Posts Tagged ‘United State’

Create Your Own Money

November 16, 2012

There was a post in the Democratic Underground which generated quite a lot of amusement in Conservative circles a couple of weeks ago. Put simply, the poster believed that since the government can print money, it can never really go broke. Here is the post.

Let’s say that you have the ability to print your currency using your computer printer, and every merchant accepted your printouts as a valid exchange for goods and services. You need to pick up your dry cleaning? You printout a $20 bill and your cleaners hand over your garments without question. Same would be true for your mortgage, groceries, car note, etc. Your creditors even accept your printouts as payment on your debts.

Given this, how can you ever be broke? Answer, you cannot be broke. The U.S. government is not in debt simply because it can create currency to pay off the debt, and our creditors gladly accept our currency as payment on our debts. You see, the world needs our dollars because the world needs oil, and in order to buy oil, you need dollars, which means that the world needs to stockpile dollars, and that means that the U.S. can print all of the money that it wants without incurring massive hikes in interest rates to attract lenders.

So, why the hue and cry about America being broke? Simple. The elites in this country need to create a defcit and scarcity crisis in order to dissuade the public from voting for increased social spending on things like a universal health care program, better education, better benefits for SS recipients better infrastructure, etc. You cannot argue against the logic nor the need for these programs, but you can argue that you cannot pay for them. Additionally, more social spending means that the public is not as dependent on corporate America for their economic survival. For example, if you have universal healthcare, you don’t have to take a job just for the health benefits. If you have a generous Social Security program, you don’t have to invest in the market.

To be fair, the majority of responses to this display of economic illiteracy correctly pointed out that the large scale printing to money to pay the country’s debts would lead to hyper-inflation, with many using Weimar Germany as an example. That is all true, but I think it is worth exploring why this is the case. In doing so, perhaps we can clear up some misperceptions about money and the national debt.

To begin, those pieces of green paper you have in your wallet are not actually worth anything. I am not some crank urging you to go put and buy gold and silver. Gold and silver are not worth anything by themselves either. What you actually do when you buy something at a store is exchange some good or service you possess for a good or service at the store. When you go to work and get your paycheck, your employer is trading its goods and services for the labor and skills you give it. Bartering is rather cumbersome for all but the simplest of economic activities so in order to facilitate all of this trading, people have invented money. All money is therefore, is simply a method of keeping score, or a medium of exchange.

There are two others uses for money which are a little beyond the scope of this post, but which I have to mention in passing. One is money as a unit of account, that is a way of expressing how much a good or service is worth compared to other goods and services. It makes more sense to refer to prices in dollars or euros than terms of varying goods. The third use of money is as a store of value. This means that money can be used to store wealth. You know that the dollars in your pocket will still be worth something next week and can be easily traded.

It doesn’t actually matter what is used as the medium of exchange. It could be gold or silver, or candy bars, cigarettes, leaves, sea shells, or anything. It is better, however, to use something that is not consumed, and does not go bad. Bananas would not be very useful as money because you might get hungry and eat your savings. Also, bananas go bad after a couple of days. The medium used should not be too common or too scarce. Leaves from trees would also not be very useful. Anyone could go out into the woods and get a windfall. Gold and silver have generally been the most common substances used for money since they do not corrode easily and are scarce enough to be considered money. Most countries in the world today use fiat money. That is the government says a dollar is worth a certain amount.
If you pay for something with counterfeit money, you are cheating the other person. You are trading their goods or services with something worthless. Governments cannot actually counterfeit money, since they are the ones creating it, but they can devalue the currency which has almost the same effect. If a government prints large amounts of money without any addition to the total goods and services produced by the nation, then each individual unit of currency, a dollar bill, for example, represents less and less actual value. The total amount of wealth in the system, so to speak, is divided among more dollar bills. When this happens, each dollar bill is worth less and less, leading to inflation. If the US government printed $16 trillion dollar bills and used them to pay off the national debt, it would, in effect, be cheating its creditors.

Now, you might be thinking, “So what? Who cares if we rip off the lousy Chicoms.” Well, the fact of the matter is that despite all of concern about China owning the US, the truth is that the Chinese government only holds about 8%  of the national debt. Most of the debt is owed the the citizens of the United States, through treasury bonds held in retirement accounts, mutual funds, banks and state and local governments. The Social Security Administration holds about 19% of the debt in the Social Security Trust Fund. If the federal government tried to pay off its debts in hyper-inflated dollars, most of the small investors, who were counting on a return on their investment would be ruined. Larger creditors, including foreign governments could well refuse payment in worthless dollars and insist on being paid in euros, or gold. The rest of us would experience the joys of triple or quadruple digit inflation.

The point I have been trying to make in this long post is that money is not the same as wealth. Money represents wealth and wealth cannot be created from nothing.  If you or the government just prints a dollar bill, you are not creating wealth, you are only spreading existing wealth among more money. Sorry, but we can’t print our way out of our debts.

 

 

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Zero Net Migration

April 25, 2012

Walter Russel Mead has some interesting things to say about the declining immigration rates from Mexico.

Via Meadia has long considered fears that America would be overrun by waves of immigrants from Mexico and elsewhere in Latin America to be overblown. As with previous waves, immigration from Mexico will peak and then begin to fall.

Now a new report from the Pew Hispanic Center finds that over the past five years, immigration from Mexico has fallen to a net zero—migrants are returning to Mexico at the same rate that they are arriving in the U.S. Among the report’s findings:

  • In the five-year period from 2005 to 2010, about 1.4 million Mexicans immigrated to the United States and about 1.4 million Mexican immigrants and their U.S.-born children moved from the United States to Mexico.
  • In the five-year period a decade earlier (1995 to 2000), about 3 million Mexicans had immigrated to the U.S. and fewer than 700,000 Mexicans and their U.S. born-children had moved from the U.S. to Mexico.
  • This sharp downward trend in net migration has led to the first significant decrease in at least two decades in the number of unauthorized Mexican immigrants living in the U.S.—to 6.1 million in 2011, down from a peak of nearly 7 million in 2007. Over the same period the number of authorized Mexican immigrants rose modestly, from 5.6 million in 2007 to 5.8 million in 2011.

This is an important shift, but it’s still too soon to foresee an end to mass migration from Mexico. As the US economy improves, immigration is likely to pick up again. The recession was deepest in the construction industry, which hired a lot of unskilled immigrants, legal and illegal. It’s not surprising that many of these immigrants have chosen to return home, but as that industry returns, many of these immigrants will return with it.

Nonetheless, those who think a fragile America is about to be overwhelmed by a human tsunami from Mexico need to take a deep breath and calm down. Yes, the US needs to control its borders, and yes, illegal immigration needs to be stopped. But in the medium to long term, Mexican immigration to the US is on a downward path.’

It’s hard to know what the medium to long term will bring us and we can be sure there will be surprises. I hope that Mead is right though. It is not good for either the US or Mexico to have large numbers of people crossing the border and going north. We have been having difficulties assimilating large numbers of illegal immigrants and the refusal of both parties to actually enforce immigration laws contributes to the decline of the rule of law here. Mexico has been losing a lot of the very people they need to grow their economy.

I think Mead is right though. There have been some positive developments in Mexico over the last decade or so. Despite the troubles with drug cartels, Mexico’s economy has been doing fairly well. They have had solid growth rates since 2010 and an unemployment rate lower than ours. Mexico’s GDP is actually the fourteenth highest in the world, between Australia’s and South Korea’s.  Mexico’s birth rate is dropping and there is a growing middle class, which I hope will have less tolerance for the traditional corruption in Mexico’s politics. If these trends continue, always a big if, then an increasingly prosperous Mexico will be good for both our countries.

More Mail from the Democrats

October 14, 2011

I was feeling a little neglected after President Obama and the rest of the Democrats stopped sending me e-mails. It appears that the fundraiser was over and they didn’t need to ask for any more from me. I have to say I felt a bit used. At least I would, if I had ever sent them any money.

Well, I am glad to see that the Democrats don’t just love me for my money. They also need me to sign petitions.

We told you last week about Republican efforts to suppress the vote nationwide that could prevent 5 MILLION Americans from voting. According to the New York Times, the voter fraud Republicans say they’re preventing simply isn’t an issue. “The only reason Republicans are passing these laws is to give themselves a political edge by suppressing Democratic votes.”

The scary thing is, it just might work. Enough votes could be lost to states like Florida, Ohio, Wisconsin, Nevada and Virginia to hand the Senate – and the White House – to the GOP.

This news really struck a nerve with grassroots activists – we’re nearly halfway to our goal of 150,000 signatures. But we’re missing your name – will you click here and sign?

After you’ve signed, check out our brand new 2012 Election Protection Project website, where you can view maps of affected states, learn facts about the new laws, share information on Twitter and, most importantly, register to vote.

We’re starting to put together our voter outreach plans based on these new GOP laws, and I sure could use your help. Thanks in advance for signing and sharing. We’ll keep you posted on our progress.

Crystal King
DSCC Political Director

I am just outraged that the Republicans are trying to suppress the necro-American vote. Sure the living can show IDs easily enough, but does anyone care about how hard it is for the dead to get identification. They don’t normally drive so they can’t get driver’s licenses. Illegal immigrants also have considerable difficulty in acquiring valid. I will be glad to sign this petition identification. Just because a person is not a US citizen or even alive is no reason to deny them the vote.

Then I got this.


We have to act fast.

House Republicans are set to vote today on a bill that would go even farther than Republicans’ previous efforts to restrict women’s access to reproductive health care.

This GOP bill would allow emergency rooms to refuse women life-saving healthcare. Pundits are calling it the “Let Women Die” act.

We must act immediately to call out the right-wing Republicans behind this assault on women. We’ve set a goal of raising $100,000 for the DCCC Women’s Health Rapid Response Fund so we can hold these Republicans accountable.

Please make an urgent contribution of $3 or more to the DCCC Women’s Health Rapid Response Fund. Your generous support will send a powerful show of grassroots strength against the Republicans’ extreme agenda.

Instead of focusing on jobs or the economy, today’s vote will mark the seventh time this year House Republicans have chosen to undermine women’s access to health care.

First, it was Republicans redefining rape to deny health care coverage. Now, they want to allow hospitals to turn away women in life-or-death situations. Plus, for the first time ever, this bill would restrict how women with private insurance can spend their own private dollars in purchasing health care. It has to stop.

Help us send a message to Speaker Boehner, Majority Leader Cantor, and the rest of the House Republicans that their repeated insistence on restricting women’s access to health care has consequences.

Thank you standing with us.

Taryn

Taryn Rosenkranz
Dept. of Grassroots Activism

The fiends!!. They want to deny women needed healthcare, just because the Republicans hate women. I wonder though. This wouldn’t have anything to do with making sure the tax payers are not paying for abortions, would it? No matter. Nancy Pelosi has said the Republicans want women to die on the emergency room floors and I am sure she wouldn’t lie or exaggerate. I’ll send that $3 right away.

Attackwatch

September 14, 2011

Yesterday, I got an e-mail from Jim Messina, the campaign manager for Obama for America.

David —

Remember the claims that President Obama wasn’t born in the United States?

Or that health care reform — a law that brings down costs and improves health care for all Americans — would help “pull the plug on grandma”?

If he had released his birth certificate two years ago, the claims that he wasn’t born in the United States never would have gotten as much attention as they did. I wonder if I told Mr. Messina that I had a bag of magic beans that I would be willing to sell him, if he would believe me. That makes about as much sense as believing that “health care reform” can simultaneously lower costs and improve health care. But, on
to the message.

This campaign isn’t going to wait to find out what’s coming. We’re building a program right now to snuff out these false attacks the moment they start, fight back against distortions of the President’s record, and mobilize our supporters around the truth.

It’s called AttackWatch.com — and if you have an interest in seeing lies about President Obama countered, you should give it a close look.

Will you visit AttackWatch.com today and sign up to fight back on the President’s behalf?

Yes, I want to help respond to attacks on the President.

Not right now, but I can donate $5 to fund the 2012 campaign and support this work.

Not right now, but I want to check out AttackWatch.com.

Being a part of AttackWatch.com is simple. Just visit the site when you see a new attack on the President. If we’ve heard it before, you’ll be able to download all the facts and resources you need to fight back. If we haven’t, you can be the first to let us know about it.

You can also sign up to be on the front lines as attacks develop — we’ll be in touch in the months ahead with new tips for how to spread the truth to your friends and neighbors.

I am so tempted to join attackwatch and see what kind of stories I can make up. Republicans say Obama is a lizard man from Alpha Centauri! They are running ads accusing Michelle Obama of really being a man!

It would be fun but judging from the derision this is attracting, see here, here here, and I’m sure many other places, I imagine that this effort will soon be consigned to the memory hole.

Best of the Web from the Wall Street Journal picked this up too.I wonder if the people who came up this this thought about the probable reactions they would get.

In a related note, President Obama wants to have dinner with me.

David —

Supporters like you are the reason I’m here, and the values we share have always made our organization more than just a political campaign.

So whenever I can, I want to take the opportunity to meet you. Last month, that meant I got to talk to folks in Iowa about small-business opportunities, and sit down with a group of volunteers from around the country who helped build this campaign in their communities this summer.

Today, I want to ask if you’ll join me and three other supporters for a meal and conversation sometime soon.

He’s asking for a donation to his campaign, of course, but you can enter without contributing, so I entered. My chances of winning are about the same as winning a lottery, but it would be fun to meet him, and tell him what I think of the job he’s doing.

Can This Presidency be Saved?

June 17, 2011

Walter Russel Mead asks the question.

Can the Obama Presidency still be saved?

To some, the question may seem premature or even insulting.  President Obama’s personal popularity remains high and the most recent RealClearPolitics poll average has him at a more than respectable 47.6 percent approval; while the President’s popularity is drifting lower, congressional Republicans have been losing ground to their Democratic rivals in recent polls, and the Republican primary field remains both uninspiring and polarized.  Small government, libertarian and Jeffersonian Paulites, globalist ‘great nation’ conservatives, conservative social activists and Jacksonian hyperpatriots are united only in their antipathy to the Obama administration and it is not yet clear whether a GOP candidate can unify this agitated but inchoate mass of energy into a strong and focused campaign.

Nevertheless it seems increasingly clear that the Obama presidency has lost its way; at home and abroad it flounders from event to event, directionless and passive as one report after another “unexpectedly” shows an economy that refuses to heal.  Most recently, the IMF has cut its growth forecast for the United States in 2011 and 2012.  With growth predicted at 2.5 percent this year and 2.7 percent next, unemployment is unlikely to fall significantly before Election Day.  On the same day, the latest survey of consumer sentiment shows an “unexpectedly sharp” dip in consumer confidence.  The economy is not getting well; geopolitically, the US keeps adding new countries to the bomb list, but the President has fallen strangely silent about the five wars he is fighting (Iraq, Afghanistan, tribal Pakistan, Libya and now Yemen).

The problem is only partly that the President’s policies don’t appear to be working.  Presidents fail to be re-elected less because their policies aren’t working than because they have lost control of the narrative.  FDR failed to end the Depression during two terms in office but kept the country’s confidence through it all.  Richard Nixon hadn’t ended the Vietnam War in 1972 and George W. Bush hadn’t triumphed in what we still knew as the Global War on Terror in 2004.  In all these cases, however, the presidents convinced voters that they understood the problem, that they were working on it, and that their opponents were clueless throwbacks who would only make things worse.

Barak Obama was elected largely because he was a blank slate on which the electorate could project their hopes and dreams. He was a good campaigner who took full advantage of that fact. He has not been so good at actually governing or leading. He seems to be in far over his head, which is no surprise since the presidency is the first job he has held in which he has actually had to manage anything. He is more inclined to blame the country’s problems on the previous administration than to create new policies to resolve them. And, as Mead has been writing, what he calls the “Blue Social Model” has been breaking down and it is not entirely clear what will replace it. The times call for strong leadership and we are not getting it.

Americans are realistic enough to understand that the breakdown of the blue social model is a messy process and that perhaps no president can deliver a pain free transition to the next stage.  But what they aren’t hearing from President Obama is a compelling description of what has gone wrong, how it can be fixed, and how the policies he proposes will take us to the next level.

What they hear from this administration are defensive responses: Hooveresque calls for patience mingled with strange-sounding attacks on ATMs and sharp, opportunistic jabs at former President Bush.  The White House has responded to strategic challenges at home and abroad with tactical maneuvers.

Voters sense that we live in historic times that demand leadership of a different kind.  What does President Obama think about the fiscal squeeze forcing trade-offs between state employee benefits and services to the poor?  How much trouble is the American middle class in — and what changes are needed to save it?

The President of the United States has to own this conversation.  His vision, his initiatives must dominate the political scene.  His opponents may fight him and defeat his proposals in Congress — that is not the worst thing that can happen.  Harry Truman did very well running against a ‘do-nothing’ Congress in 1948.

At a time of historic anxiety and tension like the present, the President of the United States cannot be an administrator, a fence-sitter, a finger-pointer.  He must first and foremost stand for something — and he must be able to make that something resonate with the voters.  The President’s job is to lead.

So, can this presidency be saved? Do we really want to? My answer to both questions is no.


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