Wednesday, May 22, 2019

Absurdity of Candidates Promising ‘Free’ Goodies, and Modern Monetary Theory

Below is an orthodox analysis of government spending but Obama's big spending without inflation has thrown that into doubt.  Trump is just following the Obama precedent to see where it leads. Modern monetary theory claims to account for the new reality but it is not much of a theory. Prudence as advocated below would be wise but we are basically in uncharted waters now

As the campaign in the 2020 presidential race heats up, so do the promises, with each new candidate vying for who can offer voters the most goodies.

But goodies don’t come cheap. Many of the promises being thrown around could prove quite expensive to implement. The implications for the economy should be obvious.

Experts in fiscal policy can’t help pondering some important questions:

Should the federal government create additional fiat currency to directly finance government spending and then issue government bonds or raise taxes if this newly created currency begins to stoke inflation?

Should Congress enable the Treasury to unilaterally change tax policy to prevent inflation stemming from this spending largesse and to manage the business cycle?

Can politicians actually be entrusted to allow the unpopular decisions (spending reductions or tax increases) required to prevent potentially disastrous inflationary consequences of fiat currency expansion?

Should the trillions of dollars of government debt be viewed as public asset—as something we as the public merely owe ourselves?

For proponents of modern monetary theory, the answer to all of the above is “yes.” This defiance of economic and political reality rivals the absurdity of the Flat Earth Society’s rejection of geographic reality.

The fact is, fiat currency represents value; it doesn’t create value. An increase in the supply of fiat currency without a corresponding decrease in the scarcity of resources leads to the price of those resources increasing—i.e., inflation.

The Federal Reserve printing presses cannot magically transform digital bytes into sparkling treasure. Alchemy makes for great fiction, but dismal public policy.

The absolute value of every existing unit of currency declines, harming consumers and investors. Such government-induced inflation also siphons wealth from the holdings of savers to the federal government as the real worth of accumulated savings declines.

In ages past, kings and emperors required commercial transactions be conducted using coinage from the sovereign mint. In order to enrich the Crown without resorting to outright taxation, the mint would debase coinage by diluting gold and silver with cheaper metals, such as bronze and copper. Economic and political mayhem often followed.

Churning out paper and digital fiat currency is far easier than the metal debasement of yesteryear. The results become disastrous even more quickly.

Look at Venezuela’s current 80,000% annual inflation, the destruction of the German mark in World War II, Zimbabwe’s 1,730% annual inflation in 2007, or Argentina’s 1,100% annual inflation in the 1980s. In fact, from 1980-2005, two dozen nations experienced bouts of hyperinflation of at least 1,000% over a one-year period.

Rudyard Kipling’s warning of false economics prophets stated it well: “[W]e were promised abundance for all, by robbing selected Peter to pay for collective Paul; but, though we had plenty of money, there was nothing our money could buy.”

As economist Henry Hazlitt explained, “[Inflation] unbalances, reduces, and misdirects production. It leads to unemployment and to malemployment.”

Regardless of the demonstrable harm, governments struggle to deny themselves the attainment of temporary political gain through manipulation of the money supply.

Here in the United States, our own central bank has pursued a nearly constant—albeit less grossly negligent— inflationary course over the past century. The most recent episodes of distortionary activity include multitrillion-dollar purchases of government debt and mortgage securities.

To prevent this newly created money from flooding the economy—and stoking inflation—the Federal Reserve began paying banks to hold excess reserves in the Fed’s digital vault. Banks obliged.

Although this prevented massive inflation, the monetary experimentation resulted in relatively less funds available to other sectors, likely contributing to the historically slow recovery following the Great Recession.

To their credit, modern monetary theorists acknowledge the inflation risk of newly created fiat currency funding government spending. But even if their proposals to issue government debt and hike taxes successfully staved off inflation, the bottom line remains: As government gobbles up more of the economy, less wealth is left in the hands of the populace.

There is no free lunch. We will pay either through the visible burden of direct taxation, the hidden tax of inflation, or higher borrowing costs (as the government competes with businesses for available capital).

Such realities might not make for a great stump speech, but facing them squarely now can save us a lot of headaches down the road.



A nihilist-Driven Birth Dearth:  Four straight years of a declining birth rate reflects the Left's effects on Americans

According to provisional data provided by the Centers for Disease Control and Prevention (CDC), America’s birth rates hit a 32-year low in 2018. The data on more than 99% of America’s birth records indicates there were 3.788 million children born last year, marking the lowest total since 1986.

The CDC also noted that this is the fourth straight year of declines. That’s because slight gains made by women in their late 30s and early 40s, were more than offset by record-low birth rates for women in their teens and 20s. More ominously, the total fertility rate also hit a record low of 1.728 births per woman — meaning there aren’t enough babies being born to maintain current population levels.

Why does this matter? “A country’s birthrate is among the most important measures of demographic health,” columnist Ariana Eunjung Cha explains. “The number needs to be within a certain range, called the ‘replacement level,’ to keep a population stable so that it neither grows nor shrinks. If too low, there’s a danger that we wouldn’t be able to replace the aging workforce and have enough tax revenue to keep the economy stable.”

Those who responded to the report cited obstacles to child-bearing that included a lack of child care and parental leave, high insurance costs and job instability, as well as a lack of other policies to help younger adults cope with student-loan debt and housing costs.

University of Southern California demographer Dowell Myers believes those obstacles reflect an overall feeling of hopelessness. “The birthrate is a barometer of despair,” Myers asserts, explaining that people don’t have children unless they’re optimistic about the future.

No doubt, but quite likely something more insidious is in play here. Previous generations of Americans have coped with similarly pressing problems, yet continued to have children and raise families.

So what’s changed? While the opposite of optimism is pessimism, the bet here is young Americans have heartily embraced nihilism: Traditional values and beliefs are unfounded, and existence itself is both senseless and useless.

That’s not hard to understand, since they’ve been fed a steady diet of nihilism beginning as early as kindergarten. That’s where they begin learning that America is an inherently flawed, hopelessly bigoted nation in need of “fundamental transformation.” Transformation that wholly embraces the nihilistic dogma that men are “toxic,” whites are “privileged,” minorities and women are “victims,” gender is “fluid,” Christians are “bitter clingers,” the rich are “greedy and selfish,” certain speech is “hateful,” and social justice must transcend the Rule of Law.

More telling, as one moves up the educational ladder, the level of infantilism increases, as students become coddled by “trigger warnings,” attuned to “micro aggressions” and comfortable with safe spaces — replete with Play-Doh, therapy dogs, and coloring books.

Unfortunately for many young Americans, it’s a seamless transition from their “helicopter parents,” who are firmly convinced that even the slightest dent in their child’s self-esteem has the makings of life-long catastrophe — especially in a world where everyone gets a trophy just for showing up. This one-two punch has produced a generation of Millennials that considers itself the most stressed generation in history.

Thus, growing up — as in the primary prerequisite for responsible child-bearing — is to be feared.

Yet the most nihilist agenda force-fed to America’s youth is global warming. “It is not an easy time for people to feel hopeful, with the effects of global warming no longer theoretical, projections becoming more dire and governmental action lagging,” The New York Times reports. “And while few, if any, studies have examined how large a role climate change plays in people’s childbearing decisions, it loomed large in interviews with more than a dozen people ages 18 to 43.”

Those interviewees felt “saddled with painful ethical questions that previous generations did not have to confront,” the Times adds.

Really? Wholly inaccurate doom-and-gloom predictions have been an integral part of the leftist agenda for decades. In 1970, Nobel laureate and Harvard biology professor George Wald insisted the world “will end within 15 or 30 years unless immediate action is taken against problems facing mankind.” The same year Population Bomb author Paul Erlich declared that the “death rate will increase until at least 100-200 million people per year will be starving to death during the next 10 years.” Erlich further insisted “all important animal life in the sea will be extinct.”

In 1975, British science writer Nigel Calder warned that the world will endure a new ice age, a threat that “must now stand alongside nuclear war as a likely source of wholesale death and misery for mankind.”

And who can possibly forget the pronouncements of Al Gore and Alexandria Ocasio-Cortez, who predicted the end of polar ice caps by 2014, and the end of the civilized world itself in 12 years, respectively?

Independent Women’s Forum senior policy analyst Patrice Onwuka views such rhetoric as counterproductive. “I would love to see a national campaign that says, ‘If you want to have kids, you should,’” she stated. “What we should not be hearing particularly from the far left is, ‘No, don’t have children right now because they are going to die in 12 years.’ And unfortunately, that’s what is picking up steam.”

What else is counterproductive? The Left’s ongoing love affair with abortion on demand right up to — and on occasion, beyond — the moment of birth. Since the Roe v. Wade Supreme Court ruling in 1973, this nation has endured 60 million abortions.

Coupled with declining birth rates, that genocidal level of carnage ought to elicit a slew of proposals regarding ways to incentivize child-rearing and the moral responsibility necessary to undertake it properly. Instead, exactly like the EU, America’s Ruling Class has a “better” idea: incentivize a wholesale invasion of the nation by illegal aliens, coupled with it unsupportable levels of legal immigration — and tell Americans it’s all for their own “demographic good.”

What are they really saying? Americans must sell out their culture, customs, language, and borders to maintain the solvency of Social Security and Medicare.

Does it get more cynical? The Trump administration has announced a comprehensive plan to deal with illegals, but every sentient American knows it’s a non-starter, because every sentient American knows that when each party had two years of unassailable control of Congress and the White House, the border remained wide open, and visas continued being overstayed with impunity. Moreover, the cap on H-1B visas for legal immigrants has already been filled — for the year 2020.

“Getting married, raising families, staying in one place, still working with our hands, and postponing gratification may be seen as boring and out of date,” writes Victor Davis Hanson. “But nearly 2,000 years later, all of that is what still keeps civilization alive.”

Not without hope. And for an American Left that embraces the institutionalization of victimhood and the grievance culture that sustains it, the choice between keeping civilization alive and “saving the planet” is becoming irreconcilable.

That’s the essence of nihilism. And unless Americans become willing to reject the intellectual and moral bankruptcy that sustains it, expect the “birth dearth” to continue.



Anti-Semitism Must Be Defeated at Home and Abroad

Israel is under attack—both in its own homeland and in ours.

One week, The New York Times runs an anti-Semitic cartoon. The next week, Hamas launches 600 rocket attacks against Israel.

These are merely some of the more recent occurrences in an ongoing effort by the global anti-Israel community—which now includes members of our own Congress—to delegitimize and destroy one of our most reliable allies and to bolster a terrorist regime that harms Israelis and Palestinians alike.

Israel’s opponents employ a host of double standards. Hamas attempts to kill as many Israeli civilians as possible through indiscriminate rocket attacks, yet international outrage is directed at Israel’s precision strikes—in self-defense—against military targets that seek to minimize civilian casualties.

But just imagine if the situation were reversed, if Israel’s enemies were the ones who held a decisive military advantage. Hamas would without a doubt destroy Israel if only they had the capability, but Israel time and again has shown exceptional restraint in seeking peace.

When President Donald Trump rightly followed through on our longstanding commitment to move the U.S Embassy from Tel Aviv to Jerusalem, the anti-Israel community insisted that Israel be the only nation on earth denied the right to determine its own capital. 

The United Nations falsely accuses Israel of human rights violations while ignoring actual human rights violations committed by nations like Cuba, Pakistan, and Saudi Arabia, all of which sit on the U.N. Human Rights Council.

Here in the United States, anti-Semitic attacks, including at Pittsburgh’s Tree of Life synagogue and last month at the Chabad of Poway synagogue in California, have led to a growing unease among Jewish communities.

Even in Congress, anti-Semitic statements have become a regular occurrence, with members such as Rep. Ilhan Omar, D-Minn., characterizing Jews in Israel as using money and hypnotism to control world leaders—slurs that have centuries-old anti-Semitic roots.     

House leadership recently had the opportunity to pass a resolution condemning anti-Semitism, yet lacked the courage to stand up to these vocal anti-Semitic members, opting instead to pass a vaguely worded resolution against “hatred” in general.

Just this week, in an attempt to smear Israel, Rep. Rashida Tlaib, D-Mich., made the wildly inaccurate claim that Palestinians provided “safe haven” to Jewish refugees, when in fact Palestinian leaders (including the grand mufti of Jerusalem, Amin al-Husseini) allied themselves with Hitler and attempted to bar entry to those fleeing persecution.

Ever since, terrorist groups like Hamas have waged violence against Israel, with the recent rocket attacks being only the latest instance. And to do this day, the Palestinian Authority compensates many who are imprisoned for acts of terrorism against Israeli citizens, along with many families of terrorists who died committing such acts.

But what the blame-Israel-first crowd refuses to acknowledge is that Hamas is responsible not just for violence against Israel, but for victimizing Palestinians themselves. The terrorist organization has not allowed legitimate elections to take place since it took over Gaza in 2007. And the Palestinian people have paid dearly—both materially and with their lives—for multiple wars started by Hamas against Israel.

In fact, hundreds of fed-up Gaza residents recently protested their government’s actions, and were fired on by Hamas forces.

Hamas also consistently misuses funds that could be used to benefit the Palestinian people, instead choosing to fund terrorism. Hamas spent $90 million to build tunnels for use in terrorist attacks—money that could have funded thousands of homes or hundreds of medical clinics.

And if that weren’t enough to demonstrate Hamas’ true priorities, consider that they routinely use Palestinian residents as human shields, firing rockets at Israel from schools, mosques, and hospitals in order to maximize their own civilian casualties and win international sympathy when Israel responds in self-defense.



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