Posts Tagged ‘debt’

BTL Update 2011 December 4

Sunday, December 4th, 2011

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Ron Paul Blasts Debt Deal

Monday, August 1st, 2011

August 1, 2011ALEXANDRIA, Virginia – Today, 2012 Republican presidential candidate Ron Paul issued a statement outlining his opposition to the debt ceiling deal struck between the White House and Congress. See statement below.

“While it is good to see serious debate about our debt crisis, I cannot support the reported deal on raising the nation’s debt ceiling.  I have never voted to raise the debt ceiling, and I never will.

“This deal will reportedly cut spending by only slightly over $900 billion over 10 years.  But we will have a $1.6 trillion deficit after this year alone, meaning those meager cuts will do nothing to solve our unsustainable spending problem.

“In fact, this bill will never balance the budget.  Instead, it will add untold trillions of dollars to our deficit.  This also assumes the cuts are real cuts and not the same old Washington smoke and mirrors game of spending less than originally projected so you can claim the difference as a ‘cut.’

“The plan also calls for the formation of a deficit commission, which will accomplish nothing outside of providing Congress and the White House with another way to abdicate responsibility.

“In my many years of public service, there have been commissions on everything from Social Security to energy policy, yet not one solution has been produced out of these commissions.

“By denying members the ability to offer amendments and only allowing an up-or-down vote that will take place in the hectic time between Thanksgiving and Christmas, this Commission essentially disenfranchises the vast majority of members from meaningfully participating in the debate over reducing spending and balancing the budget.

“Furthermore, despite the claims of the bill’s proponents, there is nothing to stop the commission from recommending tax increases.

“One of the reasons why I humbly suggest that I am the most qualified Presidential candidate is my experience to see and understand the long track record of failure, disappointments, and bad recommendations made by such commissions.

“Times like these require statesmanship and steady leadership, which I and the grassroots activists who have joined my campaign believe I am uniquely qualified to provide.

“What should bother Americans most is that under cover of this debt ceiling circus, we learned from a recent GAO one-time, limited audit that the Federal Reserve secretly pumped $16 trillion into American and foreign banks over three years.  All of the Fed’s fat cat cronies were taken care of at the expense of the American public.

“To put that into perspective, our entire national debt is $14.5 trillion, and our annual deficit will be about $1.6 trillion, meaning the Federal Reserve created and appropriated more than our entire national debt to banks around the world in a few short years.  We have been fighting in Congress these past few weeks over raising our debt ceiling by $2 trillion, an amount the Fed secretly gave away to just one big bank.

“For decades, politicians have promised future restraint in exchange for hikes in the debt limit.  We are always told that we must act immediately to avoid a crisis.  But time and time again, politicians reveal themselves to be untrustworthy, and we soon find ourselves in a crisis being led by the same folks who wish only to maintain the status quo.

“I believe in the great American traditions of free markets, sound money, and personal Liberty.  But we are moving far away from what made us the greatest nation in human history. We must cut spending and balance our budget now, before it is too late.

“Let me be clear.  The cuts we must make will not be easy, and there will be difficult times in the short run.  But I have the greatest confidence that if we come together as a People, work hard, and do the right things, our country will be back on track in no time and on its way to unprecedented prosperity.  But, if we continue to print money and pyramid debt, we will destroy ourselves and lose the promise of America forever.

“These difficult times require a President willing to stand against runaway spending.  If elected, I will veto any spending bill that contributes to an unbalanced budget, and I will balance the budget in the first year of my term.  I will not allow the Federal Reserve to destroy the value of our money by shoveling dollars into the pockets of its banker friends.

“I remain committed to working on behalf of the American people to drastically reduce spending and implement fundamental changes that will reform government and restore our nation’s prosperity.”

Paid for by Ron Paul 2012 Presidential Campaign Committee
www.ronpaul2012.com

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Important Debt Ceiling Update

Monday, August 1st, 2011

President Obama just announced late this evening that a deal has been reached to cut government spending and raise the debt ceiling in order to avoid a debt default. If the deal is approved on Monday, it will raise the debt ceiling by between $2.1 and $2.4 trillion in three installments: $400 billion immediately, $500 billion this fall subject to a disapproval vote by Congress, and $1.2 to $1.5 trillion more after a special committee agrees on a matching amount of spending cuts that will be in addition to $900 billion in spending cuts proposed in the bill. With no tax increases included in this plan, all of this additional debt will eventually be monetized and paid for through monetary inflation.

Although the deal is supposed to cut as much as $2.4 trillion in spending over the next decade, Obama said that none of the spending cuts will occur anytime soon so that not to derail the phony economic recovery. That’s right, none of the cuts will come until early 2013 and by then we will need to once again raise the debt ceiling to north of $20 trillion. If our elected representatives were serious about cutting spending, they would have the bulk of the spending cuts now and not in the future when many of them will be out of office.

This deal is a complete and total sham, and will do nothing to prevent hyperinflation. In no way will these spending cuts be mandated and nothing will force future Congresses to abide by them. Even with these cuts, government spending is going to increase every single year for the next decade. As price inflation spirals out of control in the years ahead causing the purchasing power of the dollar to plummet, all government employees will demand higher salaries and it will cost more to run all parts of the government. Future Congresses will raise spending and make the spending cuts proposed in this deal meaningless.

NIA believes that all of the events that took place in Washington this weekend were scripted in advance. It is likely that both parties knew from the beginning what deal they would ultimately agree to, but came out with these other proposed bills in order to satisfy tea party supporters and make them think that their efforts are making a difference. The reality is, although the tea party movement helped Republicans take over the House of Representatives so that Democrats didn’t have free rein in Washington, most of the new Republicans elected to Congress haven’t followed through with their promises and have failed to make any kind of a positive difference.

Everybody in Washington assumes that interest rates will remain at artificially low levels for the rest of this decade. The interest rate that the U.S. paid on its total marketable debt in the month of June was only 2.38%. Exactly one decade earlier, in June of 2001, we paid 6.162% interest on our total marketable debt or 159% higher than current average interest rates. On August 15th we owe our next interest payment of approximately $30 billion. Imagine if that payment rises 159% higher to $77.7 billion or $932.4 billion annualized. Later this decade, interest rates will not only rise back to normal levels like we had in 2001, but will likely rise to artificially high levels to balance out the damage being created today from artificially low interest rates.

If this bill is approved by Congress and the President on Monday, it will avoid a short-term honest debt default but just about guarantee a default by inflation later this decade. There is about a 1 in 1,000 chance that future Congresses will stick with the spending cuts in this bill, but even if they do, rising interest payments will not only wipe out the $2.4 trillion in spending cuts, but they will add trillions more to future deficits and the national debt. A new Gallup Poll shows that 53% of Americans oppose raising the debt ceiling compared to only 37% who favor an increase. We pray that millions of Americans march to Washington tomorrow in protest of this bill and that millions more call, email, and fax their elected representatives in the morning demanding that they vote no.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us

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BTL Update 2011 July 30

Saturday, July 30th, 2011

Push Back Against FDA Growing

Two States Defy DC on No Child Left Behind

The Unintended Constitutional Mistakes of “Cut, Cap, and Balance”

Green agenda has parallels with excesses of communism

Busting Posse Comitatus: Military Cops Arrest Civilians in Florida City

New NASA Data Blows Gaping Hole In Global Warming Alarmism

NIA Exposes Debt Ceiling Truth

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Government is Ripping Off the People

Friday, April 8th, 2011

On Tuesday, Congressman Ron Paul appeared on MSNBC’s The Dylan Ratigan Show to discuss the budget, a possible government shutdown, and the continued fleecing of Americans by an out of control federal government.

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Reality Zone Unfiltered News 2011 January 15-21

Saturday, January 22nd, 2011

US: Giant rocket lifts off from Vandenberg Air Force Base in California carrying a secret spy satellite (the third of 6 that are planned). It is believed that the new satellite will be capable of reading car license plates.
DailyMail 2011 Jan 21 (Cached)

US: Congress has introduced a bill to repeal the ban on incandescent lights by 2012. Compact fluorescent lights save energy but they contain toxic mercury and are a potential health hazzard when broken.
Natural News 2011 Jan 21 (Cached)

Chinese President Hu, speaking in Chicago, says China is not a military threat and also denied that his country has a one-child policy. [Well, that settles that, doesn't it? Surely he wouldn't say anything that was untrue!]
DailyMail 2011 Jan 21 (Cached)

Australia: Global-warming myth makers claim that recent floods are the result of so-called “climate change”. Here is the historical proof that such claims are pure bunk. These charts show that floods of this magnitude are not unusual for that area and, in fact, were more common and severe in the 19th century.
WUWT Posted 2011 Jan 21 (Cached)

Spain: Government is pouring freshly created money into banks in hopes of warding off an international bailout. Billions of euros in previous bailouts have been ineffective. [As always, the influx of money out of nothing will create even more inflation for consumers.]
WSJ 2011 Jan 20 (Cached)

US: FDA is investigating a possible connection between flu vaccines and 36 seizures in young children that occurred within 24 hours of receiving the shots. [Don't expect much here. The FDA is more of a partner to Big Pharma than a regulator and likely will "find" that the problem was not the shots in general but a bad batch or some other temporary condition or that the number of adverse reactions is too small to worry about, so keep those kids coming for more. We shall see.]
Yahoo 2011 Jan 20 (Cached)

US: Supreme Court has denied hearing a case exposing corruption by lower-court federal judges. The proof against them is so clear that no one even tries to deny it. Yet, the Supreme Court has refused to hear the case, which has the effect of releasing them from conviction and, at the same time, condemning an innocent man.
Breitbart 2011 Jan 19 (Cached)

Goldman Sachs’ earnings fell by 53% in the 4th quarter and 37% overall in 2010 due to a reduction in bond trading and investment banking. (Investment banking involves acting as an agent for companies that need to raise capital from investors.) However, its own investing and lending segment showed a larger profit than last year. [This so-called profitable sector is the same one that was bailed out after suffering huge losses from high-risk loans. It's easy to show a profit when your losses are covered by taxpayers.]
Yahoo 2011 Jan 19 (Cached)

Goldman Sachs has 475 secret elite partners who stand to reap a windfall from 38 million stock options that were granted to them in 2008. [Options allow the holders to purchase stock at a stated price, usually very low, in anticipation of the stock being much more valuable at a future date. This method of compensation often is concealed from the public because it does not show up as salary or bonus. Among those to benefit are former Treasury Secretaries Hank Paulson and Robert Rubin.]
NY Times 2011 Jan 19 (Cached)

Obamacare has been repealed in the House but, likely, will be sustained the Senate and/or the President,  so this was largely a symbolic effort. Most Republicans want to reform parts of the law instead of abolishing it completely. [Neither the Right nor the Left in Congress has any intention of repealing Obamacare because they stand to collect an extra $345 billion a year with the new tax provisions. That's why we support State Nullification.]
Fox News 2011 Jan 19 (Cached)

US: 26 states have joined a lawsuit filed by Florida to challenge the constitutionality of Obamacare. [This is a good sign of public opposition but contains the seeds of its own defeat. The lawsuit says Obamacare is unconstitutional because it forces Americans to buy health insurance. However, if that provision is struck down, all the other provisions would remain, and funding would come from taxes and inflation instead of premiums. So this has the appearance of opposition but is without real effect. If the states are serious about abolishing Obamacare, they should simply nullify the whole thing under the 10th Amendment.]
Guardian 2011 Jan 18 (Cached)

Ireland’s central bank begins printing Euros [that's right, Euros] out of thin air to cover its debt. This will have an inflationary effect on the rest of the EU countries. [This seems strange, but appears to be not much different than having the money printed by the EU and then shipped to Ireland. It's all just an accounting trick anyway.]
Daily Bell 2011 Jan 18 (Cached)

US:  An air traveler at the Baltimore-Washington Airport declined to accept a full-body scan but was forced to walk through the machine anyway. He believes it was a psychological move to show that opt-outs cannot claim a “victory” over their authority.
InfoWars 2011 Jan 18 (Cached)

Hawaii: Natural farming, using compost and earthworms, has doubled the yield of a small farm in just two years – and no pesticides, herbicides, or chemical fertilizer are needed. There was a 30% decrease in water usage. [Even though most of us are not farmers, it is important that even city dwellers know that chemical fertilizers and pesticides are not necessary for our food supply.]
Staradvertiser 2011 Jan 18 (Cached)

Overpopulation time bomb is a myth, according to several recent scientific studies. The problem with global hunger is not that there is not enough food but that distribution is hampered by a holdback in technology.
The Independent 2011 Jan 18 (Cached)

City of Camden, New Jersey, lays off 17% of its employees, including police and firefighters, who warn that the city will become a “living hell.”. Public-safety workers and unions refused to take job-saving cuts, and the state is unable to bail out the city again (as it has for the past 2 generations).
Yahoo 2011 Jan 18 (Cached)

US: Department of Agriculture provides a $12 million secret bailout to Domino’s Pizza in a bizarre new partnership. The announced purpose is to promote “a cheesier pizza.” [How's that for the proper function of the state?]
Shatter Limits 2011 Jan 18 (Cached)

Chief climate scientist at NASA calls for Chinese-style dictatorship to fight global warming. He laments that the democratic process allows voters to obstruct the process. [Is anyone surprised? The global-warming myth is merely an excuse to establish a global dictatorship, and this fellow is just confirming it.]
Washington Times 2011 Jan 17 (Cached)

A study from the University of California found that all of the pregnant women in the test were contaminated with toxic chemicals, many of which have been banned in the US for decades. The source? Plastics, toys, personal-care products, and pesticide residue in food that is imported from other countries. Even though banned in the US, they can be imported with no problem. In addition, many toxic chemicals are still allowed in the US.
Natural News 2011 Jan 17 (Cached)

UK: A single mother, who was temporarily paralyzed by a fall, was told that her two-month-old baby (which was being well cared for by her sister) was to be put up for adoption by social services. The case workers claimed (with absolutely no evidence) that the mother may have been suicidal. The case has dragged on for 18 months after the mother’s total recovery. [This is only one case, but the details are painfully reminiscent of many similar cases that occur in every collectivist nation of the world where children are considered to be property of the state.]
Telegraph 2011 Jan 15 (Cached)

Here is a list of the top 10 prescription drugs linked to violent behavior, including homicide and suicide. Most are anti-depressants and attention deficit drugs. [Incidentally, these are some of the most highly prescribed drugs in history. Instead of outlawing guns, how about outlawing these killers?]
Time Posted 2011 Jan 15 (Cached)

Here is an article that contains astonishing excerpts from Air Force documents describing how the HAARP installation in Alaska (High Frequency Active Auroral Research Program), may create weather modification as a weapon. [When they speak of nanotechnology and particles in the atmosphere, be aware that the most efficient method of putting them there is through aerosol spraying from aircraft. We call them chemtrails.]
PPJ Gazette Posted 2011 Jan 15 (Cached)

See: What in the World Are They Spraying?

Montana is considering ‘Sheriffs First’ legislation requiring federal agencies like the IRS, FBI and ATF, to get written permission from local sheriffs to perform searches and seizures.
WND Posted 2011 Jan 15 (Cached)

US Mint reports a buying frenzy of physical silver within the first 12 days of January 2011. Gold sales also have jumped. [Ironically, the spot price of silver and gold dropped significantly shortly after this announcement. It appears that those who manipulate the market are making a last-ditch effort to push the demand back down. They do this by selling bullion contracts (not the bullion itself). If buyers decide to demand physical delivery, the game is over, and the speculators who have done this will be wiped out.]
ZeroHedge Posted 2011 Jan 15 (Cached)

US: Here is a list of the tax hikes that are in Obamacare. It is one of the largest tax increases in American history.
ATR.org Posted 2011 Jan 15 (Cached)

US: Patriot Act that allows the government to conduct warrantless searches, monitor private computer records, tap phone calls, and prevent you from knowing you are being spied on, has wide support in Congress and is expected to be renewed this month with little or no debate or fanfare. [This will be a test of the sincerity of those Tea-Party Republicans who recently were elected on their promise to uphold the Constitution.]
Huffington Post 2011 Jan 15 (Cached)

Genetically modified chickens have been created that developers say will not transmit avian flu to other birds. [That's good news, but developers don't say what negative effects to human health may come from eating the meat from these chickens. This is part of the current trend whereby GMO companies are trying to get farmers to grow only foods that they have patented, and they always justify this practice as, somehow, providing a benefit to mankind.]
PopSci Posted 2011 Jan 15 (Cached)

UK: Grandmother received swine flu vaccine and was told by her doctor that it would absolutely protect her from the flu. She did not have the flu at the time but died from swine flu two months later.
Natural News Posted 2011 Jan 15 (Cached)

California applies to the federal government for bankruptcy protection. Currently, states are prohibited from declaring bankruptcy, but a new law to change that is being considered. [If states can declare bankruptcy, they will be able to re-negotiate impossible-to-sustain employee pension plans and health-care contracts, which is why unions oppose the measure. For taxpayers, it would be a great relief.]
LA Times 2011 Jan 15 (Cached)

US Fish and Wildlife has agreed (only after being sued) to stop planting GMO crops on refuges in 12 Northeastern states. More lawsuits to stop the practice in other regions are being pursued. [This article says that, while farming is allowed on refuges, most have been converted to GMO crops because those were the only seeds farmers could obtain. A peek into the future?]
PEER Posted 2011 Jan 15 (Cached)

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ANALYSIS

Reports and commentaries that look beyond the news to identify historical facts and trends that must be understood to place the news into perspective. This is our “think-tank” section that makes it possible to anticipate future events.

Texas: Activist confronts Austin Chief Sustainability Officer as she confirms that the UN’s Agenda 21 program, which she supports, calls for reducing the population by 85%. She laughs when the issue is raised and says she is not concerned about that aspect of the program. [This is only one official out of thousands just like her in positions of government authority around the country, but be assured that she represents the norm, not the exception. These people are dead serious.]
YouTube 2011 Jan 16

Goldnomics: the value difference between cash and gold bullion. [You probably know most of this, but it is a good idea to take a refresher course from time to time.]
YouTube Posted 2011 Jan 15

Mike Adams and Farmer Brad discuss the impact of the misnamed Food Safety Bill: Many small farmers will go out of business due to extensive paperwork and FDA regulations; food prices will increase; and more food will be imported from other countries. [Imported food bypasses most safety regulations, so Americans will be at greater risk than before. Incidentally, small farms have never been the source of major outbreaks.]
Natural News Posted 2011 Jan 15

This is an excellent animation that explains the illusion of the “American Dream” and fiat money. [Caution! Some of the historical information is not accurate. For example, the story that JFK was assassinated because of his stand against the Federal Reserve cannot be substantiated. In fact, Kennedy always was a friend of central banking (See The JFK Myth). Nevertheless, because of the high quality of this program and the fact that the general theme is correct, we recommend it highly.]
YouTube Posted 2011 Jan 15

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Freedom Force DISINFORMATION

When the enemies of freedom cannot hide or deny the truth, their disinformation agents proclaim it boldly but mix it with questionable or offensive claims so people will recoil from the whole, like mixing garbage with groceries to stink up the bag and cause us to throw out the good with the bad. News items in this section may be in that category.

EU Times story on “toxic-oil spill rains” correctly spotlights damage from the Gulf-oil spill but makes claims that it cannot be substantiated, thus, undermining genuine concerns.
Rense.com Posted 2011 Jan 18 (Cached)

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First Amendment Rights Denied by Courts

Wednesday, December 8th, 2010

Bob Schulz
We The People Foundation

On Monday November 29 2010, the Supreme Court of the United States entered the following orders:

Case 10-446
KERCHNER, CHARLES, ET AL. V. OBAMA,
PRESIDENT OF THE U.S., ET AL.

The petition for a writ of certiorari is denied.

Case 10-560
SCHULZ, ROBERT L. V. FEDERAL RESERVE SYSTEM, ET AL

The petition for a writ of certiorari is denied.

Both cases were controversies involving subject matter critical to the primary governmental functions and intent of law set forth in the Constitution for the United States.

Kerchner was defending his individual Right to a President that is a natural born citizen.

Schulz was defending his individual Right to a government that does not give or lend public funds to private corporations for definitively private purposes (i.e., the $700 billion AIG and TARP financial bailouts), a power not inherent in the People, much less transferable or granted by the People to the Government.

The Judicial Article III of the Constitution guarantees Kerchner and Schulz that the merits of their cases would be heard by the independent, federal courts (“the judicial Power shall extend to all cases, in law and equity, arising under this Constitution ..”).

However, the lower courts violated Article III, summarily dismissing the cases for “lack of standing,” on the (erroneous) ground that because the injuries to Kerchner and Schulz were no different from the injuries suffered by the rest of the people in the country, neither Schulz nor Kerchner’s Petitions to cure constitutional torts could proceed. By dismissing the cases on “lack of standing”, the courts essentially suggest that Kerchner and Schulz should have directed their Grievances to Congress – as if the issues raised were political questions and America was a pure democracy with rights granted by the will of the majority, rather than a Republic with unalienable, individual, Natural Rights, guaranteed by written Constitutions, enforceable through an independent Judiciary.

Kerchner and Schulz had Petitioned the Supreme Court of the United States to overrule and reverse the “no standing” rulings of the lower courts and send the cases back to the lower courts for a hearing on the merits of the constitutional challenges. In denying both Petitions for Certiorari and avoiding a judicial examination of the merits for no other discernable reason than political eagerness, the Supreme Court added a ruthless sneer to the Grievances.

About all that can be said about the Kerchner and Schulz cases is we can add “presidential eligibility” and “corporate welfare” to the dung heap of other desecrations of our sacred Charters of Freedom, including but by no means limited to violations of the war, money, taxes, privacy, property, immigration, petition and sovereignty clauses — all of which have been the subject of repeated Petitions and court challenges that have been either ignored by government officials or tersely dismissed by abuses of one judicial doctrine or another.

Unfortunately, this leaves us – the People – with but one irrefutable conclusion: the Constitution is NOT now serving any meaningful purpose. The rule of law has been replaced by the rule of man and whim. The Constitution has become a mere menu of words, phrases and ideas which the government may choose to define or ignore at its sole will and discretion.

The way the system is working is in sharp contrast to the way it was designed to work. Ignoring Article V’s prescriptions for orderly change, our elected and appointed officials are now doing whatever they think best, literally unrestrained by either the written words of the Law itself or the intent behind those words – i.e., the set of principles, prohibitions and mandates proclaimed to govern them - the Constitution for the United States, the Supreme Law of the Land.

Rather than three independent, co-equal branches of a highly-limited federal Government, each designed to be a check and balance on the other two, keeping them in their constitutional places, with the People possessing the ultimate Power, we now suffer the branches cooperating in decisions to deny the People their creator-endowed, unalienable Rights to life, Liberty, property and the pursuit of happiness.

Since 1995, People have been attempting to hold the Government accountable to the Constitution by exercising the little-known, unalienable Right guaranteed by the last ten words of the First Amendment, “.and to Petition the Government for a Redress of Grievances”.

While this Right was placed in the First Amendment as the PRIMARY means through which the power of the People to directly hold the Government accountable could be exercised, peaceably, our modern-day existence of materialism and apathy, public largesse for votes, and routine usurpation of power by the Government, has left the “capstone Right” of the Bill of Rights dormant and all but forgotten. Ask any attorney to cite the five rights guaranteed by the First Amendment and most will not mention the Right to Petition the Government for a Redress of Grievances.

We were first motivated by the knowledge that a departure from the Constitution in one instance becomes a precedent for a second, that second for a third, and so on, until the People are reduced to misery and suffering.

We knew, “The time to guard against corruption and tyranny is before they shall have gotten hold of us. It is better to keep the wolf out of the fold than to trust to drawing his teeth and talons after he shall have entered.” Thomas Jefferson. Notes on the State of Virginia, 1782.

We know that each violation of the Constitution has a ravaging effect on America, Her People, economy, reputation and security, and that the whole of the devastation would be greater than the sum of the parts.

We know that an act of tyranny anywhere is a threat to Freedom everywhere.

We repeatedly Petitioned the Government to remedy the following violations and abuses of the Constitution and the Rights of the People

1.       the $ 20 billion bailout of Mexico in 1995 without approval by Congress; and

2.       the bombing of Yugoslavia in 1999 after Congress refused to authorize it; and

3.       the direct, un-apportioned tax on labor; and

4.       the withholding of earnings from the paychecks of workers; and

5.       the Federal Reserve System’s fiat, debt-based currency; and

6.       the decision to invade Iraq by the President, rather than Congress; and

7.       the USA Patriot Act; and

8.       the federal gun control laws; and

9.       the failure of Presidents to enforce the immigration laws; and

10.    the movement toward a North American Union; and

11.    the counting of votes in secret by machines; and

12.    the eligibility to be President if both parents are not U.S. citizens; and

13.    the $ 85 billion bailout of AIG; and

14.    the $ 700 TARP bailout.

The result has always been the same: utter silence and failure to respond by every official in the Congress and Executive, and outright dismissal of any and all Petitions pursued through the Judiciary. However, under well established U.S. law, silence is admission, when a public official has a duty to respond and fails to do so.

The People further decided to test the attitude of the Judiciary specifically challenging the nature of the First Amendment Petition clause itself. On July 19, 2004, the People filed a lawsuit asking the federal Court to formally declare — for the first time in history — the Constitutional meaning of the last ten words of the First Amendment.  The title of this historic case (sponsored by the We The People Foundation) was, We The People v. United States.

The Court was asked to answer two fundamental questions: 1) whether the Government is obligated under the First Amendment to respond to Petitions for Redress of violations of the Constitution; and 2) whether the People possess the Right to retain their money until those Grievances are redressed.

Obviously, the correct answer to the first question is “yes” – the Government is obligated to respond. To speculate otherwise would be to call into question why the clause was even included as part of the First Amendment. It is noteworthy that the Petition clause is the only part of the Amendment which articulates a specific and direct form and process of communication from the People to the Government, thereby reiterating the potent principle from the Declaration of Independence that defines government as a servant of the People. Finally, in the words of the Supreme Court of 1803, “It cannot be presumed that any clause in the constitution is intended to be without effect….” Marbury v. Madison, 5 U.S. 137, 174.

The correct answer to the second question is also “yes” – the People must be able to enforce their Rights, or they essentially have none. The Right to withhold money as a peaceable means for the People to “weigh in” on and Redress unconstitutional governmental acts arises from the Founding Fathers and their sound reasoning as to how a Republic must operate to ensure the Rights of a Free People.

Indeed, the Right of Petition to secure Redress against government transgressors has evolved as the cornerstone of the law of Western Civilization finding its first written citation as part of Magna Carta in 1215 A.D.

On October 6, 2006 oral arguments were heard by the United States Court of Appeals regarding the nature of the Right to Petition.

Traditionally, Appeals Courts issue their decisions within 4-6 weeks following oral arguments. However, the decision in the Right to Petition lawsuit was issued more than seven months after oral arguments. Why the delay?

In hindsight, we now know activities were quietly taking place within the other two branches of the Government that appear to have directed the verdict in our case.

Rather than work in good faith with the People’s concerns by responding directly to our Petitions for Redress, the Government chose to “clamp down,” through a (constitutionally abhorrent) tripartite treaty – a tripartition, divided among the three branches, for the purpose of (unlawfully) colluding to deny the People their First Amendment Right to hold the government accountable to the Constitution. These actions were taken in a manner to attract the least attention possible.

First, in December, 2006, the 109th Congress passed the Tax Relief and Health Care Act of 2006.” (Summary, H.R. 6111) Please note the title. This Act was meant to retroactively extend tax credits that had expired in 2005: Sounds good for the People – but look again.

Tucked away in the Act was a provision (Title III — Health Savings Accounts, Section 407) (see full text) that authorized the (Executive Branch) Treasury Department to make law (i.e., unconstitutionally) to administratively prescribe a list of “specified frivolous positions,” and impose a penalty of $5,000 on any person who uses a “specified frivolous position” as a ground of reasoning for retaining his money from the Government. Disturbingly, there is no definition of “frivolous” in the Act.

Then, on March 15, 2007, the Treasury Department published Notice 2007-30, a list of “Frivolous Positions”, again, without defining “frivolous.” Included on the frivolous list – i.e., subject to a $5,000 penalty, among numerous other well-researched and proven positions, is Government’s refusal to respond to First Amendment Petitions for Redress of Grievances. (See paragraph (9)b of the Notice).

In other words, citizens who raise the issue of government’s failure to respond to First Amendment Petitions of Redress are subject to a $5,000 penalty. 

In short, all the “positions” cited in the Treasury Notice (including the full exercise of the First Amendment Right to Petition) are deemed “frivolous” simply because Government says so.

Then, on May 8, 2007, the U.S. Court of Appeals for the DC Circuit finally issued its decision in We The People v. United States (seven months after it heard oral argument), ruling that the Government is not obligated to respond to the People’s First Amendment Petitions for Redress and, therefore, the People do not have the Right to retain their money until the Government responds.

The Judiciary fell into line with the “verdict” directed by the actions of the Legislative branch on December 9, 2006, and the Executive branch on March 15, 2007. A ruling that abused the judicial doctrine of stare decisis by relying on a principle of law laid down in two irrelevant cases.

It is difficult to come to any other conclusion but that there has been a tacit assent by the three branches of the central government to actively thwart and quash any attempt by the People to enforce their Right to hold the Government accountable to the rest of the Constitution, even as the Government has patently refused to honor its obligation to respond to the People’s First Amendment Petitions for Redress.

The People of America should roil when they fully realize what effect these actions have had upon their Freedom.

A Petition for Certiorari (w/ Appendix) was filed, but the Supreme Court refused to hear the case which could have recognized the People’s Right to peaceably hold the Government accountable to the Constitution, thereby shifting the ultimate power in our society from the Government back to the People, where it was meant to reside in the first place.

A Scheme Well-Concealed

Who among us knew that a very lengthy bill, the “Tax Relief and Health Care Act of 2006,” widely popular because it retroactively extended for two years, hundreds of tax credits that had expired in December 2005, which was introduced and passed both houses of Congress in three days in December 2006 (with no record of who voted for or against the bill) actually included a buried provision that authorized the Executive branch to prescribe a list of “specified frivolous positions” and to fine anyone $5,000 if they cite any of those positions as a reason for retaining their money? The Table of Contents for the Act itself runs 25 pages.

Who among us knew that on March 15, 2007, the IRS published Notice 2007-30 containing a list of “specified frivolous positions,” and that the list included “the Right to Petition the Government for Redress of Grievances”, among many others and now being used against citizens who are standing up and acting on their beliefs?

Who among us was able to see the connection between the acts of the Congress and Treasury and the May 8, 2007 decision by the Court in We The People v. United States, declaring the Government is not obligated to respond to the People’s Petitions for Redress of constitutional torts and the People have no Right to peaceably enforce their Rights?

What great discords and suffering might have been prevented, especially now, in these days of great national distress and economic turmoil had a government founded of the People, by the People, and for the People, been willing to openly answer the questions asked by the People in their Petitions for Redress.

It is clear that we, the People are up against unjust government and laws. If we are to maintain the great American experiment, it is essential for the leaders of every group of “Freedom Keepers” to come together and meet face-to-face, with great haste, to develop a “Liberty Matrix” and a peaceful course of action for the Free to defend the greatest governing documents ever given to mankind and with the recollection that the cause of America is still the cause of the World.

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Reality Zone Unfiltered News 2010 October 30-November 5

Saturday, November 6th, 2010

UN criticizes U.S. for human-rights violations. Ironically, the most vocal critics are from nations with the worst record on human rights. The criticism is based on statements contained in a report submitted to the UN last year by President Obama. This is preparing the way for the U.S. eventually to be subject to UN sanctions.
Yahoo 2010 Nov 5 (Cached)

AT&T moves into health business. Anticipating that government will take over the medical system (regardless of which party is in power) AT&T is developing wireless services to monitor every detail of health care – such things as video links to replace doctor visits, pill-bottle caps that detect when they are opened, and slippers that monitor patient activity. Here is another new industry that will profit from government control and personal micro-management. [Ever wonder why large corporations favor collectivism?]
GTB 2010 Nov 5 (Cached)

How to build a house out of what other people throw away. Dan Phillips, builder, craftsman, and humanitarian helps working poor to build their own homes from materials destined for the landfill. See it – and believe it.
YouTube posted 2010 Nov 5

AIG received $100 billion bailout 2 years ago and is 80% government owned. Despite a $2.4 billion loss for the 3rd quarter, now it plans to pay back the bailout with an accounting trick similar to that used with banks and auto companies: They will pay with stock which the government will offer for sale to the public. [We predict that, eventially, it will be discovered that the Fed and the Treasury will have quietly injected funds into the financial industry to enable favored players to buy the stock at unrealistically high prices – so the government can claim the bailout program worked after all. In essence, the government will create the money to pay itself back. Note the spin in the article's headline: "AIG cleans house." Cleaning house is good, right? But, in this case it's more like selling off the furniture, carpets, appliances, plumbing, light fixtures, wiring, and roof shingles to make one more payment to the mortgage holder.]
Yahoo2010 Nov 5 (Cached)

US: Republicans are not even in office but already are reneging on their promise to repeal ObamaCare. Now they are talking about reforming it and only taking out its bad features. [If they actually did try to repeal it in its entirety, there would be a filibuster in the Senate to block it, and Obama still has veto power. So the issue will carry forward to the next election.]
Yahoo 2010 Nov 4 (Cached)

US: Ron Paul discusses the Federal Reserve’s new quantitative easing announcement and what he and his newly elected son want to do about it. [This segment includes a lively exchange between the news commentator and Judge Napolitano. Great video!]
YouTube 2010 Nov 3

US: Republicans ride voter unrest and take over the House. They promise to roll back the size of government. [How fast people forget! Republicans always make that promise, but it never happens. Both parties are controlled by collectivists who thrive on big government.]
Yahoo 2010 Nov 3 (Cached)

If you think the concept of chemtrails is ridiculous and that no one would be interested in dumping chemicals into the atmosphere, take a look at this. Here is a list of 151 patents issued by the U.S. Patent Office for stratospheric aerial spraying programs. [The inventors and corporations holding these patents are not hobbyists.]
Sovereign Independent 2010 Nov 3 (Cached)

US: Fed announces ‘Quantitative Easing’ and will buy $600 billion of government debt to keep interest low. Great news for banks, sad news for citizens who must pay for this through more taxes and inflation.
ClusterStock 2010 Nov 3 (Cached)

Ireland: Students surround the Ministry of Finance in a massive protest against economic policies. [This is widely viewed as a sign that the Irish are rejecting the collectivist policies of their governments, but that is not the case. Watch closely and you will see that these young demonstrators are organized by a Leftist organization. Read their signs, such as: "Fight for free education - Make the rich pay." This is merely street theater to perpetuate the Left/Right Paradigm. True reform cannot come from that.]
Zero Hedge 2010 Nov 3 (Cached)

European Commission has funded development of a traffic camera that can detect 5 different driver offenses, including not wearing a seatbelt and tailgating. It is being field tested in Finland. [Motoring organizations say they approve of the device so long as it is not used primarily to raise money. What's wrong with these people? Of course it will be used primarily to raise money. Duuh!]
Guardian 2010 Nov 2 (Cached)

US: Major TV networks ban a TV commercial about the US national debt because it is too controversial. In it, a Chinese professor tells students that America has turned its back on the principles that made it great and borrowed too much money. He says: “We own most of the debt, so now they work for us.” [Is that controversy or is it truth? Either way, why don't TV networks want Americans to see this?]
American Dream 2010 Nov 2 (Cached)

California Governor Schwarzenegger bans welfare cards at medical marijuana shops, Bingo parlors, and psychics. [Anyone who uses welfare payments for such things is not very needy. Welfare is not charity but vote buying. California refuses to reform its welfare system because it would lose matching federal funds. Collectivism cannot be cured.]
Yahoo 2010 Nov 2 (Cached)

General Motors will try to sell $10 billion of new stock so it can shed government control by buying back some of the stock it previously gave the government in return for bailout. [We shall see if the public is willing to buy and we will be looking closely for evidence that the government itself will create the money to make that possible. It would not be the first time they created new debt to pay off old debt and then claim progress.]
Yahoo 2010 Nov 1 (Cached)

US: Department of Homeland Security is rapidly purchasing emergency supplies like freeze dried foods and will be distributing them regionally over the next 90 days. There is no explanation for the sudden rush.
SHTF Plan 2010 Nov 1 (Cached)

BPA, a common chemical used in consumer products and food packaging, is a neurotoxin and can cause cancer. Finally it is to be removed from several well-known food brands. This is because 20 states have introduced legislation to limit its use.
Independent 2010 Nov 1 (Cached)

ObamaCare may provide birth control, including pills and sterilization, at taxpayers’ expense. Unwanted pregnancy is viewed as an illness to be prevented. [Much debate will follow on the ethics of this issue but the Administration is firmly behind it.]
Fox News 2010 Nov 1 (Cached)

US: President of Allied Pilots Association says pilots should not go through whole-body scanners because of danger from frequent exposure to radiation. He says also that the pat-down procedure is demeaning to pilots so they should have a private location for that. [It is not demeaning to anyone else? This whole thing is disgusting because the alleged threat is fabricated to keep the public in a state of fear so they will meekly accept continued loss of liberty supposedly to protect them from terrorism.]
Dallas News 2010 Nov 1 (Cached)

Canadian city of Waterloo votes to get rid of fluoride in their water.
YouTube 2010 Oct 30

UN asks nations now engaged in geo-engineering to honor a moratorium until such time as the UN itself is recognized as the principle authority to direct it. [This declaration is further proof that geo-engineering already is underway even though government officials have denied it to the public. Do not be fooled into thinking that world leaders at last have recognized the insanity of geo-engineering. It means only that the UN wants to be the controlling center of it. Since it will bring political power and massive funding, the UN will enthusiastically embrace all aspects of it while issuing comforting words about the need for caution. The UN's honesty or accuracy in this matter will be no better than with its fraudulent support of the global-warming myth, which is the underlying justification for geo-engineering.]
ETC Group Posted 2010 Oct 30 (Cached)

Arizona’s controversial immigration bill was heavily influenced by a private company that runs prisons on contract with Immigration and Customs, the US Marshall’s Office, and the Federal Bureau of Prisons. This year, Arizona’s Governor set aside $98 million for private prison corporations. [Regardless of one's opinion of the merits of Arizona's immigration bill, it was largely inspired by the profit motive.]
Immigration Impact Posted 2010 Oct 30 (Cached)

Wall Street Journal exposes trashing of “conservatives” in the mainstream media. [What is said is true, but the WSJ also is part of the mainstream media and represents the Republican voice in politics. In the past, it has trashed "liberals" and Democrats. Note in this article the attempt to implant the idea that the Tea Party movement and the Republican Party are synonymous. This is just more theatre to keep the masses pre-occupied with the Republican vs. Democrat ploy in which voters are never given a real choice on important issues.]
WSJ Posted 2010 Oct 30 (Cached)

==============================

ANALYSIS

Reports and commentaries that look beyond the news to identify historical facts and trends that must be understood to place the news into perspective. This is our “think-tank” section that makes it possible to anticipate future events.

Dr. David Janda explains how health care will be rationed in 2013 and how the law requires that older people will be denied treatment. (The formula is: cost of care divided by number of years the patient will benefit.) Another requirement is that all treatments will be determined by a federal medical board. If a doctor fails to follow that treatment, he will be fined $100,000 for the first offense. For a second offense, he will be imprisoned. And there is more. You must see this.
YouTube Posted 2010 Oct 30

While we have been debating the issue of legalizing Marijuana based on freedom vs. health and ethical arguments, there has been a much deeper issue totally ignored by mainstream media. [This article explains why elitists like George Soros and corporations like Monsanto are supporting the legalization movement. It is because hemp has strong commercial and medical characteristics they plan to genetically modify so they can patent the seeds. They plan to monopolize these new markets through government control of hemp production; but first it has to be made legal. Here is the amazing story. The problem lies, not with legalizing hemp, but with allowing corporations to genetically modify and patent it.]
RadicalJusticeMan Posted 2010 Oct 30 (Cached)

“Crude Awakening,” An investigation of the aftermath of the Gulf oils spill uncovers a series of cover-ups instead of a long-term fix. Delayed effects may turn out to be worse than what has been seen so far.
Journeyman Pictures 2010 Oct 28

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Inflating War: Central banking and militarism are intimately linked

Wednesday, July 28th, 2010

Thomas DiLorenzo

One can say without exaggeration that inflation is an indispensable means of militarism,” Ludwig von Mises wrote. “Without it, the repercussions of war on welfare become obvious much more quickly and penetratingly; war weariness would set in much earlier.”

This explains why American politicians have always resorted to the legalized counterfeiting of central banking to finance wars, the most expensive of all government programs. If citizens had a clearer picture of the true costs, they would be more inclined to oppose non-defensive intervention and to force all wars to hastier conclusions.

Government can finance war (and everything else) by only three methods: taxes, debt, and the printing of money. Taxes are the most visible and painful, followed by debt finance, which crowds out private borrowing, drives up interest rates, and imposes the double burden of principal and interest. Money creation, on the other hand, makes war seem costless to the average citizen. But of course there is no such thing as a free lunch.

As a general rule, the longer a war lasts, the more centrally planned and government-controlled the entire economy becomes. And it remains so to some degree after the war has ended. War is the health of the state, as Randolph Bourne famously declared, and the growth of the state means a decline in liberty and prosperity.

As Robert Higgs wrote in Crisis and Leviathan, among the effects of World War I were “massive government collusion with organized special-interest groups; the de facto nationalization of the ocean shipping and railroad industries; the increased federal intrusion in labor markets, capital markets, communications, and agriculture; and enduring changes in constitutional doctrines regarding conscription and governmental suppression of free speech.”

Inflationary war finance inevitably leads to calls for price controls, which inflict even greater damage on the private enterprise system by generating shortages of goods and services, which are falsely blamed on capitalism. The state uses this excuse to grant itself even greater central-planning powers. Inflating the currency as a method of war finance is often a first step in the adoption of what is essentially economic fascism.

Paper and printing were invented in China, but American politicians were the first to use government paper money. It was adopted by the colonial government of Massachusetts in 1690. As Murray N. Rothbard wrote, the Massachusetts government was “accustomed to launching plunder expeditions against the prosperous French colony in Quebec.” The loot was typically used to pay mercenary soldiers, but when one of the expeditions failed and the soldiers threatened mutiny, the Massachusetts government printed 7,000 British pounds in paper notes to pay them. The government promised to redeem the paper money in gold or silver, but took 40 years to do so. Meanwhile, the public was so suspicious of the notes that they depreciated by 40 percent in the first year.

By 1740, every colony except for Virginia had followed Massachusetts’ lead in issuing fiat paper money. The results were dramatic inflation, boom-and-bust cycles, and depreciated currency.

During the Revolution, a form of centralized banking was adopted when the Continental Congress issued “the Continental” in 1775. Because it was not backed by anything of value, the Continental depreciated so severely that it was virtually worthless by 1781. “Not worth a Continental” became a popular slang.

Some of the states attempted to deal with the inflation caused by the massive printing of Continentals with price-control laws. The predictable effect: shortages so severe that George Washington’s army almost starved in a field in Pennsylvania. The situation became so desperate that the Continental Congress issued a resolution on June 4, 1778 urging all the states to abolish their price-control laws: “Whereas it hath been found by experience that limitations upon the prices of commodities are not only ineffectual for the purpose proposed, but likewise productive of very evil consequences – resolved, that it be recommended to the several states to repeal or suspend all laws limiting, regulating or restraining the Price of any Article.” Within three months, “the army was fairly well provided for as a direct result of this change in policy,” write Robert Schuettinger and Eamonn Butler in Forty Centuries of Wage and Price Controls: How Not to Fight Inflation.

Despite the economic calamities caused by America’s first foray into centralized control of the money supply, at the end of the Revolutionary War the nation’s first central bank – the Bank of North America – was created, with defense contractor/congressman Robert Morris implanted as its president. Centralized banking might have been ruinous for the general public, but political insiders like Morris profited handsomely. The bank was given a monopoly license to issue paper currency, and it used most of its newly created money for loans to the central government. In so doing, it inflated its currency so rapidly that within one year the market lost all confidence in the bank and it was privatized.

Alexander Hamilton was the real founding father of central banking, as the Federal Reserve Board declares in one of its publications. His Bank of the United States (BUS), established in 1791 after a momentous debate between Hamilton and Jefferson over its constitutionality, was partly intended to finance “sudden emergencies” like war, in Hamilton’s own words. He rejected Washington and Jefferson’s foreign policy of commercial relations with all nations, entangling alliances with none. Instead, he advocated a permanent military establishment complete with a large navy and standing army that would pursue “imperial glory.” As historian Clinton Rossiter explains, “Hamilton’s overriding purpose was to build the foundations of a new empire.”

Hamilton praised public debt as a “blessing” and complained to George Washington, “We need a government of more energy!” Jefferson, on the other hand, opposed both a large public debt and a national bank, arguing, “the perpetuation of debt, has drenched the earth with blood” – a reference to European monarchs’ endless wars of conquest funded by public debt.

Hamilton’s Bank of the United States ran up 72 percent inflation in its first five years and created such economic instability that its 20-year charter was not renewed by Congress in 1811.

Then came the senseless War of 1812. There was no central bank, but the federal government still devised a way to monetize the war debt. It encouraged the creation of dozens of private banks, then in 1814 declared a “suspension of specie payment.” That is, banks were not required to redeem their paper currency in gold or silver. Thus, under the direction of the U.S. Congress, banks were allowed to inflate their currencies at will for two-and-a-half years as a means of monetizing the war debt, thereby disguising the costs of the conflict to the public. Inflation during the war years averaged about 35 percent.

This was exacerbated when the BUS was resurrected in January 1817 and empowered to create a national paper currency, purchase public debt, and receive deposits of U.S. Treasury funds. Rothbard explained the politics in his History of Money and Banking in the United States:

The Second Bank of the United States was pushed through Congress … particularly by Secretary of the Treasury Alexander J. Dallas … a wealthy Philadelphia lawyer [and] close friend, counsel, and financial associate of Philadelphia merchant and banker Stephen Girard, reputedly one of the two wealthiest men in the country. … Girard was the largest stockholder of the First Bank of the United States, and during the War of 1812 Girard became a very heavy investor in the war debt of the federal government. … [A]s a way to unload his public debt, Girard began to agitate for a new Bank of the United States.

The Second Bank of the United States “launched a spectacular inflation of money and credit,” writes Rothbard, coupled with a great deal of fraud. It promptly created the “Panic of 1819,” the first real depression in American history. For the first time there was large-scale unemployment in cities such as Philadelphia, where employment in the manufacturing of handicrafts fell from 9,700 persons in 1815 to only 2,100 in 1819.

After nearly 20 years of inflation, fraud, political corruption, and boom-and-bust cycles caused by the Second Bank of the United States, President Andrew Jackson heroically vetoed the bill to recharter the Bank in 1834, and it went out of business. But the Hamiltonian nationalists did not. They would wage a political crusade for the next two decades as members of the Whig and Republican parties to inflict central banking on the nation once again.

They finally succeeded during the Lincoln administration with the Legal Tender Act of 1862, which empowered the secretary of the Treasury to issue paper “greenbacks” that were not redeemable in gold or silver. The National Currency Acts of 1863 and 1864 created a system of nationally chartered banks that could issue bank notes supplied to them by the new comptroller of the currency. The Acts also placed a 10 percent tax on competing state bank notes to drive them out of business and establish a federal monetary monopoly.

The predictable effect was massive inflation, with the greenback dollars so devalued that within one year they were worth only 35 cents in gold. All of the negative economic effects of inflation – devaluation of private wealth, unfair redistribution of income from creditors to debtors, and hindrance to rational economic calculation – damaged the Northern war effort, but not as much as that of the South. The North funded most of the war with public borrowing; the South funded most of its wartime expenditures by printing Confederate dollars. Consequently, inflation in the Confederacy averaged more than 2,200 percent per year.

The nationalization of the money supply created an engine of inflation – and a powerful lobbying force to advocate that it keep running. Northern manufacturers realized that during periods of inflation, domestic currency tends to depreciate faster than prices are rising. A falling dollar makes domestic goods cheaper and the price of imports higher. Henceforth, they became a powerful political force in favor of an even further centralization of banking. Meanwhile, the heavily indebted railroads realized that inflation cheapened their debts, so they allied with manufacturers as a permanent lobby for inflation.

These special interests joined the political coalition that created the Federal Reserve Board in 1913, which became an important source of finance for America’s disastrous participation in World War I four years later. The Fed did not just print greenbacks, as was the case during the Civil War. It printed enough money to purchase more than $4 billion in government bonds that were used to finance the war. The amount of money in circulation doubled between 1914 and 1920 – as did prices. This was an enormous hidden war tax on the American people: wealth was cut in half, along with real wages, and just about everything consumers purchased became more expensive.

The boom created by the Fed’s war financing inevitably caused a bust – the Depression of 1920, the first year of which was even worse than the first year of the Great Depression of the 1930s. Gross domestic product declined by 24 percent from 1920-21, while the number of unemployed Americans more than doubled, from 2.1 million to 4.9 million. The Great Depression of 1920 only lasted one year, however, thanks to President Warren Harding’s inspired policy of cutting both government spending and taxes dramatically.

In the wars that have followed, central-bank financing has inflicted essentially the same kind of damage on American society: inflation, economic chaos, reduced real wages, price controls and other government interventions, and ideological attacks on capitalism rather than the real culprit, the Fed.

Adam Smith recognized the advantage of financing wars with taxes rather than public debt when he wrote, “Wars would in general be more speedily concluded, and less wantonly undertaken. The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and the government, in order to humor them, would not be under the necessity of carrying it on longer than it was necessary to do so.” Central-bank inflation renders the costs of war even more invisible than debt financing does and is therefore even more disastrous for the American public.


Crisis and Leviathan: Critical Episodes in the Growth of American Government
- Robert Higgs

Higgs, a political economist, analyzes how the American federal government has come to exercise so much control over individuals and the marketplace in this century. Essentially he proposes that government control, which increases during a war or economic depression, continues after the crisis, with each increase influencing the prevailing ideology, making further increases more acceptable to the public. The process involves government taking on new functions more than expanding traditional ones. Because of this ratchet-like movement toward ever bigger government, Higgs is somewhat pessimistic about the survival of individual rights and a free society.


A History of Money and Banking in the United States: The Colonial Era to World War II
- Murray N. Rothbard
Rothbard employs the Misesian approach to economic history consistently and dazzlingly throughout the volume to unravel the causes and consequences of events and institutions ranging over the course of U.S. monetary history, from the colonial times through the New Deal era. One of the important benefits of Rothbard’s unique approach is that it naturally leads to an account of the development of the U.S. monetary system in terms of a compelling narrative linking human motives and plans that often-times are hidden, and devious, leading to outcomes that sometimes are tragic. And one will learn much more about monetary history from reading this exciting story than from poring over reams of statistical analysis. Although its five parts were written separately, this volume presents a relative integrated narrative, with very little overlap, that sweeps across three hundreds years of U.S. monetary history.

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U.S. National Debt and Inflation

Tuesday, June 22nd, 2010

National Debt

The official U.S. national debt has just surpassed $13 trillion. This does not include the debts of Fannie Mae and Freddie Mac, which are now backed by the Federal Government. Once you include Fannie/Freddie’s debts of $6.3 trillion, our real national debt is now $19.3 trillion. The U.S. also has $60 trillion in unfunded liabilities for Social Security, Medicare and Medicaid, which bring our total obligations to $79.3 trillion or about 5 1/2 times our gross domestic product (GDP) of $14.6 trillion. With consumer spending now making up 71% of our GDP (compared to the long-term average of 65%), it is impossible for the U.S. to ever pay its national debt and unfunded liabilities through taxation.

Total U.S. tax receipts in 2009 were only $2.105 trillion, less than the $2.112 trillion Americans received from the government last year in the form of transfer payments for Social Security, unemployment compensation, welfare, and other entitlement programs. The U.S. government had a budget deficit in fiscal year 2009 of $1.4 trillion, which is projected to reach $1.6 trillion in fiscal year 2010. Congress recently raised our national debt ceiling to $14.3 trillion, which we will easily hit in less than one year.

It took 25 years for our official national debt to double from $257 billion in 1950 to $533 billion in 1975. On September 30th, 2003, the U.S. ended fiscal year 2003 with a national debt of $6.78 trillion. This means that a few months from now, the latest doubling of our national debt will have occurred in just 7 years! Our official national debt is now growing more than 3 1/2 times faster than decades ago.

In April of 2010, the U.S. paid $22.48 billion in interest payments on our national debt for an interest rate on our marketable debt of only 2.498%. Just three years earlier in April of 2007, our total marketable debt interest rate was 4.963% (almost double). We will inevitably see our marketable debt interest rate rise back up to 5%, which will cause our annual interest payments on our national debt to rise above $500 billion or 23% of projected 2010 tax receipts of $2.165 trillion.

Inflation

Today, the average American’s net worth (adjusted for real inflation) is down to year 1970 levels. In terms of income, average hourly earnings in the U.S. is now at a record nominal high of $18.99; but adjusted for real inflation, hourly earnings is now about half of what it was in the early 1970s. Americans have experienced a dramatic decline in their standard of living since 1970.

The Federal Reserve has expanded its monetary base from $873.8 billion in September of 2008 to its current level of $2.036 trillion. U.S. financial institutions now have over $1.045 trillion in excess reserves, compared to only $59.5 billion in excess in September of 2008. Banks currently have their excess reserves parked at the Fed where they are earning interest. Based on the Bureau of Labor Statistics’ (BLS) latest CPI report, the current year-over-year U.S. price inflation rate is 2.02%.

Taking into account how the Consumer Price Index (CPI) understates inflation, we believe the real rate of U.S. price inflation is currently 5.02% to 6.02%. We doubt that banks will want to keep their $1.045 trillion in excess reserves parked at the Fed for much longer earning 0.25% interest, when based on the real rate of inflation, those dollars are losing about 5% of their purchasing power on an annualized basis by sitting there.

Eventually, these banks will be forced to seek a higher return than what the Fed is paying them. As these dollars get lent out and enter the money supply, they will multiply through our fractional reserve banking system, creating a huge surge of price inflation.

Entitlements

Americans are more dependent on the government than ever and will continue to rely more heavily on government entitlements. There are now 40.2 million Americans on food stamps up 21% from one year ago. That is more than 1/8 of the U.S. population. Food stamp usage has increased for 16 consecutive months and 43% of Americans on food stamps have a job. The White House estimates that food stamp usage will increase in fiscal year 2011 to an average of 43.3 million people.

Americans are now only receiving 41.9% of their income from private wages, down from 44.6% in December of 2006 and 47.6% in the first quarter of 2000. Americans are receiving 17.9% of their income from government programs, up from 14.2% in December of 2007 and 12.1% in the first quarter of 2000.

Unemployment

Inflation does not create jobs. Although the official U.S. unemployment rate is now 9.7%, including short-term discouraged workers who gave up looking for a job, the real unemployment rate is 16.9%. If you also include long-term discouraged workers who haven’t looked for a job in over one year, 21.7% of Americans are now unemployed.

Employment

The Federal Government is now the single largest employer in the U.S. The average federal worker is now earning $119,982 per year with benefits, compared to average annual earnings of only $59,909 per year with benefits in the private sector. While incomes in the private sector are contracting, federal workers are receiving a 2% pay raise in 2010, after receiving a 3.9% pay raise in 2009.

Growth in government is a drain on the private sector. While the U.S. Treasury sold $78 billion in new government debt in May, companies sold only $66.1 billion in corporate debt, the least since December of 2000. The extra yield investors demand to own corporate bonds over government bonds increased by 44 basis points in May to 193 basis points, its largest increase since November of 2008.

The Value of the Dollar

The U.S. dollar index only compares the value of the U.S. dollar to other fiat currencies and is heavily weighted against the euro. The best way to determine the purchasing power of the U.S. dollar is the price of gold. Despite the huge rally this year in the U.S. dollar index, the price of gold rose to a new all time nominal high on June 8th of $1,252.10 per ounce.
The U.S. dollar index has rallied in 2010 only due to the declining euro, which has been fueled by the debt crisis in Greece. Greece had a budget deficit in fiscal year 2009 that reached 13.6% of its GDP. As a member of the eurozone, Greece’s budget deficit wasn’t supposed to exceed 3% of GDP.

Source: The National Inflation Association 2010 Inflation Report, June 2010

Full text of the report here

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