The Most Dangerous Woman in America

>> Tuesday, November 8, 2011

[Link to the full article is to your right]

I remember an episode of Family Affair wherein Jody was struggling with the "new math." I remember that time and had difficulty too. I also took economics in high school-- a mandatory course requirement then. But nothing of what I learned then, seemingly, is understood today. The Keynesian Model is fundamentally flawed, yet everyone with access to policy-makers in Washington, who accepts the Keynesian Model, is granted an imprimatur-ish status in the development of our national fiscal policy.

Bad as our economy now is, it didn't get where it is without the guidance of both parties. Washington DC is more than just a seat of our federal government, it is also the seat of power of the Washington establishment, which has nothing to do with parties and everything to do with keeping the wheels turning in Washington no matter who is in power-- parties rise and fall, but the establishment is eternal, so to speak. Control may pass from one party to another, but the policy wonks never leave, and Washington today, no matter who controls the reins, is decidedly bent toward Liberalism in all its quirks, misconceptions and flaws. And nowhere, today, are those flaws and misconceptions more pronounced than in the managing of our economy:

Because the Keynesian Model is both a sham and a failure.
Anyone wishing to understand the way economies really work-- if government could only take its hand out of the mix --and how capitalism... unrestrained capitalism... could fix the mess we're in need only read The Case For Legalizing Capitalism by Kel Kelly. It's so simple even a neolithic-minded Liberal cave-dweller can understand it... and it's a free download.

But to the most dangerous woman in America, Christina Romer. From the article referenced above:

In a recent New York Times editorial entitled, “Dear Ben: It’s Time for Your Volcker Moment,” Romer publicly tries to goad Ben Bernanke into doing MORE to fight the great contraction.

It’s not enough that Mr. Bernanke has expanded the money supply by an amount never before seen in the history of the world. It’s not enough that he’s nearly exhausted every policy tool at his disposal. It’s not enough that global confidence in the dollar is fading rapidly.

Romer wants Bernanke to take things to the next level.
Say one thing for the Keynesian deranged, they are consistent... consistently wrong.. and unable to fight the urge to double down. If it were Christina's own money and livelihood I'd say let her hit rock bottom, then she can seek help from a gambler anonymous support group. But it's our livelihood she and the rest of her liberal 'cadre of the deranged' are playing with.

In her editorial, Romer draws comparisons to past economic difficulties and expresses admiration for those who employed extreme tactics to deal with them. She praises FDR for abandoning the gold standard and allowing the dollar to depreciate.

She also erroneously recounts economic history, suggesting that Roosevelt’s actions led to “the most impressive [economic] swing the country has ever seen from horrible contraction to rapid growth.”

Swing? That’s a bit revisionist. The Great Depression languished for years. And years. Perhaps if we’re speaking in terms of a geological timeline in which millions of years are a drop in the bucket, the recovery could be characterized as a rapid ‘swing’.
Anyone with a shred of intellectual honesty understands that the Great Depression lasted as long as it did BECAUSE of FDR and government interference in the economy. Now history is in the process of repeating, unrecognized by the those who esteem themselves as the best and the brightest, and now advising the Obama administration on how best to solve our debt crisis. In effect, doubling down on stupid.

In Romer’s world, paper is wealth. And hey, why should she believe anything else? She’s been in academia and politics for her entire life. She’s never actually had to DO anything and has been free to live inside a consequence-free Keynesian bubble throughout her entire career.

The scary thing, though, is that this woman has VIP access to the halls of power in Washington DC. She advises the decision makers who set policies affecting hundreds of millions… even billions of people. And she has no clue how the world actually works. This is incredibly destructive for the rest of us.
This blog has, from the very beginning been an attempt to fight, as meagerly as we knew how, what we knew was coming from the moment we learned Obama had won the White House. But I've come to learn a thing or two in the last three years... specifically, that people tend more often to cling to their tropes and paradigms than allow them to be modified or altogether cast aside in favor of clearer, truer understandings. If anything, they double down on stupid. And when it's Washington that does it, we all suffer.

You can only blame your predecessor for so long. You can only continue down a failing path for so long before the economy wrecks peoples lives and those people begin to get resentful.

I honestly don't see how Obama could possibly get reelected, but stranger things have happened and, I've come to understand, people tend to get the kind of leaders they deserve. Now, as to what that says about the American people, I'll leave that to someone else. Suffice it to say, however, that the longer we allow the genuinely uneducated and 'ignorant-to-real-world-truths' individuals decide economic policy (among other things) we deserve whatever they cram down our throats.

After all, we allowed them to wipe their collective asses with the Constitution, so we shouldn't be surprised that our country is now in a world of hurt; the kind from which there is no real avoiding the coming shit-storm of consequences. It won't matter if a Republican wins next November, that shit-storm is coming regardless-- the only caveat being, how long that storm will last compared to the policies currently administered by the Obama White House.


BenT - the unbeliever,  November 9, 2011 at 11:01 AM  

The article from is crap. This guy is just trying to sell his get rich scheme. "dual citizenship and following his stock tips" He is no serious political commentator. It's like planning a vacation with advise from a condo salesman.

As far as your other source Ms. Kelly's book Legalizing Capitalism I didn't have the energy to read a 500 page book. Can you summarize her arguments? If you disagree with the Keynesian model of economics can you describe an alternative? Can you offer a an example economy using your alternative system?

As I understand the theory Keynes's ideas have been validated through application in modern economies.

ELAshley November 9, 2011 at 12:32 PM  

f you think Keynes' ideas have been validated 'through application in modern economies,' then you haven't been paying attention to Europe. Or what's happening here, now, under Obama's failed stimulus.

The author of the book you don't have energy to read, by the way, is male.

ELAshley November 9, 2011 at 1:09 PM  

I'll make it easy for you, Ben (or anyone else interested). The book is free to read online or download as a PDF. It's divided into five parts, so just go to part five and read chapter 10. You won't have the benefit of all the previous groundwork, but Kelly's conclusions are not too difficult to grasp on their own.

Here's the link again:

The Case for Legalizing Capitalism

BenT - the unbeliever,  November 9, 2011 at 1:49 PM  

I'm sorry if my illness this week renders me a less than energetic debater.

Did you read "Legalizing Capitalism"? (Really? Kel is a male name? Maybe it's short for Kelvin.)

Skimming through the last chapter of the book I was struck by the number of unfounded assertions that I just could not agree with. The one that stood out most to me was the contention that government spending doesn't stimulate production or employment.

The easiest rebuttal to that statement is to look at Seattle. Imagine Seattle without Boeing manufacturing, the technology growth of that area stimulated with government money. The employment base of the region resting on aviation technology. And the private sector benefits that derive from a company with large government contracts.

In another statement the author denigrates government infrastructure projects during a recession, but I can't reconcile that with the reality of the Hoover Dam. A government works project which spurred the growth of the entire Southwestern US for decades.

I also didn't see any scholarship examining the role of monopolies in pure capitalistic economies like Kelly advocates. It is the conglomeration of banks and other financial service firms that have created "too big to fail" businesses. Surely an unregulated marketplace would be even more plagued by these.

Have you read the book? Can you address some of these concerns?

Marshall Art November 9, 2011 at 8:27 PM  

I don't see the gov't patronage of Boeing, nor the creation of the Hoover Dam and examples of gov't spending for the intention of stimulating the economy.

In the case of Boeing, we see the gov't as consumers of products Boeing produces to satisfy needs it has as regards their constitutional duties. In other words, the US Gov't is no different than United Airlines, or any other company that contracts with another for mutual benefit. The Gov't isn't doing business with Boeing to stimulate the economy, but to acquire that which it needs to do its job as federal gov't of the USA. In the same way, it buys paper for its copiers from the local Office Max type supplier because it needs paper for its copiers, facsimile machines and printers, not to stimulate the economy. With planes and plain paper, the federal gov't is merely buying (hopefully no more than) what it needs. This is not spending meant to stimulate anything as it would go on regardless of the state of the economy and job market.

The Hoover Dam also fails as it was not built with the intention of providing jobs or stimulating the economy, but to divert the water of the Colorado River for irrigation, to prevent flooding, and later, to provide electric power to the states of the region, regardless of the state of the economy and job market at the time.

Thus, these two examples do not support the idea of using tax dollars to stimulate a bad economy. They are legitimate needs that were, or are, being addressed and would have been regardless of the economy. This is an important distinction when discussing whether or not gov't spending is stimulative, or should be engaged in for the purpose of stimulation.

ELAshley November 10, 2011 at 8:58 AM  

Yes, I've read it. Perhaps when I have time, and I'm not sick myself, I can address your questions more specifically. But it's clear you'll not believe anything I say, so I wonder what the point would be in trying.

In the case of Boeing, however, the government is actually purchasing a product. In this scenario I wouldn't call what the government is doing "stimulus", as in the vein of what the Obama administration did in '09. What the government is buying from Boeing is what the government would've HAD to buy from someone, sooner or later. In that it stimulates the economy of Seattle, well, that's what happens when you purchase anything, anywhere; albeit in terms of the average consumer, to a much smaller degree. Infusing the economy with more and more printed money, with nothing to back it up, is not stimulating anything but the rate of inflation, which hurts both job creation and the public at large. Furthermore, how was Solyndra a boon to the economy? How is doubling down on the ridiculous policy of sitting on our own energy sources a boon to the economy?

The Hoover Dam? That job lasted eight years. Nothing to be sneezed at, but hardly a permanent job for anyone, because not everyone who worked on the project was employed from beginning to end-- as each aspect of the build had its begin and end. Meaning very few of the workers actually worked every week of 8 years. What did they do after that?

These 'make-work' projects are fine in as far as they put some people to work for a short period of time, but government can't guarantee these jobs in any permanent sense. Government can boast that it created ten-thousand jobs, but it's never noised abroad when those jobs disappear. Companies that win bids for those select government contracts hire to fulfill the order, but when the order is complete and there's no more need for those workers, those workers get laid off, and many of them end up back where they started. In need of a job.

Government has the capacity for temporary relief only, and that relief, therefore, should never be relied upon as a permanent solution, by any free thinking individual. That's what's wrong with the public mindset today: "It's government's job to provide... x" But what the public mindset hasn't grasped is the fact that nothing government provides is ever permanent (except, perhaps, welfare). What government needs to do is get it's hands as much out of the economy as it possibly can (which to my mind is entirely) and let the markets work. Government, after all, presently does more to stifle job growth (and has for some time now), than to promote it. In addition, government needs to stop printing money.

Can so many millions of Americans have honestly believed that there would never have been a day of reckoning for all the interference government has inserted into the economy? Tough times are ahead. Period. There's no getting around it. And we have government to thank for it. That, and the Fed itself.

ELAshley November 10, 2011 at 9:14 AM  

But you see, Christina Romer doesn't understand this and, apparently, neither does Ben Bernanke. And Obama? He's just a child in a sandbox.

Mark November 10, 2011 at 9:22 AM  

I never could understand how the Government thinks they can decrease the debt by borrowing more money. It's completely logical to me to assume you can't spend your way out of debt. I can't do it. How can the government?

ELAshley November 10, 2011 at 9:40 AM  

Exactly! And yet this is the one question the Left can't seem to grasp the truth of.

ELAshley November 10, 2011 at 10:10 AM  

Need more proof America is screwed so long as government has it's hand in the economy? Again... Boeing.

The unions continue to fight the opening of Boeing's proposed operation in South Carolina, thereby denying needed jobs to that state. Obama's government supports the union's suit, ergo, government (THIS administration at least) isn't interested in promoting the growth of private sector jobs. Rather, they're more interested in supporting "crony" capitalism (which isn't capitalism at all), and PUBLIC sector jobs. Obama is more interested in protecting the Unions than he is in creating jobs.

This president needs to get the government's hand out of the economy and the private sector, or continue to look like a hypocritical fool.

ELAshley November 10, 2011 at 10:14 AM  

Pursuant to the previous comment here's a relevant link, at the Washington Examiner:

NLRB lawyer: "We screwed up the U.S. economy"

Jim November 10, 2011 at 1:53 PM  

It's completely logical to me to assume you can't spend your way out of debt.

Try this logic...

I don't have a job, and not much of anything in savings. I have $600 in debt on my credit card.

My background is in manufacturing, but there are no manufacturing jobs available.

I learn that there is a company 50 miles away that is hiring people with software skills. I find out that if I take a class and get certified, I can get that job if I have the means of making the 100 mile a day commute.

I still have some room on my credit card so I borrow $300 for the course, another $100 for the certification, and put another $200 into my car to make sure it can make the commute. I've SPENT $600.

I get the job and start making money again. I put $50 plus interest a month against what I charged for the next two years and I've spent my way out of debt.

Where am I going wrong?

ELAshley November 10, 2011 at 2:30 PM  

I'll tell you.

YOU are gambling on your own good name, faith and credit. Government gambles with EVERYONE'S good name, faith and credit.

YOU can reasonably expect to pay off a few thousand dollars, or go bankrupt, and no one else will have to pay the penalty in terms of credit standing and purchasing power but you.

GOVERNMENT CAN'T go bankrupt, neither can it hope to pay off TRILLIONS of dollars in debt if it keeps on spending. Furthermore, it gambles with the lives of every American by continuing to spend money it doesn't have in the nebulous hope that if it prints enough money and flushes the economy with its worthless paper, taxes the American people long and hard enough, it'll somehow come out the other end loved and respected by the people it royally screwed.

There's no way the American government can pay off its debt in two years. They can't even pay it off in ten. All these clowns are talking about is trimming a few trillion off the total in ten years; which isn't really a trim, only a reduction is what government would have otherwise spent. If it's math you want, here's a quick reminder from a previous post

Marshall Art November 10, 2011 at 7:36 PM  

I would like Jim to explain how his little story is analogous the what is happening as regards gov't spending as a means of stimulating the economy.

What your anecdote shows, Jim, is not spending one's way out of debt. What's more, this gov't has no more room on its "credit card", but instead demanded a credit limit expansion, which it did by demanding the debt ceiling be raised, and then has commenced in spending THAT money. To pay off this debt, it doesn't "get a new job", but it wants to take more money from some of its citizens or borrow it from other countries.

Jim November 19, 2011 at 2:51 PM  

All readers of this blog are invited to read and comment on a new post on my blog about American Exceptionalism.

My blog is According to My Sources

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