The Federal Reseve Bank Has Driven Innovation to China

I recently subscribed to Gerald Celente's Trends Journal. In the winter issue Celente makes the following point:

Innovation, once the province of the developed West, and especially the USA, is now too “Made in China.” In 2009, the Chinese processed some 600,000 patents, compared to 480,000 in the US. China plans to raise that figure to one million by 2015 and double the number of its patent examiners to 9,000, while currently in the US there are only 6,300 such examiners.

The reason innovation is now made in China is monetary. Under a market-driven monetary regime, as existed prior to 1913, if excessive numbers of manufacturing jobs were to move to China, its currency, the yuan, would rise in price. This would cause demand for Chinese goods to slow. Manufacturing would stop moving there, and move back. But the Federal Reserve Bank has not allowed that to happen. Because the dollar serves as the reserve currency around the world, the Fed has been given carte blanche to inflate the money supply without short-term consequence. This has fueled the federal deficit, consumer debt and real estate and stock speculation on Wall Street. The dollar remains firm despite the Fed's profligate monetary policy because the Chinese and other central banks hold treasury bonds as reserves. It seems cheap to manufacturers to move to China.

Thus, by voting for the Democrats and Republicans, Americans have voted to disemploy themselves. They have voted for politicians who have empowered the Fed to inflate while holding the dollar at excessive levels. Consumers have benefited, but when those consumers put on a hard hat or a white collar they have been harmed. Younger Americans have been increasingly harmed. The post-war generation consumed at the expense of boomers' jobs, and boomers consumed at the expense of gen-x's and gen-y's jobs. One of the offshoots of unlimited monetary expansion has been the expansion of government education programs, which churn out ever greater numbers of unemployed graduates who lack skills necessary to compete.

One of the offshoots of de-industrializing America is loss of innovation. Creativity results from familiarity with processes. Most advances are made by engineers and laborers familiar with specific production processes and problems who attempt to build on the status quo with respect to a particular process. Innovation is particularistic, it is not theoretical. Einstein's science, while broad, imaginative and impressive, has done little for important innovation. Tesla, who lacked theoretical breadth, had an enormous impact on human standards of living. Innovation does not generally come from theory. It comes from creative thinking about specific practice. So if practical activity moves to China, then innovation will move to China as well.

The loss of manufacturing, therefore, has graver implications than loss of jobs. It implies the loss of America's future as the Chinese replace the Americans as the world's innovators. How long will it be after that until the Chinese grow weary of holding treasury bonds that steadily decline in value? The final step in America's turning itself into a Third World nation will occur when the Chinese and other nations sell, and the dollar crashes. Then consumers will find prices increasing just as producers they have been able to find only low-wage retail jobs.

Another Progressive President Will Be a Failure by Another Name

Many on the left are disappointed by Barack Obama's presidential performance.  Socialist Bernie Sanders now calls for a "progressive" candidate to compete with Obama from within the Democratic Party.  But it wasn't so long ago that all the progressives were chanting "change" and goosestepping behind their Fuhrer. Sanders and his fellow progressives do not know where the term progressive comes from or why Obama certainly is a Progressive, like it or not. They do know that his health care plan is a ludicrous bust, a sop to the insurance industry, that Obama has never seen an oil company whom he did not dream of subsidizing, and that his foreign policy is confused.  But they cannot figure out why Obama has failed them.

The truth is that Progressivism has repeatedly failed because the American economy is too big and too complex to manage from the center, and the heart of Progressivism from the beginning has been the idea that the economy must be managed from the center. It has nothing else to offer beside that tired, stale, failed idea. So there is little about it that's progressive in ordinary English.

Progressivism was a Republican ideology, created by the founders of The New Republic Magazine, among others, and led politically by Theodore Roosevelt.  Although historians claim that there is a distinction between Progressivism and the New Deal (and today's progressivism), in fact there is none.  Theodore Roosevelt enunciated most of the New Deal and the Great Society programs in his speeches. The first national health care bill was proposed right after World War I.

Progressivism has failed because special interest groups manipulate the democratic process. The costliness of information and the complexity of law make it difficult to pass fair laws that do not favor special interest groups.  Thus, the advocates of "progressivism" grievously erred with respect to Obama, whom they did not understand--all those Obama stickers on the bumpers of the progressives in Woodstock, NY. Progressives will continue to err with respect to any candidate whom they scrape up.  Let's look at their recent history: Lyndon Banes Johnson, the worst president in history; Jimmy Carter; Barack Obama, the fourth worst.

The Wall Street-friendly legacy media and the Democratic Party's left can complain about the failure of Obama's progressivism; the inability of his big government, tax-and-spend approach to function; his grasping for power; his attack on the states; his incompetence with respect to foreign affairs; his continuation of the wars that the progressives loved to hate under Bush; and his massive bailout of Wall Street.  Under Obama, more money has been printed and handed to financial institutions than under all the other presidents in American history combined. The subsidies to the super-rich amount to as much as $100,000 per American when all the printed money is accounted for.


But support for banks was always part and parcel of Progressivism. The Federal Reserve Bank, which prints the money, was conceptualized and made constitutional in the first decade of the 20th century. It was put into law by President Woodrow Wilson, the Progressive whom Theodore Roosevelt helped gain office when he ran for president on the Progressive Party line against William Howard Taft.

Guest Opinon: Democracy in the Middle East - Is the Obama Administration “Fair and Equal”?

Paula Dierkens is a writer who asked to contribute a piece on the Middle East. The views are her own and do not reflect mine.

There were 18 days in the month of February this year when the world watched Egypt closely to see what would happen – some countries openly supported the people’s demands for the ouster of President Hosni Mubarak and a democratic government in his place, others like the US sat by and gaped silently because they were not sure which way the wind would blow. The Obama administration did issue statements from time to time that seemed to indicate that all they cared about was the Egyptian government’s degree of friendliness with the US. It’s no secret that Mubarak was an ideal choice for the US because he was not a hardcore Islamist even though Egypt is a predominantly Muslim country. And that is the very same reason why the US did not openly support the demand that Mubarak step down until it was apparent that the growing discontent and the hint of violence in the revolution meant that Mubarak leaving was the only way out.

And so Obama’s administration said they wanted a “peaceful and orderly transition” to the new democratic government. But with the army taking over for the interim and with strong signs pointing to the Muslim Brotherhood being significantly involved in any new government that would be formed after a supposedly “free and fair” election process, it’s doubtful if the US would enjoy the same amount of cordiality it did with Egypt during Mubarak’s reign. To the people of Egypt, Mubarak was a tyrant and a despot, but to countries like the US who depended on Egypt for their oil and for the safe passage of their military and trade vessels through the Suez Canal, he was a benign ally amidst the turmoil in the Middle East. 

In the case of Iran however, the US administration has never really enjoyed any kind of friendship with this nation. And even though Obama hoped to improve relations with Iran when he took office by helping them break the impasse over their suspected nuclear program. But with the Iranian government rebuffing his administration, not much of a breakthrough has been achieved. 

And now in the backdrop of the pro-democracy revolutions that are sweeping through the Middle East like a set of dominos, the US has issued a strong statement against the mass arrests and the intimidation of anti-government protestors and their families in Iran, calling on the government to fulfill its human rights obligations and allow the people to demonstrate peacefully for their demands of democracy.

There’s a direct contrast in the way the Obama administration responded to the crises in Egypt and Iran – in the former, there was a strained silence as they straddled the fence waiting to see which way the chips would fall before sliding down that side so they could save face; and in the latter, they know they have nothing to lose and everything to gain by taking a strong stand, and this is what they did. Both Egypt and Iran are fighting for their democratic rights, and the Obama administration showed that more than being in favor of democracy in the Middle East, it preferred to play favorites with the Egyptian government, at least for some time until it became very clear that Mubarak was going down, no matter what.  

By-line:

This guest post is contributed by Paula Dierkins, who writes on the topic of Online PhD Degree . Paula can be reached at her email id: paula.dierkins@gmail.com

The CAPRA Party

Frank Capra is remembered as director of all-American movies where the little guy wins and corrupt politicians and plutocrats lose.  Mr. Smith Goes to Washington, Meet John Doe and It's a Wonderful Life voice libertarian sentiments to which many Americans resonate.  Frank Capra voiced sentiments that explain the Tea Party's groundswell.

Mike Marnell, publisher and editor of Kingston, New York's innovative Lincoln Eagle newspaper has a great new idea: The CAPRA Party.  CAPRA stands for Constitutionalists Against Progressives Reforming America,or, alternatively, Constitutionalists Against Progressives Wrecking America.

Stay tuned.