Contrairimairi has forwarded this link to Ron Polarik's blog. Polarik offers an in-depth analysis of the question of the forgery of the Obama birth certificate. I'm trying to understand if the judge who supposedly checked out the copy in one of the cases was able to assess Polarik's claims.
Polarik writes of President-elect Obama's birth certificate that the Obama campaign had posted on a left-wing blog:
"from the first time I saw the Daily Kos image, or what I now call, "Obama's bogus birth certificate," that something was just not right about it. As someone who has scanned hundreds of thousands of documents in his lifetime, I had a hard time accepting that this was an original scan image made from an original paper document. As Fate would have it, right then, on June 13, I was looking at the conclusive evidence that the text on this image had been graphically altered, or "manufactured," as my first blog post would claim."
Polarik writes that he was subjected to harrassment from pro-Obama goons, which sounds like business as usual for the thuggish Obama pro-closed-society camp.
Polarik quotes from Authenticate 360, a document security expert:
Birth certificates are generally used as “breeder” documents to gain other identity documents and to perpetuate fraud. But unlike Social Security cards, birth certificates are issued by hundreds, if not thousands, of entities, with little regard to consistency or security. An accurately forged birth certificate is a dangerous document, allowing the bearer significant access to everything from driver’s licenses to passports...The increasing availability and affordability of high-quality digital scanners and copiers is a constant threat to the authenticity of government issued documents.
Polarik writes:
"There is conclusive and irrefutable evidence that the COLB image created and distributed by Obama's campaign to the Daily Kos, Annenberg's Factcheck, and the St. Pete Times, Politifact, is, unquestionably, a false identification document. Furthermore, there is conclusive and irrefutable evidence that the photos taken by Annenberg's Factcheck, in collusion with the Obama campaign, are themselves, false identification documents, having been made from the same false identification document image, as well as from additional false identification documents created for the same purpose; namely, to proffer these false identification documents as true reproductions of a genuine, Hawaii-issued and certified, "Certification of Live Birth" document, and thereby, intentionally deceive the American public into believing that Barack Hussein Obama is a natural-born citizen of the United States, and thereby, fully qualified to become their President...
"...here we are, more than twenty months after Obama announced his candidacy for the Presidency, and nearly three weeks after the election, and Obama still refuses to show his real birth certificate!"
Polarik goes on to write:
"To validate my findings that the text in this COLB document image was the result of graphic alternations, and not a result of any printer or scanner artifacts, I made over 700 test scans and images using an actual paper COLB and different scanners that were subjected to different combinations of scanning and image parameters. I was finally able to replicate the Kos image so closely that other image experts thought it was the same Kos image, and not my “clone.”
"From this date forward, when I first discovered the evidence of tampering, and regardless of the unfamiliar format of the COLB and the questionable information it contained, I collected a great deal of additional evidence, that the scanned image alleged to be a true copy of Obama’s original COLB was forged, and that this altered image of an official state-issued document is nothing less than a false identification document as defined by Chapter 18, Section 1028 of the United States Code.
"All of my findings pertaining to a single source image and the four copies made from of it that are still posted on the four (4) websites, DAILYKOS.COM, FIGHTTHESMEARS.COM, FACTCHECK.ORG, and POLITIFACT.COM, as referred to and described above, are outlined in my Final Report"
After reviewing birth certificates that appeared on Fact Check and Daily Kos, Polarik concludes:
"I have thoroughly examined the photographs that FactCheck published, and have subsequently found clear and irrefutable evidence of tampering with both the alleged COLB objects photographed and with the photos themselves. One of those COLB objects was, in fact, a printout of a forged document image with the Seal superimposed onto it for the final pictures."
"With my experience and specialization in document imaging, my findings are conclusive and irrefutable that the COLB images posted by Obama to his campaign website, fightthesmears.com, to the dailykos.com, a pro-Obama blog, to FactCheck.org, a pro-Obama political research group, and to Politifact.org, are, in fact, image forgeries with the intent to defraud the American People into believing that these images were digitally scanned from Obama’s genuine, “original” birth certificate."
Of the certificate that appeared on the various pro-Obama sites, Polarik writes:
"Specifically, I saw that the text in this image bore the telltale signs of being graphically altered after the image was created. From June 13 onwards, the unfamiliar format of this document, and the questionable information that it contained, became tangential to my discovery that the scanned image alleged to be a true copy Obama's original COLB, was a forged document image. Now, with four months worth of research and supportive evidence behind me, I can now say, without any reservations, that my initial recognition of this image forgery was absolutely correct."
"...That is, the original text had been graphically altered from what was originally written there. The signs of this "overwriting" were patently obvious to me, yet, as I was soon to learn, not at all obvious to anyone else (anyone, that is, who had personally seen and analyzed this COLB image, who knew enough about how COLB's are made, and who wanted to prove to the public that it was a forged image)."
"What is particularly important for the reader to realize is that, after four months of controversy over a single image allegedly scanned from Obama's original birth certificate, that image is still the only one ever made. Any time anyone on the Left is asked the birth certificate question, what we get back is a rhetorical question, like "Do you really think that a US Senator running for President would fake his own birth certificate?" How come they never ask why, with over $600 million dollars collected in campaign contributions, the Obama campaign could only afford to produce one lousy-looking image copy?"
"...NO, it was never intended to be a high quality image, which is how "high resolution" should be defined...Why is this discussion relevant to spotting a potential image forgery? Because, a forger knows that the evidence of graphical manipulation is more likely to be detected in a larger image of higher quality than in a smaller image of lower quality...
"No matter how many challenges to my conclusions have come my way, I have never wavered from the inescapable truth, that an image of someone's real COLB had been markedly altered to look like it belonged to Obama. Or so the forgery conspirators thought.
"To summarize, there was one, original source image that was forged, and four copies of this source image were distributed to (1) the pro-Obama Daily Kos blog, (2) Obama's Fight The Smears campaign website, (3) Annenberg's Factcheck website, and lastly, the St. Petersburg times Politifact website...
"The forgery began its life as an actual scan of a real, 2007 Hawaiian "Certificate of Live Birth," (COLB) that belonged to someone other than Obama (No, not his sister). The image acquired by the scanner was then saved as a JPG file. This is the file that was sent to the person who would do the actual forging. Whoever that person was, he or she was sent the information that was to go on the image. I doubt that the forger was the same person who did the scan (or scans, plural. In my analyses, I discovered that there had to be more than one COLB image used to make the forgery). Whoever did the scan did not have Obama's real birth certificate on hand, nor did he or she pull the birth information out of thin air. Only Obama, himself, knows the full truth of his birth origin, and only Obama would know which parts of it needed to be "modified." Somehow, and by some mean, that information needed to be relayed to the forger.
"The most salient point about the person who created the forgery (a person I dubbed, "Dr. X") is that he or she was not very diligent in its construction, even though the process used was sound. The original image, that served as the basis for the forgery, was made from a scan of a real, 2007 COLB that belonged to someone other than Obama (No, not his sister). This image acquired by the scanner was then saved as a GIF file (an image format different from the JPG format of the four image copies posted online). This GIF image was then imported into a graphics program (NOT Photoshop) where the existing text was covered over with portions of the background pattern, and on top of that, in the spaces where the original text formerly information appeared, fraudulent information was typed in to make the image LOOK like it was Obama's COLB. I say, "fraudulent" information, because if it were true, then Obama would have had no reason to refuse showing a real, paper copy of his COLB from Day One."
"Three months later, no other "reporters" have ever received a copy of this "birth certificate" image, or any other birth certificate image, for that matter, from Tommy Vietor or any one else. To reiterate, there has been one, and only one, image alleged to have been scanned from Obama's "original birth certificate," and that the only people alleged to have received a copy of this document image from the Obama Campaign have been (1) Markos Moulitsas, the creator of the Daily Kos, a pro-Obama blog, (2) FactCheck, a pro-Obama political research group, and (3) Politifact."
"When Barack Obama Jr. was born on Aug. 4,1961, in Honolulu, Kenya was a British colony, still part of the United Kingdom’s dwindling empire. As a Kenyan native, Barack Obama Sr. was a British subject whose citizenship status was governed by The British Nationality Act of 1948. That same act governed the status of Obama Sr.‘s children."
"Since Sen. Obama has neither renounced his U.S. citizenship nor sworn an oath of allegiance to Kenya, his Kenyan citizenship automatically expired on Aug. 4,1982.”
Polarik goes on to discuss additional analyses. He concludes:
"To put it bluntly, the Factcheck photos have been "Frankensteined," just as the Factcheck scan image was cobbled together with the parts of different COLBs. The use of the term, "document" is simply for expediency sake, as no, single "real" document was used for these photos or for the scan image."
All of this is going to take some time to digest. I suggest that you start reading what Polarik says as I am.
Tuesday, November 25, 2008
Bob Robbins Asks President-Elect Obama: What's Wrong with This Picture
I just received the following e-mail from Bob Robbins:
>WHAT’S WRONG WITH THIS PICTURE ?
... Sorry to bother you, Mr. Obama, Sir?
Excuse me, Mr. Obama, ... I mean President-elect Obama, sir. Um, ... I know you are busy, and important, ... and stuff.
I mean, ... running for president is very important and, ... umm, ... ah, ... I hate to bother you. I’ll only take a minute, OK?
See, … I have these missing pieces that are holding me up, and I was wondering sir, if you could take time out of your busy schedule and help me out. You know, - … no big deal, … just some loose ends and things.
I can't seem to get some information I need to wrap this up. These things seem to either be “locked” or “not available”. I'm sure it's just some oversight or glitch, or something ....... So, if you could you tell me where these things are .....
I, er,… ah, … I . . . have them written down here somewhere, ... oh, wait. Sorry about the smears. It was raining out. I'll just read it to you.
Could you help me please find these things, sir?
1. Occidental College records -- Not released
2. Columbia College records -- Not released
3. Columbia Thesis paper -- Not available, locked down by faculty
4. Harvard College records -- Not released, locked down by faculty
5. Selective Service Registration – Questionable, … at best (under review)
6. Medical records -- Not released … (except for a one page summary)
7. Illinois State Senate schedule – “Not available”
8. Law practice client list – “Not released”
9. Certified Copy of a valid original Birth certificate - - “Not released” (lawsuits pending)
10. Embossed, signed paper Certification of Live Birth – “Not released” (lawsuits pending)
11. Harvard Law Review articles published -- None
12. University of Chicago scholarly articles -- None
13. Your Record of baptism -- Not released or “Not available”
14. Your Illinois State Senate records —“Not available”
>WHAT’S WRONG WITH THIS PICTURE ?
... Sorry to bother you, Mr. Obama, Sir?
Excuse me, Mr. Obama, ... I mean President-elect Obama, sir. Um, ... I know you are busy, and important, ... and stuff.
I mean, ... running for president is very important and, ... umm, ... ah, ... I hate to bother you. I’ll only take a minute, OK?
See, … I have these missing pieces that are holding me up, and I was wondering sir, if you could take time out of your busy schedule and help me out. You know, - … no big deal, … just some loose ends and things.
I can't seem to get some information I need to wrap this up. These things seem to either be “locked” or “not available”. I'm sure it's just some oversight or glitch, or something ....... So, if you could you tell me where these things are .....
I, er,… ah, … I . . . have them written down here somewhere, ... oh, wait. Sorry about the smears. It was raining out. I'll just read it to you.
Could you help me please find these things, sir?
1. Occidental College records -- Not released
2. Columbia College records -- Not released
3. Columbia Thesis paper -- Not available, locked down by faculty
4. Harvard College records -- Not released, locked down by faculty
5. Selective Service Registration – Questionable, … at best (under review)
6. Medical records -- Not released … (except for a one page summary)
7. Illinois State Senate schedule – “Not available”
8. Law practice client list – “Not released”
9. Certified Copy of a valid original Birth certificate - - “Not released” (lawsuits pending)
10. Embossed, signed paper Certification of Live Birth – “Not released” (lawsuits pending)
11. Harvard Law Review articles published -- None
12. University of Chicago scholarly articles -- None
13. Your Record of baptism -- Not released or “Not available”
14. Your Illinois State Senate records —“Not available”
Obama Eligibility Issues
I just received the following e-mail to propagandist media outlets from Bob Robbins. Unfortunately for Bob's ulcer, he still believes that they are mass or mainstream media as opposed to propagandists:
>Please report on these activities. I beg of you - for the good of the country! This is probably the biggest story since the beginning of television, and you've almost totally ignored it. Even if it turns out good for Obama, there is a huge story in the number of people who are deeply concerned about this and the number and quality of lawsuits in-work with more to come. Report on THAT.
There are two different lawsuits active at the US Supreme Court right now. One is scheduled for a full conference of all nine judges on December 5. Another is awaiting response from the Obama camp by December 1. So far, Obama has resisted all attempts by journalists and courts to obtain information. He refuses to supply any verifiable data relative to his birth or citizenship. To millions of Americans, that sure looks like he's hiding something!
The only available documents are posted on websites as photographs or “scans” of purported real documents. The existence of or veracity of these real documents have been in question for some time. As of this weekend, technical analysis completed and underway have revealed, with very little room for error, that these documents have been forged or substantially altered.
Dear reporter, journalist, newscaster, commentator or whatever you wish to be called; - THIS IS NEWS!
No specific facts of the situation are above dispute - either pro or con - but the abundance of credible information and the high level of legal activity make this an important topic. Not only should you be reporting it, but you should be involved in significant investigative journalism.
How can you promote your role as a fair and balanced information source when you do not even mention these critical activities? And, many of us watching and listening to you don’t buy for a second that this is because the results aren’t final yet. You always report on many other significant activities “in progress”.
Continued silence is not helping anyone. You are not only allowing, but aiding and abetting a great sore to fester. Better to address it sooner than later. And, it will NOT go away by itself. It will likely only get bigger and bigger.
Please pass this on to many others, blogs, etc., and ask them to ALSO send copies to Fox News, as well as to send Cc and Bcc copies to numerous other recipients.
>Please report on these activities. I beg of you - for the good of the country! This is probably the biggest story since the beginning of television, and you've almost totally ignored it. Even if it turns out good for Obama, there is a huge story in the number of people who are deeply concerned about this and the number and quality of lawsuits in-work with more to come. Report on THAT.
There are two different lawsuits active at the US Supreme Court right now. One is scheduled for a full conference of all nine judges on December 5. Another is awaiting response from the Obama camp by December 1. So far, Obama has resisted all attempts by journalists and courts to obtain information. He refuses to supply any verifiable data relative to his birth or citizenship. To millions of Americans, that sure looks like he's hiding something!
The only available documents are posted on websites as photographs or “scans” of purported real documents. The existence of or veracity of these real documents have been in question for some time. As of this weekend, technical analysis completed and underway have revealed, with very little room for error, that these documents have been forged or substantially altered.
Dear reporter, journalist, newscaster, commentator or whatever you wish to be called; - THIS IS NEWS!
No specific facts of the situation are above dispute - either pro or con - but the abundance of credible information and the high level of legal activity make this an important topic. Not only should you be reporting it, but you should be involved in significant investigative journalism.
How can you promote your role as a fair and balanced information source when you do not even mention these critical activities? And, many of us watching and listening to you don’t buy for a second that this is because the results aren’t final yet. You always report on many other significant activities “in progress”.
Continued silence is not helping anyone. You are not only allowing, but aiding and abetting a great sore to fester. Better to address it sooner than later. And, it will NOT go away by itself. It will likely only get bigger and bigger.
Please pass this on to many others, blogs, etc., and ask them to ALSO send copies to Fox News, as well as to send Cc and Bcc copies to numerous other recipients.
Obama Advocates Inflation, Big Government
The Wall Street Journal reports that Barack Obama is arguing for deficit spending and a sharp increase in government.
The Journal's Jon Hilsenrath and Jonathan Weisman report that President-elect Obama includes in his spending and stimulus plan:
"a list of priorities that included: creating 2.5 million jobs, and spending on roads, bridges, schools and clean-energy programs. Jason Furman, the Obama campaign's economic policy director, briefed Democratic leaders and conservative "Blue Dog Democrats" last week on the shape of the proposed stimulus, according to senior House aides...
"...The advisers Mr. Obama named on Monday hail from the centrist part of the Democratic Party. During the Clinton years they played an important role in turning a budget deficit into a surplus. Now they argue the worsening economy requires steep deficit spending."
There is considerable question as to what the current economic malaise really is. In the 1930s the Fed (not with the support of Herbert Hoover, as many people believe) decided to contract the money supply (i.e., raise interest rates), which led to the stock market crash, subsequent bank failures and unemployment. Franklin D. Roosevelt appointed Marriner Eccles to be Fed chairman, and he began to re-inflate. In 1935 and 1936 there was a bull market in stocks. In 1936 Eccles in effect tightened again, to the chagrin of the Roosevelt administration, and there was a second crash in 1937, leading to a market bottom. The re-inflation associated with World War II led to a subsequent 65 year inflation that continues.
In the current situation there has been no cutback in the money supply. Interest rates are at all time lows. The excessive liquidity of the Bush years had led to recklessness among bankers, to include both low-quality lending to sub-prime borrowers and willingness to provide credit guarantees, swaps or derivatives concerning those loans across financial institutions. From what I can gather, few bankers were able to assess the risk of the swaps or derivatives which they transacted, and they panicked this year, leading to their unwillingness to lend. This kind of psychological reaction to risk can be undone by adding a few extra shots of heroine. The Fed has added a few kilos.
Banks have slowed lending because of their panicked reaction to their own incompetence. Lending leads to increased circulation of money, which economists call velocity. Velocity increases the amount of money in circulation, because when a borrower deposits the loan, the bank can lend out that deposit. A shift in velocity can cause a short term reduction in the amount of money and a slowdown in economic activity. The velocity of money probably fell during the past few months of the recent bankers' psychological panic. However, it is important to note that not many (if any) commercial banks have failed. This contrasts with the Great Depression, when a large number of banks failed. AIG, an insurance company which owed money to banks was not allowed to fail, so the Fed took action several steps away.
I do not believe that the Fed was able to assess either the risk or the necessity of bailing out AIG or Bear Stearns, nor of the likelihood of Citibank's failure. This was done by guesswork akin to how an investor decides on how to invest in a stock. Someone once said that throwing a dart at a newspaper is as good a way to choose a stock as what portfolio managers do, and the quality of the Fed's decision making is probably even worse than that.
The bailout took two forms. First, a large amount of money was borrowed and used to purchase the complex derivatives from investors. This not only protected the economy but also the well being of a wide range of wealthy investors, including many in foreign countries who have no direct effect on the United States's economy. Again, the actions that the Fed has been taking have been several steps removed from any important economic effects on the nation and have the advantage, much to the pleasure of the propaganda outlets, of helping wealthy investors, the Ochs Sulzbergers, Rupert Murdoch, etc.
Second, the Fed created a large amount of new money and deposited it in the various commercial banks by purchasing bonds. This contrasts with the Great Depression, where the Fed cut back on the money supply. In other words, the situation now may have surface behavior in common with the Great Depression, but little else. So far, it seems to bear the same relation to an actual bank run as as a Hollywood movie's depiction of an earthquake is to a real earthquake. Of course, many billionaires have received direct income transfers in the name of helping the poor...or have the Keynesians dropped that pretense and just started saying what they've really meant all the time---the wealthy should be subsidized via the stock market at the expense of workers and the poor, who should have reduced wages and opportunities?
The result of credit expansion is normally twofold. The average person pays higher prices, and stockholders and large borrowers, i.e., the wealthy (not the young and poor as William Greider incompetently claims in his book Secrets of the Temple ) gain. Stockholders gain because lower interest rates increase the present value of future earnings--a lower interest rate discounts the future revenue stream less and so increases shareholder wealth. Borrowers (to include large corporations, real estate developers, hedge funds and the like) gain because interest payments are reduced and inflation reduces the value of the loan in the future. In contrast, poor people who cannot borrow because they aren't credit worthy, pensioners, the elderly who have anything more than social security but are not big stock market investors (i.e., the lower middle class elderly) pay through higher prices. Old ladies begin to eat cat food while William Greider's buddies on Wall Street see higher returns. The Democrats used to claim that this process helps the poor, and Barack Obama reinvents this tradition, as opposed to the Republican tradition of not claiming this but doing it anyway.
Obama's solution to this problem is to further enhance the amount of borrowing and inflation. His advisers are Keynesians (as are Bush's, there is no difference there) and they advocate several nonsensical ideas. First, you get the government to spend more. This in turn accelerates velocity and "stimulates" the economy. For instance, you have people dig ditches and then fill them up again, and Keynesian economists believe that this is good for the economy because demand has been stimulated. They do not contemplate that wealth is not money but real goods, and government does not produce goods that the public generally wants. As well, their assessment of a decline in "aggregate demand" depends on the existence and neutrality of the slowdown. It is not clear that there really is a slowdown. Rather, the banks may have exaggerated the risk of the derivatives in their own minds, and when they settle down there will be increased velocity. This will be an inflationary period in that case because the amount of reserves that Bush has created has been immense.
I have previously argued that George Bush = Barack Obama and we can see this in Obama's plan for a stimulus package. Obama aims to further increase already enormous federal deficits, increase the already massive increase in monetary expansion and encourage government to engage in boondoggles. Bush squandered, Obama will squander more.
Macro-economics, in which government policy makers are trained, is akin to sociology, psychiatry and theory-y management, the package of quackery that the twentieth century concocted to shore up big government, Wall Street and the Progressives' strategy of convincing the public that big government, which is the chief reason that big business exists, is necessary to regulate big business. Government has been so successful in regulating big business that big businesses like Citibank get $25 billion bailouts while small businesses get to suffer from the inflation. Sounds to me like the Bush-Obama plan is to kill small business in the interest of big.
The inflationary plan that Obama offers is just the same as the inflationary Bush plan. We can look forward to continued decline in the real economy and declining real wages coupled with inflation. Smart people will not rely on the dollar and think in terms of hard assets or going into debt, i.e., mimicking real estate moguls like the Pritzkers (Obama's chief backers), hedge fund managers and the like. It's been a nice ride for the dollar, but I would not want to be holding cash during the Obama administration. It's going to be a big payday for the Pritzkers.
Howard S. Katz responds
Dear Mitchell,
I define velocity of money as (nominal) GDP divided by the money supply.
GDP measures the amount of wealth produced. Hence it measures the total amount of money changing hands per year. Divide this by the money supply and you have the rate at which the average dollar changes hands.
Defined this way velocity is very stable, and there is no evidence that it has fallen.
Howie
The Journal's Jon Hilsenrath and Jonathan Weisman report that President-elect Obama includes in his spending and stimulus plan:
"a list of priorities that included: creating 2.5 million jobs, and spending on roads, bridges, schools and clean-energy programs. Jason Furman, the Obama campaign's economic policy director, briefed Democratic leaders and conservative "Blue Dog Democrats" last week on the shape of the proposed stimulus, according to senior House aides...
"...The advisers Mr. Obama named on Monday hail from the centrist part of the Democratic Party. During the Clinton years they played an important role in turning a budget deficit into a surplus. Now they argue the worsening economy requires steep deficit spending."
There is considerable question as to what the current economic malaise really is. In the 1930s the Fed (not with the support of Herbert Hoover, as many people believe) decided to contract the money supply (i.e., raise interest rates), which led to the stock market crash, subsequent bank failures and unemployment. Franklin D. Roosevelt appointed Marriner Eccles to be Fed chairman, and he began to re-inflate. In 1935 and 1936 there was a bull market in stocks. In 1936 Eccles in effect tightened again, to the chagrin of the Roosevelt administration, and there was a second crash in 1937, leading to a market bottom. The re-inflation associated with World War II led to a subsequent 65 year inflation that continues.
In the current situation there has been no cutback in the money supply. Interest rates are at all time lows. The excessive liquidity of the Bush years had led to recklessness among bankers, to include both low-quality lending to sub-prime borrowers and willingness to provide credit guarantees, swaps or derivatives concerning those loans across financial institutions. From what I can gather, few bankers were able to assess the risk of the swaps or derivatives which they transacted, and they panicked this year, leading to their unwillingness to lend. This kind of psychological reaction to risk can be undone by adding a few extra shots of heroine. The Fed has added a few kilos.
Banks have slowed lending because of their panicked reaction to their own incompetence. Lending leads to increased circulation of money, which economists call velocity. Velocity increases the amount of money in circulation, because when a borrower deposits the loan, the bank can lend out that deposit. A shift in velocity can cause a short term reduction in the amount of money and a slowdown in economic activity. The velocity of money probably fell during the past few months of the recent bankers' psychological panic. However, it is important to note that not many (if any) commercial banks have failed. This contrasts with the Great Depression, when a large number of banks failed. AIG, an insurance company which owed money to banks was not allowed to fail, so the Fed took action several steps away.
I do not believe that the Fed was able to assess either the risk or the necessity of bailing out AIG or Bear Stearns, nor of the likelihood of Citibank's failure. This was done by guesswork akin to how an investor decides on how to invest in a stock. Someone once said that throwing a dart at a newspaper is as good a way to choose a stock as what portfolio managers do, and the quality of the Fed's decision making is probably even worse than that.
The bailout took two forms. First, a large amount of money was borrowed and used to purchase the complex derivatives from investors. This not only protected the economy but also the well being of a wide range of wealthy investors, including many in foreign countries who have no direct effect on the United States's economy. Again, the actions that the Fed has been taking have been several steps removed from any important economic effects on the nation and have the advantage, much to the pleasure of the propaganda outlets, of helping wealthy investors, the Ochs Sulzbergers, Rupert Murdoch, etc.
Second, the Fed created a large amount of new money and deposited it in the various commercial banks by purchasing bonds. This contrasts with the Great Depression, where the Fed cut back on the money supply. In other words, the situation now may have surface behavior in common with the Great Depression, but little else. So far, it seems to bear the same relation to an actual bank run as as a Hollywood movie's depiction of an earthquake is to a real earthquake. Of course, many billionaires have received direct income transfers in the name of helping the poor...or have the Keynesians dropped that pretense and just started saying what they've really meant all the time---the wealthy should be subsidized via the stock market at the expense of workers and the poor, who should have reduced wages and opportunities?
The result of credit expansion is normally twofold. The average person pays higher prices, and stockholders and large borrowers, i.e., the wealthy (not the young and poor as William Greider incompetently claims in his book Secrets of the Temple ) gain. Stockholders gain because lower interest rates increase the present value of future earnings--a lower interest rate discounts the future revenue stream less and so increases shareholder wealth. Borrowers (to include large corporations, real estate developers, hedge funds and the like) gain because interest payments are reduced and inflation reduces the value of the loan in the future. In contrast, poor people who cannot borrow because they aren't credit worthy, pensioners, the elderly who have anything more than social security but are not big stock market investors (i.e., the lower middle class elderly) pay through higher prices. Old ladies begin to eat cat food while William Greider's buddies on Wall Street see higher returns. The Democrats used to claim that this process helps the poor, and Barack Obama reinvents this tradition, as opposed to the Republican tradition of not claiming this but doing it anyway.
Obama's solution to this problem is to further enhance the amount of borrowing and inflation. His advisers are Keynesians (as are Bush's, there is no difference there) and they advocate several nonsensical ideas. First, you get the government to spend more. This in turn accelerates velocity and "stimulates" the economy. For instance, you have people dig ditches and then fill them up again, and Keynesian economists believe that this is good for the economy because demand has been stimulated. They do not contemplate that wealth is not money but real goods, and government does not produce goods that the public generally wants. As well, their assessment of a decline in "aggregate demand" depends on the existence and neutrality of the slowdown. It is not clear that there really is a slowdown. Rather, the banks may have exaggerated the risk of the derivatives in their own minds, and when they settle down there will be increased velocity. This will be an inflationary period in that case because the amount of reserves that Bush has created has been immense.
I have previously argued that George Bush = Barack Obama and we can see this in Obama's plan for a stimulus package. Obama aims to further increase already enormous federal deficits, increase the already massive increase in monetary expansion and encourage government to engage in boondoggles. Bush squandered, Obama will squander more.
Macro-economics, in which government policy makers are trained, is akin to sociology, psychiatry and theory-y management, the package of quackery that the twentieth century concocted to shore up big government, Wall Street and the Progressives' strategy of convincing the public that big government, which is the chief reason that big business exists, is necessary to regulate big business. Government has been so successful in regulating big business that big businesses like Citibank get $25 billion bailouts while small businesses get to suffer from the inflation. Sounds to me like the Bush-Obama plan is to kill small business in the interest of big.
The inflationary plan that Obama offers is just the same as the inflationary Bush plan. We can look forward to continued decline in the real economy and declining real wages coupled with inflation. Smart people will not rely on the dollar and think in terms of hard assets or going into debt, i.e., mimicking real estate moguls like the Pritzkers (Obama's chief backers), hedge fund managers and the like. It's been a nice ride for the dollar, but I would not want to be holding cash during the Obama administration. It's going to be a big payday for the Pritzkers.
Howard S. Katz responds
Dear Mitchell,
I define velocity of money as (nominal) GDP divided by the money supply.
GDP measures the amount of wealth produced. Hence it measures the total amount of money changing hands per year. Divide this by the money supply and you have the rate at which the average dollar changes hands.
Defined this way velocity is very stable, and there is no evidence that it has fallen.
Howie
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