01-28-2010: WPA or Bust!

Watching the leader of the free world incoherently wander through his State of the Union (SOTU) address Wednesday evening was a lot like watching a lazy high school student trying to give an oral presentation to a civics class of which he missed the last three quarters. Embarrassing is the only word I can think of. This poor man has no apparent tools to work with. Making matters worse is his non-stop look at me arrogance, which he seems to think is the height of cool.

First of all: governments don’t create anything. Governments can’t and don’t stimulate economies in spite of the most ardent Marxist belief in Keynesian Macro-economic theory. John Maynard Keynes (1886 – 1946) was a director of the Bank of England (read Rothschild plaything) and in my humble opinion created an economic philosophy intended specifically to support and foster two things: central bank profits and Marxism.

Keynes argued for government intervention in economic policy whereby government would impose fiscal and monetary controls intended to mitigate swings in the business cycle and hopefully to eliminate economic recession or depression. In order for this concept to work a powerful national or central bank is required. I believe it was Keynes’ job on behalf of the international banking cartel made up of Rothschild, Schroder, Morgan, Warburg, Brown, Harriman and others to convince the world of this necessity, just as their League of Just Men financed Karl Marx and the Communist Manifesto along with Lenin’s Bolshevik Revolution in Russia. The cartel, of course, would own and profit by the central bank(s) using government control as their own legal monopoly.

Keynes became the philosophic darling of economic theory for quite some time, even through today with hopelessly indoctrinated Progressives, as his theories were mistakenly credited with creating sustainable economic growth and stability. In reality central banks in general and more specifically our own Federal Reserve System employing Keynes’ ideas are responsible for the now non-stop carnival ride of business cycle ups, downs and collapses such as in 1929 and 2008. Keynes was the salesman tasked with the job of convincing otherwise sane people that central banks should be free to monopolistically manipulate the financial climate for their own personal gain as well as to collect interest from tax payers for providing absolutely nothing. This includes interest on war debt, without which modern wars would not even be possible.

In private business a person or business creates a good or provides a service for which other people or businesses are willing to pay. If done effectively the good or service is sold at a profit. This allows the business to invest its profits, expand, hire more workers (that means more jobs) and sell more goods or services thereby earning even more profit. The ripple effects of this process via free market participation involving dozens, hundreds or even thousands of businesses across a city, country or the globe result in an “up” or growing business cycle. Bad judgment and mistakes, when contagious result in losses and a “down” or shrinking business cycle.

By contrast, every government job requires tax payer dollars to pay for it. There is no offsetting profit gain to offset the cost thereby resulting in a self perpetuating cycle as happens in the private sector. The government job is pure cost – no gain – no profit. Every government job therefore acts like a siphon draining gas from a car’s fuel tank. When the tank runs dry the engine quits. When the private sector money runs dry, the economy quits. The U.S. private sector is now bone dry relative to availability of capital.

Every dollar our government borrows or spends dries up available capital a little more. A government which persists in this behavior is either intentionally self destructive or stupid or both. For Obama to stubbornly suggest that vastly increasing government borrowing and spending will somehow stimulate the economy and generate growth in jobs is appallingly ignorant. He now, on the one hand says he wants a freeze on some government budgets, but with the other hand pushes for his government take-over of health care, cap and trade, banking regulation, etc., all of which means thousands more government jobs all acting as new economic siphons draining potential growth and vitality.

Anything that takes or drains profit, that is, working capital or investment capital away from the people or businesses participating in this free market process slows the cycle down or retards it. Taxes on profit for example leave less available for investment and therefore slow the possible economic growth and job creation. Not too complicated for a Harvard grad I wouldn’t think?

Somewhat more difficult to see or grasp for the Harvard grad is the effect of borrowing on growth. Even with the leveraged banker’s magic of fractional reserves under which a dollar becomes nine dollars, there is only so much money available for banks to lend. When the government scoops this limited capital up for its own use, then funds are no longer available for borrowing by private individuals and businesses. Thus government borrowing is antithetic to private sector economic growth as it removes investment capital from the marketplace and subsequently stunts potential job growth.

Congressman Ron Paul includes a nicely detailed and simplified explanation in Chapter Three, The Origin and Nature of the Fed, of his latest book End The Fed on why government borrowing, spending and arbitrary intervention in interest rates, etc. causes economic problems while creating the illusion of health and stability. Every single government job is a drain on our free markets and economic vitality. We do, of course, need some government jobs, but they should be severely limited in both scope and number. No one should promote their growth – ever. Unfortunately, 52% of all union jobs in the United States today are government jobs and union officials are now the most frequent of all White House visitors. This cannot and will not ever be economically healthy.

Massive government borrowing as we see with 2008 / 2009 and 2010 U.S. government fiscal policy acts as an emergency airbrake crushing potential job creation and economic growth. It is delusional for Barack Obama to speechify about our need to create jobs in 2010 at the very same time he is glibly outlining new government borrow and spend programs. Perhaps in Obama’s community activist world there is no responsibility for outcomes and no accountability for results, but in the real world where normal people earn a living results and outcomes matter. Failure leads to impairment of the future, homelessness and hunger.

The reality in Obama’s organizing world is that results are frowned upon. Unresolved issues are useful for garnering political power as well as for draining tax payer pockets through socialist, government give away programs through which obtaining Progressive votes are a given quid pro quo. The last thing in this world poverty pimps like Barack Obama or Jesse Jackson want to see is real solutions to inner city poverty, education and lack of self actualization. These organizers and their abhorrent policies are an affront to human dignity and we have brought their diseased thinking into the people’s house. This is the thinking that now runs the United States of America and we wonder why things aren’t going well. Adding insult to injury, the American people yesterday evening were subjected to more than an hour of more promises for more of the same failed policies and more than half of Congress standing and ignorantly applauding.

My free advice to myself and to readers of The Kolinski Chronicle is to pay attention during future election cycles. Watch what politicians do; don’t pay attention to the lies they spread. Look at a candidate’s past results and failures, not to soaring rhetorical promises. Results and outcomes matter to our families even though they may mean nothing to organizers and politicians. Let’s start paying attention and making a difference. Things will get better only if we force our out of control government back into its rightful position; that is, working for us and then we will straighten this mess out. The government can only make it worse regardless of intentions and I for one am not convinced that the intentions are at all honorable.

Knowledgeable voters command honor.

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2 Comments

Filed under Main Street Economics

2 responses to “01-28-2010: WPA or Bust!

  1. I usually agree with your article content, but in this case I am sorry to say that I do not share your views.

    • thekolinskichronicle

      I’m curious what you disagreed with. I just reviewed the post and I don’t see anything factually incorrect, although I did slam Obama pretty hard.
      Thanks,
      BK

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