AMTV News: 4th Aircraft Carrier to Gulf, Condi VP, Amerikan Incarceration & Burn Penn State

Topher Morrison

PurpleSerf.com

Aircraft Carrier USS John C Stennis

This is AMTV News, I’m your host Topher Morrison.  Today is Finally Friday 13^th of July, 2012.  Our final production video is located at the bottom of this post. Enjoy...

War drums…

US Sends 4^th Aircraft Carrier to Persian Gulf

RT

Along with a fleet of SeaFox drone submersibles the aircraft carrier USS John C Stennis will join the Eisenhower, Lincoln and Enterprise in the Persian Gulf.  It’s an unexpected show of extraordinary force and comes on the heels of a 12,000 troop, 19 nation, massive military drill imitating a Middle East invasion.  US raises…Iran your bet.   

Next…

Neocons Love Them Some Condoleezza Rice

Noonan, Limbaugh, Kristol

No its not a Mexican dish – it just might be the next vice president of the United States.  They’ve all been floated Pawlenty, Huntsman, Christie, Haley, Jindal, Portman, Ryan and Rubio, but this looks to be their ’54 special reserve select.  Eager to erase a polarizing Palin this liberal kryptonite – black, female, experienced and academic – brings back the fervor and favorability of Herman Cain with none of the baggage.

Land of the free, hu…

America #1 in Incarceration

AllGov

This is what the drug war has brought us – the prison industrial complex.  Over a 30-year-period, from 1980 to 2010, the US incarceration rate has quadrupled from over half a million to over 2.2 million and leads the world in per capita incarceration 743 persons per 100,000, ahead of Rwanda and Russia. 1 in 9 state employees work in corrections to the tune of over $30,600 per inmate roughly more than what 1/3 of Americans make a year.

Here’s a lesson in futility…

Karzai: Taliban Chief Can Run For President

Dawn.com

Can’t we all just get along.  After 11 years, $546 billion and over 3,000 dead soldiers in our adventure in the Graveyard of Empires President Karzai welcomes reconciliation with Mullah Omar supreme leader of the Taliban.  This is what nation building looks like – a dog chasing its tail.

Next…

M2 Just Shy of $10 Trillion!

Zero Hedge

Still in shock after we learned the S&P 500 is 50% larger only because of the Federal Reserve’s printing press the M2 – the total amount of money available in the economy – is just 8 and a half billion dollars shy of 14 digits for the first time in history.  Gone is the housing bubble and our confidence, going are our municipalities; coming is a world wide economic train wreck.  Ground Zero is America’s Private Central Bank and everyone with a dollar to their name.

A runaway cult…

Burn Penn State Football to the Ground

Business Insider

“JoePa” over 61 years effectively became a one-man cult raising over a billion dollars for Penn State during his tenure.  The institution as a result morphed into a “roque civilization with its own structure, authority,  and ethical assumptions.”  From the janitors to the upper echelons of PSU depravity rained for over a decade as Jerry Sandusky ensconced within the pantheon of litany lions roamed wild freely sating himself one young boy after another.  Football - a base American pastime – was given precedence over innocence.  Because of it – the NCAA “death penalty” should be merely the first step along the long road of repentance.

Catch my latest choice headlines on AMTV News Monday – Friday at AMTV Media and catch our in depth commentary and analysis of stories like these at GreeneWave.com part of the AMTV network.

 

The Fed Wants to Twist Again, Until the Election

Topher Morrison

PurpleSerf.com

Fed Chairman Ben Bernanke and the Federal Open Market Committee.

The once arcane strategy – “Operation Twist” – is evidently becoming a trusty financial tool as much as a screwdriver is to a repairman.  The Federal Open Market Committee (FOMC), charged with overseeing the buying and selling of US Treasury securities, is to meet this week and it looks like another round of Operation Twist is on the table.  The FOMC’s decision whether to inject more liquidity into US markets, in an attempt to inoculate them from European debt crisis, or proceed with other more temperate measures will help influence the financial trajectory of America and with it the rest of the planet for the remainder of the year and beyond.

Operation Twist, selling short-term treasuries in order to buy longer term ones in an effort to bring down long-term yields, is one of many tools available to the Federal Reserve.  In general it is more palatable than firing up the printing presses or plugging fresh zeros into the digital currency supply and then purchasing billions (or potentially trillions) in assets, which is how quantitative easing (QE) is employed and what the Wall Street Oligarchy and Gold Bugs hope occurs.  It may, for the time being, be sufficient for markets to feel the Fed is doing something and therefore Twist 2.0 may be just the ticket.

In previous rounds of QE benefits were double edged, as one can never fool the markets. There was ‘good’ inflation (high prices for equities, corporate bonds, remember: will the Dow hit record high in 2011?) making the rich richer, so to speak, and then there was the collateral damage – ‘bad’ inflation via surging commodity prices – making the poor poorer.  This is of course how the Fed steals for the 1% and the logic, which explains how the Fed triggered the Arab Spring.

While both QE1 and QE2 became intensely controversial Operation Twist, aside from the dubious name, looks to become the preferred method of intervention.  Forbes reports on the upcoming FOMC meeting with regard to the latest limping economic numbers:

“Barclays Capital called Operation Twist ‘the most likely outcome,’ saying it would give the Fed more time to sort out whether recent softness in data is mainly ‘payback’ for hiring during a warm winter or a more prolonged slowdown. ‘If the latter is the case, then more outright asset purchases that expand the balance sheet (QE3) would become likely,’ Barclays said.”

To be sure, as the frequency of crises increase moves like Operation Twist allow the financial engineers to manipulate the economy without having to deal with the underlying causes of addicting entitlements, long term debt and growing corporate malfeasance (got Zucked lately?) and without addressing public concern over persistent and reckless intervention.  But again, nothing changes, Operation Twist is a shell game as much as everything else the Fed attempts. 

The political calculation here, however, is important.  Should Ben “Bubbles” Bernanke go on a printing spree, say by injecting a cool $500 billion, look for Obama to win in November.  If the Fed doesn’t it may harm him according to Gary Dorsch writing for Seeking Alpha:

“Without the artificial life support of QE3, the U.S. stock market could sink ahead of the upcoming election and torpedo Mr Obama's chances. On the other hand, a $500 billion printing operation could lift the Dow Industrial above the May 1st highs, and tilt public opinion in favor of the president over his Republican challenger.”

This would undoubtedly raise Republican ire like no state recognized gay marriage or stimulus bill could and would likely fuel a harder line conservative (sound money anyone?) to take place of a lukewarm Romney in 2016.  The Federal Reserve doesn’t like attention and especially the pesky kind from sound money conservatives like Ron Paul.  Not doing anything that would help Obama will sap any animosity a resurgent and victorious GOP harbors for the Fed in November.

The alternative is of course, Twist 2.0 or perhaps another series of secret European loans or some derivative thereof.   If the Federal Reserve can lay the economic turmoil entirely on Barack Obama’s doormat, which Republicans will happily aid, Ben Bernanke and crew are as usual in the clear.  Suffice it to say that has always been the magic of the Federal Reserve – out of sight and out of mind of the electorate.

3 Reasons to Repeal 1913

Topher Morrison

PurpleSerf.com

cross-posted at

GreeneWave.com

This Saturday at a stump speech in Rochester, Minnesota Ron Paul may have outdone even himself.  Famous for advocating the repeal of many laws, the elimination of numerous agencies and substantially reducing the size and scope of the federal government Ron Paul recently told the Wall Street Journal “I’d really like to repeal 1913.”  Why a whole year?  Three reasons:

·      On February 3, 1913 the 16^th Amendment to the United States Constitution was ratified.  The amendment allows Congress to levy an income tax without apportioning it among the states per the Constitution Article I, Sections 2,8, and 9.

·      On May 31^st, 1913 the 17^th Amendment was declared part of the Constitution by Secretary of State William Jennings Bryan.  It established the direct election of U.S. Senators by popular vote stripping the right away from the state legislators.

·      On December 23, 1913 the Federal Reserve Act was passed.  This act grants a consortium of private banks legal authority to issue Federal Reserve Notes.

These three events are barely discussed in today’s retail politics, but they are at the genesis of nearly every controversy the country suffers from today.  After 1913, the United States, once a grand laboratory of democratic experiments became irrevocably chained to the one-size-fits-all decisions of experts and special interests in Washington D.C.

The 16^th Amendment or the federal income tax created the IRS as we know it today and allows the federal government to pool national wealth and keep it without returning it to the states.  This allows Washington to create massive entitlement programs, go to war, prop up foreign governments, fund extensive bureaucracies and bribe state governments with their own money to accept federal regulation.

The 17^th Amendment, while affirming the redemptive qualities of popular sovereignty by instituting direct elections of U.S. Senators, removed the state governments from the federal process.  The bicameral legislature was originally set up to represent both the people (House of Representatives) and the states (Senate) as an indispensible component of federalism and an essential check on government overreach.

Prior to 1913 Senators gave the 10^th Amendment teeth by acting as jealous guardians of individual state rights.  Held to account by local legislatures U.S. Senators were charged with preventing unlawful federal encroachment upon those rights.  Any legislation that would emphasize the federal government over of the state governments or their citizens would be voted down.

The Federal Reserve Act also known as the Aldrich Plan effectively privatized what was otherwise a public utility, the nations money supply.  Handing monetary policy over to a fundamental conflict of interest is all that is important here.  The Constitution as originally conceived charged Congress with the public regulation of monetary policy, not private banks.  The Federal Reserve inherently desires our government to spend more and thereby borrow more at interest, whether it be for peace or war.

Few Americans appreciate the fact that while the last century is known as the “American Century” we began it already on top.   By 1906 the United States was the dominant economy in the world, enjoying the highest living standards and literally recreating the world in our image.  It stands to reason therefore that it is what we did (or better yet, did not do) as a country in the 19^th century, which led to our prominence in the 20^th.

With this in mind it strikes me as odd when someone praises what we “accomplished” during the last century when it in fact these accomplishments testify to where we are now – divided, decadent, laden with debt and in decline.   Nonetheless it has become a buzzword for some to claim the Tea Party movement, conservative leaders and libertarians want to “repeal the 20^th century” evidenced here, here, here and in this video:

This byword hides the fact that nearly all of the 20^th century’s legislative accomplishments and wars are predicated on the fundamental changes that literally ripped the heart and soul out of the Constitution.  Its a matter of perspective, does one measure accomplishments on what we are able to do through government namely by winning wars or passing laws?  Or does one measure accomplishments on our aggregate ability to progress and add value to each others lives, something government can never do?

These three pieces of legislation over the last 105 years acting in concert have effectively ended capitalism and replaced it with corporatism.  The year of 1913 was crucial in reducing a vibrant republic to one glacial organism monolithic in its agenda, pallid in its imagination, unresponsive to the needs of its people and growing in capacity to harm not only Americans, but others as well.  We must now ask ourselves: shall we like so many other nations succumb and be pulled back into the fog of history or are we to reclaim our culture of freedom and emphasis on the individual and resist the fate of so many nations?

50 Things I Hate About Romney: PART 1

Topher Morrison

PurpleSerf.com

I created this video just before Newt Gingrich rose in the polls and when he did I didn't feel it appropriate to release considering there was so much to knock him on.  Now that Romney has cemented his front runner position, at least for now, I thought we should take another look at his record.  This first part covers the economy.

If you like the video please "like" it "comment" and "share!"  There is 40 more things I hate about Mitt and there is a long primary coming!

BEWARE: Vatican Calls for Central World Bank

Topher Morrison
PurpleSerf.com


Read: Vatican Calls for Central World Bank


Watch: The Money Masters (1996)

This movie is essential for beginning to understand why a private central world bank has the very real possibility of bringing on economic Armageddon.  This is not to be understated.

GOPs New Love Affair, Herman Cain and VAT Taxes

Topher Morrison
PurpleSerf.com

There is a floating faction in the GOP which can't seem to settle on one candidate.  First into the spotlight was Michelle Bachmann and her Tea Party legitimacy.  Then it was Rick Perry who in classic Texan fashion came out of the gate guns a blazin' only to be holstered just as fast.  Begrudgingly the conservative undecideds have returned to Mitt Romney who wears his experience in Massachusetts like a scarlet letter.  In every case with a challenger to this ostensible nominee their loss of appeal is someone else's gain, Herman Cain is the latest example.  But is Cain destined for a similar fate once the restless side of the GOP takes a closer look at him?


          He is a straight talker.  You feel like you know where he stands and if he doesn't know he'll tell you.  But aside from the esoteric who is Herman Cain?  What would his first 100 days look like?  Well in the words of Herman Cain himself, "Lets Get Real."


UPDATE: American Research Group says Cain is #1 in South Carolina



          No stranger to business (or admittedly to ignorance in world affairs) and evidently adept at communicating his goals, Cain has succinctly articulated his platform; 9-9-9.  He advocates flat taxes of 9% on net business profits, 9% personal income tax allowing only for charitable donation deductions and a 9% national sales tax.  The 9-9-9 plan includes a transitional stage where the "the Fair Tax would ultimately replace individual and corporate income taxes."  Why there is a need for a transition is not clear, however, Cain claims that "amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax."  Whether America will be ready for the lesson is another question entirely.   


          There are some interesting opinions on this strategy of transition.  Considering Congress' short attention span who's to say that some "crisis" won't arise (they do so often in Washington these days) and stymies any transition from Cain's tripartite taxation system into a true flat and fair tax.  How many crises do you think would arise should the United States carve out not only the IRS, but the galaxy of ancillary organizations from Deloitte & Touche to Turbo Tax?  Who's to say we wouldn't be stuck with the whole shebang?


          The Wall Street Journal calls "Cain's tax mutiny" a "political killer."  They admit the plan is deficit neutral and would bring into government coffers as much as the current tax system, that it would eliminate double taxation on savings and investment, eliminate loopholes that have allowed companies like Google and General Electric to pay next to zero income tax.  Cain's plan admittedly would also reduce the distortions created by compliance (and avoidance), would substantially increase our global competitiveness, and would allow the U.S. economy to tap into a deep worldwide reservoir of foreign direct investment; in other words "if Americans want more jobs, this plan would produce them in a hurry" according to the WSJ.  However, there is a dark side to Herman Cain's plan.


          Americans have been snookered before, according to the WSJ:


          "the current income tax was introduced in 1913 with a top rate of 7% amid promises
           that it would never exceed 10%.  By 1918 the tope rate was 77%."


Because his plan does not first eliminate the 16th Amendment, which created the national income tax, America seduced by the intoxicating prospect of flat and fair taxes and rapid growth will in reality be made vulnerable to newer more demagogic style tax politics akin to those in Europe. 


          "Consumption tax rates usually started at less than 10%, but in much of euroland 'the
           rates have nearly doubled and now are close to 20%,' according to a study by the
           Cato Institute's Dan Mitchell.  Because a sales tax would raise hug sums with small
           increases in the rate, we would see regular campaigns like 'a penny to fight poverty,'
           or 'one-cent for universal health care' that would be politically tough to defeat."


Moreover, Josh Barro of the National Review points out that the 9% business tax needs either some fine tuning or at least clarification as it seems to be in essence a "lightly modified VAT" which doesn't exactly "equalize the treatment of corporate debt and equity."


          If you don't buy that the European track record will apply here, a head Senatorial tax advisor pointed out to PurpleSerf today the abysmal situation in California.  The politically blue state is very much in the red even though it has both sales and state income taxes which exceed corresponding rates in most of the lower 48!  "That is a staggering double whammy!" he continued "...unless the income tax is completely abolished an additional tax system like a VAT is and should be a non-starter."   


          The issue of federal taxation is of growing importance not only when it comes to reducing the debt, simplifying our lives, but who is ultimately being paid and how much control Washington should wield over the country's wealth.  Herman Cain's time with the Federal Reserve of Kansas City has been a concern for many paleo-conservatives, libertarians and constitutionalists.  The group WeAreChange.org recently followed Herman Cain in Iowa (gets interesting at 6:50):

          Evidently Herman Cain is for a sound money system and from this interview apparently one based on gold, which brings him within the orbit of Ron Paul yet there is little publicity on this point.  However, much in the same vein as his 9-9-9 plan there needs to be another transition period from fiat currency to sound money so don't expect him to end the Federal Reserve any time soon.  He offers a compelling reason not to: "the guiding economic principles is... measurements must be dependable" if we were to eliminate the Fed "there would be chaos."  

           He advocates that Congress should start doing its job by vetting Federal Reserve appointees more closely and narrowing their prerogatives.  In response to Thomas Jefferson's words lamenting the prospect of a central bank Mr. Cain claimed we now live in a "global economy and a global financial system."  The exact point at which a private central bank was required for this new world order rather than the democratically elected Congress of the United States he did not elaborate.   

          I wonder if Mr. Cain has thought about how the global system would react to him undercutting their tax rates and reintroducing a gold standard to a world based on fiat.  Talk about chaos!  For all the transitions Herman Cain advocates one has to wonder when or will the rubber ever meet the road.  With no public record to point to, lets get real, it's anyones guess. 

UPDATE: Ron Paul's Revolution Super PAC has their own incendiary compare and contrast.

Occupy Wall St. is 3 Years Late

Topher Morrison
PurpleSerf.com


Is Occupy Wall Street a new Tea Party?  The simple answer, no.

"Eat the Greed!"
Two things are certain, neither the rich or the greedy will ever go away so what do we do from here?

          If anything else, Occupy Wall Street is unfashionably late to the protest party.  It seems frustratingly clear that this part of the occupation is merely transient.  While I don't want to gloss over the libertarian streak clearly evident in signs protesting America's wars, police abuses and bailouts, many in the Occupy Wall Street crowd have been protesting the age old vice "greed" as if it has just reared its ugly head.  In this case their protest is about as productive as protesting lust.


          To ignore that big government (a frequent target in Tea Party demonstrations) and Wall Street (the target of this protest) collude to our detriment is to sacrifice an opportunity to point a public finger in the right direction.  This is not a failure of capitalism, but of brazen corporatism!  Washington and Wall Street created this mess by appropriating and creating nearly $13 trillion of our money in order to buttress teetering financial institutions.


          Ben Bernanke, one of the architects of the 2008 bailouts, has now admitted the recovery is "close to faultering."  Evidently their plan has failed leaving us with a debased currency, stratospheric debt and intolerable unemployment.  Much of the Occupy Wall Street is a reaction to this failure, not to the cause.  The occupiers are seeking ends not a return to restraint.  They see Wall Street getting theirs and they want in.  They are concerned about unemployment, lack of benefits and Wall Street's exorbitant bonus structure not the close relationship between elected officials and CEOs.  The opprobrium being foisted on Wall Street, is justified, but many are not seeing the forrest for the trees.


          In short, much of Occupy Wall St. are 3 years late.  The real protest should have taken place in front of the Department of Treasury, the Federal Reserve, the White House and the FDIC.  If these elements of Occupy Wall Street are sated with more government spending in the form of free college tuition, universal health care and a living wage in the form of a Restoring the American Deal Act, watch the movement dissolve as quickly as it arose.


          There are highlights in the Occupy X movement, however.  Occupy Chicago has camped in front of the Federal Reserve for 11 days and there seems to be a mix of conservative and liberal elements.  Occupy Boston melodically chanted "fuck the Fed" to the beat of drums.

          It is possible, given these recent ancillary developments, there merely has been a strong effort by traditional organizations to re-inject themselves into relevancy before the elections.  It has been reported that labor unions have thrown their weight behind Occupy Wall Street.  Maybe it's the name Wall Street itself, which calls for the traditional left to come out and try to continue where they left off, but given the new direction and the new focus on the Federal Reserve these protests may turn out to be quite different.  Lets hope they are.

Want to know exactly who we're up against, who we should be protesting?  Click here.

Libertarians and Conservatives, Who Understands the US?

Topher Morrison

PurpleSerf.com

A friend of mine asked me a couple of days ago: what is the difference between a libertarian and a Republican (or conservative).  I offered him a simple critique: while Republicans may deride big government at home, at least publicly, they applaud military adventurism abroad and reinforcing traditional values at home.  Libertarians on the other hand are consistent in their advocacy of liberty from government intervention in all arenas.

           We were talking about Ron Paul (R-TX) at the time and my friend was very confused (as is Rush Limbaugh) about why Ron Paul would run as a Republican, "He's not going to win" he assured me.  I reminded my friend that I had heard that more than once, but also reminded him that, albeit Ron Paul hasn't come close to winning the presidency, he has greatly influenced American politics.  

          Additionally, Congressman Paul has infused the GOP with a viral dose of libertarianism, which has set brush fires in the minds of millions of young conservatives (and popular progressives) which will no doubt spread in the coming years.  Ron Paul sparked the modern day Tea Party movement (which he receives little credit for) a fact some conservatives would love to bury.  

          He has shattered campaign fundraising records with spontaneously ordered (how wildly appropriate!) moneybombs, the most famous of which occurred on the 234th anniversary of the Boston Tea Party with 58,407 individual donations in one day, which undeniably anticipated the popular movement.  Since 2008 Ron Paul has doubled his political visibility, almost won the '10 Iowa Straw Poll, brought two sons into politics and launched one, Rand Paul (an ostensible libertarian), into a higher office than Ron Paul ever attained!

          While there has been much written on the difference between conservatives and libertarians Ron Paul has exemplified those differences.  He has shown libertarians labor towards a fixed set of philosophical principles while Republicans tend to favor pragmatic principles informed by charismatic leaders and the varying political winds.   

          My friend reminded me of as much: "[Republicans] don't want to hear some of that stuff", referring to Dr. Paul's more controversial positions.  This is because unlike libertarians, Republicans (very much like Democrats) are often swayed by demagoguery, according to Ron Paul in his recent book Liberty Defined:

"...[these] demagogues seek influence and political power by appealing to the prejudices, emotions, fears, and expectations of the public.  They do not enlighten; they browbeat and play rhetorical games." 

          Paul showed in Monday's CNN/Tea Party debate he wasn't afraid to offend the prejudices of neo-conized Tea Partiers when he claimed 9/11 was in part a likely result of over 900 bases (that we know of) in 130 countries around the world.  He argued that 9/11 was arguably blowback from clandestine operations and overt intervention throughout the Middle East over the last 60+ years not merely because our culture is antithetical to fundamentalist Islam as Rick Santorum suggested - something conservatives in the audience expected to hear.  Dr. Paul even went further, admonishing the crowd, "...if your not annoyed by this there is something wrong!" 

          Libertarians are an international bread, whereas Republicans are found only within the United States.  They believe the Constitution was meant to extend beyond our borders as it defends "persons" not merely "citizens."  Not only can one find libertarian strains within left wing and right wing circles here in the US they are found internationally, albeit mostly in English speaking countries like Australia, Canada, New Zealand and the United Kingdom.

          A Gallup poll (above) shows to me the most important synthesizing characteristic of the libertarian ideology.  Whereas Republicans and Democrats believe respectively that "big government" or "big business" are the biggest threats to the United States it is the libertarian who understands how the collusion of both these vested interests including, to a much smaller degree "big labor", threatens to our country.  Big government enables big business to buy political favor and cut down competition through regulation, barriers to entry and subsidies, which collectively raise prices, unemployment, profits and impoverishes the middle and lower classes. 

          Similarly, libertarians like Ron Paul understand like political winds the value of goods and services extend from the human mind alone!  Prices aren't set in some ivory tower at Harvard or Stanford and planes, trains, gold, bottled water and iPods don't have an inherent value besides what social needs and circumstance dictate.  Money is (or should be) the viewed the same way.  Why do we allow a few people like Ben Bernanke and a dark consortium of private member mega-banks whom run the Federal Reserve to dictate the worth of the dollars we hold in our hand?  For the same reason we don't allow them to decree what the tomatoes in our garden are worth.  

          It would seem in a democratic society, one that professes to have a free market, that the people should dictate the price of our currency transparently through Congress in accordance with the Constitution!  Never mind the standard on which the money is based (gold, silver, toenail clippings, etc.) libertarians want abolish this financial dictatorship, Republicans are coming around (a little) and 74% of Americans want it audited.  All signs the libertarian drum beat is being heard and felt.   

Image Source: Kevin Middleton at
RedBubble.com

          Lastly, there is something very special about libertarians and Ron Paul that America doesn't fully understand.  Ron Paul wants to put the "States" back into the United States of America!  Ask yourself an honest question: who is my state legislator?  Who is my state senator?  Who cares is probably the next question!  With so many decisions going on in Washington DC all eyes are now refocused on that humid swamp passed on long ago for greener more temperate pastures.  

          Many refer with derision to our 50 states enacting their own laws as a patchwork, a hodgepodge or a mishmash of different laws, but that was the original beauty of America.  In a phrase coined by Lord Bryce and popularized by Justice Louis Brandeis the separate states are seen as "laboratories of democracy" giving the United States a competition not only in the free market, but also in the market of governments, which generated fresh new ideas for public problems and therefore competed for citizens!  After 1913 when states legislators no longer elected Senators to serve as their ambassadors to Washington DC "senators became substantially less responsive to the policy interests of the state legislature."

          Besides the controversial legalization of drugs, dismantling of the FDA, EPA, CIA, FAA, etc. which bog down most debates over the libertarian ideology and Ron Paul's campaign there lies the magic we have lost in this country, respect for reason, life, liberty, property and most all limited government. 

          

Why the "Great Depression" Annoys Me

Topher Morrison

PurpleSerf.com

Image Source: VintageVivant.com

It is like walking into a classroom where the professor is teaching a class about how the Soviet Union put the first man on the moon...  

          It seems as though every time someone refers to the Great Depression they subsequently thank Franklin Delano Roosevelt for literally digging us out of it.  If they don't they invariably annunciate the macroeconomic dogma (the belief that public institutions ought to influence the economy), that the Great Depression "shattered" the previous orthodoxy presumed by our Constitution, that free markets are self correcting.  

          While this may be true, that economic mores radically changed after the turn of the century, to not thoroughly explore why we abandoned over 125 years of tested theory, practices, which raised a feeble constellation of colonies into an unparalleled economic power by 1900 is blatant intellectual disinterest and frankly annoying. 

          The problem with using the Great Depression to bolster the macroeconomic strategies of monetary and fiscal stimulus, favored tools of the new economic vantage, is they were used just before, during, and after the decade long depression and therefore can be included among those suspected influences, which exacerbated what would arguably have otherwise been only a serious recession.  Banking panics prior to 1929 stretching back to the founding never persisted for more than a couple years let alone over a decade!

          Furthermore, the previous orthodoxy's policies, those promulgated by Adam Smith and lain down officially by the Founders, suffered damning blows in 1913 (see Federal Reserve, 16th and 17th Amendments) and were almost all effectively on the bench by 1933.  To blame laissez faire economics, an environment where interactions between private parties are free from government intervention, for the Great Depression and its abnormal longevity is not dissimilar to blaming a sidelined quarterback for his backup's interception and the subsequent touchdown. 

          To be sure, the prospect that public officers could wield control over our economic environment was (and still is) intoxicating and considering what we had achieved since our founding it was a pretty easy sell.  The very idea of control is incredibly self aggrandizing and antithetical to free markets as Adam Smith, the father of capitalism, according to Joyce Appleby: "described an economic universe that was not subject to the laws of the state, but on the contrary, subjected the state to its laws."  In other words, the government can't make the grass green.  We may be able to isolate and explain many parts of an economy because of these known laws, but to expect to steer the fluidity, dynamism, and titanic scope of modern economies with any sort of precision parallels only the naïveté and results of the Sorcerer's Apprentice. 

Image Source: Foroureconomy.org

         The motives for abandoning over a century of limited intervention was not to create an army of patriotic economic sentinels through the Federal Reserve, economic councils, or the alphabet soup of regulatory agencies.  The United States scuttled sound economics because of a newly landed elite's common desire to accomplish what European aristocracy had achieved, government sponsored capitalism also known as "crony capitalism."  It is imperative to understand this was not the necessary evolution of capitalism, quite the opposite, it was a return to feudalistic if not mercantilistic economics! According to W. Cleon Skousen:

“In Europe, certain confederations of wealthy families had gained control of their respective governments and were making a financial killing.  Some of the wealthy families in America coveted the rich government monopolies of their trans-Atlantic cousins.”

          Look no further than J.D. Rockefeller, "competition is a sin."  The "robber barons" of the new world sought to harness central government to wipe out competition, expand their interests, and bail them out in times of need; all on the backs of the American public.  This desire should not be used to deride capitalism and definitely should not be considered laissez faire.

          Capitalism, an economic and political system where trade and industry are controlled solely by private owners, is a novel idea to this world.  The relationship between the state and the economy, until the 1700s, had historically been an intimate one; the nostalgia, therefore, to recapture lost conventions was persuasive.  In the words of Mrs. Appleby:

“…the mores of a more traditional organization of society do not die out with the dominance of capitalism.  Rather they regroup to fight again with new leaders and new causes.  Any history of capitalism must contain the shadowy history of anticapitalism, sometimes carried out in the name of a new theory, but often as a reexpression of values that prevailed before the eighteenth century.”

          This is what was sold to the American working class and all over Europe, a repackaging of benighted policies, by an odd amalgam of interests including, but not limited to eager politicians, "...wealthy industrialists, heads of multi-national banking, leaders in the academic world, and some of the more innovative minds in media" according to Skousen.  While their goals were progressive, as their moniker insinuates, their methods for achieving those goals were in fact regressive.  American aristocracy required a powerful and gullible ally in its quest to fend off the waves of creative destruction inherent within capitalism, the working masses offered that alliance.  From Appleby:

“…critics saw industrialization [brought about by capitalism] as a rapacious transformation engineered by an upstart upper class eager to destroy both the aristocracy and the peasantry, which had once been protected from economic turbulence.” 

         No doubt!  Who wants either peasants or aristocrats in a modern economy?  The new socioeconomic organization of capitalist economies resembled more a tomato than a pyramid, however, the foundation of the New Deal was essentially integrated by the Great Depression even before the legislation by the same name was passed through Congress in 1933.  

         The grand bargain was achieved.  In turn for 8 hour work days, minimum wage, elections for nearly all public officials, social insurance, etc. the elite received the keys to the castle: the Federal Reserve, a public cartel of private banks, introduced plans for a fiat currency and proclaimed their members immortalis corporatus, while an income tax fed their cause and pooled massive wealth under Washington's discretion.  

          By dismantling the Senate and its strict allegiance to the state legislatures a centralized and seemingly endless regulatory bureaucracy arose with the powers to legislate, adjudicate, and enforce most laws and without democratic deliberation beckoned legions of lobbyists.  And the grand prize, an emboldened executive, with what would become the most spectacular military in human history was proffered to carve up the world into spheres of influence under the guise of making the world safe for democracy.

          Here we are over 90 years later still wrangling over similar issues: pensions, benefits, workers rights, depression/recession, and blaming it all on capitalism again while our currency is debased, we prosecute multiple foreign wars and occupy foreign lands, our benefits teeter on the brink of insolvency, while we bail out the aggressive multinational and foreign banks which wrought this travesty upon just us as they did in 1929!

          All of this old baggage rehashed only to fight amongst ourselves over how to pay for it all in some apocalyptical pincer move on what is left of a middle class first created almost a century ago by ideals almost forgotten.

This is the position of a mere serf and why talking about the Great Depression annoys me.

Ancient Knowledge of Money: Sound Money and Forgiving Debt

Washington's Blog
7/16/11

We Have Forgotten What the Ancient Sumerians and Babylonians, the Early Jews and Christians, the Founding Fathers and Even Napolean Bonaparte Knew About Money

Mike "Mish" Shedlock has repeatedly pointed out that we have reached "peak credit" - and there will not in our lifetimes be as much credit as we saw from 2000-2008.

I noted last year:

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

Hudson says that - in every country and throughout history - debt always grows exponentially, while the economy always grows as an S-curve.

Moreover, Hudson says that the ancient Sumerians and Babylonians knew that debts had to be periodically forgiven, because the amount of debts will always surpass the size of the real economy.

For example, Hudson noted in 2004:

“Mesopotamian economic thought c. 2000 BC rested on a more realistic mathematical foundation than does today’s orthodoxy. At least the Babylonians appear to have recognized that over time the debt overhead became more and more intrusive as it tended to exceed the ability to pay, culminating in a concentration of property ownership in the hands of creditors.”

***

Babylonians recognized that while debts grew exponentially, the rest of the economy (what today is called the “real” economy) grows less rapidly. Today’s economists have not come to terms with this problem with such clarity. Instead of a conceptual view that calls for a strong ruler or state to maintain equity and to restore economic balance when it is disturbed, today’s general equilibrium models reflect the play of supply and demand in debt-free economies that do not tend to polarize or to generate other structural problems.

Read more of this intriguing article at Washington’s Blog.