The View From 1776

Riposte to Helicopter Ben

Peter Schiff explains why There’s No Pain-Free Cure for Recession.


Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn’t have a surplus, then it must come from taxes. If taxes don’t go up, then it must come from increased borrowing. If lenders won’t lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.


Posted by .(JavaScript must be enabled to view this email address) on 12/27 at 02:31 AM
  1. We hear this over and over.

    The government does not create anything, so it is basically a drag on the economy.

    So, what is your conclusion, Tom? Should the present conservative government do anything about the current economic downturn that was created on their watch before it hands the mess to Obama? Or just wait and see how bad it gets?

    Should Bush and Paulson be required to tell us what happened to the first 300 billion they have given to Wall Street?
    Posted by .(JavaScript must be enabled to view this email address)  on  12/27  at  03:16 PM
  2. I am thinking, this is so, so crap, this mantra from the the right and from The View!
    Posted by .(JavaScript must be enabled to view this email address)  on  12/27  at  03:52 PM
  3. First, both parties use the same sources for their financial and monetary experts. All but two presidents and all secretary of states since 1921, when the CFR was created have come from it. The people who advised both McCain and Obama came from the Trialateral Commission which is linked to the CFR and a creation of the same people who created the Federal Reserve Act.

    For 95 years we have been operating under flawed policies and principles that the "experts" recommend to the presidents and their cabinets.

    There is no solution to this but a depression. We can delay it for a year or two at best but, that will only make what comes worse. This is a normal pattern that happens when there is too much personal, city, state, corporate and federal debt used to create an illusion of growth and prosperity.

    In 1968, long before Bush, we started borrowing $1 for each $1 of GDP growth. Now we borrow $5 for each $1 of GDP growth and beginning with the last year of Clinton, actually, using "real inflation," have had virtually no GDP growth. Only one quarter of GDP was positive since then, using the very same method of calculating GDP we use to use.

    For over 40 years we have been in decline and few people knew it because each decade used more debt to create the illusion we were growing. Real growth is when you produce more than you consume and use productivity to increase the standard of living, infrastructure and power of a nation.

    Now, during Bush, who is certainly either dumber than a box of rocks when it comes to economic and monetary issues or is so tied to the "new world order" that even as far back as President Johnson, was being touted as a goal, that is was, like Clinton, Bush I, Reagan, Carter, Nixon, and Johnson, were, part of the problem.

    Since both parties are destroying American in slightly different ways, domestically, but similarly internationally, like with NAFTA, WTO, IMF, etc., things are not going to get better regardless of who is elected. At some point, we have to have the depression it will take to restore solvency.

    You can't go from a consumer nation that consumes more than it produces with ever increasing debt, to a solvent, productive nation without a depression.

    The bailouts that Bush has allowed would have been done regardless of who was in office because both parties depend on "banking experts" to guide their monetary and economic decisions. Presidents don't "pick" the experts. The parties do and the power brokers do.

    In order to be an "expert" that is "worthy" of being appointed, you have to have risen in the ranks of the CFR's controlled businesses, foundation, organizations and political parties. If your goals are not the same as that of those who lead the CFR, Trilaterial Commission, Bilderbergs, etc, then you don't get "promoted."

    Over the decades since 1921, we have created a "group think," mentality among the experts about centralization of power and internationalism. Unfortunately, the central bank cartel that created the organizations they use to evaluate people, based their goals and plans on flawed monetary theories.

    These flawed theories and policies have led to one boom/bust cycle after another beginning in the early 1920's and continuing to this day. These are good people, for the most part who want to end global hunger, global war, global poverty. While the goals are certainly noble (not all have noble goals, as some desire personal wealth and power), the means of reaching the goals are so flawed that the goals are unobtainable using their flawed policies and theories.

    We can say Bush rapidly sped up the day of reckoning. We can say that Bush was reckless and foolish. But, we would have said that if Kerry had been elected or if Gore had been or if any other Democrat had been.

    How do we know? Because the Democratic party is well represented in Congress and we only have to look at the leadership of the Democrats in Congress who helped create the housing bubble and who voted for the bailouts and who are calling for more and more stimulus and government spending to see that they too, are using the same advisers.

    The solution is not "stimulus," simply because it will require more debt. The solution is total reform of the monetary and economic policies, total tax reform so we can increase tax revenues while decreasing the cost of doing taxes even more than what we increase the tax revenue by.

    Currently many businesses, due to the 17,000 page tax code and 40,000 additional pages of decisions, court rulings, IRS letters, etc. spend 400% more on doing taxes than on what they send in and each year it gets worse.

    However, reform will cause a depression just as will, not doing reform. Thus, with or without reforms, we have to have a depression and possibly a new currency and possibly, one or two decades of misery before we can actually rebuild the nation.

    Each decade for 95 years, we have gotten deeper into this mire of economic quicksand and now, our head is about to go under.
    Posted by JanPBurr  on  12/28  at  09:12 AM
  4. "We can say Bush rapidly sped up the day of reckoning. We can say that Bush was reckless and foolish. But, we would have said that if Kerry had been elected or if Gore had been or if any other Democrat had been."

    Nevertheless, it is appropriate that Bush was president at this time, he being such a free market ideologue. Under him we truly learned that unfetter markets are not the be-all and end-all. He is the one who enabled the 'tipping point' that at some point was going to make itself known. So why not have this occur under the tutelage of the most unknowing and reckless president the USA has ever known.

    If Gore or Kerry were president, perhaps they may have held back this inevitability until someone like Bush came to power. However, being liberals they would most likely would have been hands-on presidents and avoided the severity of the crisis.

    IanPBurr, you were a great booster of the Irish economy because of its low taxation. Low taxes you said gave Ireland the miraculous economic success it had. Ireland in your eyes was a model. Today, though, the Irish economy is in the same economic predicament as the other developed nations. Why, because it over expanded like the USA did, partly due to the low taxes that created and nourished a false economic environment.
    Posted by .(JavaScript must be enabled to view this email address)  on  12/28  at  12:16 PM
  5. But, he wasn't a free market advocate. Why do you believe what they say, vs. what they do. Any president of either party would have done most of what he did, including Iraq.

    You have even heard Obama threatening to use military force on Pakistan, Afghanistan, and Iran if the need (in his view) arises.

    You had Clinton pass NAFTA. You had Bush calling for CAFTA and more international intervention in things because he works for the international elite just like the leaders in the Democratic party do.

    Until people begin to realize that both parties are bad for America as long as they staff themselves with the pawns of the internationalists, we will continue to have the kind of problems we have had for 95 years.

    I did say Ireland was a great example and also that they would make the same mistakes we did if they didn't realize the difference in a growth economy and a mature economy and I also warned, as you probably recalled that they were creating problems, esp, in a real estate bubble.

    If you recall, I also have said many positive things about China and also warned that they too, will make the same mistakes we made if they don't understand what causes the problems we face.

    No president can do more than delay the crisis and make it worse. It doesn't matter which party is in power since they aren't who control the trends. Those are controlled by the banking elite here and in Europe who control the money supply.

    As you recall, Rothschild himself, said that as long as he controls the money supply it doesn't matter who is running the government. Until American voters are educated in monetary and economic policy and vote into office people who also are educated in it and understand it, the results will be the same even if the timing is a little sooner or later.

    Low taxes aren't the problem with over expansion since you only need enough taxes to cover spending and the better the nation is run, the less taxes are needed. Spending more than a nation produces whether at the personal or city or state or national level creates unsustainable trends.

    The government can't regulate human nature. It can encourage and discourage it but not regulate it. Even with the death penalty as discouragement to commit murder, you still have murderers. Same with taxes to try and control behavior. Same with other government regulation and along with the power to regulate, you also end up with corruption like you see in Illinois right now and in most major cities and many states.

    Our federal government has been corrupt to various degrees at various times from its inception because that too, is "normal" in any nation. There are always people who use power to enhance their own lives and their "network" of "friends" who keep them in power. That is why the more you centralize power, the more risk you run of increasing corruption and abuse of the citizens. Both parties are deeply involved in the corruption of party politics and both rely on funding from the same people, corporations and international elite.

    All nations, unless ruled by very wise and unselfish people will do exactly what we have done, Ireland has done, England did, France did, Germany did, Argentina did, etc. On and on and on, you will find history repeating itself.

    The emerging markets will probably contain the next super power and the U.S. and Canada will find very tough times in many ways as the government will lack the funding needed to maintain what we have. But, that is normal in the cycle of nations.

    The elite don't care because they have no loyalty to any nation, including the U.S. They will sacrifice any nation that gets in their way or that they no longer need. Study the history of the CFR, Trilateral Commission, IMF, World Bank, Bilderbergs, Bohemian Grove, and other international organizations where the world's elite get together to determine what is "best" for mankind and you will learn how much power they have accumulated over the last 95 years.

    We face a currency collapse and have known we do for over 40 years. All that any President, of either party, has been able to do is delay the day of reckoning. Can they delay it one more time until the entitlement crisis hits? Possibly.

    George Washington warned of the dangers of political parties in 1796. He, in the same speech (farewell address) warned of our foreign policy become what it did after WW II and where that would lead.

    Why would anyone compare a nation to another nation for "what to do," instead of the actual principles needed for good government? That is the problem we face now in both parties. They are not looking to "principle" and real life for what is needed but to "fixes" to try and keep bad policies and principles in play.

    Our growth period was based on things that won't work in a mature society. Our growth was based on producing more than we consumed and exporting the excess and saving and investing in not only new businesses, but infrastructure.

    The one good thing we see (intention wise) is that Obama wants to improve our infrastructure. But, as bad as that is needed, unless we reform our business and monetary policy, we will still continue to decline as a nation. It like building a new factory but, then finding you can't get anyone to work in it. The building, no matter how modern and high tech it is, won't produce without workers.

    Our nation is in that shape. Even if we bring infrastructure up from the current "D" rating to a "B", we will still be uncompetitive in the world. We will have virtually total democratic control and yet, as you have seen, they are planning on making the same mistakes that got us into this mess where more debt is used to solve a "too much debt" problem. Obama, is calling for over $1 trillion in spending on various things, including the stimulus and infrastructure packages and yet, that will only make what comes that much worse.

    Yes, doing nothing means we have a depression. Doing nothing means high unemployment and loss of tax revenues and deflation and falling values in stocks and homes and assets.

    Yet, "doing something" (no matter what) won't solve anything. It will only delay the inevitable.
    Posted by JanPBurr  on  12/28  at  04:10 PM
  6. One difference on Ireland and the U.S. They lowered debt from 120% of GDP to 21% or so during their "economic success."

    The U.S. increased their debt under every president and from 1968 on, were making it worse under every president and congress. We have not had growth. Ireland did.

    To have real growth, debt should be dropping as a percent of GDP growth, not rising as it was here for decades. Don't confuse what Ireland did and is having happen with what the U.S. is doing and has had happen other than that the tendency of all governments is to lack good leadership that truly understands when change from growth policies to "mature economy" policies are needed.

    Why is that so common? Simple. Politicians need to be re-elected (they think) and to do that means they have to tell the voters what they want to hear, not what they need to hear. It doesn't matter if it is here or Ireland or France or Germany, staying in office becomes a priority that trumps common sense and needed policies in most politicians.
    Posted by JanPBurr  on  12/28  at  04:16 PM
  7. "But, he wasn
    Posted by .(JavaScript must be enabled to view this email address)  on  12/28  at  06:58 PM
  8. You really are a moron, david. An ideological and philosophical illiterate. If Pich Sulzberger says it, it musr be true. Think, for God's sake.
    Posted by .(JavaScript must be enabled to view this email address)  on  12/28  at  07:47 PM
  9. David, you obviously don't really know what "free market" is and why what the Federal Reserve did under President after President to alter the market and to intervene isn't "free market" policy. Bush used every intervention tactic in the book in his first term. Also, remember that some of what was done to create the bubble was done under Clinton as well as Bush because both Clinton and Bush get their advice from the same sources.

    Changing taxes whether up or down to alter the economy is not "free market" thinking. Bush used tax cuts to encourage some behavior just like Clinton did when he cut the capital gains tax or increased taxes to discourage some behaviors whether he knew it would or not.

    The idea of taxes is to cover spending, not to alter behavior. However, any President has to keep in mind that how taxes are applied will alter behavior and doing the wrong things can really hurt tax revenues. That harm can come from either increasing or decreasing tax rates, depending on what they are applied to and depending on the lag factor which can be as long as 3 or 4 years before the full impact is realized.

    Stability in taxes and simplistic tax codes are very important in preventing the altering of behavior that harms the economy. Neither party has been good at it. Again, this isn't pro-Bush or anti-Bush as both parties are miserable at what they try to do. Both parties are greatly to blame for the mess we are in. The Democrats controlled Congress for 40 years and the Republicans for about 10 and neither period was good for the long term health of the nation because of the "experts" both parties were using who were allied with the CFR and Bilderbergs and Central Bankers.
    Posted by JanPBurr  on  12/28  at  08:26 PM
  10. Burr,

    You think you understand the free market? There is always someone or something out there trying to manipulate it.

    First of all there is no such thing as 'free'. Everything has its restrictions, including the free market. The free market has to be managed because of the limitations of resources and the changing dynamics of the world. If the market was truly free then we would be living in a jungle where anything goes and anybody over 30 would be dead.

    If we want to live in the best environment possible, then, things can't be totally be free. The limitations we put on 'free' is what affords stability and civilization.

    There is some rational to the free market idea. I should know, being in business for myself. But a lot of it is myth.

    I'd like to say, the 'free market', bah humbug! In your dreams, just like utopia.
    Posted by .(JavaScript must be enabled to view this email address)  on  12/29  at  06:55 PM
  11. Remember though, we are not going to be living in the best place for much longer.

    And I am not a free market advocate as I believe the founders saw the risks of "no regulation," but had the sense to let each state take care of what is needed since each society in a nation has different needs, resources and solutions that are more effective.

    In my business that I had, I too, had many regulation that were for the good of my customers. But, Free Market isn't what you think it is either. It is the "freedom" to "market" you goods in a fair and equitable manner with your competitors. That is what our government has been moving away from for decades.

    That is why so many businesses have left the U.S. They couldn't compete when the playing field is no longer level.

    Now, if I had to pick the sector that needs the most regulation, it would be banking and the banking elite. Due to fractional banking and the use of a fiat currency, the possibility for abuse of power, such as has led to this current crisis is too great.

    That is why our founders were so against a central bank. The lessons they learned from the Bank of England's abusive practices that led to the Revolutionary War, were lessons well learned.

    Once you study history enough to see what abuse of monetary and economic power can lead to, you will develop many of the same cautions our founders did. You will also see why they created a "Republic," and not a "Democracy" for our federal government and also why they appointed Senators instead of electing them, among other things.

    Remember there is nothing new in the world. From the beginning of mankind, the same mistakes have been made.
    Posted by JanPBurr  on  12/29  at  10:53 PM
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