More Money Does Not Necessarily Equal More Wealth

December 20, 2008 

I am a billionaire. Well, I would be if I lived a little farther south in Zimbabwe.  You could be as well if you moved to the south-central African nation.  Once known as the breadbasket of the region, Zim (as it is affectionately called in southern Africa) is on track to be the country in the world with the highest billionaire rate.  You see, through government mismanagement of the economy and extensive exercising of the printing press by the central bank in the country, inflation is in the millions of percent.  The central planners answer, well, continue to print more money in larger and larger denominations so people can have the currency to buy things like bread and beans.  Of course, as all Austrian economists know more money means even more inflation – prices double about every day in the capital Harare.  Unbelievably, the most recent note issued was a $100 billion bill – equal to about $20 USD on the black market.  The problem is that through the policies of its central economic planners Zim. is becoming the poorest country on earth.  This is proof that more money in the economy does not necessarily translate into more wealth.

This would be a lesson that our economic central planners should learn.  Now to be sure, our Federal Reserve Bank is not increasing our money supply anywhere near the rate of increase that Zim’s central bank has imposed on that economy.  After all, Zim’s central bank is more like Bernanke on speed.  But, Uncle Sam is spending a lot of money He doesn’t have on programs that are not working to reinvigorate the economy.  Take the $161 billion stimulus package passed earlier this year by Congress.  It hasn’t achieved its intended goal – consumer spending to induce economic recovery in the United States.  Maybe it didn’t work because Americans spend 61 percent of their consumer goods dollars on imports.  Or maybe it didn’t work because the American people are smarter than their leaders.  They simply saved the money for the impending rainy day that is sure to come.

Then there is the $700 billion bank bailout bill hurriedly passed by Congress in October.  In November over one million workers lost their jobs.  Housing prices are still going down and Americans are still not buying from the Big Three automakers.  The Administration can’t even decide on a definite plan to use the money.  First it was to buy bad assets from financial institutions, then to liquidate banks balance sheets, then to buy bad paper from corporations, and now it is to bailout the automotive industry.  Since, oil has plunged to below $34 a barrel maybe the petroleum companies could use some taxpayer funds to tide them over for a while.

Speaking of the automakers, Bush once again showed exactly what kind of a weasel he is – the worst kind.  He essentially threw $17.4 billion dollars of money we don’t have down the drain so that Chrysler and GM would not collapse on his watch.  The automakers belong in bankruptcy court.  They have no chance of restructuring into something that is economically viable.  The President has given them 3 months to shape up.  Give me a break.  The UAW has already rejected even the mention of wage and benefit concessions that would allow the Big Three to be more competitive against foreign car makers.  Even though he has run GM into the ground, Rick Wagoner has been allowed to stay on as CEO.  Lastly, there is an impression among American consumers, rightly or wrongly, that American automakers produce junk vehicles.  By simply changing car designs, this impression of quality will not change and sales will not improve.  The Big Three will eventually fail or they will become like many banks have become, wards of the state.  The Big Three bailout is just the latest example of policies that will not even bailout the recipients of the money let alone reinvigorate the economy.

To come will be President Obama’s stimulus package.  It will be huge, probably in the neighborhood of $700 billion.  It will include all of the things FDR was revered for – public works, welfare payments, and other Keynesian spending.  Just like the Great Depression, this spending will not work today either.

Zim’s problems began when President Robert Mugabe confiscated farms and handed them over to his non-farming cronies.  Scarce resources were stolen from productive users and given to incompetent recipients.  The U.S. government is doing the same thing right now.  It is taking scarce resources away from productive individuals and businesses who are efficient and valuable to our economy, and giving them to banks, automakers and other corporations who through their performance are a drag on our economy and therefore must be liquidated.  As Uncle Sam continues to spend money it doesn’t have on programs that will not improve our economy like Zimbabwe the United States will be poorer for it.  The only question is how poor?

Will Obama “Change” U.S. Foreign Policy? Part II

December 15, 2008

As noted in this column on November 8, Barack Obama’s first two presidential acts were not encouraging for those who believed him during the campaign when he said his administration would bring “Change We Can Believe In”.   The appointment of Democratic neo-cons, Joe Biden as vice-president and Rahm Emanuel as chief of staff raised serious questions as to Obama’s commitment to “change” U.S. foreign policy.  But, even this writer was willing to give the president-elect the benefit of the doubt until such time as he made more appointments.  Well, that time has come.  Obama has made three more foreign policy appointments.    Each of those appointments indicates no change in direction, but a continuance of failed past policies.

First of all, Robert Gates will stay on as Secretary of Defense.  Gates, a career CIA guy has been a vocal critic of Obama’s Iraq withdrawal plan.  He supported the invasion of Iraq and bought into the fraudulent excuses for attacking.  Additionally, at a time when Russo-American relations need repairing, Obama is keeping a veteran Cold Warrior as head of defense.  Lastly, Gates is no Rumsfeld, but he still is connected with the Bush regime and its reign of terror around the world.  At the end of the day, Gates is nothing more than an establishment choice for the important position at Defense.

Another Obama appointment was Marine general James Jones as national security advisor.  Jones is a good friend of John McCain’s and served as an outside advisor to him on national security issues.  As a matter of fact, McCain would have appointed Jones to a similar post in his administration.  Clearly the two are like minded, which calls into question why Obama would want Jones around.

Lastly, there is the appointment of Hillary Clinton as Secretary of State.  During the campaign, the biggest and perhaps only substantive issue that she and Obama differed on was Iraq policy.  She voted to give the president the authority to invade and was slow to call for withdraw.  This was not the first time her hawkish inclination reared its ugly head.  In a 1999 interview with Talk magazine, the former first lady was quoted as saying she urged her husband to use NATO to bomb Serb targets to halt ethnic cleansing in Kosovo.  “I urged him to bomb….What do we have NATO for if not to defend our way of life?”  The actions and verbiage of Mrs. Clinton seem more like those of a Bush appointee, which doesn’t bode well for the idea that there will be change in foreign policy from the new administration.

No, it is clear from Obama’s appointments that U.S. foreign policy will not change much from the Bush years.  It is telling that not a single top official of Obama’s foreign policy/national security team opposed the war with Iraq–or the fraudulent claims leading up to it.  He has chosen establishment figures that have the approval of the ruling elite.  Recently, Senator Lieberman, a big supporter of McCain during the campaign was quoted as saying, “Everything that President-elect Obama has done since election night has been just about perfect, both in terms of a tone and also in terms of the strength of the names that have either been announced or are being discussed to fill his administration”.  With an endorsement like that we can be assured that on the last Election Day the American people voted to replace one belligerent administration with another.

Russo-Georgian War Revisited

December 5, 2008

On August 17, 2008, I published a blog that decried the reporting of the Russo-Georgian War by the American “mainstream” media.  In that piece, I accused our media of disinformation, ignoring the facts and downright lying in its coverage of the conflict.  Specifically, my condemnation centered on the impression our media gave that the conflict was all Russia’s fault.  We were led to believe that Russia had invaded Georgia unprovoked and Georgia’s enlightened democratic president Mikhail Saakashvili was a victim of the big bad bear from the north.

Of course, I took a lot of abuse for my siding with the bad guys (Russia) in this event.  It was indicative of the “you are either with us or against us” mentality that our esteemed president has instilled into our cultural norms.  Some of the comments I received for that blog included, “Are you getting your news from TASS”; “I suggest that from your perch in Zambia, you need better binoculars to see the action”; and my favorite, “do cue me as to when I start playing the Russian national anthem on the violin here…”  I also received hate e-mail from a woman of Georgian descent. 

Now, I am a big boy and can take the abuse, even the e-mail that condemned me to eternity in hell.  And as a big boy I can also boast and say I told you so.  On November 26, Georgia’s former ambassador to Russia Erosi Kitsmarishvili, told a Georgian parliamentary commission that Georgian President Mikheil Saakashvili was “itching” to do battle over South Ossetia.  Kitsmarishvili labeled Georgia the aggressor in the conflict and said that Georgian officials told him President Bush gave his blessing for such a use of force when he met the Georgian president in Washington in March. 

Vindication is sweet, but I am sure that the same detractors will respond to this blog by saying Kitsmarishvili is suffering from Stockholm Syndrome.  Or they will say he is really a Russian parading around as a Georgian ambassador.  Or that he is lying because he is a communist.  In any event, these detractors will probably still not face reality that their media and president have lied to them again.  They will still have faith in the man who chewed on his tie in front of live TV cameras.

But, this blog is not just about saying I told you so.  It is a reminder that we shouldn’t believe everything the media in America tells us.  Their perspective on most things is skewed.  They have been socialized by the public schools, their college professors, and the underlying persuasion in this country that the U.S. government can do little wrong.  Most journalists have sold out to their corporate employers who in turn are more interested in pleasing the politicians so they can get the interview or the special favor than in doing their jobs – holding elected official accountable.  With the advent of the Internet we do have more choices when it comes to media outlets.  Here’s hoping more Americans will overcome their socialized belief that if ABC, NBC, CBS, CNN, and Fox said it then it must be true.