to succeed and keep the fruits of our success. Let us work without a government bureaucrat looking over our shoulder with his hand in our pocket. Freedom, not coercion, is the key to peace and prosperity. Until we have people in government who actually believe that and have the courage to act on it, we are condemned to continue our decline with this president leading the way.