Richard Fisher, Dallas Fed President, recently gave a speech. In it, he discussed the limits of monetary policy. (Hence the title.) If you’re in my class, you really should read that speech and discuss it here. If you’re not in my class, it’s not required, but you owe it to yourself, all the same.
Category Archives: Economics
A Scary Story
Looking at the Wiki article on the 2010 budget, I noticed that total tax receipts for 2010 were $2.381 trillion. Total mandatory spending was $2.184 trillion. That’s very close to 100% of tax intake. Before the USA spent a nickel on military affairs, a further $664 billion, the USA had to borrow about $1.3 trillion dollars.
The problem isn’t in goofy discretionary spending programs, although they deserve to be cut. The problem is in the swelling amount being spent on Social Security, Medicare, and Medicaid… and interest on the national debt. I’m not talking about repealing so-called “Obamacare.” We’re looking at the unsustainability of our three biggest social safety net programs.
Something has to give. The question is what?
Bad Legislation! Bad!
“US House Moves Against China’s Undervalued Currency” reads the headline, and I wonder if we won’t soon see the Senate and President doing the same thing. It’s a really bad idea to try and start a trade war right now, but the government seems to be united in a bipartisan effort to do so. Once the export sector gets whacked, we’ll all get to see firsthand how awful protectionist legislation truly can be.
My Take on Health Care
After spending a good deal more than 9.5% of my family’s income on health care this year, with a good-sized chunk of that amount going to a health insurance plan that’s gutted its benefits since I first enrolled, I’m now ready to enter the ranks of the uninsured. I don’t see the existing reform as a source of hope for me, nor do I see any alternative the Republicans suggest as hopeful, either. I see both parties pandering to lobbyists and that’s not going to be good for anyone.
I don’t care about being able to keep the doctor of my choice. I can’t afford to see the doctor of my choice. I already take my kids to a school clinic for their immunization shots and if I plan to travel anywhere exotic, I’ll see the county health office about getting my inoculations there. Otherwise, I’m not able to go to the doctor. I have to use that money to pay off my debts – house, car, college loans, credit cards. At least canceling my insurance will get me some extra money to pay those off faster.
This is the problem I face: I’m poor, and I’m living in a land that rewards the rich. It doesn’t matter who I vote in, within a matter of days or weeks the poor sap is going to be surrounded with lobbyists that will turn him to their way of thinking. If that doesn’t happen, no problem: they’ve already got their hooks in everyone else.
Without health care reform, I’m still faced with a choice of paying lots of money for an insurance policy that does nothing or not paying for any insurance and taking the attitude that we go when we go and that’s that.
Putting It All Together
BP. Goldman Sachs. Lehman Brothers. AIG. Enron. Bear Stearns. Ameriquest. Tyco. Worldcom. Merrill Lynch. All of these companies and more profited greatly from lax regulation in industrialized nations and outright running riot in poor nations, or the poorer parts of industrialized nations. Yes, a lack of regulation is good for business. It’s even more amazing for criminal operations. Making a nation friendly for business often means leaving it wide open to criminal exploitation.
These huge corporations and their bretheren have huge piles of cash which they can use to influence politics. They invest funds in supporting campaigns. They provide contributions, legal and illegal, to congressmen in exchange for favors. They push legislation they want in order to make more profits than ever before. They ignore the crimes they commit by forcing others to pay their costs or bear the consequences of their evil, selfish decisions. The level of criminality in the boardrooms of major corporations is mirrored in the criminality in the Congress and the management of regulatory agencies. The levels of corruption in the USA have long been well-hidden, but are now obvious to me to be worse than anything I’ve heard of in Nigeria, Russia, or China.
The corruption is endemic in both government and boardrooms. Neither operates for the benefit of the nation, but only for the benefit of the ultra-wealthy. The same Congress that expressed concerns in public that the banking industry had gone too far secretly passed a bill that would give that same industry even more power, choosing to use a voice vote to mask which legislators supported such a measure. The same banking industry that promised to get the US economy back on its feet after receiving $1.5 trillion in bailouts has so far invested out of the country, bought up other banks, or parked their bailouts in treasury bonds. This is just recent news: past crimes would only make this post longer and more rambling than it needs to be.
The key to each scandal, to each looting of the poor to benefit the rich, is in the salient fact that the leaders of the USA have given themselves over to the worship of money. It is their God. Money is a God of War, a God of Hate, a God of Pride. We may try to justify the worship of money in the name of capitalism or free markets or as some form of self-centered Calvinistic entitlement that is our just due, but when we strip away the veneer of patriotic love of free markets, we see the worship of money at the heart of it all.
There is a way to survive without money. One must first reject the lure of money in order to be prepared to survive without it. One must first have faith that there is a better way to live before one can find that better way to live. Yes, this is getting mystical and obscure, but that’s what happens when one rejects money. One finds something better, something eternal that resonates in the heart and mind, that resonates in the soul.
The world of BP, Enron, Lehman, Ameriquest, AIG, Goldman Sachs, and every other megacorporation is not a world that cares about human life or dignity. It seeks to convert every possible thing into profit. Its servants, the worshippers of money, subvert the governments of men. If the government is strongest, they join it to gain by corruption, as they did in the former USSR. If the business world is strongest, they join that to gain by corruption, as they did in the current USA. They will mock and tear down anything not of their world, then buy and sell everything in their world for their own profit. They will leave behind the husks of men, women, and children they either used as raw materials or who they tricked into serving them with violence towards their fellow humans.
The greatest enemy of humanity is money. That’s what I get when I put it all together. Money is the physical representation of evil. All the frauds, pollutions, and crimes corporations have committed against humanity stem from a desire to get more money. If any crusading atheists want to make themselves useful, they should turn their activity to destroy belief upon those that worship money. We can’t prove or disprove the existence of God, but we can prove the existence of money and that it is an evil thing. We know that. We should deal with that first.
For any crusading Christians that want to make themselves useful, they should remember what Jesus taught and take no thought for the morrow but seek instead to do God’s work: aiding the sick, helping the poor, supporting the elderly. Same for anyone in any other religion: look to the origins of your belief, and there is a nonviolent heart, dedicated towards getting people to forget serving themselves and instead thinking about others first.
As for the USA, I don’t have good hope for it. The criminals that worship money have taken over. Look at any department of government, and you’ll see it run by people sympathetic to the ones they regulate. The elected officials are all beholden to those with money and not the people they serve. They all follow the false teachings of money and will shout down anyone that tells them the truth about the need for balance in their lives and equations. They truly believe they can have profit without end simply by making more and more money, but they are blind to the fact that their systems all have an end – and that the more debt a nation acquires as it heads toward that end, the more bitter and destructive that end will be.
When I add in global instabilities, I see even more potential for sadness born of greed and pride. I truly wonder if I will see the cities of my land burn in destruction during my lifetime.
I’m not going to end with some sad, “do something about it!” quip. The solution is not in getting mad and trying to change the system. The solution is in exiting the system and never coming back to it. Once enough of us refuse to participate in the system that demands we all buy and sell and never give of our own free will, then it will no longer have power over us.
Until such a time comes, I am working on the one thing I can control – myself. I refuse to turn to violence to solve the problem of evil. The wicked will destroy the wicked. The righteous and just will convert the wicked with their love – or move to a place where the wicked can not reach. The wicked will try to say that such a place does not exist, in order to further their control in the world. Such a place does exist, and one finds it with pure, unselfish love. Let go of hate, let go of anger, let go of pride. I used to want to be rich, but now I know it is a curse and desire it no more.
For the Love of Money
WHAT IS THIS I DONT EVEN Read it and weep, then discuss. It’s an account of the criminality in the subprime mess: don’t you even try to blame the borrowers. The lenders would get a signature on some innocuous form and then forge that on a variable-rate mortgage with all its attendant papers. Not just once, but often. Federal regulators let all this slide because they were either understaffed, shifted to other departments, or co-opted by their bosses hired from the financial world.
Ubuntu Cola
http://vimeo.com/6064337 Go there and check out a cool video about the concept of Fair Trade. It’s not some commie propaganda. It’s actually something of an antidote to the oligopolies we have today, the ones Adam Smith warned us about. In fact, Fair Trade is exactly what Smith wanted us to have. So watch and learn!
GM Foods vs. Property Rights
Set aside arguments for or against the safety of genetically modified, or GM, foods. Consider their impact on property rights. I recently saw a report on how a farmer that collected his own seeds ran into trouble when a herbicide-resistant strain of canola started growing on his property. He couldn’t get rid of it with normal herbicides and sued Monsanto for the damages caused to his crops.
Monsanto counter-sued the farmer for growing its canola without a license. Monsanto won both of its cases. While the farmer is appealing the case, he’s outclassed in terms of what he can do legally. Other farmers that maintain their own seed banks have been sued by Monsanto when some of Monsanto’s species started to grow on their property. The farmers never intentionally planted the crops, but courts have nevertheless held them liable for violating Monsanto’s property rights.
This is a travesty. Leave the benefit or harm of GM crops aside: no amount of benefit could justify the way Monsanto is essentially polluting the countryside and then using that pollution to take down farmers not using its products. Simple laws that should keep plundering such as this from happening have been easily perverted by Monsanto’s legal teams. Yes, Monsanto’s got to make a profit to stay in business, but for it to destroy rights in the name of profits is inexcusable.
What Is the Economy?
Henry C. Wallich, former Federal Reserve Governor, on the economy: “It’s a form of fraud, perpetrated by everybody on everybody. It is a world in which nobody keeps his word. Even if you could adjust perfectly for it, it would be a very unpleasant world.”
Important Files for My Classes
Below are links to PDF files for my AP US Government and AP Economics classes. These files are current as of August, 2010. Syllabuses for my courses are updated and abridged versions of the ones I submitted to College Board, so AP instructors hoping to submit them will be advised to use my fuller, approved syllabuses I’ve already submitted to CB. Instructors and students are free to use this material for personal and class use, but are not allowed to present this material as their own work, nor are they permitted to sell this material. All materials copyright 2010 and on, L. Dean Webb and Zzzptm.com. All rights reserved.
AP US GOVERNMENT
AP US Government Syllabus
AP US Government Multiple Choice Question Correlation
AP US Government Free Response Question Correlation
AP MACROECONOMICS
AP Macroeconomics Key Concepts and Terms 2010