The Consequences Of Not Understanding Economics

I am not an authority on economics. I am, however, a person who watches what goes on around me and sometimes learns lessons from what I see. Some economic principles are obvious enough to be learned that way.

In 2013, Forbes Magazine posted an article quoting a statement by then-President Obama on the subject of economic freedom. Economic freedom was not something President Obama believed in. President Obama acted on his belief that economic freedom was not a good thing, and the American economy suffered during his presidency.

The article quotes a speech President Obama gave in Kansas:

there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes–especially for the wealthy–our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.

Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked. (Applause.) It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade. (Applause.) I mean, understand, it’s not as if we haven’t tried this theory.

Well, have we tried this theory? A little history is in order here.

The article reminds us:

I pick 100 years deliberately, because it was exactly 100 years ago that a gigantic anti-capitalist measure was put into effect: the Federal Reserve System. For 100 years, government, not the free market, has controlled money and banking. How’s that worked out? How’s the value of the dollar held up since 1913? Is it worth one-fiftieth of its value then or only one one-hundredth? You be the judge. How did the dollar hold up over the 100 years before this government take-over of money and banking? It actually gained slightly in value.

Laissez-faire hasn’t existed since the Sherman Antitrust Act of 1890. That was the first of a plethora of government crimes against the free market.

…Obama absurdly suggests that timid, half-hearted, compromisers, like George W. Bush, installed laissez-faire capitalism–on the grounds that they tinkered with one or two regulations (Glass-Steagall) and marginal tax rates–while blanking out the fact that under the Bush administration, government spending ballooned, growing much faster than under Clinton, and 50,000 new regulations were added to the Federal Register.

The philosophy of individualism and the politics of laissez-faire would mean government spending of about one-tenth its present level. It would also mean an end to all regulatory agencies: no SEC, FDA, NLRB, FAA, OSHA, EPA, FTC, ATF, CFTC, FHA, FCC–to name just some of the better known of the 430 agencies listed in the federal register.

Even you, dear reader, are probably wondering how on earth anyone could challenge things like Social Security, government schools, and the FDA. But that’s not the point. The point is: these statist, anti-capitalist programs exist and have existed for about a century. The point is: Obama is pretending that the Progressive Era, the New Deal, and the Great Society were repealed, so that he can blame the financial crisis on capitalism. He’s pretending that George Bush was George Washington.

Please follow the link to read the entire article. It accidentally explains the reasons the economy has prospered under President Trump. I also strongly recommend reading The Creature From Jekyll Island by G. Edward Griffin for the story behind the creation of the Federal Reserve System.

 

 

So How Did The Federal Debt Do This Year?

President Trump is a businessman. Regardless of whether you like him or not, he is a businessman, and successful businessmen are relatively careful about how they spend money, and how much money they spend. President Trump is no exception.

Yesterday The Gateway Pundit posted an article about the impact of the Trump Presidency on the debt.

The article reports:

In spite of the fact that President Trump took over with nearly $20 trillion of debt and the related interest payments on the debt, and in spite of the federal reserve (fed) under Janet Yellen increasing interest rates by a full 1 percent since the election, President Donald Trump’s first year debt is $1.1 trillion less than Obama’s.

Here is the picture:

The article at The Gateway Pundit reports:

Right after Barack Obama was elected President, on December 16, 2008, the Federal Reserve (The Fed) lowered the Fed Funds rate by an entire percent, from 1% down to 0% . The Fed had not lowered the Fed Funds rate by such a large amount (1% ) since at least before 1990, if ever. The Fed kept this 0% rate for most of Obama’s eight years in office.

CNBC reported in December 2015 that President Obama oversaw “seven years of the most accommodative monetary policy in U.S. history” (from the Fed). The Fed Funds rate was at zero for most of Obama’s time in office. Finally, in December 2015 after the Fed announced its first increase in the Fed Funds rate during the Obama Presidency.

The only Fed Funds Rate increases since 2015 were after President Trump was elected President. The Fed increased the Fed Funds Rate on December 14, 2016, March 15th, 2017, June 14, 2017 and again on December 13, 2017. Four times the Fed has increased rates on President Trump after doing so only once on President Obama.

If the Federal Reserve was political and wanted to prevent Republican Presidents from successful economic growth and debt decreases, then the Fed would increase the Fed Funds rates during Republican Presidents’ terms while decreasing the Fed Funds rates under Democratic Presidents’ terms.

This appears to be exactly what the Fed is doing.

The article at The Gateway Pundit also notes that without the increases in the interest rate it is possible that President Trump would have a balanced budget to date.

Remember that the Federal Reserve is neither Federal nor a Reserve. It is a stranglehold on our economy held by a small group of extremely wealthy people who control our money supply. For those who are interested in learning exactly how we got the Federal Reserve, I strongly recommend reading The Creature from Jekyll Island by G. Edward Griffin. It explains the chicanery that was involved in creating the Federal Reserve and how it was sold to the American people.

Why It Is So Hard To Get Anything Done In Washington

The Federal Reserve is neither federal nor a reserve. It is the vehicle that moves money around the country. The fed controls interest rates and the money supply. There are some real questions as to whether or not the Fed accountable to anyone.

In 1994, the book The Creature from Jekyll Island by G. Edward Griffin was published. The book tells the story of the creation of the Federal Reserve. It chronicles the secret journey from New Jersey to Jekyll Island (to create the federal reserve) in Senator Nelson Aldrich’s private railroad car by such luminaries as Abraham Piatt Andrew, Assistant Secretary of the U.S. Treasury, Frank A. Vanderlip, president of the National City Bank of New York, Harry P. Davison, senior partner of the J.P. Morgan Company, and Benjamin Strong, head of J.P. Morgan’s Bankers Trust Company. I strongly suggest reading the book to discover how the Federal Reserve was passed through Congress and formed.

Fast forward to March 29, 2017. One America News Network is reporting that the House of Representatives Committee on Oversight and Government Reform has approved a bill to allow a congressional audit of Federal Reserve monetary policy. Democrats have uniformly spoken out against the idea.

The article reports:

Republican President Donald Trump expressed support for audits of the U.S. central bank during his election campaign, but it remained unclear whether the White House would back the proposal.

Republicans proposed numerous bills during the Obama administration to open the Fed up to deeper scrutiny, arguing the added transparency would ensure the Fed was accountable and free of outside influence.

Currently, the Fed publishes detailed audits of its finances but it keeps the inner workings of its monetary policy deliberations secret, publishing transcripts of policy meetings only with a five-year lag.

The proposal approved on Tuesday would “put an end to that reign of secrecy,” said Representative Thomas Massie, the Kentucky Republican who submitted the bill.

The House has already passed versions of the bill twice, with dozens of Democrats joining nearly unanimous Republican support in 2012 and 2014. Those versions of the legislation died in the Senate.

The article also cites the example of Representative Stephen Lynch, a Democrat from Massachusetts, who voted for similar legislation in 2012 and 2014, but spoke against the current proposal because he fears political interference at the Fed.

It goes without saying that there will be a group of establishment politicians who will oppose an audit of the Fed. The Fed is another example of something put in place by politicians that has a major impact on the finances of every American, yet very few Americans know its history or how it works. It is probably one of the least transparent institutions in Washington. It is time to audit the Fed.