"Lawmakers don’t like to cut spending, but they have to do something. Otherwise the exploding national debt will be an increasing burden on our children, economic growth and our future standard of living."

    ~Martin Feldstein.  
March 26th, 2019

(Caveat Emptor)

News and opinion from all over the political universe.

  Much of it to be taken with several grains of salt.

Email: Wrisley.com


   Curmudgeon's        Archive.      

Who Supports Whom?

Magical Money
Posterity's Debt To Me

  Honest Money
From Riches to Rags
Fiddler's Broken Wrist
Jack-lantern Wealth
Chance of Gold Confiscation

Poobahs of Positivism
Blood In the Streets

America Descending
Just Plain Stealing  ?
A thing to fear
Heavenly Sex
What Fools, We Mortals
Unvarnished Truth
Hucksterism Gone Wild



     News media are all in a tizzy today reacting to the Mueller report which, after spending two years and some $25 million of public money, did not find evidence of collusion between the Trump presidential campaign and Russia.   This is a shocking turn of events to Trump haters. 

          Perhaps one or two political reporters can turn their attention, however briefly, to developments on the monetary/economic front.  The shadow of recession or worse seems to be threatening the world future and it may be unavoidable.  That, it seems to us, deserves a few minutes of airtime or inches of news print.

   "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."  ~Ludwig von Mises

      Why should we pay any attention to dead economists when it comes to government policy on money creation? 

      The careful reader will note the two sentences above (from "Human Action" by Mises) are based on a historical fact that has been demonstrated over and over through the ages by societies that chose to promote economic booms through use of the printing press and credit creation.  This is what the Federal Reserve does by monetizing debt and forcing a steady rate of price inflation.  When he observed that there is no means of avoiding the final collapse of an economic boom brought about by credit expansion he knew  what the record showed and what the consequences of debauching the currency must be.

              But would it not knock the props out from under the economy if we  made government affordable and began spending only what we could bring into the Treasury?


                So why would we even think for a second about living within our means?

                 Because of the Laws of Nature.  Human experience clearly shows that no debt-based economy can endure when it runs too far out of balance. 


  Opinions from the left - opinions from the right.
Mix them all together to create an awesome plight.
Is compromise the answer? Do cool heads still prevail?
Or, do the texting masses just prefer to rant and rail.

The Fed cannot admit it.  There's little it can do.
Quantitative Easing was only helpful to a few.
It wants inflation higher. It will "make things come alive."
But the Fed is strangely  failing no matter how they strive. 

We'd like to see sound money return to save the day
With long forgotten lessons  coming into play.
It's contrary to the experts. They tell us "take on debt!"
But we suggest the opposite. Stay solvent and you're set.

Pay no attention to the windbags when they  rise to speak.
No debt and some  savings is what we all should seek.
Let's erase all this confusion. Let's bring back common sense.
Restore the Constitution and  celebrate its eloquence. 
~John Wrisley

       Tom DiLorenzo offers ten reasons why socialism always fails.  This is number nine:
       "9. Nineteenth-century socialism was 'government ownership of the means of production,' but it now includes the welfare state progressive income taxation and the strangulation of capitalism with regulation and taxation. The welfare state has destroyed the work ethic of millions; destroyed millions of families; caused a 400% increase in out-of-wedlock births in America since 1960; and transformed millions into lifelong beggars and wards of the state."  The Lure of Socialism

      From the noisy left of the political spectrum we have a cadre of socialism boosters howling about the necessity of throwing in with a government framework that is even more socialist than the present U.S. welfare state.  It's one of the issue that will continue to divide public opinion.  Mr. DiLorenzo provides a brief essay against socialism.  It's a keeper.


   Harvard professor Martin Feldstein warns, "The most dangerous domestic problem facing America's federal government is the rapid growth of the budget deficit and national debt."

    In other words, Professor Feldstein is pointing out that the federal government can't keep spending more money than it takes in each year without eventually running into an economic catastrophe.  He adds, "The government either has to impose higher taxes or reduce future spending." 

    "But why?" cries a voice from the gallery.  "Can't we just print all we need?"
     Sure.  But that can trigger runaway price inflation.  Who wants to emulate Venezuela's 2,000,000 percent annual rate of inflation?   

      So if the U.S. persists in running annual budget deficts of $900 billion or more because the voting majority will howl if taxes are raised too high, who gets to pay the growing debt in the long run. 

      Posterity - that's who.  The trillions of dollars of national debt must be paid off by sharply lower living standards if the Treasury Department can't reach an income level that offsets the debt. 

       The simplest approach, suggests Feldstein, is begin with raising the eligibility age for Social Security.  He believes 70 is a rational level given the extension of lifespans in recent generations.  This will create a push-back from voters who have fallen for the myth that it is a good thing to abandon the workplace as soon as possible and spend one's later years in recreational pursuits. 

       Let's hope the Harvard professor's observations enter the political rhetoric in the campains of 2020.  Put into simple terms he is saying you can't continue spending money you don't have without running into a debt crisis.  A painful correction lies ahead no matter what path we choose, but postponing it does little good for anybody.

   "We modern Cassandras are certain that the theories based on spending and borrowing yourself out of the biggest debt bubble in history are totally fallacious," writes Swiss goldbug Egon von Greyers."We know that a debt problem cannot be solved by more debt. No one defined it more succinctly than Albert Einstein: 'We cannot solve our problems with the same level of thinking that created them'"  GOLD = INSURANCE

Von Greyerz's columns are generally dismissed by liberal economists as nothing more than a sales pitch from one of the gnomes of Zurich.  We're not so sure the Scandanavian goldbug is wrong.  Consider the purchasing power of gold in Venezuela right now.  People who tucked some Krugerrands away a few years ago can still buy almost anything they want in the storm of economic chaos in that country after the wretched effects of Socialism.           
       MMT proposes that it's okay for governments to spend money they don't have as long as it doesn't drive up prices too quickly.  It's all the rage.

       We're not kidding.  The theory contends 1st world economies should not  worry about running budget deficits as long as it doesn't trigger high inflation.  ("Low" inflation, say 2 percent or so, is fine with the MMT crowd.)

        So, if the MMT system is merely perpetual (but "low") inflation, What's the harm?  Everybody is getting a piece of the pie and that old debbil deflationI is not a problem.

         Because perpetual debt invariably leads to widespread misery.  Mild inflation may buy additional time until the inevitable day of reckoning, but the rise in prices - including the rise in wages - rarely occurs in synchrony and it's always a horserace with a few heading the pack but most trailing behind.

          We think an Honest Money System (HMS) will lead to the better conclusion in the long run. 
"Communists like Alexandria Ocasio-Cortez are so ignorant that they do not even know the economic problems that faced their communist predecessors. “Democratic socialists” are ignorant communists who seriously claim that democracy will solve all economic problems."  ~Mike Rozeff

  Whoa, there! This retired scholarly professor usually doesn't take to name calling when arguing a point. But perhaps calling Ms. Ocasio-Cortez a "communist" is not far from the fact. Calling her ignorant of fundamental economic understanding appears accurate, also.

   A strong attraction to socialist notions is firmly embeddeed in the psyche of humanity. It's natural to wish to get a good living with as little effort as possible. It is the reason democracy crumbles in the long haul as the desire to "equitably" share the wealth overwhelms the system. Whereas in bygone days of Constitutional rule the people were expected to shoulder the responsibilities of government, today the government is expected to shoulder responsibilty for the people. The basic language of the Constitution didn't change very much, but the Supreme Court in the 20th century interpreted the document into a socialist-leaning democracy from the basic republic ratified by the several states in 1789.

    Many people alive today recall the United States being called "a great republic" in patriotic speeches before mid-20th century. Today one rarely hears it called anything but a DEMOCRACY. The record shows the Founding Fathers thought they had created a
republic. (See OCASIO-CORTEZ)

Economic depression ahead?  Who's making such a silly claim?

"Hysterias don’t last forever, but the economic depression ahead will last a long, long time, and the nation will have to find some way to adjust to a lower standard of living. None of the nostrums currently in the air — the guaranteed basic income, Medicare for all, the Green New Deal — will avail to alter that fate. The big question is just how disorderly and violent the journey through that will have to be.

      The moral problem with debtors failing to meet their contractual promise to pay back money borrowed is  - it's stealing.  

       As Rutherford B. Hayes, the 19th president of the United Sates pointed out, "It is the debtor who is ruined in bad times."    History clearly shows that economic setbacks occur every now and then and almost everyone suffers the effect.  The person who suffers least is the prudent one who had little or no debt.

        We believe this principle applies to nations as well as individuals.  So - who's up for a national balanced budget and a pay down of the public debt?

What any third or fourth grader should know.
    "Suppose you borrow $1,000 from a bank to buy furniture. The bank is the lender. Who pays for the furniture? You or the bank? 

     "The answer is that you pay. You make the deal with the furniture dealer. You write the dealer a check. You take possession. You own the furniture. If it’s stolen, the bank can’t go after the furniture dealer. You are the one who owes the bank. The lending bank doesn’t make an exchange with the furniture dealer. The bank doesn’t write a check to the dealer. The bank doesn’t pay for the furniture. The bank provides money to you so that you can pay for the furniture. Your actual and legal position isn’t the same as the bank as lender. Borrowers and lenders are not an amalgamated entity."  ~Mike Rozeff

      Too complicated for a young mind?  Simple economic fundamentals like this should be taught in elementary school, but they are avoided.  It's possible the teacher corps has not mastered the facts or school boards object to the idea of teaching practical economic fundamentals.  Perhaps some parents are opposed to teaching children how the world really works. 

The inflation thing.
    We overheard the head of the Federal Reserve tell a CBS interviewer that "inflation is muted." 

     Well, yes - if you compare our present Consumer Price Index with Venezuela's, which is perking along at quardruple digits, annually.  In the 1970s the U.S. CPI roared in double digits until the Fed slammed on the brakes. 

      Inflating the money supply is a tricky thing.  When government pumps up currency creation at high levels (think of all the pay raises awarded to offset cost-of-living costs) and it clearly a never ending exercise.  It usually ends with the purchasing power of the money unit reaching zero.  Luckily, we have a way to go.  Under the guidance of  elected politicians and the purchasing power Federal Reserve the $1.00 of 1914 has been reduced to less than a nickel.  When it approaches zero it will be replaced with a different money unit. 

      No one seriously worries about our "muted" inflation as long as their basic paycheck is raised at some rate to compensate for the "increase in living costs". 

Exclusive poll: Young Americans are embracing socialism.
    Generation Z has a more positive view of the word than previous generations, andalong with millennials — are more likely to embrace socialistic policies and principles than past generations, according to a new Harris Poll.    
    No surprise here. From what we can glean from history the idea of the socialist government framework has had wide appeal for milennia. We look to Venezuela for a clear example of the political chaos socialism can produce. Humans have a built-in desire to get "something for nothing." Don't we all relish the idea of gaining as much liesure as possible with little effort?  As children we heaved a sign of relief when the Friday school dismissal bell sounded. We groaned on Saturday when an adult reminded us of our obligation to mow the lawn. 

   Getting out of chores is built-in to human nature, although there are some who relish work and often  gain  monetary success in life. Their wealth accumulation becomes a natural object of envy and the "have nots" conspire to separate the well-to-do from their assets.

    Politicians like Bernie Sanders, Alexandria Ocasio-Cortez, Elizabeth Warren, et al, have no trouble gaining followers with their promise  to take from the rich to provide more for the masses. From each according to his ability, to each according to his need is an enticing idea. It was the scheme used by the Pilgrims after landing at Plymouth, MA. They nearly perished from that socialist experiment.

    Capitallism is a hard sell.  So is freeedom and liberty. It's easier to live out of someone else's pockets.  Think; "free college," "free medical care" and all the other freebies. Yet the words of the late economist Milton Friedman echo from offstage..."There is no such thing as a free lunch."


nt impossible for future generations. 

Consider the following:

  • The IMF has already called for a wealth tax of 10% on NET WEALTH.
  • More than one Presidential candidate for the 2020 US Presidential Race has already openly called for a wealth tax in the US.
  • Polls suggest that the majority of Americans support a wealth tax.

And if you think this will stop with the super wealthy, you’re mistaken. You could tax 100% of the wealth of the top 1% and it would finance the US deficit for less than six months.

Which means…

Cash grabs, wealth taxes, and more will soon be coming to Main Street America.

  What calumny is this? Is someone suggesting that one's net wealth should be taxed at the rate of 10 percent just because it exists? This is the last thing we need if citizens are going to be attracted to the idea of accumulating and saving.

   We are reminded of a long-ago exchange with a caller to our radio talk forum who said he was willing to pay whatever tax was necessary.  We asked him how much money the government would receive if it taxed at a rate of zero percent.

    "Why...nothing!" he replied.

    We then asked what the government would receive if the tax rate were 100 percent.      

    "All of it," said he. 

    "You wouldn't mind giving all your money to government?"

    "Not if they took care of me."

    This is an example of the mindset that has taken firm root among the citizenry. When we reach the stage where it's OK for government to commandeer one's legally acquired assets just because they exist one can count on big trouble. WHAT NEXT?