The Path To Opportunity?

I've sent a few emails to my Senator (Klobuchar - D,MN) regarding Porkulus. The other day I received a response and responded in kind. Her response is below mine. Notice the Appeal to Pity common to almost all left wing arguments.

I'm not saying we shouldn't have compassion on people but I can come up with equally compelling vignettes decrying their policies. The question is, "What really is the best policy?" I really don't believe government is competent to manage the economy. I should do a post on why this is.

Senator,

1. The bridge didn't fall because there wasn't enough money. We spend enough money on roads every year to plate them all in gold. There was a design flaw with the bridge and to imply otherwise is dishonest.


2. In the last 8 years, we spent more money than ever on our schools. Money is not the answer.


3. The problem with government investing is it has to take the money from the market to put back in the market. This either comes from taxes which deprive people of capital directly; from borrowing in which the government competes with the capital markets again depriving business of the capital necessary to create jobs; or from inflation which diminishes the value of cash and deprives the market of capital. None of this can possibly "stimulate" the economy. The only real stimulus government can give is to spend less money and take less out of the economy.


4. Since you mention the Great Depression I'll quote Henry Morgenthau who was FDR's Treasury Secretary on their stimulus packages. "We have tried spending money. We are spending more than we have ever spent before, and it does not work... I say after eight years of this administration, we have just as much unemployment as when we started -- and an enormous debt to boot."


5. Investing in "Renewable Energy" by the government is a waste of money. If there is a cheaper form of energy out there, the market is incented to find it. If government has to subsidize it, by definition it is less efficient.


6. I wish you would do "do what's needed to get our economy back on track and restore our footing on the path to opportunity" but you have a poor start so far. If you would head down a path toward free markets and not the Keynesian slope we're on towards complete government control of the economy, we could be out of this and growing again in 6 months to a year. As it is Congress and the President are going to lengthen and deepen this into the Great Depression of the 21st Century.

Servius

Dear Servius,

For years our country has been adrift, with bridges falling, schools decaying, and science lagging.

We all know now is the time to invest. As the President noted the other evening when he addressed the nation, in January alone our country lost 598,000 jobs--that's the equivalent of all the jobs in the state of Maine. And these are not just statistics. These are real people, living in the state of Minnesota-- the couple who writes and tells me that every night after they put their daughters to bed, they sit at the kitchen table with their heads in their hands wondering how they are going to make ends meet, the woman who inherited a small amount of money she was going to use for her daughter's wedding but is now using it for her retirement because she lost so much of her savings.

The American Recovery and Reinvestment Act will give our economy the jolt it needs in the near term while also building the foundation for longer-term prosperity.

This legislation provides economic assistance aimed directly at Main Street. It provides economic relief to working families, small businesses and seniors, including a tax cut for more than 2 million working families in Minnesota. It also gives critical support to states and communities so they can ensure a safety net for families hurt by the economic downturn. And it is estimated to save or create 3.5 million jobs, including an estimated 66,000 jobs in Minnesota.

At the core of this legislation is jobs. Just as we built back our economy after the Great Depression with WPA projects that are still with us today, this plan will put Americans back to work by rebuilding our roads, bridges and schools, by investing in homegrown renewable energy, and by expanding our high-speed Internet infrastructure.

I'm proud to have championed infrastructure, Internet and police funding in the bill. I led the charge in the Senate to make sure Minnesota and other states which had seen recent increases in unemployment got their fair share of Medicaid funding. I also pushed for more investment in our schools.

No one considers this a perfect bill. I don't agree with everything that's in it and everything that came out, but I knew we had to act.

Over the coming months, I will continue to do what's needed to get our economy back on track and restore our footing on the path to opportunity.

It is good to be back in Minnesota this week. I hope to see you soon.

Sincerely,

Amy Klobuchar

How about some real solutions?

Obama Makes Stimulus Law: "But today does mark the beginning of the end".

Posted the following in the comments.

Wrong again O'President. This is the end of the beginning. We're going down much the same path as we took in the '30s. Japan did this as well in the '90s and they called the result the "Lost Decade".

This plan is unadulterated Keynesianism and can't work for much the same reason Socialism and Communism can't work. Socialism and Communism can't work because they do away with price signals when governments take over industries and without price signals you cannot have rational calculation in an economy.

Keynesianism fiddles with the price signals which also prevents rational calculation in the economy. Of course, by preventing rational calculation you ensure companies and industries getting into trouble and create the environment for government to take over the industries. So Keynesianism is a slippery slope towards Socialism which history has proven to be a failure.

Now, many say, "The last eight years prove that unfettered free markets are a failure." I ask you when the markets were free and unfettered in the last eight years. In fact, it was Keynesian manipulation of the markets and interest rates that got us into this situation.

It was the constant cutting of interest rates and the rampant inflation (inflation is an expansion of the money supply not the rise in prices that often results from inflation and has come to be called inflation) that caused the bubble. The bubble showed up in the housing market because the politicians coerced banks and mortgage companies to push home ownership to people who couldn't afford it. (Thank Acorn for their intensive lobbying efforts.)

The cutting of interest rates causes inflation because money is debt. This is important. Money Is Debt. In most cases, when the bank loans money it doesn't loan money it already has. The bank creates money in order to loan it. It actually loans money into existence. Lower interest rates encourage more borrowing. More borrowing means more money creation which means more inflation.

Well, interest rates are at 0 now. The fed can't cut rates anymore so the whole thing stalls, the bubble pops, money starts to vanish, there's not enough money to pay off the loans, people and companies start to go bankrupt, causing unemployment which causes more people to go bankrupt...

If we want out of this, and not to get back into this we need a monetary system that is not based on debt, where in order to loan or borrow money it must first be saved.

To that end, we need to end fractional reserve banking. This is the policy that allows a bank to create money from thin air.

We need to remove the Fed's and the Government's ability to manipulate interest rates. In fact, without fractional reserve banking there would be no need for a Federal Reserve Bank.

This is a fundamental change. For one thing, we would need a new money. Since the banks would no longer be able to loan money into existence we would need some mechanism to replace this money creation. The market has generally chosen gold if gold is available. Although our free market system should be allowed to choose what it will, I'd expect it to choose gold and or silver but there could be several competing currencies.

Servius
iamservius.blogspot.com

My note regarding Porkulus to my Democrat Senator

You passed Porkulus!

Congratulations. You get to take credit for the recession deepening into Depression.

I don't understand how you think taking money out of the economy to spend on less productive things will stimulate the economy.
Japan tried this. They called the result the Lost Decade.

* Make the Bush tax cuts permanent.
* Cut Spending. Really cut it.
* Cut taxes. Specifically, remove corporate tax rates and make Social Security & Medicare optional.
* Allow interest rates to return to natural levels. This will hurt but the pain should be offset somewhat by the tax cuts.

From Reagan to Business Cycle Theory

A conversation from Twitter.

Servius: @CraigMayhem I need to go now. I'm not an economist, I just read the best ones I can. The article I shared a bit ago is by one. #tcot

Servius: @CraigMayhem I'll modify that a bit. There's nothing wrong with earning money. It's when you MAKE it that you cause problems. #tcot

CraigMayhem: @Servius Nothing wrong with making money. Making it at the expense/detriment of others is the problem. Thus regulation.

Servius: @CraigMayhem http://mises.org/story/672 Here's a brief introduction to why inflation and cutting interest rates is the problem. #tcot

Servius: @CraigMayhem People will always try to make a much money as possible. Without gt manipulation we can do that without booms and busts.

hankracette: @jmp5329 @Servius "I believe that ... I'm going to buy gold coins and hide them ! #tcot" -- Let me hide them for you. Safer that way....

jmp5329: @Servius I believe that ... I'm going to buy gold coins and hide them ! #tcot

CraigMayhem: @Servius The point is that people wil exploit the system, high or low inflation

Servius: @CraigMayhem That if everybody withdrew their money the bank couldn't pay them back?

Servius: @CraigMayhem Do you know that all the money you put in the bank is not there? #tcot

CraigMayhem: @Servius Even people who should know better are greedy. i.e. anyone taken in by Madoff

CraigMayhem: @Servius Are you nuts? Greed causes investments such as fractional reserve banking.

Servius: @CraigMayhem Inflation is driven in large part by the Fed cutting interest rates and the banks practicing Fractional Reserve Banking #tcot

Servius: @CraigMayhem It's when inflation ends, and it always must, that we feel these busts. #tcot

Servius: @CraigMayhem See, the problem is inflation. It's inflation that causes investments that depend on more inflation. #tcot

CraigMayhem: @Servius So wait - does the govt. regulate that?

Servius: @CraigMayhem Better would be one simple regulation. No more fractional reserve banking. And no more manipulation interest rates by Fed #tcot

CraigMayhem: @Servius The opposite has already been proven. So what's YOUR suggestion?

Servius: @CraigMayhem You're also assuming people in government won't abuse their power to control these traders. #tcot

Servius: @CraigMayhem But you're presuming government is competent to keep the excess in check while allowing innovation that drives economy #tcot

CraigMayhem: @Servius Good question. Allowing banks/traders to run rampant unchecked didn't seem to work - so something different

Servius: @billstreeter http://mises.org/story/2810 Here's an article about interest rates & inflation. Same site has more. #tcot

Servius: @CraigMayhem Yes regulation to ensure bubble doesn't happen. But what regulation? #tcot

CraigMayhem: @Servius I'm all for tax reform. And regulation ensuring bubble don't happen again

Servius: @CraigMayhem I doubt any have easy time w/ 15% payroll taxes increasing inflation & underwater mortgages due to inflated housing value #tcot

Servius: @CraigMayhem re: "smaller, richer class" you're wrong about that. But I'll have to find the figures. #tcot

CraigMayhem: @Servius I doubt your financial situation reflects the vast majority of middle class.

Servius: @CraigMayhem I am a one income middle class family. My only real problems are rising inflation. #tcot

CraigMayhem: @Servius Instead we have a smaller, richer class

CraigMayhem: @Servius If supply-side economics worked for m.c. there would be leess poor and middle class.

CraigMayhem: @Servius AGAIN: middle class wages fell in the 80's and have been falling ever since. Remember 1-income middle-class families? sheesh

Servius: @CraigMayhem What huge minuses? #tcot

CraigMayhem: @Servius It STILL doesn't make up for the decline of the middle class? It's a tiny plus amongst huge minues

Servius: @billstreeter Put another way. Raising inflation causes natural interest rate to rise. Keeping interest rates below this is inflationa #tcot

Servius: @CraigMayhem Excuse me? If I can get better goods for less money or for less work I'm better off. #tcot

Servius: @billstreeter Oh please. Cutting interest rates is inflationary. Raising them is deflationary. Floating them on the market is stable. #tcot

CraigMayhem: @Servius Availability and cost of goods doesn't equate to decline of wages/lifestyle.

billstreeter: @Servius BTW high interest rates cause inflation

CraigMayhem: @Servius Maybe it's because those goods aren't made in America anymore.

Servius: @billstreeter Watch the money supply. Today, interest rates need to go up and government needs to stop spending so much. #tcot

billstreeter: @Servius who said anything about hyperinflation? WTF are you talking about?

Servius: @CraigMayhem you said middle class was worse off than before Reagan. What I can buy today vs then suggest otherwise. #tcot

Servius: @billstreeter So the answer is Zimbabwe style inflation? No. The answer is stable monetary policy and returning rates to natural levels ...

CraigMayhem: @Servius Waht does that have to do with anything?

billstreeter: @Servius we are about to enter a deflationary spiral unless something is done do you know how bad that will be?ever seen an empty store?

Servius: @CraigMayhem That's simply not true. Check out an old Sears or Penneys catalog. You can get more and better goods for your money now. #tcot

billstreeter: @Servius real wages for middle class workers fell under Reagan and never grew again

Servius: @billstreeter Right. That's what killed inflation. #tcot

CraigMayhem: @Servius RT@billstreeter middle class wages fell in the 80's and have been falling ever since

billstreeter: @Servius wtf are you talking about? Remember 20% interest rates on Mortgages? That was Reagan!

Servius: @CraigMayhem He & Volker raised interest rates which drive inflation. We've been cutting interest rates below natural level for years #tcot

CraigMayhem: @Servius You're an economist now? I could find jsut as many economists that say his policies cause the Bubble/Bust economy.

Servius: @CraigMayhem He killed inflation in the early 80s. We've restored inflation and caused a world of trouble. #tcot

CraigMayhem: @Servius "better than the 70's" doesn't mean it was a win for the middle class.

Servius: @CraigMayhem I also remember how Reagan impacted the middle class and it was a sight better than the 70s #tcot

Servius: @CraigMayhem Bush 41 never believed in cutting taxes. Bush 43 wasted chances spent his capital spending on ED & not reforming SS/MCare #tcot

CraigMayhem: @Servius The Republican party looks back with the rosiest of glasses at Reagan - probably because Bush 1 and 2 were fairly awful.

CraigMayhem: @Servius I remember Reagan, too and his financial policies and how they impacted the middle class.

CraigMayhem: @Servius Just because I think Reagan was awful doesn't mean I think Carter was great.

Servius: @CraigMayhem I also remember the '70s and the malaise of the Carter years. #tcot

Servius: @CraigMayhem Except that I remember Reagan. The first time I voted I voted for Reagan in 1984. #tcot

CraigMayhem: @Servius It's also easy to attribute great things to a mediochre president after the fact.

Servius: @CraigMayhem It's easy to predict the Soviet collapse after the fact. Reagan predicted it before. #tcot

CraigMayhem: @Servius Sure, and the Soviet Union's financial collapse had nothing to do with ending the cold war (among MANY other factors), but sure.

Servius: @CraigMayhem The wisdom to win the cold war, restore American respect, and lift the country from malaise and stagflation. I remember. #tcot

CraigMayhem: @Servius yeah, the wisdom to destroy the middle class, have an Iran / Conrta scandal and go senile.

Servius: RT @calebhays: Happy Birthday, Mr. President.... today is Pres. Ronald Reagan's birthday. Oh, how we could use your wisdom now. #tcot (v ...

Lots of stuff about Porkulus

Servius: @MissFabBeth #tcot http://tinyurl.com/aazse4 I hear you. Here's Bastiat on protectionism.
Thursday, February 05, 2009 7:15:51 PM

MissFabBeth: @Servius I can say one thing- stimulus pkg encourages the buying of American goods- does ANYONE remember the results of Smoot-Hawley?
Thursday, February 05, 2009 2:50:11 PM

Servius: http://bit.ly/MKFk Obama losing stimulus message war - Jeanne Cummings - Politico.com The sheer size of it — hovering at about $900 bi...
Thursday, February 05, 2009 2:47:15 PM

Servius: @Servius will have 2,003 followers in 85 days according to TwitterCounter: http://twittercounter.com/Servius&p=85
Thursday, February 05, 2009 2:05:04 PM

Servius: #tcot Kill the Bill: The Democrats' pork bill is scheduled for a vote in the Senate later today. Public sup.. http://tinyurl.com/cadzvx
Thursday, February 05, 2009 1:16:47 PM

Servius: #tcot Socialism: Yesterday, while tag surfing, I read a post on some blog which basically questioned the no.. http://tinyurl.com/blrgho
Thursday, February 05, 2009 11:46:43 AM

On Negotiating

I retweeted this. Now I'm blogging it.

greenbacker: @miles_smit And by resorting to diplomacy with your mortal foe, you lose moral authority & give sanction to his desire to kill you. #tcot

On the Patriot Act and Violating the Constitution

I enjoyed this exchange yesterday on #tcot. @kaijuisme, feel free to leave your evidence in the comments for this post.

DDoutel: @Servius Bingo! The best of liars are those that can lie to themselves and believe it. #tcot

@DDoutel @DaveNF2G @kaijuisme They've fallen for the big lie. Having chanted Bush Lied, Bush Tore up the Const, they now believe it. #tcot

DDoutel: RT @DaveNF2G: @Servius Right on! Let's see the names of those defendants that @kaijuisme is so sure exist. #tcot

DaveNF2G: @Servius Right on! Let's see the names of those defendants that @kaijuisme is so sure exist. #tcot

Servius: @kaijuisme Prove it. Go find the law, look it up, and read it. Then post it. You can find my blog through my twitter page. #tcot

kaijuisme: @Servius No. I am talking about the Patriot Act, and its intent to combat "terrists". It has only been used against citizens. #

@kaijuisme But you're probably thinking of the laws enacted in the attempt to combat the drug trade. #tcot

Servius: @kaijuisme Find the citation and I'll believe it. Until then you're making it up. #tcot

kaijuisme: @Servius You do realize the Patriot Act allows the Feds to confiscate people's bank accounts, right? #tcot

Servius: @kaijuisme Oh, and you've never heard of FD (Let's confiscate everybody's gold) R #tcot

Servius: @kaijuisme I could say, "Only in your fevered imagination." #tcot

Servius: @kaijuisme Simply not true. #tcot

kaijuisme: @Servius Alien & Sedition Act was just one. Bush did more. Most of the Bill of Rights, except the 2nd Amendment. Trashed. #tcot

@kaijuisme You said "Bush did more to deny Constitutional freedoms than any other POTUS in history. " Now go read history and learn. #tcot

kaijuisme: @Servius "Alien & Sedition Acts?" Really. Can you say Red Herring? #tcot

kaijuisme: @Servius Compromise on freedom? Laughable. Bush did more to deny Constitutional freedoms than any other POTUS in history. #tcot

kaijuisme: @Servius Obama is about as centrist as they come. In your mind there is no road to compromise for the sake of America's success? #tcot

After decades of Keynse leading to our current problems...

The answer appears to be more Keynes.

When do we get to try having a truly free market? You know, stable money supply, less regulation, free trade, etc.

You know, free trade and free markets was essentially the idea that led us to separate from England. Why did we ever abandon it?

I know, the reformer has few allies in the status quo. But at a certain point how much failure of government intervention/mercantilism/socialism will it take before we try freedom again?

Bush Legacy

Commented on an article at Fox Forum.

In reply to: “…‘Bush Legacy”–a country facing its second great depression!”

The only real fault I have with President Bush is his approach to this recession. By “abandoning free market principles to save the free market” he has committed the Hoover/FDR fallacy: Massive interventions to prop up asset prices.

If we stop intervening and get government taxing, spending, and regulation out of the way, the market would recover from this recession within 6 months. To prevent this from happening in the future we need to control our monetary policy better.

Inflation causes booms and booms cause busts. Stop inflating the currency and we have neither booms nor busts. In a truly free market we would have steady growth, steady to rising wages and steady to falling prices.

Sadly, I fear with Obama coming in, we’ll have even more intervention which will cause the recession to drag on for another decade much like Hoover’s and then FDR’s interventions caused the depression to drag on for a decade.

A funny excerpt from a YouTube comment list

hannibalb3 wrote: "Anyone who questions global warming is automatically attacked by the modern hippy equivilance of the Medieval inquisition."

rockinchairmoney: Not true, all you denialist rite-wankers. It's true that the news is twisted to promote an agenda. Just look at all the fake War on Terror crap. Sure, there's a few terrorists, but not nearly as many as all rite-wankers and defence contractors would have us believe.

artmonkey2006: Can you POSSIBLY illustrate hannibalb3's point any more clearly? Or with more hilarious irony?

Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus

Christmas in Baghdad

Christmas in Baghdad

Good Morning

Here's an article from 1990 by Paul Weyrich who passed away yesterday.

On the Minnesota recount. From Powerline and Weekly Standard. Not looking good for the good guys.

Nut-job lefty president-elect brings crackpot scientist on as adviser.

Go look at this. It's funny.

Saddam and the Shoe Thrower

I'm commenting on an article at the Daily Beast. I find alot of non conservatives read the Beast and the comments aren't as heavy as some sites so I can have some effect.

Here's my opening salvo.

So, this isn't some popular hero but a representative of a vicious regime trying to get back in power.

And go figure that having deposed a Sadaam Hussein whose favorites have to contend with those they ruled for influence that they'd hold a grudge.

Genuine representative rule in Iraq is a good thing.

I'll update with the thread when it's done.

A Handful of Links

Paul Weyrich has died.

'I Pencil' turns 50

Milton Friedman on the Minimum Wage

Ideas on Strategy from Patrick Ruffini. Related, statistician William Briggs talks about the wisdom of raising taxes when people have less.

More strategic thinking, this time from American Spectator. We Republicans win with limited government as our standard.

Discussions on the Minnesota recount from SCSU scholars and Powerline.

Finally, we lionize our pro athletes but R. Emmett Tyrrell, Jr. reminds us that our greatest athletes don't play in big stadiums but in much more hostile environs. Where, when the opposition promises to take their head off, it's not just a metaphor.

On the Auto Bailout

I had written Senator Coleman regarding the UAW bailout package. He had voted against the bailout in the closure vote. Today I received a response that talked about compromises and remaining committed to the success of the Auto Industry.

I replied as follow.

Remember that we Republicans win when we hold the line and advance the ball on limited government. Our dip in popularity is not because we didn't spend enough and not because we didn't intervene enough but why would anyone vote for a Republican when they can get the same thing from a Democrat.

We should not bail out any industry, not for some populist reason of bailing out fat cats or because they brought it on themselves. We should not bail out any industry because any bailout expands the power of government and sets back the cause of Liberty.

Daily

A handful of links.

Why inflation is good from the 1930s

Why Keynsienism won't work from the Cato Institute.

A marine returning from Iraq surprises his 5 year old son at school.

A free market newsletter published for years by mail now all online. Sadly, the original publisher is no longer with us.

Finally, Santa vs. Bin Laden.

New Blog

Here we go. I wanted a place to share some comments I make on various articles and various writings I feel are important to the cause of Liberty. I also hope to have a little fun here so it's not all politics and economics.