When It Mattered, Sarah Palin Supported Big Government

September 24, 2008



Last week: "While people on Main Street look for jobs, people on Wall Street — they’re collecting billions and billions in your bailout bonuses." EconomyCollapse.blogspot.com notes:

"Further, in traveling to Texas to stump for incumbent Governor Rick Perry after speaking under the Tea Party Nation banner, Palin is slighting the one real tea party candidate running in Texas-- a rising Debra Medina who is insistent on shaking up the status quo and triumphing over party stooges Perry & Hutchinson."

Has Sarah Palin undergone a major intellectual transformation since fall 2008? Has she read Ludwig von Mises's Theory of Money and Credit? Or is she just yanking the Tea Party's chain.

February 6, 2010 (about 8 minutes in)



I find Alex Jones's emphasis on conspiracy theories to be far fetched, and he is too harsh about Palin. But he is right that unless the Tea Party can find a candidate who opposes the bailout for intelligible reasons, it is an abject failure.

The Obama Goose Step

Gus Murphy of Brooklyn wrote the following letter to the February Olive Press concerning my January letter. My response follows:

Dear Editor,

I found Mitchell Langbert's letter in your January 14th issue quite interesting. His theory that Democrats come in two general categories, a)liars, and b) suckers, was quite persuasive.
But why just Democrats? His theory fits Republicans even better. Republican policies are even more in thrall to large corporate interests over those of common individual citizens.

Personally, it seems to me that Party loyalty most resembles rooting for sports teams; "Yay my team, good, bad, or pitiful." No one ever wonders if the Mets really deserve to win or are really objectively the best -- Mets fans just want to win any way they can.

Gus Murphy
Brooklyn, NY


From: Mitchell Langbert
To: PhoeniciaTimes@aol.com
Sent: Thursday, February 11, 2010 2:10 PM
Subject: Letter to the Editor

Dear Editor:

Gus Murphy makes an excellent point in your February 11 issue: both parties are culpable for the serious fiscal and monetary decline facing future generations of Americans. George W. Bush engineered a policy whereby a great deal of money, some insiders are saying $14 trillion, was donated to Wall Street. President Obama executed the Bush donation, which has been his chief achievement besides reappointing Robert Gates defense secretary. Of course Obama threw in an extra trillion of "stimulus" to corrupt contractors, such as to the mob-linked construction firm that is building the power plant in Middletown Connecticut that killed five people last week.

But there is one difference between the parties. There is a movement of Republicans called the Tea Party which rejects the big business- and special interest-linked Republican leadership. I have been at two well-attended meetings of the Kingston Tea Party. At the Tea Party, complaints about George W. Bush are as frequent as complaints about Barack H. Obama. On the other hand, I know of no large group of Democrats who have not goosestepped behind Obama every step of the way. Indeed, the Wall Street-financed media, starting with MSNBC and CNN, have made every effort to paint the Tea Party as violent extremists because they threaten the Bush-Obama, Republican-Democratic Wall Street-Washington equilibrium.

Where are the Democrats who protest Obama's massive subsidy to Wall Street? I can tell you where we Republicans are. I can also tell you where plenty of Obama-cheering limousine liberals are. But where are the Democrats who don't like $14 trillion subsidies to special interests?

Sincerely,

Mitchell Langbert

Plenty of Time to Invest in Gold

Ned W. Schmidt features the above graph on his Kitco commentary and on his newsletter's website (the newsletter costs $149, a reasonable price for an investment letter).

The price of gold for the past few years seems to have tracked the rate of monetary growth, but recently diverged sharply. The reason, as Schmidt shows, is contraction of industrial loans leading to less monetary growth. However, the monetary base expanded exponentially, far more rapidly than money itself, which would explain the divergence along with the contraction in loans.

The point that Schmidt is making is very good. First, note on the graph that at least until '08 the gold price has tended to anticipate monetary expansion but trail monetary contraction. Gold investors underestimate the possibility that the Fed will raise rates and contract the money supply. They are right in the long term but can be wrong in the short term. Second, the gold investors have diverged from monetary growth since '08. This may be a larger than usual short term error. Third, it is true that in the short run the contraction in loan activity in a fractional reserve banking system leads to reduced inflation or deflation. But longer term, over the next couple of years, there will be heavy pressure to inflate further, as Schmidt points out. Moreover, government borrowing will create pressure on the Fed to expand the money supply to purchase additional bonds. Until recently, foreign governments have been buying US debt to keep the dollar strong. There are signs that this policy will abate as China has been talking about tightening its money supply. On the other hand, there may be pressure to inflate in Europe as southern European countries suffer from socialist fiscal mismanagement.

Schmidt asks:

"Will that red line turn positive? Yes. Already the lack of economic growth inspired by weak U.S. money supply growth is evident in the economic statistics. Preliminary report on the U.S. economy for the fourth quarter of 2009 was dismal, despite the praise of journalists unschooled in economics. That weak economic growth will increase the pain felt by the Obama Regime and the U.S. Congress. With U.S. national election only nine months in the future, great pressure will be applied to the Federal Reserve. Bernanke may finally get to use that helicopter, either from which to hurl money or to seek asylum in some other land."

In fact, the helicopter left the heliport years ago. The tripling of the monetary base in '08 provides the banks with plenty of liquidity. Government will take advantage of it if consumers cannot. Government spending is inevitably inflationary. Inflation is the difference between the value that the investments facilitated by the new money create and the amount of new money. Government does not create value, it merely allocates consumption. So when most of the new money is borrowed by government, hyper-inflation is likely.

This provides a simple explanation for the recent weakness in gold. But longer term the liquidity-addicted financial-bureaucratic complex will take advantage of the liquidity to expand relentlessly.

Miss Me Yet?

AOL carries this picture, h/t Jim Crum.