Americanly Yours

H.R. 1207 is the Audit the Fed bill that I wrote about earlier.  I wanted to give a quick update on the status of the bill.  This bill now has 165 cosponsors in the House of Representatives, plus the support of its author, Congressman Ron Paul.

If the bill gets 218 cosponsors, it will undoubtedly pass the House, as 218 is over half of the total House members.  Support for this bill is rising.  Please call or email your Congressman to tell them to support this bill.

Senator Bernie Sanders, a self described socialist from Vermont is the sponsor of the Senate version of this bill.  This bill has such a  diverse group of supporters, from the ardently free market capitalist Ron Paul, to the socialist Bernie Sanders.  This bill is a common sense effort at transparency for our central bank.  Our national bank, which has been given the power to print money and set interst rate and banking policies has never been audited in over 95 years of existance.  I see no reason whatsoever to oppose this bill.

Americanly Yours,

Phred Barnet

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Please take a look at the following article and then read on:

http://seekingalpha.com/article/134820-the-worst-case-scenario-someone-has-to-say-it?ref=patrick.net

This article comes from what I believe is the best financial site on the internet. Its a list of predictions for what the worst case scenario will look like in 2012. I think that every prediction made in the article is accurate and will happen if the government continues to respond to this economic crisis in the manner that it has been for the past year and a half. His unemployment predictions for 2009-2012 are almost exactly in line with what happened during the Great Depression from 1930-1933. I think that the author’s timeline is probably off by a few years, but if we do not change our course, every single prediction in this article will come true within the next 10-15, and possibly sooner.

[[However, this might not be all bad: From the comments section of the article: “On the bright side, this means there will be no money to build machines that will wind up conquering us, so we won’t have to bring a terminator back from the future.“]]

We have more than doubled the amount of money we have in print in just the last year. We have “spent, lent, or committed $12.8 trillion” in less than 2 years–over 90% of our GDP–trying to stop this financial crisis from getting worse. This money has been printed, but most of it has only been pledged and has not yet been spent. When this money is spent, economic laws of the multiplier effect and the velocity of money, along with the realities of the current fractional reserve system will lead to a massive and unavoidable increase in the money supply. This will cause the value of the dollar (and any savings that you may have) to drop, while the cost of goods and services will rise.

If you have the means to do so, I suggest that you buy some gold… just in case.  This isnt just a solution for the rich.

On top of this, we are nearing a major crisis with Medicare and Social Security.  According to the Social Security Administration, the Medicare fund will be in a deficit starting this and will be completely exhausted by 2019.  Social Security will be in a deficit starting in 2011 and will be exhausted by 2041.

Future funds for these programs will have to come from general revenues, but the CBO is already forecasting trillion dollar deficits for quite some time.  Deficits in Medicare and Social Security will put an even greater strain on our budget.  This happening because of a collective failure which is the fault of all Presidents from President Franklin Roosevelt up to and including President Obama, as well as all Congressmen who refused to debate proposals to reform these programs for the past 60 plus years.

Here is an interesting article from the President of the Dallas branch of the Federal Reserve.  In the article, he explains that to fund these programs at current levels, spending will have to be cut by 97%!  I took a few quotes and posted them below:

“I would say the mathematics of the long-term outlook for entitlements, left unchanged, is nothing short of catastrophic.”

“And just to drive an important point home, these spending cuts or tax increases would need to be made immediately and maintained in perpetuity to solve the entitlement deficit problem. Discretionary spending would have to be reduced by 97 percent not only for our generation, but for our children and their children and every generation of children to come. And similarly on the taxation side, income tax revenue would have to rise 68 percent and remain that high forever. Remember, though, I said tax revenue, not tax rates. Who knows how much individual and corporate tax rates would have to change to increase revenue by 68 percent?”

To fund these programs, the government essentially has 3 options:  borrow, raise taxes, and print money.  At some point, other nations will stop lending us money.  It is only a matter of when.  Raising taxes is politically explosive.  The  economics of printing money is too boring for the vast majority of Americans to care about, making it the only political solution to this problem.

Of course, there is a 4th option:  cut spending drastically and reform these programs before our economy collapses.  But, does anyone think that Congress or the President will make any serious effort to do so?

Americanly Yours,

Phred Barnet

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We all knew it would happen. Chrysler has declared bankruptcy. Big surprise.

The government has announced that Chrysler wont be paying back the $7,200,000,000 [7.2 billion] in aid that it received. $3,200,000,000 [3.2 billion] of that money was given to Chrysler just last week–its hard to believe that the administration was ever planning on getting this money back.

But, in yet another case of the government not learning its lesson, it has actually pledged to “loan” Chrysler another $4,700,000,000 [4.7 billion]!  And on top of this, Chrysler is planning on asking for an additional $1,500,000,000!

What is going on here?

The government has received an 8% in the bankrupt company–which it claims is compensation for the taxpayers for risking taxpayer money.  The whole company isnt worth the amount of money that the government has loaned to Chrysler!  Chrysler is bad news and has been for years.  Did you know that Diamler AG actually paid Cerberus nearly $700,000,000 for Cerberus to take over the company in 2007?

Heres an idea, how about you compensate us by not wasting our money on bailouts!

But it gets worse.  President Obama’s administration has allegedly “strong armed” Chrysler’s investors to force them into agreeing to a deal.

Form Businessinsider.com:

“The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking “end justifies the means” group they have ever encountered.  Another characterized Obama was “the most dangerous smooth talker on the planet- and I knew Kissinger.”  Both were voters for Obama in the last election.

One participant in negotiations said that the administration’s tactic was to present what one described as a  “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.”

The Wall-Street Journal reports a similar story–and also reports the lack of media coverage about this.

Basically, many bondholders have agreed (willingly or after being forced) to give  up their claims.  Many of their positions in Chrysler’s debt have been wiped out because of this deal.  These bondholders were individuals, companies, and pension funds who loaned Chrysler money, risking their own wealth to help Chrysler through a bad situation.  If Chrysler’s bankruptcy is accepted by the judge, these lenders will lose the money they loaned Chrysler.   This is nothing more than the government stealing money from one group and handing it to another.

In the future, lenders will think twice about loaning money to aid struggling businesses, especially if there is a chance that the government will cancel their loans.

And that group that got the handout just happens to be the UAW.  Under the administration’s plan, restructuring, the UAW now owns 55% of Chrysler.  The US and Canadian governments also own large stakes in the company.  The UAW endorsed President Obama and actively encouraged its members to vote for him.

But what sunk Chrysler in the first place?  If you guessed the UAW, you guessed correctly.  According to Chrysler’s own numbers from 2007, their average worker cost the company $75.86 per hour.  Around the same time, Toyota’s workers were costing the company about $40 per hour.

President Obama’s administration stole money from bondholders and equity from Chrysler’s investors and gave it to the UAW.  This is thievery and should be condemned as such in the strongest terms possible.

Americanly Yours,

Phred Barnet

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Congressman Ron Paul has proposed an interesting bill in the House of Representatives.  No, it isnt another “crazy” proposal from the Congressman, but rather a very sensible one.

If passed, this bill would require that an audit of the Federal Reserve take place before December of 2010.

The Federal Reserve was established in 1913 and has never been subjected to a government or independent audit.   The Federal Reserve controls the Nation’s money supply and has the power to print new money as it sees fit.  It also controls interest rates, and therefore has a great deal of influence (to say the least) on our economy.

It is also a private corporation, owned by its members–the same large banks who are being blamed for the current financial crisis.

Requiring an audit of this institution is just plain common sense.

I do not see how any sensible, reasonable person could oppose this on any grounds.

This bill now has 112 cosponsors in the House.  The number is growing every day.  This bill is also getting bipartisan support.  One of the cosponsors is California Representative Lynn Woolsey.  She is vice-chairman of the Congressional Progressive Caucus and was the first House of Representatives member to call for withdrawal from Iraq.  Georgia Representative Tom Price, a staunch conservative is also a cosponsor.  This bill also has the support of plenty of other prominent Democrats and Republicans.

I would not be surprised if President Obama threw his support behind this bill.  The President claims to be a very big proponent of transparency.  Supporting this bill would be a great way to prove it.

From Congressman Paul: “Since its inception, the Federal Reserve has operated without sufficient transparency or accountability to the American people. In fact, current law specifically excludes the Fed from audit or real congressional oversight. No government agency has such an utter lack of sunshine.

There is a similar bill now being proposed in the Senate.

Please click here to email and/or call your Senator, Representative, President, and/or Vice President.

With your help, an audit of the Federal Reserve will soon take place.

Americanly Yours,

Phred Barnet

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To all conservatives (and especially those in the Republican Party),

You probably enjoyed yesterday’s post quite a lot.  You have probably enjoyed many of my posts so far.  But that is because they have focused almost exclusively on economic issues.

The term conservative is far more difficult to define than liberal.  Almost 25% of registered Democrats consider themselves to be conservatives.  Then there are those in the Constitution Party who declare that they are the real conservatives.  Of course, there is also the crowd that calls former President George W. Bush a liberal.

Who is a conservative?  Is John McCain a conservative?  Is George W. Bush?  Is Ron Paul?  Is Mitt Romney?  Is Sarah Palin?

Does conservativism seek to maintain the status quo?  Or, does it seek to return to the “good old days?”

Just as with liberals, there are a range of people who are considered conservatives.  I am writing to the broadest range of them.  This is much more difficult to do with conservatives than with liberals.

You claim to be the party of small, limited government.  Yet, each Republican administration that has come to power following a Democratic administration has increased the size and scope of government by more than the Democratic administration preceding it.  I have little doubt that if a Republican candidate were to defeat President Obama in 2012 or win in 2016, he or she would increase, rather than decrease the power of the federal government.

In the months after 9/11, President Bush’s approval ratings reached 90%.  Did the Republican Party use its new political capital to eliminate wasteful programs?  Did it use this power to create any committees to review proposals for the reform or elimination of Social Security, Medicare, or any other significant government program? No, in fact, you pushed for—and got—a large expansion of Medicare. The No Child Left Behind debacle which was an extremely expensive bill which was pushed by conservatives and Republicans and gave the Federal government much more power over education.

You claim to be the defenders of the Constitution.  You rail against liberals for violating the 2nd and 10th Amendments.  True, they do ignore those amendments.  But you do your fair share of ignoring them too.  President Bush’s warrantless wiretapping program was an unconstitutional violation of the 4th Amendment.  And lets at least be consistent on the 4th Amendment.  When President Bush and his team pushed for the monitoring of phones, you called it necessary for the protection of America.  Yet, when Democrats and President Obama want similar powers over the internet, you cry foul.  As if your defense of warrantless wiretapping didnt set this up.

And while we are on the Constitution, you have also ignored the 10th Amendment and used it for your own political purposes.  Whether you support or oppose abortion, the federal government has no Constitutional basis for setting abortion policy.  The same is true for gay marriage.  The 10th Amendment gives this power to the States, where it belongs.  This power was delegated to the States so that divisive social issues would not be played out on the national arena.

How can those who claim to support limited government continue to push for so much expanded power of the government? The simple answer here is that many of those who claim to be opposed to government control are actually only opposed when their side is not in control.

You claim to be the party which supports freedom.  You claim to be the party of personal responsibility.  Yet, you have prosecuted an endless war on drugs.  Your policies have sent millions of your fellow citizens to prison for offenses which harmed no one but themselves.  I know that the Democratic Party has not exactly come out in favor of legalization or decriminalization of drugs, but the Republican Party has been relentless in promoting the prosecution of drug offenders.  [Plus, President Obama has made some great moves in this area.  More on that in a future article.]

You rail against President Obama for supporting bailouts and stimulus, but remember that the first stimulus bill was passed last year and signed by President Bush.  The TARP bill and several other bailouts, including that of AIG were all pushed through by President Bush.  I know that many of you have been against these moves since the beginning, but plenty of you were not and did not take a stand until President Obama took office.

You have supported economic populism, creating and continuing policies which have contributed to the current financial crisis.  Using the government’s power of regulations over financial companies to force banks to lend to those who couldnt afford to buy homes is exactly what caused this mess.  Yes, this practice was made government policy under President Clinton, but Republicans controlled Congress then–and did for another 8 years.

You criticize the Democrats for supporting inefficient social welfare programs which you say infringe on the free market.  Yet, you support corportate welfare.  You have given American companies tax breaks to ship jobs overseas.  Yes, outsourcing is a good, natural step that our economy needs to take, but the government should never subsidize private companies, especially for the purpose of eliminating American jobs.

Previously, I wrote that I found “it ironic that the same people who criticized President Bush for every little thing that he did–whether it was right, wrong, or unimportant have now resorted to questioning the Patriotism of people like me for simply disagreeing with President Obama.” You conservatives probably loved that comment.  But when did this start?  Anyone who criticized the previous administration was criticized as unpatriotic, un-American, or was accused of being soft of terrorists.  The medicine doesnt taste so great when you have to take it.

Americanly Yours,

Phred Barnet

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