hell hath no fury...

[moralist]

HELL HATH NO FURY LIKE A BUREAUCRAT SCORNED

October 8, 2013 -

By Ron Hart

We are into the second week of the government shutdown; shouldn't we be looting Target for a flat-screen TV by now? Why haven't you joined a marauding street gang?

Two things have become apparent: how little we need most of government, and how spiteful public servants can be when they do not get their funding.

A turning point in this game of shutdown brinksmanship happened last week when "our" petulant government went to great lengths to shut down open-air memorials in order to intimidate us from ever cutting its funding.

During the sequester, the government shut down White House tours. Now it closes open-air monuments and parks. Tourism is the second-largest reason people go to D.C.; No. 1 is to beg for a government handout.

This is a vengeful regime. It has no problem bullying and extorting from the people it was elected to serve.

The privately funded World War II Memorial was blocked with barricades; it took more effort to barricade it than to staff it. When a busload of "Greatest Generation" veterans from Mississippi and Iowa showed up, the barricades didn't stop them. They did the right thing again. The World War II vets, self-reliant and with little tolerance for petty politics, came in, anyway. They made the administration in D.C. look like exactly what it is: a bunch of heavy-handed, union-like goons.

This government tactic is known by many as Washington Monument Syndrome, and is a well-worn ploy. It got its name in 1969, when the then-director of the National Park Service contrived a plot to pressure Congress into not cutting his funding by being defiant.

We have a $17 trillion debt, up from $10 trillion when Obama took office; much of it is owed to China. All the while, Congress ping-pongs various spending bills back and forth between the House and the Senate. If we know anything about Ping-Pong, we know it happens every four years, and the Chinese always win.

Do we need a Commerce Department? Commerce just sort of happens, anyway. Do we need to pay farmers not to plant crops? Has the Education Department improved education (which is the role of municipalities and states)?

Even though we cut the workforce at home, during this shutdown Obama continues to fund foreign aid. The NSA continues to spy on us. One would think we could save money by spying on ourselves during the shutdown.

"60 Minutes" did a great piece last Sunday on how getting Social Security disability payments has become a TV-lawyer-driven scam. Payments have increased 20 percent in six years. They now cost us $120 billion a year, more than the Departments of Homeland Security, Justice and Labor combined.

Nancy Pelosi said in a recent interview that the government cannot cut anymore. Pelosi also said she will not rest until Obamacare is fully implemented or until she captures all 101 Dalmatians.

Why not require every government agency to appear before Congress and define what it does, why it does it, how much it costs, and why the private sector can't do it? We will then decide if we want to keep it.

Now, these "nonessential" government employees know they will be paid for sitting at home, which must not be dissimilar to what they do at their government jobs, if no one notices.

The shutdown is a cold-blooded, political calculation by President Obama. He knows the GOP will be blamed for it by the mainstream media, which is the echo chamber of White House Press Secretary Jay Carney. If you believe them and Carney, everything is the Republicans' fault. And if you can respect the veracity of anyone, it's a carney.

This Washington standoff has no easy off-ramps for either side. Neither wants to be the first to blink. The advantage is decidedly with the Democrats; Nancy Pelosi has not blinked since the sequester.

The tactic of government throwing a temper tantrum when denied massive funding has run its course. Is the $3.7 trillion a year it spends not enough? We are left with a swollen bureaucratic morass that intimidates its funders the taxpayers. It is structurally incapable of spending just a little less than it did the year before, and it seeks revenge when we ask it to live within its means

http://ronaldhart.com/display_column.php?column_ID=596

[Selene]

Amen...now we need to go on strike!!

[Selene]

Yorktown II

YORKTOWN, Va. -- The shutdown of Washington has now become the battle of Yorktown.

In the same place where America fought its final battle of independence, one American businessman is refusing to bow to pressure to close up shop during the shutdown.

His story is just one example of what many view as the Obama administration's widespread overreach during the government gridlock.

'Battle of Yorktown'

Glenn Helseth loves serving up good food at his Carrot Tree Kitchens Restaurant in historic Yorktown -- something he's been doing for the past 11 years. But the government shutdown recently forced the eatery to close its doors.

The National Park Service owns the building he uses, so Helseth was ordered to move out within 48 hours when the government shutdown began last week.

O'biwan, you ain't no George Washington, you are a malignant Cornwallis...

http://www.cbn.com/cbnnews/us/2013/October/Park-Service-Abuses-Spark-New-Battle-of-Yorktown/

[moralist]

I thought this was the most delightfully creative line:

"Pelosi also said she will not rest until Obamacare is fully implemented or until she captures all 101 Dalmatians."

Pelosi makes a great Cruella DeVille.

Greg

[Brant Gaede]

I thought this was the most delightfully creative line:

"Pelosi also said she will not rest until Obamacare is fully implemented or until she captures all 101 Dalmatians."

Pelosi makes a great Cruella DeVille.

Greg

Man! That was some car Cruella drove!

--Brant

[GALTGULCH8]

<<<" have a $17 trillion debt, up from $10 trillion when Obama took office">>>

Actually the official national debt does not include certain unfunded mandates for reasons that the actual numbers are subject to change by lawmakers. An unfunded mandate is a promise the central government has made to pay those who become eligible once they reach a certain age or criteria such as a disability or retirement.

Projections are in the vicinity of $200,000,000,000,000 or $200 trillion dollars according to one analyst, Lawrence Kotlikoff, based on the number due to retire over the next ten years now that the baby boomers are reaching retirement age.

Here is a link to an interview with Kotlikoff from zerohedge.com

http://www.zerohedge.com/news/2013-09-11/lawrence-kotlikoff-us-fiscal-gap-200-trillion-our-country-broke

I recall that the federal budget reached $92 billion in 1960 that is roughly $100 billion. That was before Medicare and The Great Society of LBJ but now the cost of the federal government is over 37 times as large, $3,700 billion. Thirty seven times the cost of the entire federal government in 1960. Let that sink in.

And the president will not negotiate any reductions in spending.

Someone is on the receiving end of all that spending.

As Kotlikoff points out to generate the money necessary to keep the promises being made taxes will have to be considerably higher in the years to come to be paid by whom since so many college grads cannot find jobs and are deeply in debt themselves.

The country is bankrupt already as Ron Paul has been saying for years. It has to borrow half of every dollar it now spends. Let the printing begin or rather continue.

I am going to attend a Students For Liberty conference on Nov 2 in Boston to meet some of these students and to hear what is being told to them. There are such conferences all over the country.

http://www.studentsforliberty.org

[Brant Gaede]

You aren't adjusting for inflation which makes your 37x figure bogus. If today's dollar is worth 1/10 the 1960 buck then the government is spending 3.7 times as much, still a stupendous figure. Adjust that for increased wealth, the ratio between government and the private economy makes things somewhat better than that.

--Brant

still a very bad situation, especially when other factors are worked in

I think the 100 billion budget figure was reached in the mid to late 1950s

[GALTGULCH8]

Brant,

Thanks for pointing that out. The nominal budget figure is $3,700 billion and the man in the street is impressed that the budget was only $100 billion 53 years ago. It has taken less and less time to add an additional $100 billion to the budget. I do point out that the dollar has lost over 98% of its 1913 purchasing power because of all the printing at the mint.

I know that the Fed makes a purchase of US Treasury Bonds each month as well as mortgage backed securities to the tune of $85 billion dollars. So the Treasury conveys the newly printed Bonds to the Fed but I am not sure exactly how they get paid for. I gather it is all entrees on ledgers but at some point newly printed dollars in some denomination are printed.

Theoretically the money pouring into the Treasury get to be spent on whatever is in the budget.

[Brant Gaede]

Brant,

Thanks for pointing that out. The nominal budget figure is $3,700 billion and the man in the street is impressed that the budget was only $100 billion 53 years ago. It has taken less and less time to add an additional $100 billion to the budget. I do point out that the dollar has lost over 98% of its 1913 purchasing power because of all the printing at the mint.

I know that the Fed makes a purchase of US Treasury Bonds each month as well as mortgage backed securities to the tune of $85 billion dollars. So the Treasury conveys the newly printed Bonds to the Fed but I am not sure exactly how they get paid for. I gather it is all entrees on ledgers but at some point newly printed dollars in some denomination are printed.

Theoretically the money pouring into the Treasury get to be spent on whatever is in the budget.

All the Federal spending is one dollar into the economy = one buck out, aside from that which goes directly abroad in foreign aid and military spending. What the gross expansion of the money supply has done is export inflation--we buy and consume foreign goods--or create inflated bank balance sheets. If a bank lends it is possible to create money at a ratio of, oh, up to 8-1. One buck in the bank is reserves and through fractional reserve banking if the bank can find the borrowers it can shovel up to eight bucks out the door. The problemo is finding the borrowers. The Fed cannot produce them for the same reason it cannot produce any wealth, just move it around. This is just saying gross price inflation is quite a ways off. I know this is a terrible over-simplification, but I think I've got the essence down.

There are two, maybe three debt bubbles right now. The first is government debt. Second is student debt. The third is left over from the great expansion housing debt. Credit card debt is contracting. Paying off debt destroys money. So does defaulting, even more so. Right now I think around 10% of student loan debt is in default. If I pay off my mortgage (or am paying it off) the bank can take that money and lend it to someone else. If it can, that money is not destroyed--i.e., removed from the economy. If it is the bank may have to sell pencils on a street corner somewhere. It's not earning interest and paying off the short-term debt it owes to the Fed if it didn't get it from depositors. The bank borrows short and lends long. It can borrow from depositors or the Fed or both. Essentially debt is a claim on future production. In civilian life it really got started after WWII in the present iteration. A man comes home from the war and needs tires for his old car. He has a job--wife, a baby on the way. Goes to the tire store with hardly any money. Tells his tale of woe. No problem! We're going to lend you the money and get you going! Two years later he buys a new or newer, better, car. Wife stays home, takes care of the kids. Better job, more pay. The American up by the bootstraps way! In 1953 they buy a brand new home just outside the city for 14,000 smackeroos, most of that consumed by the lien of a 20 year mortgage. Considering the nature of central banking and "fiat" currency, all this debt was appropriate and we're still in the 1950s. Then comes the tale of woe. What I've described is pump-priming. Looking backwards, savings and capital accumulation and formation should have increased relative to debt, but foreign and domestic wars (against the citizens, mostly through welfare transfer payments) reversed or prevented this natural progression to more freedom (from debt). This is the great irony of this and almost any current central banking system in other economies: absent capital, pump-priming doesn't work. Because of savings during WWII money--capital--was available so that man home from the war could go borrow some of it and acquire his needed transportation. The giant government deficits and high taxes are consuming American capital, capital that is not being replaced. Up the mountain and now down the mountain. The hinge point was the Great Society and the Vietnam War.

--Brant

[GALTGULCH8]

Despite all the attention being paid to the threat that the government will not have the money to honor the national debt there is still one aspect of fiscal policy which is not discussed at all.

Regarding the default issue interest payments on the national debt amount to only about 10% of the entire budget. Given that about $250billion dollars flow into the Treasury in taxes each month there will always be enough money to avoid default of interest payments on Treasury bonds.

It is baffling that the mentality of the Democrats is such that they seem to want to have no limit on the amount of money they can spend. Their bringing up the possibility of default is a fraud and a scare tactic. They just want the okay to raise more revenue instead of lowering spending at all.

What I was driving at in my first paragraph is the issue of constitutionality of the spending, or rather the lack of it.

There is simply no authority in the Constitution, in Article 1 Section 8, for Congressional spending for health insurance, retirement, disability to begin with.

There is authorization for post offices and post roads. That is stated quite explicitly but none of the others are so stated.

We all know that most of the taxes paid are taken from a small percentage of those who earn a living by working. The national debt is far greater than the $16 trillion dollars they are willing to acknowledge.

As Lawrence Kotlikoff tells us taxation would have to be over 50% higher now to raise the money needed to cover the anticipated budgets in coming years because of promises the Congress has made to the tune of $200 trillion not addressed at present. Or spending would have to be cut by 36% and that is not happening.

I think that the Fractional Reserve System is 10 percent. Any money given to the Regional Federal Reserve Banks can be kept as reserve and nine dollars can be loaned out if borrowers can be found for every dollar kept in reserve.

I understand that the interest on ten year Treasuries has gone up from 1.5% to over 3.0% recently and given all the uncertainty and threats of default may cause rates to climb even higher even if a compromise is found. That will hamper the economy, the housing market, the recovery and borrowing causing a recession if not worse.

[moralist]

Despite all the attention being paid to the threat that the government will not have the money to honor the national debt there is still one aspect of fiscal policy which is not discussed at all.

Regarding the default issue interest payments on the national debt amount to only about 10% of the entire budget. Given that about $250billion dollars flow into the Treasury in taxes each month there will always be enough money to avoid default of interest payments on Treasury bonds.

It is baffling that the mentality of the Democrats is such that they seem to want to have no limit on the amount of money they can spend. Their bringing up the possibility of default is a fraud and a scare tactic. They just want the okay to raise more revenue instead of lowering spending at all.

What I was driving at in my first paragraph is the issue of constitutionality of the spending, or rather the lack of it.

There is simply no authority in the Constitution, in Article 1 Section 8, for Congressional spending for health insurance, retirement, disability to begin with.

There is authorization for post offices and post roads. That is stated quite explicitly but none of the others are so stated.

We all know that most of the taxes paid are taken from a small percentage of those who earn a living by working. The national debt is far greater than the $16 trillion dollars they are willing to acknowledge.

As Lawrence Kotlikoff tells us taxation would have to be over 50% higher now to raise the money needed to cover the anticipated budgets in coming years because of promises the Congress has made to the tune of $200 trillion not addressed at present. Or spending would have to be cut by 36% and that is not happening.

I think that the Fractional Reserve System is 10 percent. Any money given to the Regional Federal Reserve Banks can be kept as reserve and nine dollars can be loaned out if borrowers can be found for every dollar kept in reserve.

I understand that the interest on ten year Treasuries has gone up from 1.5% to over 3.0% recently and given all the uncertainty and threats of default may cause rates to climb even higher even if a compromise is found. That will hamper the economy, the housing market, the recovery and borrowing causing a recession if not worse.

You just offered an excellent reason for why I avoid any direct contact with the financially TOXIC debt economy, so as not to become contaminated by its contagion.