The View From 1776

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What that means is pumping still more artificial, fiat dollars into the money supply.  Wall Street today greeted Bernanke’s affirmation that the Fed stands ready to bail out the stock market whenever necessary by a driving up the Dow Jones Industrial Average 90 points. 

The Fed’s monetary policy has benefitted banks, stock brokers, money managers, and the United States Treasury.  Banks are awash with liquidity, and the profitable spread between returns on their loans and investments and their artificially low cost of funds, thanks to the Fed, is producing big profit rebounds.  The stock market has experienced a bull market surge for many months, and the Treasury is able to finance the government’s massive spending deficits with artificially cheap interest rates.

The rest of the economy remains essentially flat.  Unemployment has scarcely budged since 2008, contrary to promises of Keynesian economists.  Pay rates for those who have jobs remain flat or declining.  Retirees and others living on fixed incomes have been robbed by rates of return on their investments lower than the current inflation rate of ca. 3%.

When private businesses finally resume expansion in this country the stage will be set for a round of devastating inflation like that of the 1970s, when the rate of inflation surged to double digits.  Just as on the eve of the 1970s stagflation, Fed economists are confident that their superior intellects will enable them successfully to fine tune the economy. 

Perhaps Mr. Bernanke and his economic planning nomenklatura really do possess that capability, but don’t bet on it.

Read Jim Grant’s opinion on the subject: Ben Bernanke should return the Fed to its golden roots.

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The Obama campaign has criticized Congressman Paul Ryan for seeking Federal handouts for his district, even though he voted against legislation authorizing the handouts.  Had he refrained from doing so, however, it would not have changed the overall condition of the economy or public morals one whit.  Some other Congressional district would eagerly have grabbed what Congressman Ryan’s district did not get.

In short, though liberal-progressivism speaks in terms of helping the little guy, it actually corrupts public morals and induces greed and self-interest.  The big special interest groups, primarily labor unions, trample the little guy in the rush to the pig trough.  Public employee labor unions in every jurisdiction push for more benefits, while cities and states face bankruptcy from skyrocketing union pension and health care liabilities.

Another egregious example of the phenomenon is Wall Street’s continual clamor for easier money from the Federal Reserve.  The moment the stock market falters, money managers and brokers push for more quantitative easing, i.e., the Fed’s pumping more fiat, phony dollars into the money supply.

Since the October, 1987, crash, in which the Dow Jones stock market average dropped 22.6%, the largest percentage drop on record, Wall Street has counted on the Federal Reserve’s coming to the rescue.  That so-called “Fed put” has contributed mightily to expansion of the money supply and a concomitant reduction of the dollar’s purchasing power.

Quantitative easing by the Fed has done nothing whatever to benefit the bulk of the nation’s citizens.  We experience the slowest economic recovery in history.  Unemployment, including people who have given up trying to get a job, is somewhere between 11% and 17% of the potential labor force.

Only banks, brokers, and money managers have benefitted.  But it’s hard to blame them, when liberal-progressivism’s economic doctrine is Keynesian macroeconomics, the secular religious faith that more fiat money is the solution to every problem.  Wall Street is simply taking what is being offered.

In a free-market economy, as Adam Smith noted in 1776, each person’s seeking to maximize his own wellbeing will, as if directed by an invisible hand, maximize the total of society’s wellbeing.

In a managed economy, with special interest groups competing with each other for government handouts or special tax and regulatory preferences, the opposite is true.  Higher government taxes and government borrowing to fund deficit spending both crowd out private business from access to capital markets and reduce the incentive to expand production and to hire more workers. 

People increasingly are driven to dependence upon the government for their needs, as the purchasing power of their savings declines.  Independent initiative and self-reliance come to be regarded as quaint relics of an earlier age.  People under French socialism in the early 1800s, Alexis de Tocqueville observed in Democracy in America, came to be self-centered and heedless of the general welfare.

Such is the goal of liberal-progressivism and the Democrat/Socialist Party.

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The following is an extract from Chapter Eight, The Liberal Jihad: The Hundred Year War Against The Constitution.

Liberal-progressives’ picture of the world requires simultaneously two mutually exclusive theories of human nature: in the one, humans must be naturally good, absent the corruptions of political and social structures, in the other, humans must be characterless and passive receptors of external influences that produce sensual pleasure or pain.

Both of these theories stand in opposition to the traditions of Western civilization that picture humans as created in the image of God, but born with sinful natures. Humans have the potential for both good and evil; the course followed depends upon individual free will and personal responsibility.

When the religion of socialism was taking shape, in the half century before the 1789 French Revolution, the liberal-progressive theory was that humans originally, in the State of Nature, were entirely good, benevolent, cooperative, and generous. The invention of private property and a social and political structure that protected private property corrupted human nature and brought aggression, crime, and wars to human life.

In the decades following the French Revolution, when the religion of socialism attained its final definition, a so-called scientific element was introduced. Liberal-progressives denied that humans have a fixed nature of Divine origin, from which come spiritual religion, moral codes, and traditions of right and wrong in political governance. Instead, they proclaimed that there is no fixed human nature, and that human nature is a variable thing that can be controlled by an intellectual elite employing political power. The implication is that these intellectual rulers have the knowledge, and thereby the power, to perfect humanity.

This is a Darwinian sort of doctrine. Human nature is perceived to evolve over time. Liberal-progressives will just direct and expedite the process. It therefore is a synthesis of sorts between the biology of evolution, which states that evolution is without design or purpose, and Comtean Positivism, a gnostic doctrine, proclaiming that through human reason alone intellectuals can attain a knowledge of history’s secrets. With that knowledge intellectuals uniquely are enabled to direct the affairs of humanity toward earthly perfection.

These two mythical pictures of human nature and political society exist only in the minds of intellectuals and their fellow worshippers of socialism. In present-day liberal-progressive-socialism, the two theories, though mutually contradictory, are mixed in a way that produces dangerous political and social policies.

On the one hand, liberals are unwilling to deal realistically with the real evil displayed by some human beings. On the other hand, liberals are captivated by the intellectualist fallacy that whatever intellectual planners decide to do can easily be accomplished in the real world. To date results have ranged from disappointing to barbaric.

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President Obama encapsulated the misrepresentation with his widely bruited assertion that someone else (i.e., the government) built the main elements of the economy: private businesses.

Mr. Obama and his fellow liberal-progressive-socialists fail to note that government itself produces nothing at all without taxing the economic output of private businesses.  All government spending programs are simply transfer payments: taking money from producers via taxes and spending it elsewhere, usually to buy votes from the recipients.

The thesis that consumer spending drives the economy puts the cart before the horse.  Consumers get their money ultimately from business payments to employees and suppliers.  To the extent that they spend government welfare and stimulus payments, the government has diverted tax money from real, non-inflationary economic activity, a process that is analogous to eating our seed corn.

George Fuechsel emailed the letter below.  Its message is dead on target.

To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn’t pose a threat to your job.

What does threaten your job however, is the changing political landscape in this country. Of course, as your employer, I am forbidden to tell you whom to vote for - it is against the law to discriminate based on political affiliation, race, creed, religion, etc.

Please vote for who you think will serve your interests the best. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest. First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story.

This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You saw my big home at last year’s Christmas party. I’m sure all these flashy icons of luxury conjure up some idealized thoughts about my life. However, what you don’t see is the back story.

I started this company 12 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living space was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business—hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting Nordstrom’s for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the 70’s.

My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business—- with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9 am, mentally check in at about noon, and then leave at 5 pm, I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, ****, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to me like a 1 day old baby.

You, of course, only see the fruits of that garden—the nice house, the Mercedes, the vacations… You never realize the back story and the sacrifices I’ve made. Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail out all the people who didn’t.

The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for. Yes, business ownership has its benefits but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check?

Obviously, government feels the latter is the economic stimulus of this country. The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy. Here is what many of you don’t understand .. to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you

defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the mud of America are the essential drivers of the American economic engine.

Nothing could be further from the truth and this is the type of change you can keep. So where am I going with all this? It’s quite simple. If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem anymore. Then, I will close this company down, move to another country, and retire.

You see, I’m done. I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

While tax cuts to 95% of America sounds great on paper, don’t forget the back story: If there is no job, there is no income to tax. A tax cut on zero dollars is zero. So, when you make decision to vote, ask yourself, who understands the economics of business ownership and who doesn’t? Whose policies will endanger your job? Answer those questions and you should know who might be the one capable of saving your job. While the media wants to tell you “It’s the economy Stupid” I’m telling you it isn’t.

If you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the Constitution, and will have changed its landscape forever. If that happens, you can find me in the South Caribbean sitting on a beach, retired, and with no employees to worry about.

Signed, Your boss,
Michael A. Crowley, PE
Crowley, Crisp & Associates, Inc. Professional Engineers
1906 South Main Street, Suite 122 Wake Forest, NC 27587
Phone: 919.562.8860 x22 Fax: 919.562.8872
Location: This is a real letter

Michael A. Crowley, PE is the owner of Crowley & Associates, Inc. and was President and an owner of Crowley, Crisp & Associates, Inc. and Michael A. Crowley, PC. As President of Crowley & Associates, Inc., Mike is a lead designer of water supply, treatment and storage projects, regional sewage lift station design, and residential and commercial site development projects and is responsible for the management of the firm. Mike’s industry background includes over 20 years experience in the civil engineering field inclusive of executive level responsibilities in Marketing and Project Management. Prior to founding Michael A. Crowley, PC, Mike held positions with several engineering firms in North Carolina and Maine. Mike holds a B.S. Degree in Civil Engineering from University of Maine and a Master of Business Administration from Boston College. Mike is a member of the American Water Works Association (AWWA) and holds professional registrations in North Carolina, South Carolina, Virginia, Maryland, Arkansas, Texas, Arizona, New Mexico, Indiana, Maine, Tennessee, Australia, and Trinidad & Tobago, West Indies. Mike is a native of Norridgewock, Maine. The Crowley family resides in Wake Forest.

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Education And The Texas Vote
By Thomas D. Segel

Harlingen, Texas, August 22, 2012: It isn’t too difficult to figure out. The lack of a solid education produces a multitude of bad or unintended consequences. Most people realize that those with the best educational background tend to have the better jobs, make more money, live in better homes, have better health care and many other plus factors in their lives that are not available to those who struggle at the low end of the economic ladder.

If there were any interested academics that wanted to examine this topic in detail, the Rio Grande Valley of Texas would be the perfect petri dish for their scientific examination of poor education vs. poverty and economic plight.

I actually started thinking about this due to an article I read written by my friend the Reverend Bill Reagan. Bill is the executive director of a multi-church supported mission to care for those who are hungry, homeless and hurting. Loaves and Fishes of the Rio Grande Valley serves thousands of hot meals and offers thousands of warm bed-nights annually to those in need. Each day he works among those who have little or no education.

In his article Bill notes that 43 out of every 100 adults in our county lack the literacy skills that will allow them to read the daily newspaper. Star County, also located in the Rio Grande Valley has a full 65% of it population unable to read or write. Another shameful record is also held by the Lone Star State. Texas is dead last among all the states in the percentage of people who do not have a good educational base. According to Literacy Texas only 19% of adults over the age of 25 have the skills to read a newspaper.

Does this translate into how we live? Of course, it does. With a masters degree or doctorate a person can expect to earn $80,000 and higher each year. Those with a bachelor’s degree average almost $55,000 annually. A person with a high school diploma can expect about $29,500 a year. People with less than a high school education earn an average of only $19,900 annually. Using these figures and looking across the nation, it is estimated that low literacy levels are costing the American economy $225 billion a year. In addition illiteracy is a strong predictor of involvement in criminal activities. Eighty-five percent of those found in the juvenile justice system have been rated as functional illiterates.

Examined from a political perspective the problem of illiteracy or low educational attainment is also significant. Those who cannot read are forced to obtain all of their information from the electronic media. This means they have a very small window for observing national affairs. The left-leaning bias of our media outlets limits the illiterate in their view of politics and public service.

Illiteracy also opens the door for those who would exploit this handicap. It allows the political elite to tap into a reservoir of people who become dependent upon the government to meet their daily needs.

Again, using the Rio Grande Valley as an example of an area open to political exploitation, the four counties, which form the tip of Texas, have a population of about 1 million people. A full 90% of this number is of Hispanic extraction. Within that group more than 30% fall below the poverty level.

The region is medically underserved and health concerns are enormous. Forty one percent of the people have no health coverage. Diabetes is almost at epidemic level. Some communities have half of their population seeking a way to find medical help.

Even more weight is added to the problem by both legal and illegal immigration. Where most of Texas sees an annual population growth of ten to fifteen percent, the Rio Grande Valley now records more than a 30% annual population increase. This stresses all public services almost to the breaking point. In addition it fosters political hooliganism.

For years the left leaning political movement has placed trained political activists in the poorest of Valley neighborhoods. These people, who are paid by the number of people they get to the polls, recruit their own following of voters. Those who have little education are encouraged to request absentee ballots. When the ballots arrive these activist leaders “help” the recipients with their voting. These same activists also arrange for their charges to attend the free food, drink and music Pachanga (party or bash) events of supported candidates for office. Those not be able to read are instructed on where the single party voting lever on machines can be found or which block to mark on paper ballots. On Election Day and even during early voting, their charges are picked up and delivered to the polls.

Does any of this work? In the Rio Grande Valley of Texas there are few individuals in public office who wear the Republican brand. Carlos Coscos, Cameron County Judge is one of these rare GOP office holders. However, for years when seeking public office, even he ran as a Democrat. Democrats hold almost every office in the four counties making up the Valley, even though every statewide office, the Legislature and other Texas counties are and have been Republican.

All of this is explained to point out one simple truth. If this population was to be educated and the literacy rate was expanded, most would be able to make up their own minds on Election Day, and there would be little need for a party activist to mark their ballots.

Semper Fidelis
Thomas D. Segel
.(JavaScript must be enabled to view this email address)

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