The New Terrapin Gazette

Number 216                                                                                                                              20 June, 2011

 


The state is the realization of the moral idea.


 

Inflation

Part Three: The New Deal, The Great Depression, And Today

Two major themes dominate the overview of how FDR attempted to cope with financial and economic disaster: first, he tried hard to increase governmental control of the economy by increasing regulation and regimentation, and second, he tried to inject money into the economy by hiring people.

The push for a centrally-controlled economy was a huge mistake. At first, it pitted the president against the supreme court, which tossed out some of his vital legislation. Furious, FDR threatened the court, which backed down (“the switch in time that saved nine”) when it should have stood its ground. Various social programs were highly-publicized attempts to win the support of the electorate, and they often did. As more and more people were added to the federal payroll — many indirectly, as they were hired to build dams and bridges — the administration took as much credit as it could for doing good.

What good? By 1938, the economic distress had grown to crushing proportions. Today only New Deal ideologues insist that either FDR or the Second World War actually ended the Great Depression. Neither assertion is correct.

In retrospect, it is not difficult to see how the administration should have responded to the crisis. Inflation of the money supply would lead the list, and that would mean using that newly-acquired gold. Second, government should have freed industry to expand by easing interest rates on borrowed money, keeping the capital gains tax very low, regulating the stock market with great care, and avoiding monstrosities like the abuse of the commerce clause of the federal constitution.

Left to seek profits, US business would have frantically sought out the remedies needed. Had the money been available, the business community would have taken huge risks to expand, assuming that consumer demand would result in the purchase of as many goods and services as could be provided. The recovery would have been slow at first, of course. Still the idea that these efforts would or could have produced a worsening of the economy in 1938 is absurd.

The Current Situation

Based on a number of rather obvious but ignored facts, the economic policies of the administration should take — or should have taken — a number of corrective measures. Here’s a partial list.

The very idea that everyone should be and can be a homeowner should have been ignored as patent nonsense. The legislative careers of Maxine Waters and her fellow ideologues should have been ended. All attempts to write mortgages for hopeless new buyers should have been rigidly discouraged by the financial institutions; unfortunately, sheer greed had overcome the common sense of the managers. Those huge bonuses for bundling junk together and calling the resulting derivatives “risk-free investments” should never have been possible.

The big question is, of course, how do you institute rational policies and enforce decent regulations and guidelines?

You educate the public in the facts of responsible borrowing and lending, the nature of inflation and deflation, and what happened in the Great Depression. That is the task of the president, who must make facts and policy clear; he must repeat the truth and appeal directly to the electorate. For a president who has Obama’s relationship with the news media, such a task would be easy.

Today’s reality is skewed by some unfortunate facts. Given the sheer existence of the federal Department of Education and the unionization of most teachers in the nation, explaining the economy and rational policy to the public would be extremely difficult, if not impossible. Add to that the ideological stance taken by Team Obama, and you can see that today’s disaster was almost certainly inevitable.

Therefore corrective measures should have been taken. Legal attempts to reclaim those astronomical bonuses from the corrupt officials at Freddie Mac and Fannie Mae would have been a start. Allowing General Motors to go bankrupt would have been a definite warning to US business that prudential practices must prevail. Rational oversight of the banking and finance industry — a sector of the economy that had become a farce and a disaster — should have been immediately imposed, and a number of executives in the rotten industry should have been investigated as possible criminals.

The shock waves would have sent a powerful message. That, in addition to a repudiation of Obama’s “spread it around” obsession with other people’s money, would have told the nation that a free market would be in charge of economic recovery. The harebrained concept of “fairness” in tax policy should have been abandoned, and the capital gains tax cut to the bone. The government should have been put on a radical diet, and expenses should have been slashed. The federal Department of Education should have been abolished immediately, and the property auctioned off. Wherever possible, borrowing from other nations should have been avoided. The train to nowhere that W dispatched from the station at top speed should have been derailed.

Given the insight that while the prices of some things rise, the prices of others may remain the same or fall, the government should have identified a major source of consumer distress and moved to reduce it. That means petroleum. In perhaps no other area has the Obama administration made so many fundamental mistakes, and it is necessary to reverse policy. (See this critique.)

Having blundered through the BP spill in the Gulf of Mexico, Team Obama has shut down the exploitation of huge petroleum resources in the USA. This is sheer idiocy. While offshore drilling is risky, high petroleum prices can reduce the danger by permitting the use of whatever technology works, however expensive. Oil shale is now financially viable, given the price of the crude that can be extracted. Yet the administration is sitting on its hands, fearful of allowing the oil companies to make a profit (which they are doing in any event). This is class-warfare ideology and a mindless “green” attitude combining to produce economic disaster. It does not punish Big Oil, it does not help the consumer, and it does not help business reduce unemployment. Overall, Team Obama is just getting in the way.

The most rational oil policy imaginable runs head on into a serious problem, however: as long as the international price of petroleum is extremely high, producing more domestic oil will not lower costs to the US consumer. Oil produced in the USA will be exported for cash rather than sold cheaply on the national market. The benefit, an improvement in the balance of payments, will not noticeably affect US consumers. In response to increased US oil production, the Arabs and their greedy allies will simply reduce production in order to keep prices high. (See the Addendum.)

In the long run, therefore, the relief of the consumer will have to depend on a rational energy policy, not on pumping more oil. The nation should be headed toward the purely electric automobile, so the goal should be the production and storage of huge quantities of cheap electricity. That will require sea changes in policy. For example, the bizarrely low priority of the development of the technology of thermonuclear power generation should be astronomically upgraded. Silly fantasies like wind power should be abandoned along with the ethanol hoax, while solar technology and fuel cells, the eternal power sources of the future, should be shunted to a slow track.

The short term will be difficult, but some relief may be found if policy is realistic. Realism begins with the understanding that the major cause of high prices, the knock-on effects of high petrochemical prices (including the costs of producing fertilizers and pesticides for agriculture), has next to nothing to do with inflation. For Bernanke to imply the the price of oil can be kept low by having the Federal Reserve implement anti-inflation policies was unconscionable. The price of oil is not solidly linked to the value of the dollar, though the two do have a vague and shifting relationship, just as the price of dishwashing liquid is related to the cost of manufacturing an electric motor. Deflation extreme enough to bring oil down to under twenty dollars a barrel would be a globally devastating event.

Like many economists in the public eye, Bernanke uses the word “inflation” with imprecise abandon, and tends to create the impression that deflation — which can be ruinous — is somehow good. He also seems to want everyone to believe that he is rather like the conductor of an orchestra, in that with a wave of his hand he can change the music.

Nonsense like Bernanke’s self-aggrandizing babble should be shouted down by an informed electorate.

Inflation and deflation are aspects of the economy, and the sheer complexity of that system is such that no one understands it, no one can control it, and no one can predict it. Those who believe otherwise almost always find that their hubris causes the misallocation of resources. Then there is the probability that rascals, recognizing the confusion and misapprehensions fostered by people like Bernanke, will exploit the buzzing, blooming reality. Chief among those rascals are the ideologically inspired politicians. None of those are more dangerous than the Utopians who preach “economic democracy”.

Once the ideologues and fake experts have been told to shut up and sit down, the nation can ponder the efficient allocation of its resources. No quick fix is available today, so the strategy will have to be to cope as efficiently as practical while pushing hard to find new ways to generate electricity very cheaply. The manufacture of vastly better batteries must be a major goal, as well, and nanotechnology may be helpful there.

Some believe the high price of gasoline is a benefit. The nation will have to adopt cheaper transportation systems, and in so doing it will necessarily advance technology. That requires the cooperation of the political elite — and there’s the rub, for those folks tend to follow eco-cults through the looking glass and/or cater to influential, greedy interests that corrupt politics to obtain undeserved subsidies and special privileges.

Posturing politicians will have to be curbed, and the sloganeering of superannuated teeny-boppers must be countered. “Green” is not nearly good enough or relevant if the nation is to meet the challenges imposed by economic change; “ecology” and “environmentalism” are obsolete catchwords. The old slogans and the simple-minded AGW-centric authoritarianism of the eco-freaks belong in the dumpster. What matters in both the short and long terms is the rational application of innovative technology, and that statement does not fit well on a Volvo’s bumper sticker.

Addendum

If a truly novel and experimental approach for the short to medium term were justified, one might consider the following scheme: new oil fields in the USA might be opened and their production carefully allotted at drastically reduced prices to refiners in the nation who would be forbidden to sell the oil unrefined — and who would be required to pass the reduced cost along to distributors for US consumers only. (Arab nations have done something very like this for years.) The law could require that the price of the refined products reflect the price of the crude, which might be pegged at USD 35 per barrel. This cheaper oil would be used, along with more expensive supplies, to produce gasoline and other products. The drillers would realize a profit and domestic consumers would see some price relief, which would have a ripple effect on virtually all consumer products, especially food. Of course there would be problems enforcing the law, but if they proved soluble, one might purchase gasoline at half of today’s prices. Too authoritarian, and too hard to enforce? Probably. A more sophisticated version of this idea that depends more on the free market just might deserve some consideration. Perhaps price competition alone would deliver relief to the consumer and regulate the distribution network appropriately. It might be an interesting experiment….

The final part of this article will appear in a forthcoming issue.

 

Impeachable Offenses

Article two, section three, clause four of the US constitution informs the president that he “…shall take Care that the Laws be faithfully executed…” (see Footnote). An invading force composed of aliens currently occupies large sections of at least one state as far as eighty miles from the US-Mexico border. Citizens and residents of the USA are warned by the federal government against entering this dangerous area, yet the president insists that he will do nothing to reverse this de facto though informal cession of territory and reclaim US soil until the Congress passes a specific bill. That bill would grant amnesty to many aliens whose presence in the US is explicitly unauthorized by long-standing legislation and statute. The president’s tactic is a blatant act of extortion worthy of a Mafioso.

In addition, the president is conducting an illegal war in Africa. His flat refusals to see to the defense of the nation and the faithful execution of its laws constitute high crimes and misdemeanors sufficient for the impeachment of the president by the House and his conviction and removal from office by the Senate.

Footnote: when the constitution was written and for at the very least a century thereafter, “shall” did not mean “will” or “ought to”. The word unambiguously expressed a command, a compulsion strictly imposed by higher authority. For clarification, see Fowler and Fowler, The King’s English, original edition 1906, reprint 1993, ISBN 1-85326-304-4.

 

Links

Zinger of the week: “…opinion surveys reveal that Big Apple voters believe that Weiner should have continued to represent Brooklyn and Queens in Congress. Such sentiments are not surprising in a city where Woody Allen is a celebrity and Kitty Genovese is a chalk outline on a city street.” From here.

Alert the media! Er, no…wait…the media are already alerted, or inflamed, or something. Oh, what it is, is, Palin sent this e-mail, see, and it really really shows what a total witch she is, how nasty and dangerous to the country she is, because, like…unh, wait…. Hey, how come nobody is talking about this any more? Hell-OH! I mean, like, wow….

Computers have been around for a few years, and lawyers for a lot longer. Why is it that when lawyers think about computers, it’s as if they lose their ability to understand anything? What makes the Department of Justice so special, anyhow?

Aha! There’s a film out starring Barack and Hillary. You better click on the link, or “wingnuts” will use Tweeter and Disgracebook to circulate photoshoppped snapshots of you and your dog.

If you are planning a visit to Toronto, Canada, be sure to stop by this charming mosque. Here’s information to help you make the most of your visit.

Hey, instead of going to Canada where people talk funny and can’t say all the things you can in the USA, how about a cruise to rustic Gaza? Well….

From time to time, this puzzling phenomenon makes the news. It has been a mystery for many years, and it appears no closer to explanation than ever.

Geert Wilders interviewed on Ezra Levant’s TV show. Levant says he can’t agree totally with Wilders, while The New Terrapin can’t find anything to dispute in all of Wilders’s statements.

Related: Levant reports on the Canadian problem with free speech and interviews the first man ever to be acquitted of a hate speech crime in Canada.

Mainland China: “After several big clashes in recent weeks the names of half a dozen big towns have been eradicated from the search engines of the country’s most popular microblogging sites. … One of the ‘disappeared’ cities, Dongguan, is the fourth-largest producer of exports in the country and has a population only slightly smaller than London’s.” Read the rest of this disturbing report on protests in the dragon’s lair.

Is the Tea Party Movement vulnerable to serious, rational and principled criticism? Yes, and if you watch all of this video, you will see it come under telling fire. The Tea Partiers do not have to be on the wrong side of the issue, so it is to be hoped that they will become aware that they have carelessly set aside necessary reverence for the US constitution. The fellow in the video is correct: the fourth amendment is central, and the police in general are much more militarized than they used to be. Today they will kick your door open and shoot you in seconds, where only a few years ago they were a lot more careful…and much less likely to get the wrong house or provoke a citizen into doing something that gives the cops a chance to shoot. To all this The New Terrapin adds its opinion that the “war on drugs” laws are serious mistakes. The authoritarian urge to power is too strong in today’s USA, and the courts have repeatedly erred, giving the police bad reasons to do bad things.

“A bipartisan group of House members announced on Wednesday that it is filing a lawsuit charging that President Obama made an illegal end-run around Congress when he approved U.S military action against Libya.” Read more here.

Who is this guy, anyway? And why doesn’t he want you to know?

The Democrats in Congress continue their effort to expand the power of Congress beyond its constitutional mandate. The story here links to a paper written by a law professor that sets forth a clear argument against such tomfoolery. The “progressive” members of Congress tend to consider the constitution a noisome hindrance to those who desire to control the grate unwashed (it’s not American to tell The One he can’t have his way!).

The GOP may be a bit overconfident. Obama has not already lost the next election, in spite of considerable evidence that he simply can’t produce results. His abiding strength lies in two areas: first, there are lots of folks who claim that a vote against him must necessarily be racist, and second, the resolutely collectivist segment of the electorate is locked in. Obama the human hardly matters to either group. Faced with this absurd situation, Republicans must find a strong, articulate, experienced and unobjectionable candidate who can persuade the political center that he has a plan for recovery and renewal. Sarah Palin, the most hated woman in the USA, is not that candidate. Governor Jindal would be, but he has been ignored when he should be coming under pressure to agree to a draft.

Worse than Iran-Contra? “Progressives” will ignore the question, but the facts show that the Bureau of Alcohol, Tobacco, Firearms and Explosives, which is part of Holder’s mismanaged Department of Justice, is in the hands of incompetents and political freaks. In case you are not keeping up on the insane things the DOJ has been doing, look here and then here. “…arrogance, over-confidence, and staggering ineptitude by the Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives…. Rather than admit to any mistake, the ATF embarked on a cover-up.” Read the report. Ye gods, how can this madness be ended? As long as The One keeps Holder in place, it can’t. Well, if the voters knew about this, Team Obama would be in serious trouble. Why is the scandal known to such a small percentage of the public? Gosh, nobody can explain it…. Wait! Could the general ignorance have something to do with the news media?

This snob has been a rotter for a long time, and the misbehavior was tolerated by those cosmopolitan, multiculturalist, sophisticated Eurofools.

This is a bold assertion: “…multiple methods for producing vast amounts of energy at extremely low cost have been developed. None of these technologies have made it to the open consumer market, however”. Is it true? The website tries to prove that it is. Conspiracists and diehard anticapitalists preach fables like this as part of their politics. You, on the other hand, are a rational cynic, so you read absurdities for their entertainment value. Have fun with the loony tune linked above.

The French ban on Muslim attire for females is incredibly stupid. It plays into the hands of the enemies of Western Civilization. Well, it’s French, and France is unique…you know, that’s the nation that gave the world Vichy France during WWII, and that was a stunningly unique and revealing enormity. So you might say today’s mess is precedented, in a way.

That murderous raid on a luxury hotel in India worked out so well for the Muslims that they plan to repeat it, and if they have their way, this time it will happen in the USA. Look out, Las Vegas.

No one should be surprised to learn that some US federal agencies were complicit in defying the ban on funding ACORN. The problem may still not be cleaned up, though it’s been more than a year since the policy change was made.

You know that any book review that includes the line, “An expedient postmodern Oprahfied excuse is a useful device for a politician while falling on his sword…” must be excellent. Yes.

You may have missed this: “Turkey warned Syria that it will start supporting tougher United Nations resolutions asking further pressure to be exerted on the Bashar al-Assad regime if the Syrian government does not adopt sweeping reforms immediately and halt the crackdown on anti-government demonstrators”. More.

Those pessimistic, eternally complaining Jews are wringing their hands again, whining about how dangerous the world has become. They are right. And they indicate clearly that they understand the situation when they point to a very ominous sign that bad, bad times could be weeks away: “This dire state of affairs was reinforced with the inauguration of Obama as US president in 2009.” Yes, Israel does stand alone against the worst people on the face of the earth, and that is the shame of the West.

This video expresses the thoughts of one Pat Condell on political correctness, peace, and tolerance. Highly recommended.

Does Obama understand economics? Can he comprehend the fundamental facts regarding the US economy? This weblogger says no, but The New Terrapin is unsure. The One might (against all probabilities) understand the economy (in spite of being under-educated in economics); it’s just that if he does, he hates it and wants to reform it to conform to a totalitarian Utopian fantasy.

Watch this video. Then watch it again. Memorize it. Suggest it to everyone you know, and nag them until they watch it.

Do you have enough to worry about? No? Well, add Syria to your list, then, and worry away.

“…it seems increasingly clear that the Obama presidency has lost its way” but maybe The One can be re-elected anyway. Yeah, maybe. But he does seem to have united the Republicans.

Put a machine politician from Chicago in office, and what do you get? Right, corruption.

Final thought: the staff of this newsletter has been waxing nostalgic lately, and you’ll never guess what the object of the sentiment is. It would be wonderful to hear the sound of Kentucky-Fried Hillary again! Remember that? Whenever she addressed a predominantly black audience, Hillary put on the most absurd and humiliating “accent”, which she presumably felt would connect her to the crowd. Good grief, how her staff must have cringed! And how the howls of laughter rang through the halls of the Eagle Wing Palace! There must be a video on YouTube…yes, there is!


The masthead includes a quote from the works of Georg Wilhelm Friedrich Hegel.

The staff of The New Terrapin Gazette expresses its sincere gratitude to the many people who have gifted the world with Arch Linux, Emacs, Screen, and Chromium.

Publisher:    The Eagle Wing Palace of The Queen Chinee