July 23, 2019

Here Comes Another Recession Wrongly Blamed on Capitalism

recession-comingThe stock markets sold off on Friday, and financial media headlines were dominated by an inverted yield curve, a key recession indicator for the past several decades. Was the selloff just a pullback as equity prices consolidate before heading for new highs? Or is this the top of a dead cat bounce after the December market meltdown?

Economic indicators are somewhat mixed. Unemployment remains low at 3.8 percent, although it is always important to consider what kinds of jobs people are doing, what they are producing, and why. Unemployment is always low just before a bubble pops, as monetary inflation leads to unsustainable expansion.

Meanwhile, February saw a nearly subterranean jobs report, and December’s much-ballyhooed number was revised downward from 312,000 jobs to just 227,000. Holiday retail sales, reported as “heating up” during December, ended up declining by 1.2 percent, the biggest drop since 2009.

That a recession is coming is a certainty. The question is when. And whether it hits in 2019 or 2020, you can bet it will take center stage in the political arena, with Democratic presidential hopefuls climbing over each other to blame President Trump and the Republicans. The GOP will find it hard to fight back after taking full ownership of the tail end of this ten-year, inflation-fueled bubble.

As ridiculous as we free-market types always find it, a recession during a Republican presidential administration is always characterized by our opponents as an indictment of capitalism, even though the business cycle is driven much more by monetary policy than anything presidents of either party do. And the Federal Reserve is not a capitalist institution. It’s an economic central planner Karl Marx considered a vital part of moving society towards communism.

Read the rest at Foundation for Economic Freedom…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Greek “no” vote on austerity isn’t remotely heroic or “libertarian”

greece-referendum-_3365507bThe 21st century global banking system based on fiat currencies and redistribution of wealth through inflation is immoral and destructive. That doesn’t mean stiffing your creditors is at all justified, heroic or remotely “libertarian,” as many on my newsfeeds are suggesting.

The Greeks who decided to take two month vacations, vote themselves useless government jobs and then retire at 50, all on someone else’s dime, aren’t the victims today. They are as much the perpetrators as the so-called “banksters.”

Photo: Sakis Mitrolidis/AFP

The real victims are those hardworking Greeks who have hitherto paid for all of this and the honest creditors who lent them money, although the latter have some culpability for bad judgment.

The Greek “no” vote on accepting “austerity” measures in return for additional loans from the European Central Bank (ECB) was more like a childish tantrum than a blow for freedom.

Imagine if you couldn’t pay your rent and asked a friend for a loan. If she agreed, stipulating you must cut your ice cream consumption from $100 to $50 per month, you wouldn’t be considered heroic for defiantly refusing her terms and still not being able to pay your rent or repay the other friend you borrowed from last month.

The Greek vote had nothing to do with liberty, but it was certainly democracy in action. Over two hundred years ago, John Adams wrote,

“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.”

The Greek democracy has the revolver to its head. Time will tell if democracy or common sense will prevail.

 

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

 

$1.1 trillion budget deal doesn’t change fiscal cliff

Photo: Jacquelyn Martin/AP

Photo: Jacquelyn Martin/AP

TAMPA, January 15, 2014 – The Associated Press reported today that Republicans and Democrats are ready to support a $1.1 trillion spending bill that would fund the federal government through its current fiscal year, which ends September 30, 2014. Citing a perceived mandate from voters to put aside their differences, Congress largely abandoned the superficial cuts remaining from sequestration.

Those widely reported “cuts” weren’t really decreases in spending. They were merely promises to increase spending less than planned.

Out in the real world, when an employee making $18.00 per hour gets a 5% pay cut, his new hourly wage is $17.10. That’s not how it works in Washington, D.C. When a federal program funded at $3 billion in 2013 is “cut,” it’s funded for $3.1 billion in 2014 instead of $3.2 billion.

What have been called “draconian cuts” and “gutting the military” by hysterical politicians and media are, for the most part, increases in spending that beneficiaries deem inadequate. Now, even that infinitesimal restraint is gone.

Depending upon which poll one cites and the wording of the questions in it, there is some evidence that the public was unhappy with last autumn’s government shutdown and desires more “bipartisanship” in Congress. Representatives on both sides of the aisle were eager to comply in an election year.

“There’s a desire to show people we can do our job,” said Rep. Mike Simpson, R-Idaho.

However, no poll attempts to separate net taxpayers from net tax collectors. It shouldn’t surprise anyone that the latter group would be unhappy with any interruption in government spending. A poll exclusively querying the former group may have yielded far different results.

Regardless of how any part of the public feels about federal spending, it is going to be cut dramatically. The fiscal realities that prompted sequestration and the shutdown have not gone away. Playing nice in Congress hasn’t changed that.

The federal government can only service its $16 trillion debt while its interest rate remains artificially low. The Federal Reserve has attempted to keep it near zero since 2008. It has only been successful because other buyers of federal debt have continued to buy while the Fed has pumped liquidity into the economy with its own purchases.

Should China, the Fed or any other buyer of federal debt cease or even significantly decrease its purchases, interest rates will begin to rise.

When interest rates rise on home mortgages, it hurts. When interest rates rise on $16 trillion, chaos ensues.

According to the White House’s fiscal year 2014 Budget proposal, interest in fiscal year 2013 was $220 billion or 6.2% of all federal spending. That was with interest rates below one half of one percent. It doesn’t take a Nobel Laureate to imagine what happens if the rate begins creeping up to the modest 3-6% levels of the last decade, much less the double digit rates accompanying the crises of the late 1970’s and early 80’s. Annual interest due on federal debt would increase hundreds of millions of dollars.

That would amount to de facto cuts in federal spending on everything else. We’re not talking about make believe “cuts” where spending is still more than the year before. We’re talking about hundreds of billions of dollars less available to spend than the year before. We’re talking about cuts.

Increasing tax revenues isn’t the answer because taxes revenues are already maxed out. The only real debate left on tax rates is whether the top rate on the wealthiest should be 33% or 39%, which is inconsequential to the debt problem. If tax rates are raised significantly overall, revenues go down. That’s already been proven.

So, the federal government tiptoes forward on a fiscal tightrope, dependent upon a set of artificially-created conditions that could change at any time. An overpriced stock market could crash on its own. China could decide to cease or decrease its debt purchases. A natural disaster could occur. Any of these could start the dominoes falling towards higher interest rates, recession for the economy and an unserviceable federal debt.

Even if none of the above occur, the end is inevitable. If printing money to buy your own debt were sustainable, the government could legalize counterfeiting and everyone would be rich. Sooner or later, economic reality will assert itself and the United States will be forced to consume less than it produces. The only question on federal spending is whether it will decrease due to a deliberate act of Congress or the way Greece’s did.

The current budget deal may provide an answer.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Mitt Romney did not pay less in taxes than his secretary (and raising capital gains tax will destroy the economy)

TAMPA, December 1, 2012 ― President Obama and the Democrats were successful in 2012 largely on the strength of some rather outlandish demagoguery. “Billionaires pay fewer taxes than their secretaries” was one slogan that was particularly successful.

The Obama campaign successfully made an issue out of Mitt Romney’s taxes, finally getting Romney to admit that he paid around 13% of his earnings in taxes over the past several years. The “fair share” crowd contrasted this with the higher percentage that would have been paid by a secretary in the 28% bracket, for example, who would still pay more than 13% even after deductions.

That Americans bought this specious argument is more worrisome than that the Democrats made it.

Romney’s tax percentage was low because most of earnings came from capital gains, not income. Capital gains are just what they sound like. They are the appreciation in the value of one’s capital. If you buy a stock at $5 per share and its price goes up to $7 dollars per share, you have realized $2 in capital gains. If you sell that stock at a $2 dollar profit, the government wants a percentage.

Right now, Mitt Romney would pay 35% income tax and 15% on capital gains. The average secretary would pay 15% income tax and 15% on capital gains. So, Romney’s tax liability as a percentage of income is more than double the average secretary’s. His tax liability on capital gains is the same. Obviously, Romney’s nominal tax payments in both categories would exceed the secretary’s by orders of magnitude.

That’s how things actually are out here in the real world.

So why is the tax rate on capital gains lower than on income? Because “capital,” by definition, comes from previously taxed income.

Read the rest of the article…

Interview (Video): Christina Tobin of Free and Equal Elections Foundation

TAMPA, November 4, 2012 – “Remember, remember the 5th of November.”

So says Christina Tobin, found and chair of the Free and Equal Elections Foundation, a 501 (c)3 non-profit formed to ensure a fair an open electoral process for all. The organization is sponsoring its second presidential debate this election season on November 5th at 9 PM EST. Libertarian Party nominee Gary Johnson will square off against Green Party nominee Jill Stein.

Johnson and Stein won the right to participate by finishing first and second, respectively, in an online vote conducted after the first Free and Equal debate on October 23rd. In addition to Johnson and Stein, Constitution Party nominee Virgil Goode and Justice Party nominee Rocky Anderson also participated in the first debate.

While united in their opposition to the two-party system, Johnson and Stein have very different ideas about the role of government and the solutions to America’s problems.

“They do have a different take on things such as healthcare and so on, but my feeling is that the two-party system has been playing us for over a century now and they’ve made us quite divisive. I do foresee, after this election, a huge movement of independents running for office and finding, well, we do have a lot in common across the spectrum,” said Tobin.

Watch the video interview at Communities@ Washington Times…

Read Free Chapters of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America here!

 

Obama and Romney on reviving the economy: Blow up the education bubble

TAMPA, October 18, 2012 – Mitt Romney has been able to cruise through two debates with Barack Obama by utilizing a surprising strategy. When Obama has gone on the attack, citing the “draconian cuts” that the delusional on both sides of the aisle imagine Romney would propose as president, Romney has completely defused the president by simply telling the truth.

He’s not cutting anything.

He went a step further during last night’s debate. Like Obama, Romney is not only refusing to cut a single penny from any government program (other than Big Bird), but he’s now on the record that expanding the welfare state is a key plank in his “job creation” plan. In addition to stating “I want to make sure we keep our Pell Grant program growing,” Romney went on to emphasize the importance of keeping student loans available.

Forget the supposedly conservative principle that it is immoral for the government to force one citizen to put up his money to guarantee loans taken out by another, much less force that citizen to pay another’s tuition outright. That principle is long, long gone from the conservative psyche.

What is disturbing is that neither candidate seems to have any idea that their plans for education will exacerbate a bubble that has all of the same characteristics of the housing bubble.

Continue at Communities@ Washington Times…

Questions Obama and Romney won’t have to answer at tonight’s debate

TAMPA, October 16, 2012 – Tonight, we will be subjected to another presidential “debate,” in which two candidates who agree that government is the solution to everything argue about whose central plan is better. With the questions coming directly from the electorate and super-liberal Candy Crowley deciding which ones to ask, there is not much chance that big government will be challenged by anyone.

Wouldn’t it be refreshing if the candidates were actually asked substantive questions that couldn’t be answered with rehearsed talking points? Here are just a few that you won’t hear asked in any debate or interview:

1. Both of you support U.S. military involvement in the Middle East and elsewhere against nations that have committed no acts of war against the United States. How do you justify planned military action when no state of war exists?

2. Both of you support employing the U.S. military to promote “democracy” in other countries. Why is the U.S. taxpayer financially responsible for the liberty and security of everyone on the planet? When will this financial responsibility end?

3. You both agree that President Obama was right in signing the last NDAA bill which has provisions allowing the arrest and indefinite detention of U.S. citizens by the military without due process. How do you reconcile this policy with the 4th and 5th Amendments to the U.S. Constitution?

4. It is almost universally acknowledged that Social Security and Medicare have unfunded liabilities that can never be paid, with Medicare representing the graver financial threat. Both of you argue that the programs must be preserved. However, don’t U.S. citizens who weren’t even born when these programs were started have a right to opt out of them, if they agree to waive all benefits in exchange for not being required to pay in? Would you sign a bill allowing younger workers to opt out under those conditions?

Continue at Communities@ Washington Times…

What Ron Paul didn’t say

TAMPA, September 6, 2012 — There was no big announcement during Ron Paul’s appearance on Jay Leno Tuesday night. On the contrary, Paul’s appearance was somewhat anticlimactic given Mitt Romney’s nomination at the Republican National Convention last week. Of course, he still said what he has been saying for over thirty years in public life: America must stop spending money it doesn’t have, must liquidate its debts and rethink the role of government as cradle-to-grave caregiver and policeman of the world.

Ron Paul has said many memorable things during his two most recent campaigns for president. A debate moderator tried to put him on the spot regarding his position on leaving Iraq, asking contemptuously, “What is your plan to get U.S. troops out of Iraq?” Paul replied without hesitation, “We marched right in there without a plan, we can march right out.”

When asked about Newt Gingrich’s suggestion that the U.S. government explore colonizing the moon, Paul replied, “No, I don’t want to go to the moon, although I’d like to send some politicians up there.”

A few days ago, I posed a question at the end of my story on the Maine delegation fiasco. What were they really so afraid of?

It wasn’t what Ron Paul said that had them so scared. It was what he didn’t say.

Continue at Communities@ Washington Times…

The real story behind those Ron Paul delegates from Maine

TAMPA, September 2, 2012 – By the time of Marco Rubio’s speech at the Republican National Convention (RNC), rhetoric overload and sore feet had overcome any desire I had to listen. I sat down at a table in the corridor of the Tampa Bay Times Forum. A few minutes later, several young people sat in the other chairs.

One of them was wearing a tee shirt that read, “Texas Remembers the Alamo, and the Maine, and the Oklahoma, and the Louisiana, and the Oregon, and the Massachusetts.”

Those are the other five states in which Ron Paul had majorities one week before the RNC. Together with the three states he actually won (Iowa, Minnesota and Nevada) Ron Paul would have carried eight states had many of those delegates not been unseated at the last minute.

The man wearing the tee shirt was Chris Howe, Ron Paul supporter and alternate delegate from Texas. Rob Hinojosa was a guest and the graphic designer of the tee shirts.

One day before, both had marched out of the RNC along with the Maine delegation and an army Ron Paul’s other delegates chanting “As Maine goes, so goes the nation!”

Howe and Hinojosa went to work on their smart phones and in short order produced Ashley Ryan, 21, the youngest national committeewoman in the history of the Republican Party.

Continue at Communities@ Washington Times…

Ryan confirmed that Ron Paul did indeed still have 20 of the 24 delegates from Maine as of the day before the RNC. They had been ready for a fight since learning of a challenge to the delegation a month earlier.

All that has been reported so far is that the delegation was contested on the grounds that the state convention did not follow “parliamentary procedure.” However, the details tell a very different story.

“The contest was filed by current national committeewoman Jan Staples and Peter Cianchette, who was the Romney state director for Maine. Those are well-known Romney supporters. They filed the contest based on the claims that our state convention lacked credentialing and lacked security. The ironic thing about that is that Jan Staples is on the executive committee for the party, so it was her job to plan the state convention. So if there was lax credentialing or if there was lax security, that would have been her fault,” explained Ryan.

Credentialing and security means that the officers of the convention ensure that all inside are who they say they are and that only duly elected delegates are present to vote.

“When they first presented their case to the contest committee, the contest committee found that there wasn’t enough evidence to invalidate the state convention or to rule against the delegates. So, instead of throwing it out like you would in a regular court of law – in a court of law if you sue someone and you don’t have enough evidence your case gets thrown out – in this situation the RNC kicked it down the line for a few more weeks and said we’ll figure it out in Tampa,” continued Ryan.

So, the convention is chaired by a Romney supporter and the national committeewoman in charge of credentialing and security is a Romney supporter. After Ron Paul supporters win a landslide victory, that same committeewoman joins Romney’s state campaign director in filing a contest based upon her own failure to ensure proper credentialing and security. The matter is put before the RNC, who are working hand in hand with Romney’s campaign.

As Ron Paul himself once wrote of the Federal Reserve System, “If that sounds fishy, then you understand it just fine.”

A call on Friday to Ms. Staples’ home phone was not returned.

Facing similar pressure, four of the five states agreed to have some of their delegates replaced with Romney supporters, but Maine held out.

“We didn’t agree to anything. We decided that we’d fight until the very end. The Committee on Contests made a recommendation to the Committee on Credentials to take 10 of our delegation off, 10 of our alternates off, so that’s 20 people total, and then the RNC hand-picked 10 delegates and 10 alternates to take their place, obviously who are all Mitt Romney supporters, all hand-picked and for the most part, party insiders” said Ryan.

So who were these unelected delegates? Are they even from Maine?

“These people are from Maine, but the people who chose these people are not from Maine. From what I’ve been told, but I haven’t been able to confirm this yet, our state party paid for them to come down, paid for their travel expenses and their hotel expenses, which a lot of people are incredibly angry about because they worked for months and in some cases years to make sure that they could afford to be here. They saved up over the four years to be able to fly down and now the state party is paying to fly down people who were never elected,” said Ryan

These details lend insight into former Republican National Committee Chairman Michael Steele’s comment to Jon Stewart that the RNC’s treatment of Ron Paul and his supporters was “the height of rudeness and stupidity.”

“Why would you alienate them,” continued Steele, “get on the floor and not let them speak? Let his name go up on the board and let them see the numbers of electoral votes that he received.”

Had all of his delegates been seated, Ron Paul would also have been entitled to a 15-minute, unedited speech.

Apologists for the RNC claim that all of this was done to ensure that the convention came off as a show of unity within the party behind its nominee for president.

One has to wonder, though. What were they really so afraid of?

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Peter Schiff on The Real Crash, Austrian economics and Ron Paul

TAMPA, August 30, 2012 – Like Ron Paul, Peter Schiff was predicting the 2008 economic meltdown long before it occurred. Schiff is the president of Euro Pacific Capital, a firm that pursues investment strategies based upon Schiff’s contrarian economic analysis. Clients who took his advice over the past decade did very well, even after the financial crisis.

Both Paul and Schiff are proponents of the Austrian school of economics, which emphasizes free markets, sound money and Carl Menger’s subjective theory of value. Asked to describe what the “Austrian school” is, Schiff quipped,

“It’s kind of like you’re asking me ‘What’s Science? Or what’s astronomy, because you believe in astrology. Austrian economics is economics. Keynesianism is like a witch doctor. It’s all a bunch of nonsense, but politicians love Keynesianism, because it justifies what they want to do to get elected, which is spend more money, promise something for nothing, play Santa Claus.”

Schiff was Ron Paul’s economic advisor during the 2008 campaign.

Schiff became a national sensation when the predictions documented in his 2007 book, Crash Proof: How to Profit from the Coming Economic Collapse, came true. Not only was Schiff the darling of nationally televised financial and investing programs, but he found a whole new audience among Ron Paul supporters, who drove millions of page views to the You Tube video “Peter Schiff was right.”

Continue at Communities@ Washington Times…