I had a long discussion with a someone who is a Chinese national on Saturday. The individual is a manager in a manufacturing firm in the New York City area and a weekend MBA student at NYU's Stern School of Business. This student mentioned to me that her Chinese expatriate friends regret coming to this country and are now thinking of returning to China because of America's declining economy, its incompetent policies and its unwillingness to confront its own decline.
Moreover, she was disturbed at the recent inflation of the American monetary base and the foolhardy bailout plan that the American mass media cheers. She said that hyper inflation has begun to afflict China, and the Chinese are not happy either with the American monetary policy or the fact that they are holding over one trillion dollars in treasury bonds.
Obviously, if the Chinese decide to sell some or all of the US bonds, there will be a dramatic decline in the dollar and hyper inflation as dollars return here. Over the long run factories would return here, but the adjustment would take decades.
In my view, the United States is no longer a free country. It is a slave state. Americans in many states, such as New York, pay more than one half of their earnings to the government. Only foolish slaves would be happy to live in this condition. Americans have become a nation who do not deserve the world's respect.
On May 13, 2008 I wrote a blog entitled "Chinese Tragedy Ahead". I wrote that:
'This country and China have squandered resources in stupid ways. The bubble will burst as all credit bubbles do. America may have enough resources to reassess its errors. The Chinese likely do not, and many there will be hurt."
Tuesday, February 10, 2009
They Said It Couldn't Be Done: A President Even Less Competent Than George W. Bush
Yes folks, they said it couldn't be done. How could two major parties representing 310 million people find a president even less competent than George W. Bush?
George W. Bush doubled the money supply and socialized banking. Barack H. Obama found a way to make Bush's incompetent bailout concept even worse---load it with graft, pork and stupidity. The Bush bailout was to be an economic disaster. The Obama bailout, a social cataclysm.
George W. Bush doubled the money supply and socialized banking. Barack H. Obama found a way to make Bush's incompetent bailout concept even worse---load it with graft, pork and stupidity. The Bush bailout was to be an economic disaster. The Obama bailout, a social cataclysm.
Monday, February 9, 2009
President Andrew Jackson on the Current Economic "Crisis"
President Andrew Jackson vetoed the Congressional bill renewing the charter of the Second Bank of the United States and then moved the federal government's assets out of the bank, fearing that the BUS would have otherwise bribed Congress to override his veto. The following considerations in President Jackson's 1837 farewell address are peculiarly relevant to the incompetent policies of today's Federal Reserve Bank and its responsibility for the current banking problems:
"The paper system being founded on public confidence and having of itself no intrinsic value, it is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain...In times of prosperity, when confidence is high...[the banks] extend their issues of paper beyond the bounds of discretion and the reasonable demands of business; and when...public confidence is at length shaken, then a reaction takes place, and they immediately withdraw the credits they have given, suddenly curtail their issues, and produce an unexpected and ruinous contraction of the circulating medium, which is felt by the whole community. The banks by this means save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public. Nor does the evil stop here. These ebbs and flows in the currency and these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits and character of the people...It is not by encouraging this spirit that we shall best preserve public virtue and promote the true interests of our country; but if your currency continues as exclusively paper as it now is, it will foster this eager desire to amass wealth without labor; it will multiply the number of dependents on bank accommodations and bank favors; the temptation to obtain money at any sacrifice will become stronger and stronger, and inevitably lead to corruption, which will find its way into your public councils and destroy at no distant day the purity of your Government. Some of the evils which arise from this system of paper press with peculiar hardship upon the class of society least able to bear it...It is the duty of every government so to regulate its currency as to protect this numerous class, as far as practicable, from the impositions of avarice and fraud...Yet it is evident that their interests can not be effectually protected unless silver and gold are restored to circulation...
"The distress and sufferings inflicted on the people by the bank are some of the fruits of that system of policy which is continually striving to enlarge the authority of the Federal Government beyond the limits fixed by the Constitution. The powers enumerated in that instrument do not confer on Congress the right to establish such a corporation as the Bank of the United States, and the evil consequences which followed may warn us of the danger of departing from the true rule of construction...Let us abide by the Constitution as it is written, or amend it in the constitutional mode if it is found to be defective."
---President Andrew Jackson, Farewell Address, 1837. Quoted in Harry L. Watson, Andrew Jackson vs. Henry Clay: Democracy and Development in Antebellum America. Boston: Bedford St. Martin, 1998, pp. 246.
"The paper system being founded on public confidence and having of itself no intrinsic value, it is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain...In times of prosperity, when confidence is high...[the banks] extend their issues of paper beyond the bounds of discretion and the reasonable demands of business; and when...public confidence is at length shaken, then a reaction takes place, and they immediately withdraw the credits they have given, suddenly curtail their issues, and produce an unexpected and ruinous contraction of the circulating medium, which is felt by the whole community. The banks by this means save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public. Nor does the evil stop here. These ebbs and flows in the currency and these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits and character of the people...It is not by encouraging this spirit that we shall best preserve public virtue and promote the true interests of our country; but if your currency continues as exclusively paper as it now is, it will foster this eager desire to amass wealth without labor; it will multiply the number of dependents on bank accommodations and bank favors; the temptation to obtain money at any sacrifice will become stronger and stronger, and inevitably lead to corruption, which will find its way into your public councils and destroy at no distant day the purity of your Government. Some of the evils which arise from this system of paper press with peculiar hardship upon the class of society least able to bear it...It is the duty of every government so to regulate its currency as to protect this numerous class, as far as practicable, from the impositions of avarice and fraud...Yet it is evident that their interests can not be effectually protected unless silver and gold are restored to circulation...
"The distress and sufferings inflicted on the people by the bank are some of the fruits of that system of policy which is continually striving to enlarge the authority of the Federal Government beyond the limits fixed by the Constitution. The powers enumerated in that instrument do not confer on Congress the right to establish such a corporation as the Bank of the United States, and the evil consequences which followed may warn us of the danger of departing from the true rule of construction...Let us abide by the Constitution as it is written, or amend it in the constitutional mode if it is found to be defective."
---President Andrew Jackson, Farewell Address, 1837. Quoted in Harry L. Watson, Andrew Jackson vs. Henry Clay: Democracy and Development in Antebellum America. Boston: Bedford St. Martin, 1998, pp. 246.
President Andrew Jackson on The Limits of Federal Power
Woe is me. We need another president like Andrew Jackson. Although President Jackson favored states' rights, he opposed nullification, i.e., the idea that South Carolina tried to abrogate the tariffs of 1828 and 1832. Although there were things about Jackson that I don't like, such as his disregard for Indian rights, he was the best president in American history. The following excerpt from his 1837 farewell address is quoted in Harry L. Watson, Andrew Jackson vs. Henry Clay: Democracy and Development in Antebellum America*:
"In the legislation of Congress also, and in every measure of the General Government, justice to every portion of the United States should be faithfully observed. No free government can stand without virtue in the people and a lofty spirit of patriotism, and if the sordid feelings of mere selfishness shall usurp the place which ought to be filled by public spirit, the legislation of Congress will soon be converted into a scramble for personal and sectional advantages...Justice--full and ample justice--to every portion of the United States should be the ruling principle of every freeman, and should guide the deliberations of every public body, whether it be State or national.
"It is well known that there have always been those amongst us who wish to enlarge the powers of the General Government, and experience would seem to indicate that there is a tendency on the part of this Government to overstep the boundaries marked out for it by the Constitution. Its legitimate authority is abundantly sufficient for all the purposes for which it was created, and its powers being expressly enumerated, there can be no justification for claiming anything beyond them...From the extent of our country, its diversified interests, different pursuits and different habits, it is too obvious for argument that a single coordinated government would be wholly inadequate to watch over and protect its interests; and every friend of our free institutions should be always prepared to maintain unimpaired and in full vigor the rights and sovereignty of the States and to confine the action of the General Government strictly to the sphere of its appropriate duties.
"There is, perhaps, no one of the powers conferred on the Federal Government so liable to abuse as the taxing power. The most productive and convenient sources of revenue were necessarily given to it, that it might be able to perform the important duties imposed upon it...But...Congress has no right under the Constitution to take money from the people unless it is required to execute some one of the specific powers intrusted to the Government; and if they raise more than is necessary for such purposes, it is an abuse of the power of taxation, and unjust and oppressive...
"Plain as these principles appear to be, you will yet find there is a constant effort to induce the General Government to go beyond the limits of its taxing power and to impose unnecessary burdens upon the people. Many powerful interests are continually at work to procure heavy duties on commerce and to swell the revenue beyond the real necessities of the public service, and the country has already felt the injurious effects of their combined influence. They succeeded in obtaining a tariff of duties bearing most oppressively on the agricultural and laboring classes of society and producing a revenue that could not be usefully employed within the range of the powers conferred upon Congress, and in order to fasten upon the people this unjust and unequal system of taxation extravagant schemes of internal improvement were set up in various quarters to squander the money and to purchase support. Thus one unconstitutional measure was intended to be upheld by another, and the abuse of the power of taxation was to be maintained by usurping the power of expending the money in internal improvements. You can not have forgotten the severe and doubtful struggle through which we passed when the executive department of the Government by its veto endeavored to arrest this prodigal scheme of injustice and to bring back the legislation of Congress to the boundaries prescribed by the Constitution. The good sense and practical judgment of the people when the subject was brought before them sustained the course of the Executives, and this plan of unconstitutional expenditures for the purpose of corrupt influence is, I trust, finally overthrown.
*Boston: Bedford St. Martin, 1998, pp. 243-4.
"In the legislation of Congress also, and in every measure of the General Government, justice to every portion of the United States should be faithfully observed. No free government can stand without virtue in the people and a lofty spirit of patriotism, and if the sordid feelings of mere selfishness shall usurp the place which ought to be filled by public spirit, the legislation of Congress will soon be converted into a scramble for personal and sectional advantages...Justice--full and ample justice--to every portion of the United States should be the ruling principle of every freeman, and should guide the deliberations of every public body, whether it be State or national.
"It is well known that there have always been those amongst us who wish to enlarge the powers of the General Government, and experience would seem to indicate that there is a tendency on the part of this Government to overstep the boundaries marked out for it by the Constitution. Its legitimate authority is abundantly sufficient for all the purposes for which it was created, and its powers being expressly enumerated, there can be no justification for claiming anything beyond them...From the extent of our country, its diversified interests, different pursuits and different habits, it is too obvious for argument that a single coordinated government would be wholly inadequate to watch over and protect its interests; and every friend of our free institutions should be always prepared to maintain unimpaired and in full vigor the rights and sovereignty of the States and to confine the action of the General Government strictly to the sphere of its appropriate duties.
"There is, perhaps, no one of the powers conferred on the Federal Government so liable to abuse as the taxing power. The most productive and convenient sources of revenue were necessarily given to it, that it might be able to perform the important duties imposed upon it...But...Congress has no right under the Constitution to take money from the people unless it is required to execute some one of the specific powers intrusted to the Government; and if they raise more than is necessary for such purposes, it is an abuse of the power of taxation, and unjust and oppressive...
"Plain as these principles appear to be, you will yet find there is a constant effort to induce the General Government to go beyond the limits of its taxing power and to impose unnecessary burdens upon the people. Many powerful interests are continually at work to procure heavy duties on commerce and to swell the revenue beyond the real necessities of the public service, and the country has already felt the injurious effects of their combined influence. They succeeded in obtaining a tariff of duties bearing most oppressively on the agricultural and laboring classes of society and producing a revenue that could not be usefully employed within the range of the powers conferred upon Congress, and in order to fasten upon the people this unjust and unequal system of taxation extravagant schemes of internal improvement were set up in various quarters to squander the money and to purchase support. Thus one unconstitutional measure was intended to be upheld by another, and the abuse of the power of taxation was to be maintained by usurping the power of expending the money in internal improvements. You can not have forgotten the severe and doubtful struggle through which we passed when the executive department of the Government by its veto endeavored to arrest this prodigal scheme of injustice and to bring back the legislation of Congress to the boundaries prescribed by the Constitution. The good sense and practical judgment of the people when the subject was brought before them sustained the course of the Executives, and this plan of unconstitutional expenditures for the purpose of corrupt influence is, I trust, finally overthrown.
*Boston: Bedford St. Martin, 1998, pp. 243-4.
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