The Weiner Component #147 Part 1 – Development of Money & Its Uses

Various Federal Reserve Notes, c.1995. Only th...

Various Federal Reserve Notes, c.1995. Only the designs of the $1 and $2 (the latter not pictured) are still in print. (Photo credit: Wikipedia)

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Probably the most misunderstood entity that exists today is money, currency, what it is and all the ways it works in the existing societies.  The problem with money is its history, what it was and is, and how the concept is generally understood by most people today.

 

Originally money was an object of value like gold, silver, or some other precious entity.  Presumably, in places like early Phoenicia, well over two thousand years ago, goods were traded for precious metals.  This was done with scales; gold or silver would have a fixed value and an equal value of goods would be traded for a set amount of the precious metal.  Eventually someone or a group of someones came up with the idea of stamping a set weight on the gold and coins came into existence.  They were gradually refined, as time went on, with stamped pictures of the rulers profile and with these specific coins with set amounts of money came into existence.  From this, over the centuries, with occasional breaks in the sequence, the concept and use of money, set amounts of gold or silver, developed.  It was until the end of the first third of the 20th Century an exchange of value for value, the goods and services for the coins (money).  Money was as good as gold because it was gold.

 

The problem that developed over time was that the amount of gold and silver available for currency was dependent upon mining discoveries or exploitations of different parts of the world.  For example in the 16th Century Spain gutted the New World of its gold supply causing a 90 year period of inflation in Europe that lasted through most of the fifteen hundreds.  By the 17th Century there was again a shortage of the gold supply in Europe and not enough money (gold coins) available to supply all the monetary needs for economic growth on the Continent.  Consequently the value of gold rose and periods of deflation occurred, the value of the gold coins increased.

 

The problem here was that there were two totally different processes which were supposed to balance each other but never did.  Precious metals had to be discovered and mined at the same rate that business between and within nations expanded.  This never happened.  Added to this were economic systems like mercantilism, which hoarded gold by creating royal monopolies within European nations.  Economically much was not understood then.  And the amount of gold was never enough to cover all the needs for monetary growth.

 

The use of paper came into existence largely during the Renaissance with letters of credit, which allowed simple transfers of large amounts of currency.  This would eventually become paper money and checks.  Paper money was initially issued by banks and could, presumably, always be exchanged for gold or silver.  Of course if everyone decided to exchange their paper money for gold at the same time there would be a run on the bank and it would go bankrupt since generally they issued a lot more paper than they had gold.

 

Paper money was also issued by governments during times of crises when gold was in short supply, like the United States government did during the Revolutionary War or the Northern and Southern Governments during the American Civil War.  They did not have adequate gold or silver supplies to pay the cost of the wars.  Since the South lost the Civil War its money became worthless while the Northern greenbacks were eventually redeemed for gold coins.

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Up until 1933, when Franklin D. Roosevelt had assumed office as President, money was mostly gold and silver.  Other metals like nickel and copper were used for smaller coins.  The paper one and five dollar bills could be redeemed for silver; they were silver certificates.  The larger denominations were presumably redeemable for gold; they were Federal Reserve Notes.

 

Actually after 1933, the use of large bills being exchanged for gold ceased.  In the U.S. the Roosevelt administration collected all gold coins, melted them down into gold bars, issued paper gold certificates that were held by the Federal Government, and issued paper money starting with the ten dollar bill and going up.  These were Federal Reserve Notes which the banks distributed then and thereafter.  They were used in place of the gold coins.

 

The gold standard was essentially a fiction.  In 1933 the money supplied was doubled as the value of gold was legally doubled, going from $16 an ounce to $36 an ounce.  This essentially paid for Roosevelt’s New Deal.  Similar actions would also be done in other industrial nations.  The problem that existed was that there still was not enough money in circulation to meet the actual needs of most nations.  There would not be enough money available until World War II when it tended to be freely printed by the various governments.  During the war, since most production was going toward the war effort, there was more money available than the goods and services that could be purchased.  People worked double shifts in the factories and earned lots of currency, far more than they could spend.  At the end of the war there would be a large buying splurge that would create jobs for a good percentage of the returning veterans.

 

In 1969, under President Richard M. Nixon, the last limited amount of stored gold behind the dollar would be removed and the Federal Government would sell a large percentage of its gold supply.  It would cease to legally buy all gold mined within the country.  Gold would within a relatively short period of time, several years, go from $36 an ounce to $800 an ounce.  It would later go to well over $1,000 an ounce and eventually rise to $1,800 an ounce.  At this time one of the agencies in Texas would buy gold and set up its own depository.  Later, gold would drop down to around $1,100 an ounce, where, with continued slight oscillations in price, it would remain in 2016.

 

This entire process has been going on for the last 46 years.  The value of gold is determined by the economic laws of supply and demand.  The value of gold, silver, platinum, titanium, and other precious metals are determined by the amount of supply and the demand for that supply.

 

In 1969 the silver would also be removed from new coins and all money would become tokens, generally copper sandwiches, having almost no value within themselves.  All money became a valueless instrument for the exchange of goods and services, having no real innate value in itself except that of the word of the nation issuing it.

 

Today money of one country has to be exchanged for that of another when one visits Europe or Asia or, for that matter anyplace else that isn’t part of one’s country.  With very few exception it has no relevance in another country but it does have an exchange value in the banks of other countries, where generally, for a small fee, it can be exchanged for the currency of that particular nation.

 

Money is no longer as good as gold, there is no longer any gold behind it.  The metal has become too expensive and its supply is too limited to be used for a base for currency.

 

This in a nutshell is a short simplified history of money and its uses.

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Now, in terms of the modern world what is money and what are it uses?  Today money serves a myriad of purposes.  While it is no longer an object of intrinsic value it still serves as an object of inherent value.  It is, first of all, a form of score-card which demonstrates ones’ standing in the overall society, like Donald J. Trump the billionaire.  Mainly it allows the traditional exchange of goods and services within the society and between nations.  But in addition to this money also functions within the nation in relatively new ways.

 

According to most economists there are various forms of economics.  For our purposes the two more important ones are Microeconomics (small) and Macroeconomics (large).  Everything that has so far been considered falls into the area of Microeconomics (small economics).  In essence an individual has so much wealth (gold) or earnings that comprises what he/she possesses and earns.  That can be spent to satisfy needs and wants or saved for a future time of need or desire.  Some of it can be used as a commodity and invested in income gaining property or stocks and bonds or anything that will pay an income.

 

Virtually every individual or family unit fits into this category.  So also do government entities like municipalities and individual states.  Their incomes would be comprised of taxes and fines.  If any of these people or entities need more money than they are taking in or have then they can borrow.  For individuals and families there are banks and credit unit loans or credit cards.  For municipalities and states there are short and long term bond issues.  These eventually must be paid off with interest.  This is usually tax free for state and local governments and ridiculously high for credit cards.

 

Of course the object with individuals and families is to live within their incomes.  There are big-ticket purchases like automobiles and homes that generally do require long term payments or occasional emergencies like a large auto repair bill or a sick child.  With cities and states the taxes are supposed to be high enough to cover their expenses.  But they also have long term expenditures like roads and bridges which are inordinately expensive and must also be paid off over the long term.

 

The problem that comes up with individuals and families is when too many short-term expenses are charged to credit-cards, much more than can possibly be paid off in a billing cycle.  Then the recipients are paying 18 or more percent interest on these loans and life becomes an uncomfortable struggle to survive.  Particularly since the standard of living for many people will continually exceed their incomes.  This is not unusual with many families.

 

With municipalities and states the same pattern can occur.  The entities income does not match their expenditures.  This can be caused by a large number of reasons besides irresponsibility on the part of the city fathers.  Industry can move out of the area drastically reducing the tax base or other changes that drastically affect the tax base such as a natural disaster or a recession or depression.

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All this, prior to 1933, would also include the individual nations.  They would also be funded by their incomes in taxes and fines.  But from that point on, by changing from money being precious metals to printed paper, the situation became different for all the industrial nations that had switched to paper money.  And in the United States, particularly since 1969, all printed money is just that, official paper with numbers stamped upon it which in itself has no real value; it has become merely a means of trading goods and services for goods and services.

 

Federal or Central Governments still follow the age old practice of Microeconomics, collecting taxes and issuing fines for different forms of misbehavior.  But, more importantly, now in addition they also practice Macroeconomics, wherein they attempt to control the amount of money continually present within the nation.  They tend to try to keep inflation low and economic growth at a steady pace of about 3 to 4%.  Countries like modern China prefer a growth rate of 8% which they are no longer able to maintain.

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Economics is concerned chiefly with the description and analysis of the production, distribution, and consumption of goods and services.  What we have mainly looked at so far has been Microeconomics, dealing with individuals, families, local and state governments.  Macroeconomics deals with the National or Federal Government and applies these principles to the entire economy of the nation.  Its ultimate purpose is to use this knowledge to positively regulate the economy of the entire state in order to avoid economic downturns and keep the nation at its level of highest efficiency.

 

Consequently Macroeconomics (Big Economics) is now, in addition to collecting, controlling revenue, and attempting to maintain a regular level of growth a regulatory device, attempting to even out the overall incomes of the majority of the population.  Income taxes are graduated, that is, the more the individual earns the higher is his/her tax rate.  This is truer in European and Asian nations than in the United States where the graduated income tax rate is currently toped-off at $400,000 and the percentage of income paid at that amount stops rising regardless of how high the income is beyond that amount.

 

It would seem that the bulk of the Congressional Legislators, particularly the Republican legislators, have no real knowledge of modern economics and are still functioning with only an awareness of Microeconomics.  Some of the far-right, Tea Party, legislators have publically stated that they totally understand economics because they have raised families.  Consequently their reaction to economic downturns is to use a “common sense” approach which, in turn, worsens conditions.

 

It would seem that in the United States the one occupation that requires no knowledge of economics or government is that of a Republican Congressman.  Since taking over the House of Representatives in 2011 they have just passed one bill in 2015 that applied Fiscal Policy; and that was a continuation of a law that expired which added a small tax to the purchase of gasoline that has been used for road maintenance.  Every other bill dealing directly or indirectly with employment actually decreased it, adding to the level of unemployment within the nation.  One can safely say they have been penny wise and dollar stupid.  They have favored government economizing over growing employment.  And even here they have not been consistent, going on mad spending splurges like the 1.145 Trillion Dollar Funding Bill of 2015.

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Basically the Central Governments issues paper money as it is needed by their particular society.  The National Debt is itself partly a fiction since the Government owns the majority of its own National Debt and will use it at times to adjust conditions within the nation.  The amount of money in circulation within the society is supposed to be the full amount needed for the nation to operate at its highest level of efficiency.

 

The Agency, in the United States, that does this is the Federal Reserve.  It continually monitors the entire economy throughout the fifty states and territories belonging to the nation.  On a constant basis it is supposed to continually fine tune the overall economy.  The Federal Reserve has twelve districts that cover the entire nation.  To a certain extent its powers are limited.  It can make adjustments to the economy but the changes or corrections it makes generally are slow in coming about.  Even though its’ Board of Directors meet once a month and carefully considers what is happening in the overall economy it can miss or misconstrue important economic changes within the society.

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The Democrats, the political party begun by Thomas Jefferson in the late 18th Century which still persists, during the Great Depression of 1929 took control of the Federal Government in 1933.  They tended to totally dedicate themselves to helping the public pull out of the Great Depression.  They dedicated or rededicated themselves to helping the ‘forgotten men” survive in what had become almost overnight an alien world.  They became responsible for the welfare of all their citizens, creating what Franklin D. Roosevelt called a “New Deal” for everyone, caring for those who could no longer properly care for themselves.

 

Freedom to the Democrats meant freedom from want and need.  President Barack Obama’s Affordable Health Care (Obamacare) meant an extension of these rights.  To the Republicans, on the other hand, freedom means government withdrawal from the public lives, giving them, among other things, the right to starve, freeze, and die.

 

In solving societal problems the Federal Government in 2009 and 2010, with the Democrats controlling both Houses of Congress and the Presidency, saved the banks and the United States auto industry by extending them massive loans and the Public by enacting Affordable Health Care.

 

According to Mitt Romney, speaking for the Republicans during his 2012 Presidential Campaign, he would have done neither of these.  It should be noted that the Affordable Health Care Law was modeled after a similar law which Romney had signed into law during his one term as governor of Massachusetts.

 

The probability would have been in 2009, if Republican actions were taken by the Republican candidate, John McCain that the United States and the industrial world would have fallen into a depression far greater than that of 1929.

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What we are dealing with here is Macroeconomics (Big Economics).  The application of vast amounts of money to parts of the economy to avoid an economic disaster that would affect everybody in the U.S. society.  President Obama did this upon assuming office over a two year period.  At the end of that time two important events occurred: first, for various reasons during the Midterm Election of 2010 the Republicans achieved a majority in the House of Representatives and second, 2010 was a census year in which the seats in the House of Representatives were reapportioned to adjust for the increase in the national population.  In those states which the Republicans controlled they gerrymandered the new voting districts to their advantage whereby they were able to get enough seats in the House to maintain control of that body.  In fact they were able to get and keep their majority in the House even though more votes were cast for Democrats throughout the United States in the next Midterm Election.

 

What followed from 2011 on was that no fiscal policy bills were passed.  In fact what the Republicans did in Congress was to shrink the size of the Federal Government when possible and actually increase the unemployment problem by decreasing funding for both federal and state governments.  The chairman of the Federal Reserve at this time was Ben S. Bernanke.  After unsuccessfully requesting that Congress pass Fiscal Policy laws numerous times he came up with Creative Monetary (Money) Policy.

 

Both Bernanke and Obama were able to work through the Great Recession and point the country toward recovery by the use of massive blocks of spending, adding large amounts of currency to the National Cash Flow.  What was being dealt with here is called Macroeconomic (Big Economics), the Federal Government controlling the economics of the nation and freely spending money in order to avert disaster.

 

The question arises: How much currency can the Federal Government print and distribute without destroying the economy?  That’s an interesting question?  Remember the money itself has no inherent value.  Theoretically any amount can be printed and issued.  But if it is done endlessly growing inflation will occur and the value of the currency will systematically decrease until it becomes valueless.

 

The limitation in terms of the amount issued would be determined then by the rate of inflation.  Once inflation reaches some single digit point, say 5 or 6%, then the limit would be reached.  But this limit was never reached.  Inflation stayed at 2 to 3%.  In 2009 President Obama added well over a trillion dollars through bank and auto loans, plus other forms of expenditure and the inflation rate stayed at its original level.  Later in the Presidency the FED for a period of well over two years added 85 billion dollars a month to the Nation Cash Flow, $45 billion buying up pieces of mortgage paper and adding $40 billion directly to the National Cash Flow. The FED added well over a trillion dollars.   Again there was no change to the inflation rate.

 

Interestingly, with all this cash being added the indication was that the country had a phenomenal need for additional money to circulate so that economic growth could occur.  Congress should have been the agency applying most of these funds.  If they had the monies could have been more focused on upgrading the dated infrastructure of the United States.  Instead over half the funds resolved the Housing Dilemma created by the deregulated banks from the 1980s on.

 

It should be noted that the money spent on mortgage paper, unlike the bank and auto loans which were repaid with interest, was never directly recovered.  The mortgages in all 50 states had been fractionalized into well over a hundred parts each and applied to many different Hedge Funds.  The record-keeping that the banks had set up to expedite the financing and refinancing was unbelievably sloppy.

 

In essence no one owned a fair percentage of those houses because it was almost impossible to put enough pieces of mortgage paper together to make up over 50% of the ownership in these properties.  Consequently how could anyone foreclose on any of these homes?  The spread sheet or sheets that the government would need to determine when it owned enough of any property would probably cost more to generate than the properties were worth.  In any event the Federal Government was more interested in solving the Housing Problem than in collecting on its debt.

 

In addition all those people would no longer be deducting their interest payments on their income taxes.  And a percentage of the home owners suddenly had more disposable income which they spent on short term activities like more eating out, infusing the additional currency into the National Cash Flow which, in turn, increased productivity and employment in the nation.  The government would indirectly get a good part of this money back in increased taxes across the nation.  Here the Federal Government was spending vast amounts of money, which Congress refused to do, upgrading the entire nation.

 

 

 

 

The Weiner Component #146 Part 2 – The Republican Party & the Future

English: Woodrow Wilson.

English: Woodrow Wilson. (Photo credit: Wikipedia)

4 U.S. Presidents. Former President Jimmy Cart...

4 U.S. Presidents. Former President Jimmy Carter (right), walks with, from left, George H.W. Bush (far left), George W. Bush (second from left) and Bill Clinton (center) during the dedication of the William J. Clinton Presidential Center and Park in Little Rock, Arkansas, November 18, 2004 (Photo credit: Wikipedia)

Franklin Delano Roosevelt, 1933. Lietuvių: Fra...

Franklin Delano Roosevelt, 1933. Lietuvių: Franklinas Delanas Ruzveltas (Photo credit: Wikipedia)

One of the effects of the American Civil War was the industrial concentration of large groups of people needed to manufacture the goods required by the military confrontation.  This slowly began the movement which would become, through the rest of the 19th and early 20th Centuries, known as the Rise of the Cities. This Industrial Revolution would increase after the War, people would leave the rural areas and numerous immigrants would come to the ever-growing cities and the United States would become mainly an urban nation.

 

From 1877 on, when the Southern occupation or Reconstruction by a Northern army of occupation ended as a result of a deal made during the disputed Presidential Election of 1876 in which the Republicans got the presidency and Reconstruction ended, with the South becoming freely again a part of the Union.  The Senate barely remained Republican and the House had a Democratic majority.

 

A Republican, James A. Garfield was elected in 1881.  He was assassinated four months into his term and was replaced by his Vice President, Chester A. Arthur, who served out the four years.  The Senate had an equal number of Republicans and Democrats and the House had a Republican majority.

 

There were an equal number of Republican and Democratic presidents after until you get to the reform presidents, Theodore Roosevelt and William Howard Taft, who are both Republicans.  They are followed by the Democrat, Woodrow Wilson, and World War I.  He will be succeeded by three Republican Presidents: Warren G. Harding, Calvin Coolidge, and Herbert Hoover.  At that point we have the Great Depression of 1929 which lasts until World War II.  The Congress will generally follow the lead of the reigning president.

 

The next President in 1933, by a landslide, was the Democrat, Franklin D. Roosevelt.  Both the House and Senate maintained a Democratic majority during his terms in office.  He is reputed to have brought unemployment down from 25% to 2%.

 

After his death, during his fourth term, his Vice President, Harry S. Truman, served the rest of his fourth term and an additional one of his own through 1953.  During his last two years in office the Congress had a Republican majority.

 

Republican President, Dwight D. Eisenhower, during his eight years in office, intermittently had both Democratic and Republican majorities in both Houses of Congress.  Democratic Presidents, Kennedy and Johnson had Democratic majorities in Congress.  The same is true of Republicans, Richard M. Nixon and Gerald Ford.  From January 1977 to 1981 President Jimmy Carter had Democratic majorities in both Houses of Congress.  Ronald Reagan had Democratic majorities in the House and mostly the same in the Senate.  George H.W. Bush had to work with Democratic majorities during his four years in office while Bill Clinton had them only during his first two years in office.  George W. Bush had both during different times and Barack Obama had a Democratic majority only during his first two years, then a Democratic Senate and a Republican House, and a Republican majority in both Houses of Congress during his last two years in office.

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In the post-Civil War period, as earlier, recessions and depressions came, at the best, every few years or at the worst, almost successively, with occasional major downturns like the Bankers’ Panic of 1907 at the New York Stock Exchange.

 

On December 23, 1913 Congress passed and President Woodrow Wilson signed the Federal Reserve Act bringing financial regulation into existence in the United States.  Prior to this time Adam Smith’s “invisible hand,” which he defined as the motivating force behind the Market System, determined which way the Stock Market would run.  The “invisible hand,” self-interest, individual greed, had historically caused continual large fluctuations in the Stock and other Markets.

 

The mission of the Federal Reserve was through Monetary (money) Policy to maximize employment, keep prices stable, and moderate long term interest rates.  This purpose was extended with bank regulation during FDR’s New Deal.  In the 1980s the Reagan administration canceled the bank regulation.  This, in turn, led to the Real Estate Bubble two decades later.  And because of the banking-caused Real Estate Debacle of 2008 the Federal Reserve’s purpose was again expanded to supervising and regulating banks, maintaining stability of the financial structure, and providing financial services to depository institutions, the United States Government, and foreign official institutions.

 

Of course the banks objected to the 2009 reforms and in the 2014 Federal Government’s Finance Bill, Citibank was able to slip in a section into this 1,600 page law limiting this power.  This was done the night before the bill had to be voted upon.  Naturally the banks object to any regulation that limits them.  I would also suppose that their executives would equally object if any of them were sent to jail for illegal activities instead of having the bank just paying fines as they have been doing since 2009.

 

In the 2012 Presidential Election the Republican Candidate, Mitt Romney, publically stated, more than once, that after he was elected he would do away with the Dodd-Frank Banking Reform Bill that was passed in 2009.  His statements called for a return to the good-old-days before the 2008 Real Estate Crash when the banks and bankers were making inordinate amounts of money and getting phenomenal compensation packages.

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If we look at the economic patterns that occurred during the last hundred and some years what emerges is the fact that the major economic downturns were preceded by Republican Presidents.  The three presidents during the last three major downturns were: Theodore Roosevelt, Herbert Hoover, and George W. Bush.

 

While they were not individually responsible for the depressions it was both the Republican policies and the general ignorance of how the economy works that brought the economic collapses into being.  In 1907, there was no central bank, money, in the shape of gold coins, moved freely according to the needs of the nation.  The Panic of 2007, also known as the Banker’s Panic, more or less, began in October of that year when the New York Stock Market dropped about 50%.  There had been an assault upon the Stock Market that blew up the economy and there was no Central Bank at that time to infuse currency into the National Cash Flow.  A few years later in 1913 this depression brought about the establishment of the Federal Reserve.

 

For 1929s depression, and all the minor recessions up to that time, there was a bland reliance upon the forces of the Marketplace to continually determine what had supposedly been long term prosperity.  In essence the Market forces, the “invisible hand,” self-interest, was the determinate.  After years of pushing stock prices upward the Stock Market was severely overpriced.  This could not go on forever and it collapsed in 1929 dropping to a fraction of what it had been earlier, and in the process bringing the entire economy down.

 

In 1933 the new Democratic President, Franklin D. Roosevelt, doubled the money supply by collecting all the gold coins, melting them down into gold blocks, burying them in depositories like Fort Knox, legally doubling their value, and issuing paper money presumably backed by gold.  It was a fiction that lasted until 1969 when, then President Richard M. Nixon took away the last bit of gold supposedly behind the dollar.

 

This action by Roosevelt, doubling the money supply easily paid for the New Deal but it wasn’t enough to offset the 1929 Depression.  It would have taken four to eight times the money then in circulation to end the economic situation.  Unfortunately the problem wasn’t understood properly at that time and it took a major war from 1939 to 1945 to offset and end the Great Depression.

 

The explosion of the 2008 Real Estate Bubble toward the end of that year also occurred during a Republican presidency.  Here the next President, Barack Obama, applied all the money needed; and what could have been a Greater Depression than that of 1929 became a major recession that should have been resolved in a year or two with applications of both Monetary and Fiscal Policy.  But the Republicans, following their historic philosophy which had caused most of the economic downturns, exacerbated the situation by refusing to pass any Fiscal Policy laws.  Virtually every economic move they made tended to worsen economic conditions.  It took the efforts of the President and the Federal Reserve to keep a depression from happening.

 

If the Republicans had been solely in charge, not only the United States but the entire world would currently be in a Great Depression that would  make 1929 look like a weekend holiday.

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Much has been learned and understood as to how National Economies work from the latter half of the 20th Century on.  Economic changes like recessions and depressions can be lightened or even avoided.  The National Economies are not like wild animals that inevitably rear their heads and bring about indiscriminately varied levels of misery to their populations.  In 2009 a multi-gigantic depression was avoided by actions of the Central Government.  Economic catastrophe or lack of prosperity can be avoided and controlled.  It was in 2009 by President Obama and his administration.

 

Yet none of these practices are or have been accepted by the members of the Republican Party.  They still follow Adam Smith’s late 18th Century work, An Inquiry into the Wealth of Nations, which in itself was, in part, a reaction against the 16th Century economic practice known as Mercantilism.  Smith defined the Free Market controlling entity as the “invisible hand,” self-interest.    What Smith did not foresee was that the Free Market led to Monopoly and Oligopoly, which led to societal economic decision-making by the few who were still motivated by self-interest.

 

This is the Free Market in which Ronald Reagan and the Republicans believe.  This is what the Reagan and his administration utilized for their newly discovered Supply Side Economics.  Lower taxes, particularly for the upper echelon of society (the rich), and they will automatically invest that new income in new industry, creating new jobs, and new productivity which will supply new goods and jobs for everyone.  And everyone will live happily ever after.  A nice fairy tale!  It never happened.

 

What did happen was that a very large percentage of the people who benefited from the tax cut gave these new savings to financial experts who invested them in old productivity, stocks and bonds.  New startup companies, when they came into existence and had proved their durability, tended to be financed by the large banking houses.

 

The theory was nonsense.  It never worked.  But the 2016 Republican candidates for the presidency are all still adhering to it.  They want to cut taxes for the very rich which currently stops being graduated after their income reaches $400,000, with the percentage the Federal Government receives staying fixed no matter how many millions or billions it goes into.

 

Why is it important for the Republicans to be Supply Siders?  Because these people are their main financial contributors.  They are the ones who pay for their political campaigns.  And the Republicans are very good at combining need (endless contributions) with political philosophy.

 

This is also true with most pharmaceutical companies.  Their products can be purchased at lower prices outside of the United States.  Congress has passed laws fixing their prices in this country and not allowing any government agency to negotiate with the pharmaceutical industry.  They are large contributors to political campaigns, particularly Republican political campaigns and Republican Congressmen are utilizing the principle of self-interest.

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Of the two major political parties in the United States the Republicans are the minority party; there are far less of them than there are Democrats.  But they are far more vociferous than the Democrats, never ceasing their loud complaining about the other party.  While the Democrats seem to keep a more or less polite silence.  The Democrats are blamed for everything wrong with the country, particularly those items caused by Republican actions.  The Republicans never take responsibility for any adverse action; they are either ignored or blamed on the Democrats.  Their theories of economics are self-serving and absurd.  And ultimately in percentage of the population they are actually shrinking in number as time moves forward and they become slowly an ever-decreasing minority.

 

They, the Republicans, have been successful politically in the last six years mainly through voter apathy and disgust.  They have done far better in Midterm Elections than in Presidential ones when a good percentage of the citizenry in disgust or disappointment for what has not happened during the last two years don’t bother to vote.  This has been added to by various forms of voter suppression in states the Republicans control.  In essence they have greater political victories when more people stay home on election days.

 

In addition to this in order to gain the support of the evangelicals the Republicans have incorporated the concept of the holiness of life from conception onward into their philosophy.  Statements have been made about passing an amendment to the Constitution giving the fetus full Constitutional rights from conception on.  This will never happen but it gives them a certain credence with the far right evangelicals.

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In the 1973, the Supreme Court found, by a 7 to 2 decision, in the Roe v. Wade case that abortions were legal; that women had a right to make their own decisions about their own bodies.  The evangelicals (religious right) have resisted this decision from the beginning.  At some point the Republicans latched onto this cause and made it their own, gaining the support of this group.

 

To many Republicans today, women are not capable of dealing with their own bodies.  They state and believe there should be no abortions allowed, not even in cases of rape, incest, or where the pregnancy endangers the woman’s life.  It would seem that they have and are trying to endanger women’s lives, both psychologically and physiologically.  In their view women are not capable of making certain decisions concerning their own lives.  It must be done by elderly white men who make up the bulk of the Republican Party.  This is, without question, War on Women,

 

In addition to this the Republicans are an extension of the National Rifle Association.  They tend to be against any laws regulating weapons, ammunition, and magazine size in any way.  No atrocity will deter them from this belief.  A goodly percentage of their blue collar membership, more or less, holds this belief.  To many members of the NRA the fact that this hasn’t happened is proof that it will happen if they allow any changes to occur to the gun laws.

 

It seems, if we consider the group in Oregon which has recently taken over the Malheur National Wildlife Refuge, that having weapons, like thousand dollar plus assault rifles, will keep the Government respectful.  Of course the fact that the Federal Government doesn’t want another blood bath is beside the point.  They have been there since January 2, 2016 and the few that have not been arrested and are still remaining there have stated that they will stay until the Federal Government gives the land to the original owners, the local ranchers.  It must be nice to just sit around indefinitely and wait for the Federal Government to give the land to the local ranchers.  Of course following their argument the land really belongs to the local Indians who have inhabited the area for at least the last two thousand years and claim it as their own.

 

It would seem that the Republican battle cry for a large number of its members is God and Guns, or is it Guns and God?  It’s often hard to tell which should come first.  I suppose it depends upon which Republican you ask.

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The American society has needs which have to be handled by necessary legislation.  These societal needs have been avoided by the Republican dominated legislature and in many cases by Republican dominated state law making bodies.  Congress has attempted to deal with these problems by ignoring them, especially since 2011 when the Republicans, by gerrymandering the states where they had a majority in the legislatures, gained control of the House of Representatives.

 

If anything what the House of Representatives has done is to shorten its meeting days until 2016 when they were reduced to 110 days for the year, to a three day week with holidays.  This allows the new Speaker, Paul Ryan, to spend four days a week home with his family: wife and two children, in Wisconsin and three days in Washington, D.C., as Speaker of the House.  A good job, if you can get it!

 

The Republican dominated Senate will meet a bit more often for the year.  Both Houses of Congress are ignoring the needs of the people within the nation and expect to maintain their majorities in both Houses of Congress after the 2016 Presidential Election and get a Republican elected to the presidency.  And they believe they can do this by antagonizing most of the other minorities and the one remaining majority, the women of the United States.

 

Speaker Paul Ryan has stated that after having passed a law doing away with Affordable Health Care (Obamacare) which the President vetoed, they will continue to pass laws embarrassing the President by forcing him to veto them.  They do not have enough votes to override his vetoes.  And in that way they, the Republicans, will show the public what they will get in the way of new laws in 2017 if they elect Republicans in both Congress and the Presidency.  I would imagine that if Donald J. Trump were to become the next President of the United States then all bets are off!

 

So much for Republicans!  They are, after all, the minority party which tends to win elections when only a minority vote in Midterm Elections.  2016 is a Presidential Election.  The majority of the population will be voting in that election.  The probability is that the Republicans, at best, will retain the House of Representatives; and that is because in 2011 they gerrymandered the Districts within the states they controlled.  In this way they choose their own voters instead of having the voters choose them.  Remember in the 2014 Midterm Election well over a million more votes were cast throughout the United States for Democrats in the House, but the Republicans still retained control of that body.

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It should also be noted that large, and, in some cases almost unlimited, contributions give immediate access to legislators and Congress by those making them.  These contributors to elections can and have influenced legislation or the direction the government is going.  The Republicans have integrated into their psyches the desires or needs of most of these individuals or corporations. For example, the Koch brothers of Wichita, Kansas, who are involved with oil, have had their state pass legislation against green energy.  Citibank has written financial regulation which has been inserted into Congressional Bills and become laws.

 

The Republicans are after all the party of business and of the individual.  They believe in everyone having as much freedom as possible.  Their solution to adding jobs is to increase pollution and other unsafe conditions.  No one forces anyone to take a job.  Everyone has choices, even the choice to starve or live in the street.

 

Finally it should be noted that even with voter suppression the Democrats are the majority party.  States like Texas have been able to limit rural voters by two or three hundred thousand by making it very difficult and expensive for these people living in rural areas, mostly, if not all, Democrats, to get proper identification and/or register to vote.  This was proven in the last Midterm Election of 2014.  But even so, the probability is that the Democrats will gain back the Senate and keep the presidency.  The probability is that the House is the one body the Republicans may still be able to control.  If my prediction is correct we will have total gridlock in the Congress for an additional four years.  It’s a depressing thought!

The Weiner Component #146 Part 1 – The Republican Party & the Future

English: Presidents Gerald Ford, Richard Nixon...

English: Presidents Gerald Ford, Richard Nixon, George Herbert Walker Bush, Ronald Reagan and Jimmy Carter at the dedication of the Reagan Presidential Library (Left to right). Français : De gauche à droite, les présidents américains Gerald Ford, Richard Nixon, George H. W. Bush, Ronald Reagan et Jimmy Carter à la bibliothèque Ronald Reagan Presidential Library (1991) où se trouve une reconstitution du bureau ovale. (Photo credit: Wikipedia)

Official Portrait of President Ronald Reagan

Official Portrait of President Ronald Reagan (Photo credit: Wikipedia)

Gerald Ford, official Presidential photo. Fran...

Gerald Ford, official Presidential photo. Français : Gerald Ford, premier portrait officiel du Président américain, (1974). (Photo credit: Wikipedia)

English: US map 1856 shows free and slave stat...

English: US map 1856 shows free and slave states and populations; this is “Reynolds’s Political Map of the United States” (1856) from Library of Congress collectionhttp://lcweb2.loc.gov/ammem/aaohtml/exhibit/aopart3b.html (Photo credit: Wikipedia)

Embed from Getty Images

Over most of its history the Republican Party has been essentially a Caucasian male Protestant group.   This was the population that originally made up the American colonies and revolted against British in the late 18th Century, setting up the United States initially along the East coast of the American continent.

 

During the late 19th and early 20th Century there were large migrations from Eastern Europe.  Asians, Chinese and Japanese initially could not become citizens of the United States, but their children, who were born in the U.S., were citizens.  Earlier there had been a large initially unwelcome migration of Irish Catholics caused by the Great Potato Famine in Ireland.  In the early 20th Century laws were passed setting quotas for people coming from different countries.  These quota systems are largely with us today.

 

We never seem to reach the quotas allowable for Western or Northern Europe but for Eastern Europe and other areas of the world like the Middle East and Central and South America there are waiting periods, after one gets in line, that in some instances could take a decade or more.

 

Since the last 40 years of the 20th Century the demographics of the United States has been changing.  Because of assorted wars in which the U.S. has been involved in the post-World War II Period in Asia, in the Middle East, and in other areas, large numbers of these peoples have come to the United States from the rest of the world.  These movements, are still continuing.  They have and are continuing to change the demographics in the U.S.  It is no longer a Wasp nation, a white Anglo-Saxon-Protestant nation.  Today there are growing numbers of other ethnic and so-called racial groups.  In fact the original Caucasian Protestant population is now a large minority among other large minorities and the Republicans make up about 19% of that population.  They are a minority among other minorities.

 

Generally in the present the Republican Party is made up of mostly the economic upper 1% of the population.  These are the wealthy who form the executives of most of the large corporations in the U.S. plus others who have intense wealth.  They have largely benefited from Republican leadership in Congress.

 

There is also a large independent-loving blue collar group who, with the evangelicals form the voting base of the party.  There would also be a percentage of white collars members, many of whom see themselves eventually joining the upper 1%.

 

Unfortunately for a good percentage of the blue collar base, particularly the independent, gun-loving ones, outside of freely owning their weapons, they have gotten nothing from the Republican leadership in Congress, particularly since 2011,  when the Republicans assumed leadership in the House of Representatives.  These currently are most of the people who support Donald Trump for President.

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With the passage of the Kansas-Nebraska Act in 1854 advocating popular sovereignty, in which one of the two newly entering states would supposedly be free and the other a slave state, the Whig Party split into two groups: the Conscience Whigs repudiated slavery and the Cotton Whigs were for slavery.  The first group joined the Free-Soil Party.  They were joined by the American Party and the remnants of the Know-Nothings Party which had become popular for a short period, calling for restrictions on the foreign born.

 

At this time, 1854, the Republican Party also began. It was able to run its first Presidential Election in 1860, attaining 40% of the popular vote and the election of Abraham Lincoln as President.  The majority party, the Democratic Party, had split into two parts, one Northern and one Southern.  The Southern section supported slavery and the Northern part tended to be neutral on this issue.

 

The new Republican Party was a combination of different political groups.  They were mainly the Northern and Northwestern Whig Party, the Conscience Whigs.  The Southern Whig Party, the Cotton Whigs, ran their own candidate in the South.  The Northern Whigs consisted of pro-business supporters who did not agree with the Democrats; abolitionists that strongly opposed slavery; and other small groups like the remnants of the Know Nothing Party.

 

In essence during 1860, there were two separate elections: one in the North and one in the South.  The Northern candidates did not run in the South and the Southern candidates were not on the Northern ballots.

 

The new Republican Party had grown from the ranks of the Free-Soilers, the Anti-Slavery Whigs, and the Anti-Nebraska Democrats.  They were in opposition to the extension of slavery anywhere within the territories of the United States.

 

Since the majority of the population occupied the North and Northwest the new Republican Party won with 40% of the vote.  As we’ve seen none of the political parties were on the ballots in all of the states.  There were no Republican votes cast in any of the Southern states.  The Southern Democrats had no ballots cast in the newer Northwestern states and in many of the other older Northern states.  The other Democrats had no votes cast in the other Southern states.  The election was actually two separate elections.  When the ballots were counted Lincoln had received 40% of the popular vote.  This translated to 180 electoral votes.  The other three candidates together had a total of 123 electoral votes.

 

This was the first Republican National Election.  Henceforth it would be them and the Democrats; the other political parties and the issue of slavery would disappear after the Civil War.  In 1876, with the election of Republican, Rutherford Hayes as President, the Southern states would lose the Northern army of Reconstruction or occupation and would come back into the Union as independent states and the country would move forward as a single unit.  The South reentered the Union as Democratic voting states.  Around the middle of the 20th Century with the emergence of the Civil Rights Movement the South would change its political allegiance to the Republican Party.  Outside of the slavery issue the Republican Party was always the Party of business and of the well-to-do owning classes, which it is still today.  It has always been conservative, against any kind of major change within the society, and conservative in its outlook.

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Up until 1964, when Barry Goldwater lost the election to Lyndon B, Johnson, the Republican Party had both liberal and conservative elements, the two political parties tended to be close to one another.  After that the Republicans tended to move farther and farther to the right.  Even as late as 1977, when Democratic candidate Jimmy Carter became President he was more conservative than a small percentage of the Republicans.  In 1974, when Nelson Rockefeller was appointed Vice President by President Gerald Ford, the Republican Vice President was more liberal than the later President, Jimmy Carter.

 

The two group’s philosophies ran into one another and compromise between the two political parties was relatively simple.  But after the Reagan Presidency the majority of the Republicans had moved much farther to the right and the Democrats to the left.  The first group became more reactionary and the other more radical.  Total philosophical separation had begun to set in.  This would continue and increase bringing the country to where it is now, at polarization.

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In order to understand the difference between the Republicans and the Democrats one needs to draw a horizontal line across a blank sheet of paper.  Mark the center of the line.  On the right side of the line would be the Republicans and on the left, the Democrats.  As one proceeds to the far left the people become more radical, on the right the further you go they become more reactionary.  At either end either end of the line they are extreme. Radical on the left and reactionary on the right.

 

_______Democrats__________|_____Republicans__________

 

No so long ago in our history the two lines overlapped.  Now they are widely separated.   This all began in the 1964 Presidential Election when Barry Goldwater ran against Lyndon B. Johnson and lost by a large amount.  Goldwater carried six states and Johnson won 44.

 

Goldwater had been the leader of the Conservative Movement.  During the campaign he alienated the liberal section of the Republican Party.  He was an opponent of the Civil Rights Act of 1964, arguing that it took rights away from the states.  When Communist China became a member of the United Nations in 1971 he wanted the United States to give-up its membership in that organization.  Goldwater criticized Johnson’s Administration for being soft on Communism and failing in Vietnam.  During his campaign he wanted a tougher blockade against Cuba and increased military action in Northern Vietnam to cut off supplies from China.  He indicated that he might use a nuclear bomb against North Vietnam.  On the domestic front Goldwater called for substantial cuts in social programs and he wanted social security to become optional.  He believed that the Tennessee Valley Authority should be sold to the private sector.  His political slogan was, “In Your Heart, You Know He’s Right”

 

It was at this time that Ronald Reagan entered politics with his “A Time for Choosing” speech.  He would run for the governorship of California two year later, largely on a Goldwater type platform and win.

 

These doctrines, those of the far right, were worked through the Republican Party until they dominated it.  Reagan would be elected President in 1980 and serve until 1988.  He would with some modification carry through Goldwater’s philosophy.  Currently all the potential Republican Presidential candidates are reflections of Barry Goldwater.

 

The Republican Party itself as it currently exists reminds me of the old Communist Party.  Everyone follows the Party-Line, there is no individuality.  I get the impression that the far right controls most, if not all, of the political contributions and they are spent only on proper followers of the party-line.

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The Democrats tend to be liberal; the Republicans, conservative.  Since the 1932 Presidential Election the Democrats have assumed a responsibility for those who cannot care for themselves while the Republicans hold to a position of individual responsibility.

 

Since that time many Republican presidents have also had the Democratic concept.  Dwight David Eisenhower (1953 – 1961), the first Republican president since Roosevelt’s election in 1932 considered himself a Moderate Republican.  As President he built a Federal Highway System across the United States, the Interstate Highway System; continued FDR’s New Deal agencies and expanded Social Security.  Nixon (1969- 1974), as the next elected Republican President, experimented with Price and Wage Controls during a period of rapid inflation; was the first chief executive to enforce desegregation in Southern schools; established the Environmental Protection Agency (EPA), the Clean Air Act of 1970, and made state run insurance policies available to all with income based premiums and cost sharing.

 

The next Republican President was Ronald Reagan, who served from 1981 to 1989.  He was the first far right Republican to run the United States.  Reagan, as we’ve seen, first entered politics in 1964 supporting Barry Goldwater.  In 1966 he was elected governor of California.  He successfully ran for the presidency in 1980 and served two terms.  Reagan applied Supply Side Economics (Reaganomics), a theory developed in the 1970s and disregarded after the Reagan Administration for not really working.  It held that economic growth is enhanced by investing in capital and lowering barriers on the production of goods and services; if excess goods were produced, it was believed prices would come down so they could be consumed (sold or supplied).  It sounds good but it has never worked.

 

President Reagan encouraged tax reduction to spur economic growth, control of the money supply to curb inflation, economic deregulation and reduction in government spending, which didn’t happen, as his administration raised the deficit to over a trillion dollars for the first time.  He did not believe in government regulation and, among other things, totally deregulated the banking industry.  This would slowly lead to the 2008 banking-caused Real Estate Crash and near depression.  He fought public sector labor by firing all traffic controllers when they went on strike.  He bombed Libya and mined the main harbor of Nicaragua, two countries with whom we were not at war and ended his administration with the illegal Iran-Contra Affair.  He was the first of the far right presidents.

 

The next two Republican Presidents were the Bushes, father and son.  While they were not to the far right they were both well to the right of center.  (For more comments on the Bush Presidencies read The Weiner Component #125 – The Bush Presidencies.)

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Democrats typically support a broad range of social services; many in the area of helping those who cannot, for one reason or another, provide adequately for themselves, making us all our brother’s keepers.  Republican policy is based upon self-reliance, more freedom for individuals, and a limited interference by government.  People are more responsible for themselves and their families.  Among other things they have the freedom to starve.

 

The Republicans also advocate a dominant foreign policy based upon a strong military.  Consequently their conservative far right is pro-religion, anti-bureaucracy, pro-business, pro-military, and pro-personal responsibility.  They see big government as wasteful and an obstacle to getting things done.  Ultimately they are pro-Darwinistic, believing in survival of the fittest.

 

Democrats tend to favor an active societal role for government in society and believe that such involvement can improve the quality of all the people’s lives and achieve greater opportunity and equality for all.  For example the Affordable Health Care Act can eventually gain health benefits for all.  But ultimately to the Republicans it means that it is unfair because they are helping to pay for other people’s medical care.

 

Republicans favor a more limited role for government and believe that reliance on the private sector can improve economic productivity and achieve the more important goals of freedom and self-reliance.  They are still for Supply-Side Economics.  To them environmental regulations and discrimination laws (regulations) impede economic growth.  They oppose laws that limit pollution because they increase the cost of pollution.  Ultimately Republicans lean toward individual freedoms and rights while to Democrats equality and social responsibility are more important.

 

Interestingly if you’ve read the novels of Paul Ryan’s former mentor, Ann Rand, who as a good Catholic he dropped when it was discovered that she was an atheist.  Society is divided into the elite and the mob.  The Republicans, especially the leadership and the well to do, are the elite and the Democrats support the masses or the mob.  This thinking goes back to Friedrich Nietzsche and the mid-19th Century.

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Up until the 2,200 page Federal Government funding bill that was passed at the end of 2015 the Republicans have been dominated by the far right of their political party which saw compromise as having the other side come to their position.  The choice here was to pass an actual political compromise or shut down the government.  It took nearly a year to effect this compromise.  The bill could never have passed without Democratic votes in both Houses of Congress.  In order to not shut down the Federal Government the Republicans had to legitimately compromise with the Democrats.

 

What the country, in disgust, has essentially seen since 2011, when the Republicans took over control of the House of Representatives, was gridlock in Congress.  The Affordable Health Care Act, which was initially passed in 2010 by a Democratic Congress, has been voted out of existence by the House 62 times since 2011.

 

At the end of 2015 there was true compromise, a bill to fund the government and avoid a government shut-down.  However, early in 2016 the House passed a bill, which the Senate has passed the prior year, defunding both Affordable Health Care and Planned Parenthood.  The Republican Speaker of the House of Representatives, Paul Ryan, announced that even though the bill would be vetoed by the President, it had passed in the Republican dominated Senate earlier in 2015.  Even though there were not enough votes to pass it over the veto when it was returned to both Houses of Congress, it was still declared a victory for the Republicans because it showed the American public what will happen in 2017 if they elect a Republican President.  He further stated that the House agenda in 2016, all 110 days it would meet, will be to pass bills that the President will veto but will state the Republican position and show the Public what will happen if they elect a Republican President.

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None of the Republican group running for the presidency strikes me as being charismatic or capable of leading the nation.  What will happen is that the Republican House will function for its three day week, be paid over $140 thousand for the three day weeks it works while attempting to embarrass the President by forcing him to issue constant vetoes.  The current one, passed the second week in January 16 will be his tenth veto in seven years.  These bills will largely disgust the Democrats and the country at large by accomplishing very little if anything.  The Republican Congress will pass well beyond gridlock for the year 2016.

 

And I wonder if Ryan and the Republicans will feel that all this will happen if Donald Trump becomes their presidential candidate?

 

 

 

 

The Weiner Component #145 – The 2016 1.145 Trillion Dollar Funding Bill & the Republican Party

Official portrait of United States House Speak...

Official portrait of United States House Speaker (R-Ohio). (Photo credit: Wikipedia)

In October of 2015, John Boehner, the former Speaker of the House of Representatives resigned from the House, effective the end of November.  His problem was getting what he considered necessary legislation through the House of Representatives without a government shutdown.  His immediate problem was extending the debt limit, which was then over 18 trillion dollars.  Not extending it would shut down the Federal Government as it would stop all government expenditures beyond a certain point that had almost been reached.

 

The extreme right of the Republican Party wanted to defund Planned Parenthood in return for extending the Debt Limit.  President Barack Obama had stated that if this measure were tied to the bill he would veto it.  By resigning, effective a month later, Boehner removed the House of Representatives from formulating the necessary bill.  The Republican majority leader in the Senate, Mitch McConnell, proposed a short term bill extending the Debt Limit until early December which the Senate and later the House passed.  The President commented that he would not again sign a short term bill.  The final version of the bill was passed early in December raising the Debt Limit for a period of two years.

 

The next major initial problem of the House of Representatives was finding a new Speaker.  Kevin McCarthy, the House Whip, was in line for a short period of time but he didn’t have the votes.  Eventually Paul Ryan, after initially refusing, ended up being the individual who could muster enough votes to be made the new Speaker.  He accepted after setting special conditions.

 

The next important bill was one to fund the Federal Government.  It had to be passed by December 11, 2015 if the government were not to be shut down for not legally having funds to keep operating.

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Generally, every year Congress has to pass a Bill in order to fund the U.S. Government for the oncoming year or it cannot legally pay its bills.  This Bill has to originate in the House of Representatives which, according to the Constitution, initially begins all money bills.  All that is needed is a one sentence law stating that the Federal Government shall be funded for one or more years.  Since 2011, when the Republicans gained control of the House of Representatives, they have used that Bill as leverage or blackmail to obtain other things that they had wanted by adding endless amendments to the Bill, many at the very last moment.

 

For example on Thursday, 12/11/14, the House of Representatives passed, what was essentially but not really a 1,603 page bipartisan 1.1 trillion dollar spending bill that will allowed the Federal Government to continue to function until September 30, 2015, the end of the fiscal year.  The bill adhered to strict caps negotiated earlier between the White House and the deficit-conscious Republicans.  It is also salted through with GOP proposals which were actually Christmas giveaways to individuals and companies and have nothing to do with the spending budget.  The bill should have been passed months earlier but it was convenient for the GOP to keep it hanging as a potential form of blackmail against President Barack Obama until the last possible moment when it had to be passed or its absence would cause a government shutdown.

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When Ronald Reagan was Governor of California he had a line-item veto over all bills passed by the State Legislature.  He could veto any section or group of sections that he thought was or were inappropriate and sign the document for the rest of the bill to become law.  But as President of the United States he could either sign a bill, veto it, or do nothing for ten days and allow it to become law.  Reagan was not too happy with this limitation but he had to accept it.  It would require an amendment to the Constitution to change this practice.

 

Not only does every bill have to be passed by both the House and Senate but both versions have to be identical.  If a word or punctuation is different, then the two versions are not the same.  Actually what happens is that the bill goes to a Committee of Congressmen dealing with that particular subject, they discuss the bill, usually modify it, and then send it to the legislative house to which they belong with their recommendations.  If it is passed then that version goes to the other legislative body, where it follows the same procedure.  In practically all cases the two versions are at least slightly different.  At that point the bill goes to a Conference Committee made up of members of the two Houses, where a final version is then hammered out.  This goes back to both Houses of Congress and it then has to be voted upon and repassed by the two Houses.  If the bill passes it then goes to the President.  After he signs it the bill becomes law.  This process generally takes at least a number of days.

 

The 1.1 Trillion Dollar Spending Bill was passed by the House of Representatives on Thursday, December 11, 2014.  The Congress was slated to end its session on Friday, December 12th.  This meant that the bill had to be accepted exactly as it was if the government was not to shut down the following week when it ran out of money.  In fact a short a short extension was also passed in case a few more days were needed to pass the bill.

 

Keep in mind that according to the Constitution only the House of Representatives can initiate a money bill since initially they were the only group directly elected by the People, the Senate was originally elected by the State Legislatures. The Founders felt that taxes should be authorized by the direct Representatives of the People so that the People are, in a sense, taxing themselves.

 

Also note that there are no rules about what a bill is supposed to contain.  It can deal with one subject or any number of subjects.  This finance bill dealt with innumerable subjects, most of which had nothing to do with financing the government.

 

Because of the catastrophe caused by a government shutdown President Obama urged the Democratic controlled Senate to pass the bill even though it had numerous amendments that were harmful to individuals or groups within the country.

 

One of these amendments cancelled parts of the Dodd- Frank Act that had been passed in 2010 as a reform measure after the 2008 Bank-caused Real Estate Collapse, to avoid such occurrences in the future and to keep banks from exploiting their depositors and the taxpayers.  Presumably the lobbyists for Citibank wrote the measure and it was secretly inserted the night before the bill came up for a vote in the House of Representatives.  The insertion rolls back regulations that limit banks from using federal deposit insurance to cover high-risk financial investments.  There had been no notice given or debate on this Amendment.  Nancy Pelosi, the minority leader in the House strongly opposed this insertion as did Senator Elizabeth Warren who called upon the Democratic majority in the Senate to oppose the entire bill if this Amendment was left in.

 

Another interesting Amendment was trading land with an Indian tribe.  A sacred mountain containing a burial ground was to be traded for another piece of land.  The sacred mountain was wanted by a company for a copper mine.

 

Another last minute Amendment dealt with campaign finance, it was extended for individuals. It went from contributions of $32,400 to $324,000.  Republicans got a 60 million dollar cut at the EPA (Environment Protection Agency) reducing their workforce to the level they had been at in 1989.

 

Not all Republicans in the House supported the bill. Many of the Tea Party members wanted to defund President Obama’s immigration executive order.  This issue was left out of the House bill.

 

In both the House and Senate the bill required the votes of both Democrats and Republicans to pass.  In the House 162 Republicans and 57 Democrats voted for the bill.  139 Democrats and 67 Republicans were against the spending bill.  In the Senate there were 31 Democrats, 24 Republicans, and 1 Independent who voted for the bill and 21 Democrats, 18 Republicans, and 1 Independent who were against it.  In both Houses of Congress it required the votes of both major political parties in order to pass.

 

Interestingly the far right and the far left both opposed this bill, both for different reasons.  On the far right, Ted Cruz wanted a section added that would limit or eradicate President Obama’s executive order dealing with illegal immigrants whose children had been born in the United States.  And on the far left, the Congressmen wanted to remove many of the giveaways that had nothing to do with the spending bill.

 

Cruz, in a procedural vote extended the Senatorial Session into the weekend.  He did not get his Amendment to the bill passed.  Harry Reed, the majority leader in the Senate, used the additional time to get a large number of Obama appointees approved beginning with the Surgeon General, Dr. Vivek Murthy, who had been opposed by the NRA because he had suggested earlier that guns were a disease since they killed a large number of people.  By the end of the session, Tuesday, December 15th, the Senate had approved a total of 69 controversial presidential appointments.

 

The Senate passed the Spending Bill on Saturday and President Obama quietly signed it on Tuesday.  Congress adjourned around midnight of Tuesday, December 16th and the new Congress, which would have Republican majorities in both Houses, met in January of the next year, after the holidays.

 

It is interesting to note that all that is required for the government to keep functioning is a one sentence bill that states that the Federal Government shall be properly funded for the fiscal year.  The 1,603 page bill detailing all the expenditures over the fiscal year was ridiculous.  In this bill every item that was to be funded had to be mentioned in detail.  For example: Vice President, Joe Biden’s and other top officials in the government’s salaries were frozen.  There was no automatic raise for them that was put into law several years earlier but the members of Congress  got their cost of living raise, raising their pay to over $140,000 each.

 

What happened originally was that several years earlier Congress had voted itself a raise.  The press got hold of the news and published it.  People were indignant over Congress giving itself an increase in salary when everyone else was hurting financially.  There was a protest and the increase was rescinded.  Thereafter Congress quietly passed a law making pay increases for Congress and government officials automatic.  From then on there was no protest or even public knowledge that this was occurring.  In 2014 Congress has voted through its 1,603 page bill not to freeze its own salary but to do so to the Vice President and other high government officials in the Administration.  How petty could they get?

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In December of 2015 the Federal Government funding situation was far different from what it had been a year earlier.  For one thing there was a major Presidential Election coming up in a little less than a year.  A government shutdown at this point could have dire consequences for the Republicans in the election if they were blamed for it.  Also the people had had enough of the shenanigans that the Republican House of Representatives had pulled since 2011 when they took control of the House of Representatives.  The President and the Democrats in both Houses of Congress were not about to go along with what the Republicans had pulled the preceding year. And they would need Congressional Democratic votes to pass any spending bill in both Houses of Congress.

 

The 2015 omnibus bill, 2,200 pages long, incorporated legislation from twelve subcommittees and was the work of nearly a year.  There had been months of negotiations between the two major parties.  The bill passed in the House with 316 positive votes to 113 negative ones.  150 Republicans supported the measure and 95 opposed it.  50 members did not vote.  Among the Democrats, 166 voted for the legislation, 18 voted against it.

 

On both extremes there were Congressmen who thought the bill did not go far enough or that it went too far in the wrong direction.  Many conservatives felt it overspent, didn’t go far enough blocking abortions and Syrian refugees from coming to the U.S.  Liberals felt that the bill did nothing to address the debt crisis in Puerto Rico, did not positively enough effect environmental concerns, and that it lifted a 40 year ban on exporting domestic oil export.

 

The bill funds the United States Government through September of 2016, nine months.  The probability is that another bill will be easily passed at that time to fund the government at least until the end of 2016.  The country will be too close to the 2016 Presidential Election for any games to be tried at that time.

 

But if a Democrat wins the 2016 Presidential Election and the Republicans retain control of the House of Representatives, the December 2016 Government Financing Bill should prove very interesting.  Who the next President will be will not be known until the November 2016 Presidential Election is over.

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This omnibus bill will be noted for what it left out, rather than for what it included.  There is no mention of Planned Parenthood or of the Syrian refugee crisis; nor of numerous other things that were important to both political parties.  Speaker Ryan promised the Democrats that the House would deal with the Puerto Rico Debt Crisis in March; that brought a number of Democrats into line to support the bill.  Ryan also spread-out the decision making process so that many members of Congress felt that they owned parts of the bill.

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Nancy Pelosi, the minority leader, was asked why the Democrats hadn’t pushed harder.  Her answer was, “I don’t think they would have passed it.”  The implications are that both the Democrats and the Republicans had each gone as far as they could in working out this compromise piece of legislation.  As a result of the negotiations neither side could claim victory or defeat.  Both had squeezed the other side as hard as they could.  President Obama praised the Republicans for doing what Congress has done so well in the past, compromising to the point of hammering out a bill both sides could live with.

 

The Democrats considered the permanent reauthorization of the 9/11 Health legislation a major win.  As a result of the 9/11 destruction of the Twin Towers in New York City a large number of the rescuers had breathed in toxic dust and, those who had not since died from resulting cancer and other maladies, still had expensive medical needs.  Reauthorizing this medical coverage would help a large number of people.  Lifting the 40 year ban on oil drilled in the U.S. being sold outside it continental borders was called by Ryan a big win.  Republicans also were able to block proposed bans on weapon purchases by people on federal terrorist lists and also federally funded research on gun violence.

 

Perhaps the most important thing that the bill did was to do away with the automatic Sequester cuts for 2015.  These cuts, which would have automatically gone into effect early in 2016, would have seriously hurt government efficiency for both defense and non-defense programs, across the board.  The military budget was actually increased above what it had been the prior year.  And this was also true for a number of other programs.  The White House was touting tax breaks for the wind and solar programs.  In all there were $680 billion in tax cuts for both businesses and individuals.  But sequestration is still there and will automatically come into being at the end of 2016 unless new legislation is passed then to stop or end it.

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Does this legislation denote a new feeling of friendliness between the two political parties?  I think not.  What it demonstrates is a wide division between both Democrats and Republicans.  It took nearly a year to come up with this 2,200 page detailed bill and make it acceptable to both political parties.  Neither party was strong enough to push any of this legislation through on its own; it required a joint effort to pass it.

 

If anything it denotes the great distance between our political parties.  Speaker Ryan has recently commented that the House will soon take up defunding Obamacare. That will mean that this bill will have been passed over 50 times without once being taken up in the Senate.  Considering that the House will officially only meet for 110 days in 2016 that is spending a lot of time upon a bill that will go nowhere.  Ryan stated that, outside of the increasing number of people signing up for the service, the bill is a failure.  Interestingly outside of his statement he offered no evidence other than his word.

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The December 11th deadline for this bill to pass was extended one week to Friday, December 18.  Directly after the bill was passed in the House of Representatives it was sent to the Senate where it was passed.  From there it was sent to the President, who signed it with positive remarks for the compromise legislation.  Obviously the Government shutdown was avoided.

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It should be noted that on Wednesday, December 6th the    House of Representatives, under Speaker Paul Ryan’s leadership, passed a bill for the 62d time defunding Obamacare and stripping Planned Parenthood of Federal Funding.  The bill was passed in the Senate last year through a special provision that avoided a filibuster in the Senate and was sent to the President for the first time.  On Friday, December 8, two days later, it was vetoed by the President, who stated that the Affordable Health Care Act had helped millions of Americans who couldn’t otherwise afford Health Care.  Republicans do not have the votes to override the veto.  Still they claimed victory, claiming that they had passed a repeal bill and that they are keeping a promise to voters in an election year.  They stated that they are capable of repealing the law if a Republican wins in the November election.  I wonder if that’s true if Donald Trump were to become the next president.

 

Of course they would still have to keep control of both Houses of Congress.  2016 promises to be a colorful year in Congress.  We may go beyond gridlock.  This should be particularly true with the House working a three day week and taking a four day weekend and all holidays.

Official photographic portrait of US President...

Official photographic portrait of US President Barack Obama (born 4 August 1961; assumed office 20 January 2009) (Photo credit: Wikipedia)

The Weiner Component #144 – The Federal Reserve & the Rising Interest Rate

English: President George W. Bush and Presiden...

In late 2008 the major banking houses in the United States, like the Bank of America, Wells Fargo, JP Morgan Chase, and others by their reckless and irresponsible actions during the prior 28 years, virtually destroyed the Real Estate Industry bringing it to a giant crash.  Not only Real Estate but also the major banking houses themselves, like the like those already mentioned and numerous other banks stood upon the edge of total disaster.  Many of the banking houses were initially saved by President George W. Bush during his last year in office and then, with restrictions, by President Barack Obama.

 

(The CEO of Bank of America complained venomously about the restrictions, cutting executive salaries well below a million dollars.  He wanted to pay-off the government debt so executive salaries could get back to normal.)

 

For the first year of Obama’s Presidency the Fiscal Policy applied by the Democratic Congress dealt mostly with bailing out banks and other industries.  President Obama also saved the auto industry in the United States.  Ford was able to just make it without any government help but its stock tanked to under $5.00 a share for a period of time and then went up to over $14 a share.  General Motors took government loans and its stock, in a bankruptcy suite, was declared valueless by a judge.  Bail out funds and a new issue of stock saved the company.  The original stock holders lost their investment.  Chrysler was saved by a bail out.

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Household property values dropped like large bombs and exploded.  During 2008, when all the indicators foretold oncoming disaster, the bank executives were in denial, in order to continue, financing and refinancing, they raised loan values on properties to 125% of appraised value.  When the Crash came, in September of that year, a goodly percentage of the home mortgages were far above the newly appraised value of the homes.

 

Many of the banks were overextended, too much money had been invested in mortgages which had not yet been converted into fractional pieces and sold to hedge funds.  Many homeowners suddenly discovered that their homes carried greater loans than they were suddenly worth.  A number of them decided to start over and walked away from their properties, leaving empty houses behind.  Values dropped overnight; employment across the country fell significantly.  There was massive unemployment and it was continuing to decrease.  The nation was in a deep recession ready to continue falling into a deeper depression than that of 1929.  It would take at least a decade or more for the housing crisis to be resolved and for the banks to be willing to finance new construction again.

 

At first the banks generated documents on properties they administered but did not own, selling these houses, and keeping the profits for themselves.  This went on until the Courts realized or discovered what was happening; then the different banking houses stopped the illegal process.  The ownership of these homes had been so fractionalized that no one really owned them.  The records on these structures had been so sloppily put together by the banks that it was impossible to establish ownership on many of these structures.

 

The banks, in their rush to make profits, had been in such a hurry to finance and refinance their numerous deals that tracing the ownership of many of these houses was like going through an impossible maze.  They could not find fifty plus percent of the mortgage ownership.  These empty houses would be sold in a few years for back taxes.  The original hedge fund owners lost their investments as their hedge funds became valueless.

 

Many who were able to hold onto their homes would eventually see their properties rise in value.  And many who held on to their homes would eventually lose them by not being able to afford the monthly payments.  It was an impossible mess!

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From 2009 to 2010 the Federal Government had a Democratic majority in both Houses of Congress and was able to apply Fiscal Policy.  In those two years Congress with the aid of the President, Barack Obama, was able to pass Fiscal Polity bills and make executive decisions that slowed down the recession gradually turned the country in the direction of recovery.

 

After the 2010 Midterm Election the Republicans achieved a majority in the House of Representatives.  From 2011 on no Fiscal Policy Bills were passed by the House of Representatives.  In fact, at one point they refused to fund the government, effectively shutting it down for a period of time, and costing the taxpayers several billion dollars in this process.

 

The prospective of the Republicans tended to be and generally still is, what’s happening right now, this minute.  The future to them seems to be an abstraction that they do not deal with.  They seem to be penny wise and dollar stupid.  Immediate savings would be the limit of their understanding.

 

They have wasted millions on pointless hearings such as on investigating Benghazi and other causes which seem to be mainly political, attempting to embarrass a Democratic leader or cause.  And they seem to like to hold their government refinancing bills to the last moment where the bill must be passed or the government will face some sort of disaster.  In 2014 they spent over a trillion dollars financing the government for 2015 and including earmarks for every other cause they supported with friendly legislation all combined into one giant bill of over 1,000 pages that cost the government billions of dollars.  For 2016 they spent 1.25 trillion dollars effecting a 2,200 page compromise bill with the Democrats.  So much for fiscal responsibility!

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In dealing with the 2008 Real Estate Crash the Federal Reserve utilized Monetary Policy.  What happened with the Crash is that the value of a dollar dropped to five or ten cents virtually overnight.  Many people lost their employment.  Most people were also confused as to what was happening.

 

The Chairman of the Federal Reserve at this time was Ben Bernanke.  He had been originally appointed by President George W. Bush.  One of the first things he did was to lower interest rates that the FED charges banks to 0%.  The current Chairperson is Janet Yellen.  On December 16, 2015 she and her Board, which consists of the Presidents of the twelve regional Banks, raised the interest rate from 0 to ¼ of 1%.  They had held it at zero for about seven years.  The average bank account in the U.S. was receiving interest at the rate of 1/10th of 1% per year.  Generally that is not even enough yearly interest to have taxes paid on it.  Most accounts received under $10 a year.  This amount was too small to be reported to the IRS which requires a ten dollar minimum.

 

The object of this move, after the 2008 Real Estate Crash, was to make money very inexpensive to borrow.  Theoretically it was to encourage the banks to loosen their lending policies and encourage economic expansion and thus reverse the Great Recession.  That didn’t happen.  Suddenly the banks became super cautious with their lending policies.  What the banks seemed to go into at this time was investing in the futures market.  This is buying items like food crops that are still growing and assorted raw materials that have not yet been mined months in advance of their coming on the market for sale and then selling these items when they came on the market with a goodly amount of profit added to them.  Here the virtually free money lent by the Federal Reserve to the banks, actually by the taxpayer indirectly, allowed them, the banks, to raise prices on much of the goods the public needed to survive and make a goodly profit on it.

 

It should also be noted that during this period the banks were also paying millions in fines for illegal practices they were and had been engaging in.  I don’t think any of the major banking houses escaped paying numerous multimillion dollar fines.  In all, these fined added up to billions of dollars; but no one went to jail for these breaches of the laws.

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Both Bernanke and Obama had tried to get the Republican House of Representatives to pass Fiscal Policy, laws that would create jobs.  President Obama had presented them with a plan for infrastructure improvement which would create jobs and Chairman Bernanke had stated the need in numerous Congressional hearings and public speeches.  Congress not only ignored them, it passed various measures shrinking the Federal Government and actually exacerbating the recession by causing more unemployment.

 

As the cheap money policy wasn’t working on a large enough scale to noticeably affect the overall economy what was needed was a new plan to encourage economic growth. This was a new creative use of Monetary Policy and the FED came up with one that would loosen currency in the economy and end the “Housing Mess” created by the banks.  This was Creative Monetary Policy.

 

We don’t know who deserves credit for it, whether it was the President, the Chairman of the Federal Reserve, or members of his Board, or for that matter a combination of the three.  But we do know that it worked.  What they did for a period of well over two years was to add 85 billion dollars each month to the National Cash Flow or the available amount of currency in the entire economy, ending the process in 2015 by decreasing the amount by 10 billion monthly until it reached 0.  Of this money 45 billion was used to buy mortgage paper and 40 billion was just added to the existing currency in circulation.

 

In all the Federal Reserve spent over 2 trillion 7 hundred billion dollars in getting rid of the “Housing Mess” created recklessly by all the major banking houses.  If we add to that another 2 trillion dollars we get an image of what the Federal Government spent through the Federal Reserve turning the country around toward economic recovery.  These are the profits the banks and their executives made from the 1980s to late 2008.

 

Somehow I don’t remember anyone in the banking industry publically expressing any remorse.  Particularly I don’t remember any banking executive being sorry about the 2.7 trillion dollars that the public paid indirectly to end the Housing Disaster in a relatively short time.  The only public complaints that came from banking executives was that, under President Obama, they had to take enormous cuts in their million or multimillion dollar compensation packages.  The fact that millions lost their homes and savings was immaterial to them.

 

The weakening of the Dodd-Frank Bill that was passed in 2009-2010 to do away with the causes that had brought about the 2008 Real Estate Crash was going to be done away with when Mitt Romney became President in 2013.  Romney lost that election.  When the Republican dominated House of Representatives passed the bill in 2014 funding the government for the oncoming year on December 11, the Thursday before the yearly Congressional session ended, one of the measures added to the Bill slightly weakened the Dodd-Frank Law.  I suspect they had originally hoped to do completely away with the legislation in 2015 with the last minute Finance Bill that year but it got dropped at some point in the negotiations between the two political parties.

 

Why is it that I feel like a victim from both the banks and Congress?

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In all the Federal Government added trillions of dollars to the currency in circulation and rather rapidly, in a little over two years resolved the “Housing Mess” created by the banks.  By 2015 there were very few houses empty houses in the country and new construction was occurring within all 50 states.  Conditions had moved in the direction of normalization and unemployment had dropped to 5% in the United States.

 

Of the 45 billion dollars that was spent buying up fractional pieces of mortgages throughout the fifty states each month there was no direct way for the Federal Government to ever directly recoup this money.

 

Originally the banks did not like having the properties having to be registered in the counties where they were situated; it was too slow a process.  They set up their own registration agency to handle all these exchanges and were able to get the Congress to pass the legislation that they needed in order to do this.  Their major problem was that the agency was not large enough to handle all these transactions throughout the fifty states.  There had to be at least a 20% error margin; it was probably much higher.  Either the agency was too small to properly record everything or it was too understaffed to properly do this and the assorted banks were not paying enough to fund it properly, or it was a combination of these.  In any event the records were rife with inaccuracies.  It would have taken an incalculable amount of time to straighten out the mess.

 

What the government bought for its 45 billion dollars in mortgage paper a month was billions of fractional pieces of mortgages that were virtually impossible to sort.  Further these came from houses situated throughout the entire United States and its territories.  There was no way sense could have been made out of these.  What the government was doing was buying up the “Housing Mess” that the banks had created and removing “the Mess” from the market where the banks had dumped it.  They were removing “the Mess” from the society and absorbing the loss.

 

The former owners of these houses who were still living in them and paying their property taxes but making no mortgage payments were living in houses that nobody owned and upon which nobody could legally foreclose.  They were, in essence, living for free in these homes that they had formally owned.  They could keep the house for the rest of their lives.  They could even sell the property if they could find a bank that would put a mortgage on the house.  Basically they could spend the rest of their lives in these houses without paying another cent on the original mortgage as long as they paid their taxes.

 

The problem here was that no one knew who really owned those houses.  It could be the Federal Government or it could be a mortgage company or, for that matter, it could be a bank.  It could also be an individual who had purchased the full mortgage from a bank.  If an individual or a mortgage company owned the entire property they would eventually make their presence known and resolve the ownership problem.  But if the mortgage had been fractionalized it was either the government or a defunct hedge fund and impossible to determine ownership.

 

Generally the behavior of these people, who were making no more mortgage payments, was to live well.  Suddenly they had more disposable income and they tended to spent much or all of it.  The result was that this money added significantly to the amount of currency in circulation and helped to eradicate much of the results of the 2008 Real Estate Crash.  It can also be stated that these people who were paying no mortgage could no longer deduct the interest on their housing loans.  Consequently nationally the IRS collected additional billions in taxes from these people across the nation.

 

This was the creative Monetary Policy that the Federal Reserve and its Chairman, Ben Bernanke, came up with.  It worked and with some Fiscal Policy applied by Congress could have totally returned this nation to full economic health.

 

Instead the nation is still at 5% unemployment.  The Republican candidates, like Jed Bush talk about doing away with the Environmental Protection Agency (EPA) as a mean of increasing employment in the United States.  It would seem that they would like to see parts of the U.S. look like some of the Chinese cities, dark with smog at noon, filled with unbreathable air.  But they believe this would increase employment in the country, even if it does shorten lives.

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It should also be noted that the interest rate that the Federal Reserve charged banks was at 0%.  In December of 2015 the new Chairperson, Janet Yellen, announced that they were raising it to ¼ of 1% that is .025%.  That will mean that the banks will raise the interest they pay on bank deposits from 1/10th of 1% to possibly 3/10th of 1%.  For the last seven or so years the public has been funding the banks practically for free.  With this increase the interest paid by the banks might rise enough so that some people, but not too many, will have to pay the IRS a few dollars in taxes on their bank deposits in 2016.

 

We, the public, have been funding the banks with our funds, checks and so forth, practically for nothing.  These monies, up to ½ million dollars per account are guaranteed by the Federal Government through the FDIC, but the banks can and do use the money they continually receive from us in almost any way they see fit for their own profit.  In 2015 the banks are reporting significant profits.  Their executive salaries are in the millions and multi millions.  And for contributing these monies the public ends up not only paying endless fees to the banks but also considerable amounts as middle men in the Futures Market.  The banks freely take a share of the money you earn and spend for your food and other necessary products as the Middle Men in the sale of many of the items people need to survive.

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It should also be noted that with 0% interest paid by the banks mortgage rates dropped to, in some cases, below 3%.  With the Federal Reserve’s action of raising the interest rate charged banks a fraction mortgage rates still dropped.  The amount the banks now pay to the FED is minuscule.  I would assume that they will continue to rise, at least, at the same rate as the first increase.  The public does deserve some return for letting the banks use their monies.

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As a sort of footnote we should remember that the banks are necessary for the national and international economies to properly work.  But we should also note that the major reason for all the banks is to serve the public.  Today it would seem that the major banking houses of the United States and much of the Industrial World serve mainly themselves.  The public seems to be exploited for the benefit of their self-interest, profit.  We, as a nation, might be better off if there was an alternative to the current privately run banking houses in this country.  If nothing else giving the public an alternative to the current banking situation might generate a certain amount of humility in the current banking houses.

 

An alternative does exist; and that is the Federal Reserve.  All the Congress has to do is extend their powers so that they can also deal directly with the public.  They are a government agency that was created in on December 23, 1913 as a result of numerous financial panics.  Their major objective is to serve the public; that is still their major purpose.  The FED has undergone an evolution, particularly in the 1930s after the Great Depression.  If the Congress were to extend their powers they could easily take on the same functions as the private banking houses and allow the public to have a positive banking experience that would operate for the benefit of the public.

 

There are twelve Federal Reserve Districts covering the entire United States.  They can easily establish banking facilities throughout the nation.  This would also give them more ability to positively control the economy.  And they need not totally replace the current private banking houses; they could function alongside them giving the public a choice of where they want to do their banking.  Their existence in this fashion would also insure that the public gets a reasonable return on their banking accounts and it would force the private banks to stay honest.

 

It should also be noted that finances in most industrial nations are run by state owned public banks, like the bank of England or France.

The Weiner Component #143 – President Obama & the Republicans

With his family by his side, Barack Obama is s...

With his family by his side, Barack Obama is sworn in as the 44th president of the United States by Chief Justice of the United States John G. Roberts, Jr. in Washington, D.C., Jan. 20, 2009. More than 5,000 men and women in uniform are providing military ceremonial support to the presidential inauguration, a tradition dating back to George Washington’s 1789 inauguration. VIRIN: 090120-F-3961R-919 (Photo credit: Wikipedia)

During the Republican Presidential Debates, which are being held nearly a year before the next Presidential Election, one of the constantly recurring themes that a number of the Republican Presidential candidates continually bring up is that the current President, Barack Obama, is a failed president, not capable of running the country.  Of course if he’s that bad one would expect a movement to impeach him.  But I haven’t heard of that happening.  So what we have is an interpretation by the prospective Republican candidates who of late have tied Hillary Rodham Clinton to President Obama as a failed Secretary of State.  I suppose the more they denounce him the greater they feel they themselves are.

 

Also after denouncing President Obama and Clinton the Republican candidates announce generally what they will do, the results from their handling of specific problems.  How they will solve military issues by sending in American troops, create a no-fly zone over Syria, create increased employment by getting rid of the Environmental Protection Agency (EPA).  But more pollution will not necessarily produce more jobs.  It will successfully, however, shorten a number of lives.  It must be wonderful to be that sure of oneself.

 

In essence most of the potential candidates are blowing in the wind!  Most, if not all, that they say they will do requires either an act of Congress or an Amendment to the Constitution.  According to what Donald Trump says as to what he will do would need a new document of government to drastically increase the powers of the president and limit Congress’ powers.  In the case of Carley Fiona I keep remembering that after she became CEO of Hewlett Packard the stock dropped to half its original value and she argued that she was a positive force even though she lied to her employees to get them to reduce their wages and thus reduce company costs.  She left the company or was fired by the Board of Directors not too long after with a buy-out package worth about 15 million dollars.  She has also lied or fabricated in her public announcements as a Presidential candidate.  Ted Cruz, it seems to me from much of what he has said, would like to become leader or fuhrer of the United States rather than just President.  He seems to have some of the elements of the late Senator Joseph McCarthy.

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I have often wondered what would have happened if in 2008 Senator John McCain had become President of the United States.  First off, he would have inherited a full-fledged Great Recession or potential Great Depression from former President, George W. Bush.  While Bush had temporarily initially bailed out many of the banks at the end of his presidency the question that arises is would McCain have continued the process?  According to the current Republican Presidential candidates no business is too big to fail.  The indication is that McCain would probably not have bailed out the banks.  The result would have been that the major banks in the United States would have gone under.  The movement of money through the economy would have slowed to a trickle and the country would have gone into a major depression that would make the Great Depression of 1929, which did not end until 1939 with the outbreak of World War II, look like a mild recession.  We would still today be feeling its strong negative effects.

 

In addition since the FDIC (Federal Deposit Insurance Corporation) insured every bank account up to a half million dollars the Federal Government would have had to pay out all the accounts of the bankrupt banks or take over and continue to operate those banks.  Either solution would have disrupted the dollar internationally and brought about major depressions in all the major industrial nations.

 

Unemployment in most if not all of these nations would have dropped to over 75%.  It was only 50% at the depth of the Great Depression.

 

In addition there would have been no bail out of the automobile industry and all the American car producing companies would have gone under in the U.S.  Mitt Romney distinctly made the point in 2012 when he ran for the Presidency, as the Republican candidate, that the auto companies should have been allowed to have gone through bankruptcy.  His point there is that in a bankruptcy the court generally declares the stock worthless.  The judge uses the value of the stock to pay off the company’s debt.  The same management that initially made the decisions that caused the bankruptcy stays in control of the company.

 

Way to go Mitt!  Your group stays in control of the company and the stockholders who trusted your leadership all get screwed.  It sounds very much like what Donald Trump did with his casinos in New Jersey.

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Barak Obama, in 2008, ran for President on a platform of change.  And it was indeed time for a change after the disasters brought about by the George Bush Jr. administration.  Presumably Bush had declared war against Iraq because they had secreted away weapons of mass destruction.  Actually he had the military invade the country because its leader, Saddam Hussein, had attempted to have his father, former President Bush Sr., assassinated and he was also acting as Sheriff of the Middle East, bringing American Democracy to Iraq.  The CIA was amazed when they heard his reasons for the act.  The United Nations, at the time, was legally searching Iraq for weapons of mass destruction.  Bush ended that with the U.S. invasion.

 

President Obama inherited a country ready to slip into total disaster.  Employment was rapidly dropping.  Property values were falling like a major landslide.  While he had been elected to bring about change his immediate problem was literally keeping the society functional.  He had to return to normality before he could inaugurate any real changes.  The fact that he also inaugurated Universal Health Care at this time is a demonstration of his level of competence.

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In periods of economic recession the government has two major weapons to fight the economic down-flow.  One is Monetary Policy which is controlled by the Federal Reserve (FED).  Here the FED can increase the amount and movement of currency in the general society by lowering the interest rates it charges banks.  This, in turn, forces the banks to lower their interest rates on the monies they lend out.  The effect of this is to loosen up the flow of currency through the economy, making the cost of borrowing cheaper, and thus encouraging growth or economic expansion.  Will this always happen?  The answer is generally; there are occasionally other variables which can hinder growth.

 

Under normal conditions there will be economic expansion and the GDP (Gross Domestic Product) would increase helping to end or counter-act the recession.  Going along with this is an increase in employment.

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The FED, which has twelve distinct branches throughout the fifty states, constantly monitors the entire economy.  It’s as though it has a thermometer throughout the nation and can interpret what’s happening in every part of the country.  Its main function is to keep the economy as healthy as possible.

 

Another tool the FED has is its control of how much money banks can led out.  This amount can be raised or lowered.  Every commercial bank or credit union has to keep a small percentage of every loan it makes.  The average is about 5% of all the monies it lends out.  For every $100.00 the bank lends out it has to keep $5.00 in cash.  If that is deposited in the bank then it has to keep 5% of that and so on until it has a $100.00 in cash.  By that time the bank has lent out $1,000.  If this amount is raised by the FED to 10% it then lowers the amount that can be lent out by 50%.  If it is lowered to 2 ½ % it increases the amount to $2,000.00 for every hundred dollars deposited into the bank.

 

The FED also controls the money flow in the U.S. by using the National Debt as a tool, buying and selling government bonds.  When the FED buys back government bonds and does not issue as much in new bonds it can increase the amount of money in circulation.  Doing the reverse of this decreases the amount of money available.  It can also, as it did after 2011, just issue currency to the National Cash Flow.  All this would be done with the concurrence of the President.  During Jimmy Carter’s four year administration he had the FED reverse its policy because of its adverse effect upon a segment of the population.

 

All of these are powerful tools for regulating the economy.  But in some instances they are not enough to bring about the needed positive change.  Such an instance was the 2008 Real Estate Crash.  At that time what was also needed was the other major Federal Government weapon that could help regulate the economy and that was Fiscal Policy.  Fiscal Policy would be one or more laws authorizing government spending passed by Congress and signed by the President.

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From 2009 through 2010, during President Obama’s first two years in office, he worked upon limiting the effects of the Great Recession.  This was done through an intensive use of fiscal policy with a Democratic Congress, continuing the bank bailouts and also bailing out the American automobile industry, among numerous other things.  During this period the Affordable Health Care Bill was passed.  This was the major visible change; the others, keeping the economy from crashing, were mainly invisible.  To many people who voted for him in 2008, the changes he had promised did not come about.

 

In the year 2010 the Midterm Election was held.  A large number of people who had supported President Obama in the Election of 2008 apparently were disgusted with him for not bringing about enough visible change in the society and stayed at home, not voting in the election; this resulted in the Republicans gaining control of the House of Representatives.

 

2010 was a census year in which the population of the country was counted so that the seats in the House of Representatives which are fixed in number could be properly reapportioned.  That year Republicans also won control of a number of states.  Those states and other Republican controlled states were then gerrymandered with new Voting Districts that would give Republicans an advantage in the future elections.

 

The new House of Representatives met as a caucus and took an oath not to cooperate with President Obama in anything.  The former minority Party in the House of Representatives, where the Democrats had had a majority, had taken the same oath two years earlier.  The Republicans had wanted to make him a one term president.  The new House of Representatives would not pass any Fiscal Policy laws.  When presented with a plan by President Obama they totally ignored his recommendations.  In fact they all opposed Obamacare and swore to rescind the Affordable Health Care law and passed such bills over 50 times from 2011 to 2014.  All these bills were ignored by the Senate.

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Because of the nature of what President Obama and his administration were doing there was very little publicity given to most of the changes they were bringing about, keeping the country from falling into a major depression and slowly bringing about recovery from the Housing Crash.  Visibly the President and the Democratic Congress seemed to be doing very little.  The one thing that emerged from that two year period was the Affordable Health Care Law, which was loudly denounced by the Republicans and passed strictly on a political party basis.  All Republicans voting against it and all Democrats, who had the majority in both Houses, voting for it.

 

As a note of irony the Affordable Health Care Bill (Obamacare) was modeled upon a Republican plan developed by a Republican Think Tank and originally applied in the state of Massachusetts by its then governor, Mitt Romney.  The plan, rather than have a single insurer, the Federal Government, relied on private enterprise, the many insurance companies across the country, in order to be put into operation.  It was a means of increasing the amount of business that the insurance companies did with some patient protective limitations.

 

To get Republican support on this bill President Obama and the Democrats had bent backwards to give the Republicans something they could easily support.  The Republicans have continued up until the present to oppose and denounce this law.  Ted Cruz has sworn to end this program when he becomes President.  The term Obamacare was originally stated as a put-down.

 

With the 2011 Midterm Election the Republicans were able to achieve a majority in the House of Representatives.  The voter turnout was very low.  A number of people who had voted for Obama in 2008, particularly among the Hispanics stayed at home and didn’t bother voting.  Thereafter virtually nothing President Obama supported was passed in the House of Representatives.

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One of the major problems within the United States has to do with its infrastructure.  The National Highway System was built in the 1950s during the Eisenhower administration.  Most of the ports are too small to allow the new giant container ships to use them.  Many if not most of the bridges built in the U.S. were done in the early part of the 20th Century if not earlier.  The majority of airports are inadequate in dealing with all the air traffic.  The electric grid throughout the United States is totally dated and in winter parts of it have stopped functioning by freezing up and parts of the country has lost electric power.  Most of the utility companies don’t have the resources to fix this problem, leaving it to the Federal Government.  These are just some of the infrastructure problems, there are many more.  Ultimately most of these come down to the Federal Government as the only source that has the resources to really upgrade the nation.

 

Most of these repairs would in a relatively short period of time pay for themselves by increasing the GDP and significantly increase the tax base on all levels of government.  With one exception, and that is renewing a functioning plan that already existed, both the House and the Senate have ignored these problems.  Ultimately a total upgrade would cost trillions of dollars.  And at some point it will have to be begun and ultimately done.

 

President Obama presented Congress with a detailed plan that would at the same time have begun work on the infrastructure and ended all the effects of the 2008 Real Estate Crash by totally ending unemployment in the country.  The plan would have reduced unemployment to about 2% which is the rate of people changing jobs.

 

The House of Representatives totally ignored the plan and did not even consider it.  To them spending government money they didn’t have to would be anathema; their basic problem was that they could only understand the present which meant that they would be spending additional funds.  The fact that the nation would get that money back with interest in the next decade or so was out of their realm of comprehension.

 

In fact what the Republicans have done in passing legislation in the House of Representatives and in the Senate has been to increase unemployment in the United States.  Using economy or reduced government spending as their excuse they have forced through bills that significantly reduce government spending.  Their final and most important cut was Sequestration which was passed when they could get no agreement with the Democrats in Congress to cut anything else.  This law automatically cuts by a specific percentage every year from just about every program unless a law is pass to stop a section of it from happening.

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The President requires the “advice and consent” of the Senate on most of his appointments of officials to government jobs; particularly supervisory positions such as judges, heads of government departments, etc.  There are more open judgeships now or unappointed heads of departments that at any other time in the history of the United States.

 

An individual that comes to mind is someone that both the Democrats and Republicans approve of whose expertise deals with a phase of banking wherein he can trace the movement of currency through terrorist organizations like ISIS and interrupt that movement.  The current Senate, that has a slight Republican majority, has refused to bring his name up for a vote.  Apparently they don’t want President Obama to have any successes regardless of the cost to the country.

 

However, even though the media just mentioned a small number of these incidents, U.S. explosive drones have killed most of al-Qaeda leaders as was Osama bin Laden in a military raid in Pakistan. They are no longer the military terrorist force they were when they blew up the Twin Towers during the Bush Republican administration.

 

President Obama has just signed a 1.15 billion dollar compromise with the Republican Congress that will keep the Federal Government going and achieve a number of Democratic programs.  It was a compromise bill and will also achieve a number of Republican goals.

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If we examine the achievements of the last dozen or so Presidents, Barak Obama emerges as one of our top leaders.  This is amazing in the respect that for the last five of his eight years in office Congress has consistently worked to keep him from achieving anything.  He emerges as a man among men who has achieved much regardless of the limitations continually set for him by the Republicans in Congress.

 

During most of his administration he has bent backwards to get the cooperation of the Republicans in Congress.  It hasn’t happened.  I suspect that by this time he had had it and will only accept positive results from Congress as he did with the 1.15 trillion dollar budget compromise.

 

In this bill the Republicans have added significantly to the National Debt, a principle they supposedly oppose.  They spent almost as much in 2014 with their last minute bill then to finance the Federal Government through 2015.  They achieved a number of their objectives but they did not defund Planned Parenthood or keep Syrians from immigrating to the United States.  They did however keep Planned Parenthood from getting an increase in funding from the government.

 

Personally I am glad that Barak Obama is President of the United States.  I would hate to think of what might have happened if John McCain or Mitt Romney had won.  President Obama has carried the United States through a very difficult time in our history.

The Weiner Component #142 – Terrorism in the World Today

September 11, 2001 attacks in New York City: V...

September 11, 2001 attacks in New York City: View of the World Trade Center and the Statue of Liberty. (Image: US National Park Service ) (Photo credit: Wikipedia)

FBI mugshot of Timothy McVeigh.

FBI mugshot of Timothy McVeigh. (Photo credit: Wikipedia)

Terror is to be afraid of or fearful of something.  Terrorism is, for a group or population, to be intensely frightened of something equally unpleasant.  Usually what is being considered here is some form of death or mayhem!

 

It is a weapon that has been used innumerable times over the centuries to attempt to achieve a political goal usually by minorities over a much larger population.  Usually within a society a group or groups that are not powerful enough to make their will or position known will use the tactics of terror to propagate their beliefs.  In Elizabethan England during the 16th Century, Catholics in this country that had decades earlier reluctantly turned Protestant under King Henry VIII secretly used this strategy to voice their objections during the reign of his daughter, Queen Elizabeth.  During the late 19th Century in Russia and Austria-Hungary, whose population was a polyglot of different Balkan ethnic groups, protest was illegal.  Revolutionaries in both these countries used terror as a form of protest, forcing their will upon the Central Governments by assassinating government officials.  This included rulers in both nations.

 

Generally when a political group is too strong to be forcibly obliterated but not powerful enough to openly influence the existing government they seem to resort to the use of terror.  The direct cause of World War I was the assassination of the heir to the Austro-Hungarian throne, Frances Ferdinand, in 1914.  Later in the 20th Century the concept of war was broadened to include the entire population of a nation and terror then covered the entire population.

 

In the case of the world today we are dealing with total war, this can cover the entire population of a nation or a group of nations.  Mayhem/ human destruction, terrorism anywhere in a nation is an act of war.  The action can be caused by some individual or groups within the nation or by people from other countries or areas of the world.

 

In the United States in 1995 Timothy McVeigh, an American terrorist detonated a truck bomb in front of a federal building in Oklahoma City on April 19th, killing 168 people and injuring over 600 others.  Presumably McVeigh was getting even with the United States for the Waco siege in 1993.  At that time the Branch Davidians, a sect that separated in 1955 from the Seventh-day Adventist Church, was led by David Koresh and lived at Mt. Carmel Ranch in Elk, Texas.  The group was suspected of weapons violations and forcibly refused to allow a search and arrest warrant by the Bureau of Alcohol, Tobacco, Firearms, and Explosives.  Because of armed resistance, and the presence of women and children at the Ranch, a 51 day siege resulted.  It ended with a tear gas attack by the FBI, in which a fire engulfed the Ranch.  76 people died that day, including David Koresh.  Timothy McVeigh had been driving to Waco to show support for the Branch Davidians.  Two years later he would explode his home-made bomb.

 

Terrorists can be either citizens of the country where the atrocity is perpetrated or come from other parts of the world to punish a particular nation.  McVeigh was an American citizen seeking revenge for the Branch Davidians.  Whether this was because he had mental problems or not is academic.  He was at heart a terrorist who resented his own government and his killing of people was an act of terror.

 

A number of the mass shootings that seem to become commoner and commoner in the United States seem to be perpetrated by people who have mental problems and should have no access to weapons.  According to an article in the L.A. Times as of Friday, December 4, 2015, there were up to 353 mass shootings in 2015 in the nation.  The problem seems to be that In the U.S. every state has different gun laws, and weapons that are illegal in one state can be easily acquired in another state, particularly at gun shows where no background check is ever required.

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It should be noted that in the case of the world today al-Qaeda, ISIS and other groups from the Middle East and North Africa, make up the majority of the terrorist groups. Their rational is that they are punishing the world for not giving in to them.  In fact the President of the United States and the government of a number of European nations have declared war upon ISIS.  Most of these groups come from nations that until shortly after World War II were colonies or protectorates of Europe and or the United States.  Among the reasons for the uses of terror this fact seems to be one of the causes for their actions.

 

The colonial imperialist empires continued after the Second World War.  It was from the 1950s on that these countries/colonies began rebelling and it became too expensive for the European nations like England, France, Holland, among others, to keep their possessions.  It was far more practical to give them their independence and trade with them.  In this way most of these nations suddenly became ready for independence.

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In the United States on September 11, 2001, the Twin Towers in New York City, the tallest buildings in the world were destroyed killing 2,700 people in the collapsed two buildings, the Pentagon in Washington, D.C. was also hit killing 184 individuals, and in a plane crash in Pennsylvania where 40 people died trying to take back control of the jet.  The fuel on the airplanes were the bombs that burst into flames and exploded when the jets crashed into their targets.  Each plane carried as passengers a crew of suicide terrorists, nineteen on all of them, who took over the planes shortly after takeoff on the East Coast and piloted the jets to their targets crashing them, in the first two cases, into the structures.

 

Osama bin Laden the leader of al-Qaeda chose these targets because he believed the United States was a “paper tiger, an easy and inept target.”  His reasoning followed the pattern of U.S. withdrawal from Viet Nam in 1975, leaving Lebanon after a bomb in Beirut in 1983 at the marine barracks killed 241 servicemen, and the withdrawal of American forces from Somalia in 1993 after the deaths of 18 servicemen in Mogadishu.

 

While al Qaeda was highly functional after the attack on the Twin Towers it wasn’t until after the election of Barak Obama as President of the United States that it was effectively gone after.  Using drones the U.S. continually went after its leaders, killing a large number of them.  What eventually became the dominant militant terrorist force was ISIS or ISIL.

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The Boston Marathon is held yearly on Patriots Day.  It is open to anyone from 18 years on who qualifies.  On April 15, 2003 the brothers Tamerlain and Dzhekhar Tsarnev placed two separate backpacks in separate areas near the finish line.  They exploded killing 3 people and wounding 264 others.  Both brothers were born in a Muslim area of Russia and migrated to the United States.  One died in a shootout with police and the other was taken prisoner, tried, condemned to death and executed.  At one point he publically apologized to his victims.  It would seem from the evidence released that these two acted on their own; they were not affiliated with any terrorist organization.

 

To my knowledge there has been one other cases of foreign terror in the U.S. since then, the recent shooting by the young terrorist couple in San Bernardino, California. This couple also largely acted on their own.  The reason, as I understand it, for this small amount of foreign terrorism has been the relentless protection provided by the F.B.I. and other law enforcement services.  Unfortunately there has been assorted terrorist killing in the United States but these have been by our own deranged citizens.  There are no real restrictions, as we’ve seen, on anyone acquiring automatic assault weapons. Freedom to buy guns seems an axiom of Republican Congressmen who will not even require background checks upon the purchasers.

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In the United States the Caucasian population no longer makes up the majority of the population.  They are one of the large ethnic groups but no longer one that is the majority.

 

In terms of religion there are today a multitude of largely different beliefs now existing in the United States.  Traditionally the country was mainly Christian, having mostly Protestant Sects, some Roman Catholics, with a relatively small Jewish population.  There was also a nonreligious group operating as a religion, Ethical Culture.  Today there are also Hindu temples, Moslem mosques, plus numerous other groups existing in the country.  The country has undergone a large number of people coming from other parts of the world for political or other reasons.

 

One of the major causes for the problems that currently exist is that society has gotten complex.  Unfortunately today to economically function successfully in our society one needs a decent education; people need to understand that nothing is simply black and white; that societal and other problems do not have just simple “common sense” solutions.

 

Not too long ago a young, high school dropout, Dylann Roof, who apparently found high school too difficult but who admired former South African apartheid, at age 21, went into a Black Church in South Carolina and, after sitting and watching a Bible class for a while, shot nine people, killing them; then stated that he had to do it because Black people “rape our women” and “are taking over our country.”  His lack of intelligence created a simplistic bigot who, incidentally at the shooting, mostly killed women.

 

Over the last fifteen years there’s been a goodly increase in hate crimes, and at the same time it has become more difficult for a large number of people, with low or no specific skills, to become gainfully employed.  It is easy to find such a reason in demographic change, particularly in a country with a Black President.  The U.S. has had an increase in homegrown domestic terror.  But the Jihad still exists.  ISIS has declared war on all opposing nations in the Middle East, Africa, Europe, and on the United States.  Evidence of their behavior is evident, practically every day.  There are acts of terror around the world or ISIS is beheading people, both Muslim and non-Muslim in areas it controls.

 

Probably in 2015 the most devastating Terrorist attack or attacks were in Paris, France on November 13th.  Since then the governors of 20 states in the U.S. have stated that they will not accept refugees from Syria.  Legally they don’t have that power but they may forcibly try to stop the process.  President Obama has committed the U.S. to bringing in 10,000 Syrian refugees.  Donald Trump wants to stop any Moslems from coming to the U.S.

 

It is important to remember that Syria has a multi-sided Civil War that has been going on for a number of years with no solution in sight.  ISIS is only one of main rebel groups that controls a fair section of the country.  The current president of the country holds a fair section of the nation and currently has the support of Russia and Iran.  The population has been caught in-between all this fighting and well over a million citizens have been killed.  A percentage of the civilian population has and is continuing to flee the country and flooding Europe.

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In Paris, late Friday, November 13th three well-coordinated simultaneous terrorist attacks in different areas of the city killed 130 people.  There were six random shootings of anyone who happened to be in range by three teams of suicide killers who wore sophisticated explosive vests.  There was no way they could or would be taken alive.

 

As far as we know the Paris attacks were planned in Syria and organized in Belgium.  ISIS has claimed credit for the killings and has promised that the next raid and killings will be in Washington, D.C.  Apparently their actual next raid in the U.S. was in San Bernardino, California.  On December 2, 2015 a married couple attacked an end of year company party, where the man worked, killing 14 people and wounding 22.  They were both killed in a car chase.  The man had been born in the United States of Moslem parents and the woman, his wife, was born in Pakistan.

 

In terms of France the November 13th killings were not the first attacks in France.  Nearly a year earlier there was an attack on the French satirical publication “Charlie Hebdo” that had come out with one edition that had a representation of Mohammed on its front page.  Several staff members were killed.  Not too long afterwards a Jewish Supermarket was attacked either by al-Qaeda or ISIS members.  Several people were killed before the French police assaulted the facility, freed the hostages that were being held, and killed the suspects.  In addition people who swore allegiance to ISIS in several instances ran their automobiles into crowds killing and maiming numbers of people.  There seems to be a strong animosity between extreme Muslim radicals and the French government.

 

Most of the people killed in al-Qaeda or ISIS attacks have been and are Muslims, both in the Middle East and in North Africa.  ISIS (Islamic State of Iraq and Syria) or ISIL (Islamic State of Iraq and Levant) is a Sunni sect.  The other major Islamic sect is the Shiites, which ISIS considers anathema or blasphemous.  The Middle East is divided mostly by these two sects, of which Shiites are in the majority.  The Shiites are the civilians in ISIS areas who are usually beheaded.

 

Sunni ISIS considers the Shiite and most other interpretations of their religion blasphemous.  They see nothing wrong with attacking their co-religionists as infidels, even during their religious services, with suicide bombers.  If the prophet, Mohammed, were to come back today he would be both shocked and appalled at much of what ISIS is doing in his name.

 

The United Nations holds ISIS responsible for human rights abuses and war crimes.  Amnesty International has charged the group with ethnic cleansing on a massive scale in northern Iraq.  Around the world Islamic religious leaders have condemned ISIS’s ideology and actions arguing that the group has strayed from the path of pure Islam and that its actions do not reflect Islam’s true teachings or virtues.  The U.N. has designated it a terrorist organization.  The European Union and all its member nations, the United States, India, Indonesia, Israel, Turkey, Saudi Arabia, Syria, Iran and other countries, over sixty in all are directly or indirectly waging war against ISIS.

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As a result of the last Paris attack the French and also the British have joined the United States in bombing attacks on ISIS strongholds.  Will all this be effective?  ISIS, the Islamic State of Iraq and Syria is holding large tracts of land in both Syria and Iraq.  The Iraqi government has not been able to mount strong enough ground offensives against them to force them out of their country.  In Syria there well are over a dozen revolutionary groups fighting President Assad and his government, plus each other.  They all have, including ISIS, different versions of what they want for their country.  It is an impossible situation that has been going on for five years.  ISIS holds large tracts of land in the country.  Both Russia and Iran support Assad’s government as the legitimate one.  The United States wants to remove Assad and work out some sort of compromise between a number of the less radical Revolutionary groups.  Millions of Syrian citizens have left the country looking for safety by going west into Europe as refugees, looking to start life over again where they can be safe.

 

For the United States or a European nation or nations to send an army in to help either Syria or Iraq is not a good idea.  There are too many people there who remember the colonial era.  And ultimately which group or groups do they support in Syria?  For that matter which of the Revolutionary group or groups do they really approve of or can trust after they arm them?  It is currently an impossible situation.

 

For the United States or any other Industrial country to send in troops would be an act of utter stupidity as we saw in Iraq where the U.S. sent in any army to dispose of one dictator only to generate another corrupt government that just about expelled the American army.  U.S. troops were not popular no matter what they did.  The same was true for Afghanistan where a small number of Americans were shot by their allies.

 

The situation in the Middle East is a mess.  The only real solution is to have the countries of the Middle East come to the rescue of their own people.  But they don’t seem to want to do that.  But then again they don’t have to with the United States and other Western nations continually intervening.

 

In Iraq incidentally the government, which the U.S. helped to set up, seems to be largely corrupt and very pro-Sunni; about 95% of the country belongs to this Muslim sect of Islam.  The government doesn’t necessarily have the support of its own people, at least not to the point of dying while militarily fighting its enemies, like ISIS for example.

 

If the United States or France or England and Germany, for that matter, were to send troops in either or both Iraq and Syria they would risk keeping them there indefinitely without the support of the people in either of these countries.  The people’s sense of values is completely different from those of the Western nations.  In both Pakistan and Iraq, when the U.S. had a presence in those countries during the administration of President George W. Bush, some of the local military ended up shooting some of the Americans.  It is quite a frustrating dilemma!

 

Currently President Barak Oboma stated, in a national speech made on television in early December of 2015, that the bombing raids by the U.S., that have been going on now for well over a year, in coordination with local military operations have kept ISIS from gaining additional territory in either Syria or Iraq.  The President stated that the Islamic State militants have not waged a single successful major offensive operation since 2014 in either of the two countries.  Currently France and England are also conducting bombing raids against ISIS targets.  Saudi Arabia is also involved in air raids against the Islamic State.

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ISIS has threatened that its next attack will be in Washington, D.C.  Of the American born man and his Pakistani born wife who killed 14 people in San Bernardino, California on Wednesday, December 8, 2015, in a shooting rampage at the Inland Regional Center.  The man, Syed Rizwan Farook, aged 28, attended a party with his fellow workers; he quietly slipped away   his jacket draped over a chair.  Then he returned with his wife, Tashfeed Malik, aged 29.  Both were dressed with body armor and unleashed a terrorist attack.  They were at the Center for Disabled People, where his company had rented a large room for their yearly social event.  They killed 14 and injured 21 people.  They were both killed in a police chase, leaving a 6 month old baby with his mother.

 

The annual event was known as a GEM (general education meeting), run by the San Bernardino Health Department.  It began at 8 a.m. and would end about 4 p.m.  It was held in a conference room that was designed to hold around 500 people.  Mr. Farook was there from the start of the meeting.  He had worked for the Department for five years.  At some point he got up and went out.  When he returned with his wife the drama began.

 

They had automatic weapons which had been legally purchased.  The man’s parents had been born in the Middle East and immigrated to the United States, becoming citizens.  His wife was born in Pakistan.  Both were college graduates and both were radicalized enough so that they left a six month old baby with his mother.  Presumably the mother, who lived with them, was told by the woman that she had a doctor’s appointment.

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What emerges here is an interesting point.  In the United States if we compare terrorist shootings, killings and woundings with American shootings, killings and woundings, the mayhem caused by the terrorists numerically is barely noticeable.  Terrorist acts get lots of publicity while American shooting are statistics barely covered by the media.  Republican Congressmen and many others are very conscience of terrorist acts but ignore other shootings because in order to limit American shootings they would have to limit the availability of guns.

 

A solution among many Republicans is to keep Muslims, followers of Islam out of the country.  The problem here is that there are a large number of followers of Islam already in the country.  This is in addition to the number children of immigrants who were born in this country.  There are also the Black Muslims who converted or whose parents converted in the last half of the 20th Century.  They are largely the descendants of slaves that were brought to this nation as prisoners and sold as slaves in the 18th and early 19th Centuries.  They converted originally as a protest to Christianity, the major religion of white America.  How will the Republicans handle them?  By putting them into reeducation centers?

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There is a legitimate fear with the terrorists.  That is that somehow they will smuggle into the U.S. bacteriological disease creating materials that can be easily put into the water supply.  Another possibility is that a stolen atomic bomb can be brought in and exploded in the center of a major city.  All this makes a good plot for Hollywood films.  But is this danger real?  Currently, it seems that the FBI has 900 open cases it is investigating.  This does not include all the other cases that are being worked on by other law enforcement agencies.  Also the possibility of acquiring any of these weapon is almost nonexistent.

 

What should our attitude be toward the current Syrian refugee problem?  Currently under the Obama administration it takes from eighteen months to two years of investigation for any Syrian refugee to be able to settle in the United States.  To the Republicans in the House of Representatives and the Republican governors of twenty some states this screening is inadequate, they want to extend it even further.  One of the terrorists from San Bernardino was born in the United States and was a citizen.  France despite its recent attack has overwhelmingly voted to take in Syrian refugees.  It seems that the Republicans who overwhelmingly believe in all kinds of gun ownership and availability would change our principles about refugees because they do not trust their government to properly monitor refugee immigration from the Syria and the Middle East.  They seem to be fearful for the sake of being fearful.

The Weiner Component #141 – Fiscal, Monetary Policy & the Republican Party

English: James Earl "Jimmy" Carter

English: James Earl “Jimmy” Carter (Photo credit: Wikipedia)

English: United States mean duration of unempl...

English: United States mean duration of unemployment 1948-2010. Data source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average (Mean) Duration of Unemployment [UEMPMEAN] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed August 14, 2010. (Photo credit: Wikipedia)

English: A map of the 12 districts of the Unit...

English: A map of the 12 districts of the United States Federal Reserve system. (Photo credit: Wikipedia)

Historically and in the present, Fiscal and Monetary Policy are the two major tools that the Federal Government is supposed to use to continually fine-tune the American economy.   Fiscal Policy is used by the Congress passing specific economic enhancing laws signed by the President and Monetary Policy is used by the Federal Reserve continually adjusting the U.S. money supply to maintain a healthy economic national environment.

 

During the Presidency of Jimmy Carter (1977 – 1980) unemployment rose to 7%.  This was also the post Viet Nam War period.   From 1977 on the government engaged in an expansive fiscal policy; there was an expansion in Public Works strongly supported by the President.  It averaged $4.38 billion per quarter.

 

At that period I was teaching Social Science classes at a High School in Southern California.  The School District was asked by representatives of the Federal Government to make a wish list of what they would like for the District.  A list of ten items was prepared by District officials and, as an afterthought, someone suggested a second or girl’s gymnasium and it was added to the bottom of the list.  The government officials choose the girl’s or second gymnasium as the item that would create the most jobs.

 

I remember that the high school got a second gym which was gray, the color of the concrete.  The money that paid for the gym ran out at that point and it was a few years before the School District came up with the funds to have the building painted.

 

It seemed that all the tasks and labor involved in building the gymnasium, both directly and indirectly, would create the maximum employment possible for the expenditure of the funds required for the project.  I suspect that Troy High School in Southern California is one of the few secondary schools in the country that has two separate gymnasiums.

 

To understand how this expenditure works for the benefit of the overall economy we have to trace the money and see what happens to it.  Usually money spent is actually spent six to eight times; it is a volatile substance.  For example, in producing and packaging the concrete used in the building the manufacturer has to pay his employees.  They, in turn, have to pay rent or a mortgage or, for that matter, buy food.  The landlord, bank, or supermarket continues the same process, and on and on for six to eight times becomes part of the natural flow within the economy.  This occurs with everyone directly or indirectly involved in producing that building.

 

Every million dollars the government spends creates six to eight million dollars in the exchange of goods and services.  To use an analogy, a child throws a rock into a quiet lake.  There are a large number of ripples spreading out in all directions from where the stone hits the water.  They spread out and dissipate as the stone drops to the bottom of the lake, infinitesimally raising the level of the water.  Consequently the $4.38 billion that the government added quarterly to the economy of the United States was actually generating a little over 26.3 to 35 billion dollars in new productivity every three months.  This also gives us an idea of the volatility of new money added to the National Cash Flow.  Of course if the reverse were to occur for any reason, such as the 2008 Real Estate Crash, the 26.3 to 35 billion dollars would be removed from the National Cash Flow.

 

In 1977, when Jimmy Carter became President, the 95th Congress was elected.  In that Congress the Democrats had a majority in both Houses of Congress; in the House of Representatives they had 292 elected Democrats to 143 Republicans and in the Senate there were 61 Democrats to 30 Republican Senators, a super majority which made the Senate filibuster proof, as only 60 votes are needed to end a filibuster.  The Democrats could pass any legislation they felt was needed and they applied, among other things, fiscal policy to the post Viet Nam War period.  Unemployment during the Carter period was considered high, running from 6.9% to 5.8%, and ending in 1980 at 7%.

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From the beginning of President Lynden Johnson’s acceleration of the Viet Nam War inflation slowly began to increase in the country.  The country was both fighting a war and allowing the public to maintain their peacetime standard of living.  By 1980 it had reached two digits and would that year eventually rise to about 15%.  The economic situation that occurred was labeled, stagflation.  It consisted of both stagnation, high unemployment, and inflation, prices rapidly rising because of shortages brought about by having fought a major war, maintaining the military during the Cold War, and supplying all the needs of the American people at the same time.

 

Generally during a period of inflation there are not enough goods and services available to match the demand and prices rise until a new equilibrium is reached of the goods and services offered.  If anything there should be lower unemployment.  But in this case there was also stagnation; there were not enough jobs for everyone able to work and wanting employment.  This was stagflation, the concurrent existence of two economic opposites.

 

There was a way to break this economic condition by having the Federal Reserve raise interest rates far higher than they were, raising the rate of inflation until it exploded.  But this would throw a lot of small businesses and even some large companies into bankruptcy.  This action would bring about immediate adverse economic conditions for a large number of people; it would bring about a short term depression which would temporarily increase unemployment.

 

President Carter had the Federal Reserve Chairman, Paul Volker, begin this process but then after receiving innumerable complaints President Carter backed off.  The next President, Ronald Reagan, allowed Volker to carry out this policy.  It took about a year and a lot of human misery to break this economic cycle.

 

When this came about, early in the Reagan administration, the President got on national television holding a copy of the Sunday New York Times Business Section and said something to the effect of there were umpteen pages of jobs available according to the newspaper and that if there were no jobs where the people lived then they should go to where there were jobs.  This presentation exacerbated the problem because suddenly there were old jalopies crisscrossing the country, being driven by people looking for employment, following whatever rumor promised jobs somewhere else.  This so-called friendly advice or thoughtless act created the homeless problem in the United States.

 

This policy, by the Federal Reserve which was necessary that broke the inflation cycle which had been begun by President Lynden B. Johnson in the 1960s, created an instant depression but ended the stagflation.  Interest rates dropped to a low single digit where they remained until 2008, when they dropped even further almost approaching zero, where they remain today.

 

As a footnote it should be noted that the people who pay for this low interest are the people in the United States who deposit their money into the banks and receive an interest payment on most of their deposits of one tenth of one percent per year.  The amount of interest most people get on their bank holdings is so low it is not even taxable.

 

Fiscal Policy with other economic remedies ended this economic crisis.  The other equally important economic remedy was Monetary Policy.  This is controlled by the Federal Reserve.

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Monetary Policy is the process that the Federal Reserve uses to control the supply of money, its availability, and the cost of money or its rate of interest in the country.  Its objective is aimed at the growth and stability of the economy.

 

The Federal Reserve (FED) has twelve regional banking districts, each with a major regional bank and each with a possible auxiliary bank covering the entire United States, with the major one in Washington, D.C.  It is a private government banking system that controls all the public banks in the country.

 

The FED’s major function is to regulate the private or public banks and to help control economic growth and stability, as well as maintain low unemployment and maintain predictable exchange rates with other currencies.

 

The tools the FED uses are:

(1) Its Open Market operation, constantly buying and selling bonds to increase or decrease the amount of money available in the National Cash Flow.  Here it works from the Public or National Debt, increasing or decreasing it to fine-tune the economy.

2) Adjusting the Discount Rate, setting the interest rates in the private banks by the amount it charges them interest.  The private banks determine the interest they charge the public based upon the interest they pay the FED.  They have to make a reasonable profit above what they pay to the FED.  The higher the FED’s interest rate the more expensive the money is and the less is borrowed.  Conversely the lower the interest rate potentially the more will be borrowed and used for economic expansion.  And the more employment will occur.  Since the 2008 Real Estate Crash the interest rate has dropped to almost zero (one tenth of one percent), and expansion has very slowly occurred.  In fact we are still, seven years later, in the process of recovering from that crash.

(It should also be noted that since 2011, when the Republicans took control of the House of Representatives there has been no Fiscal Policy.  In fact the House has forced through bills increasing the unemployment level and exacerbating the recession.  They have been very good at worsening economic conditions and then blaming the Democrats for it.

3) The third method is raising the Reserve Requirements that the banks are required to observe.  The public banks have to keep a certain percentage of their deposits for every loan they make.  But regulating the amount that the bank has to keep the Federal Reserve can significantly increase or decrease the amount of money that a bank can lend.

 

Among all the dollars deposited in the banks this would also include demand deposits (checking accounts).  Most people deposit their paychecks and reserve funds in banks which pay them a token interest for these funds.  People can at any time withdraw part or all of their money.  Meanwhile the banks lend out this money.  By law they must keep a small percentage, about five percent.  The banks can then lend out or invest ninety-five percent of the money deposited.  This expands the amount of money in circulation.  If the FED were to raise the Reserve Requirement to ten percent this would lower the amount that the banks can lend out by 50%.

The actual amounts that the banks have to keep in reserve are: up to 14.5million 0%, over 14.5 million to 103.6 million, 3%, over 103.6 million, 10%.  It should also be noted that after a bank lends out all its available funds it can deposit its loan papers with the FED and lend out the money all over again under the same conditions.  It should be noted that once the money lent out is redeposited into the banks 95% of it can again be loaned out.  Interestingly the FED is now considering raising the current reserve requirement.

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Using their Reserve Requirements, up to the end of 2008, the major banking houses in the United States had created trillions of dollars in real estate value by constantly mortgaging and remortgaging individual properties at higher and higher rates throughout the 50 states.  This collapsed virtually overnight towards the end of 2008.  President George W. Bush, at the very end of his presidency bailed out the major banking houses which were then facing bankruptcy.  This process was continued by the new president in 2009, Barak Obama.  While a few banking houses went under and were absorbed by other banking houses the Federal Government had no choice but to bail out most of the banks.  For one thing all the commercial banks had all their deposits insured up to ½ million dollars each by the Federal Insurance Deposit Corporation (FDIC).  The Federal Government would be liable for all this money if most of the banks failed.  In addition most of the business transactions in this country are paid for by either checks or credit cards that are all processed through the banks.  If the major banking houses like the Bank of America, JPMorgan Chase, Wells Fargo and most other bands were to suddenly disappear the movement of money throughout the United States would practically cease and the country would face a depression that would make the Great Depression of 1929 look like a weekend disruption.

 

Interestingly the potential 2016 Republican presidential candidates in their Third Debate, on November 10, 2015, mostly stated that if they were elected to the presidency one of the first things that they would do would be to get rid of the Dodd/Frank Bill that was passed to avert a possible repetition of the 2008 Crash and, if there were to be another economic crash they would not bail out the banks, that nothing is “too big to fail.”

 

What this 3d Republican Debate illustrated was that these people are blatant liars who will say anything to get elected or that they are totally ignorant of Macroeconomics or any other type of economics.  I don’t know which position is worse?  I was also shocked that the “media,” who seems very conscious of “fact checking” didn’t pick up on any of this.

 

If another Banking Crash were to occur and one of them were President of the United States at the time he/she would be forced by their own advisors to again bail out the banks.  For one thing it would probably cost the Federal Government and taxpayers directly more money to not bail them out and the following economic breakdown of the society would last for well over a decade, which is how long it took for the Great Depression to end.

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President Barak Obama’s major problem, after he assumed office in 2009 was dealing with the Real Estate Crash that he inherited from the Bush Administration.  For his first two years in office he had a Democratic majority in both Houses of Congress that cooperated with him.  The Republicans at this point at a meeting agreed to oppose everything he did and make him a one term president.

 

In 2006 Ben Bernanke was appointed Chairman of the Federal Reserve by President George W. Bush.  Bernanke replaced Alan Greenspan.  Bernanke working with President Obama utilized creative Monetary Policy to essentially pull the country out of a major depression without being able, after 2011, to get any cooperation from the House of Representatives.  Up until 2015 there was no Fiscal Policy applied.  Toward the end of 2015 both Republican dominated Houses of Congress passed a bipartisan bill to extend Federal Funding on road construction and maintenance throughout the nation which had initially been passed into law before the Republicans took control of the House and was due to end.

 

Initially after 2011 Bernanke innumerably called for Congress to enact Fiscal Policy legislation.  Obama even presented a proposal for much needed infrastructure improvements which would also create a large number of jobs.  This proposal never even reached the floor of the House.  If anything the Republican House of Representatives cut Federal Government funding to a multitude of programs and decreased, on a number of levels, government jobs actually worsening unemployment under the guise of economizing.

 

The FED then came up with a creative twist to Monetary Policy.  One additional major problem that came with the Real Estate Crash was who owned the properties/homes that then had mortgages on them of greater value than the property was worth.  The mortgages had been divided up into fractional shares, distributed to innumerable hedge funds, and the banks had reorganized record keeping on a very sloppy basis.  It was, in many cases almost impossible to discover who owned 50.1% of many if not most of the properties.  This was a dilemma that would ordinarily take two or more decades to clear up.

 

The FED’s solution to this problem and the shortage of money in the National Cash Flow that was causing the massive unemployment was to add 85 billion to the economy every month for a period of over two years.  45 billion was used to buy mortgage paper (fractional pieced of mortgages) in all fifty states and forty billion was used to buy back debt paper (government bonds).  This added one trillion twenty billion dollars to the National Cash Flow a year.  It was gradually phased down and ended in 2015.

 

Currently it looks like interest rates for the public will remain at almost zero for at least the balance of 2015.  But unemployment has dropped nationally to around 5%.  Creative Monetary Policy had turned a possible great depression into a recession and brought the country well in the direction of economic recovery.  All this has been done under the administration of President Barak Obama largely with no cooperation from the Republicans in Congress.

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Issues are never simple cause and effect actions.  There are always multitudes of variable affected in addition to the major outcome desired.  Everything consists of hard choices.  These should be made by experts who are aware of all the possible outcomes.  Or, at the very least, it will be people who will listen to experts and act accordantly.

 

In November of 2016 a major election is coming up, the next Presidential Election.  Both major political parties will be presenting a host of candidates for the Presidency and Congress.  The entire House of Representatives will be up for election and also one third of the Senate. In addition there will be major elections in all 50 states.  The people will speak by voting or not voting.  If the Republicans maintain their majorities in both Houses of Congress and in the majority of the states then very little will be done in the next four years.  The public by their action or inaction will decide what the future will hold.

 

 

 

 

 

 

 

 

The Weiner Component #140E – Assorted National Problems Not Dealt With by the Republican Congress

The western front of the United States Capitol...

Development, Relief and Education for Alien Mi...

Development, Relief and Education for Alien Minors Act (Photo credit: Wikipedia)

With his family by his side, Barack Obama is s...

In addition to what we have been dealing with for the last four blogs there are other serious problems that the Republican led Congress, particularly the House of Representatives, have ignored.  The first of these is guns, both pistols and assault weapons.  Another, which can seriously hurt Republicans in the 2016 Presidential Election, deals with immigration policies.  Still another immediate problem, which will be coming up at the latest in early December, is funding the Federal Government for the oncoming fiscal year.  And still another is a Declaration of War against ISIS and possibly a debate about what to do about Syria.  We’ve mentioned their compensation packages and days of work over the year but it might be worthwhile to reconsider these.  Also there is the fact that Congress has passed a law automatically giving themselves raises unless they pass another law stopping that particular raise from happening.

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President Obama and others have stated that gun violence is much worse in the U.S. than in other advanced countries.  Italy comes next with less than 20% of what occurs in the U.S.  Below that comes Canada, then Sweden, then Germany.  By the time we reach Germany the level is well under than 10% of the U.S. level.  The other industrial nations are far below that.

 

The problem with gun violence seems to be that Americans are much more likely to own guns than their peers around the world.  It seems that the more guns there are in the society then also the more homicides that occur in the society.  According to President Obama Americans kill each other with guns at a rate 297 times more than Japan, 49 times more than France, and 33 times more than Israel.

 

Following is a gun violence estimate for 2015 based upon actual shootings and prior years.

Total shootings                              47,071

Deaths                                           11,868

Children to age 11                              632

Teens 12-17 injured and killed       2,354

Mass shootings                                 303

Officer involved shootings              3,923

Home invasions                              2,029

Defensive shootings                       1,088

Accidental shootings                      1,694

The problem is an extensive one that Congress has totally ignored.  If nothing else it should be debated in Congress.  Presently it is largely invisible to the general public because the media tends to ignore the general information.  While the information is available one has to dig to find it out.  What is shocking about this is that these facts seem to make the terrorist threats minor in terms of the pointless loss of life that continually goes on.

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Another major problem that Congress should be dealing with is Immigration.  This is far more complex than just having foreigners illegally living and presumably working in the United States.  On and off Congress has ineptly been dealing with this problem for the last fifteen years.  Currently they are ignoring it and suing the administration for President Barak Obama’s executive order dealing with “dreamers,” children who were brought to the United States by their parent(s) and raised in this country

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The reason this issue is complicated is that we are not just dealing with aliens, foreigners who are illegally is this country, but also with their families, some of whom may be citizens.  Sending their parents or one of the adults back to their country of origin breaks up the family.  Among others, there is one adult Hispanic legislator whose father disappeared when he was a small child and he never saw him again.  There has to be something wrong with this.

 

First there are alien couples whose children were born in the United States and are therefore citizens of the U.S.  Do we ship the parents back to their country of origin but leave the children here?  There are children who were brought to this country and may have none or very little memory of their country of origin.  They have been educated in the U.S. and think of themselves as Americans.  Some have served in the military.  Do we send them to a country of which they have no knowledge?  There are also the Dreamers, (Development, Relief, and Education for Alien Minors,) who were 16 or younger when they were brought into the U.S.  The estimate is that there are about 1.8 million of these, many are college graduates.  There are married couples of which one is a citizen and the other an alien.  Do we separate these couples by sending one of them back to their country or origin?   There should, at least, be a debate about this in both Houses of Congress but the subject has not been brought up..

 

An important point, which the Republican candidates in the 2016 Presidential Election seem to be ignoring is that according to the 2010 Census there were 50.5 million Hispanic or Latinos counted.  That is 16% of the overall population.  They had increased 13% since the 2000 Census.  For the 2016 Election the number will have increased at least another 7%, that’s about another 4 million potential voters.  In 2012 President Obama got the majority of those voters.  What will happen in 2016?

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Starting in the Twentieth Century a quota system was devised that set the quota or number allowed in the U/S. from each country.  Interestingly both my parents came to this country indirectly from the Russian Ukraine in the early 1920s shortly after World War I.  My father and his younger brother crossed Europe and emigrated from England.  My mother signed a one year contract to work as a maid in Canada.  This paid for her passage across the Atlantic Ocean.  At the end of the year she came to the United States as an immigrant from Canada.  There were very high quotas for Northern Europe and Canada.  For Eastern Europe one had to sign up and wait for their turn.  A college friend of mine’s parents came from Greece.  The wait there had been seven years.  Someone had signed up and then when their turn finally came they changed their minds.  A neighbor and his wife took their name and their place.  My friend had been their child.

 

Quotas had never been fair.  They were set based up attitudes or prejudices toward the countries involved.  Low, in so called undesirable countries and high in desirable ones.  These same principles have essentially carried over to today.  Mexico, Central and South America have low quotas.  Asian countries would also have fairly low quotas.  Northern European quotas are never reached.

 

And then there is the concept of refugees, people who are fleeing disastrous conditions at their original homes.  In Asia a number of these people became refugees because they sided with the United States, like in Viet Nam after the U.S. left there in 1975.  Others left intolerant or dangerous conditions behind to find safe conditions for themselves and their children.  One of the places to which they fled was the United States.  Were they all upright, honest citizens?  Mostly; but they also included a criminal element.  That’s how, for example, the mafia got a foothold within the U.S.  Does that mean that we stopped letting in people from Sicily and Italy?  No.  Does it mean that we should not allow people from Syria to immigrate to the United States because some terrorists might sneak in that way?  That’s an interesting question.  It should be honestly debated in Congress and not just have Congress pass a bill practically excluding all Syrians.  After all, these people are the victims of civil war and terror.

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An immediate problem that Congress has to immediately resolve prior to December 11th is funding the Federal Government for at least the oncoming year.  If a bill is not passed prior to that day the Treasury will run out of money with which to pay the government’s bills and interest rates will go berserk and the Federal Government will again shut down.

 

The issue prior to the former Speaker, John Boehner’s retirement, was the House of Representatives refusing to pass a funding bill unless funding for Planned Parenthood was removed from the bill.  If this were done the President said he would veto the bill.  While the Republicans currently have a majority in both Houses of Congress they do not have enough of a majority in either House to override a veto.  By resigning Boehner got the bill kicked up from the end of October to December 11th.  President Obama stated that he wanted a clean bill that would fund the government for the next two years or he would veto any future bill.  This time the Republicans in the House want to keep Syrian refugees from entering the United States because a few terrorists might also sneak in and they still want to defund Planned Parenthood.  The reality of keeping out Syrians is questionable because it currently takes Syrians from 18 months to two years of screening before they are legally admitted into the country.  The House would add a further step and have each Syrian also individually approved by the head of the FBI.

 

What will happen is any bodies guess.  Will the Federal Government be functioning after December 11th?  A government shutdown would probably hurt Republicans in the 2016 Election and cost the government additional millions if not billions of dollars.  Paul Ryan, the Speaker of the House of Representatives seems poised for a dramatic showdown on December 12.

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There is still the question of a new war powers authorization which President Obama has requested for the fight against the Islamic State terror organization, ISIS, which was made last February.  Congress has not bothered using its War Powers given to it by the Constitution.  As far as they seem to be concerned his executive actions in immigration for the Dreamers are unconstitutional but his actions in going after ISIS are currently legal.  They, Congress, don’t need to act.  Is this attitude valid or does Congress need to act?

 

We also have the question of Syria.  What should our actions there be?  Congress and the country need a debate to clarify that issue if it can be clarified.  Should we continue with just air force action against ISIS?  Should there be American troops on the ground as some of the Republican candidates have stated?  There are innumerable forces involved in the revolution there.  Are there any group or groups we can support?  Russia is now also involved with support for Syria, supporting President Assad, while supposedly bombing ISIS, but according to the U.S. actually bombing Assad’s enemies.  Is it a war we can win or will we be stuck there for decades if not longer?  Congress is ignoring this problem completely.

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With the upcoming election next year, plus the fact that the Republicans have a Democratic president who they don’t like and with whom they have problems cooperating, both Republican Houses of Congress have given themselves a light schedule for 2016.  In fact the new Speaker of the House of Representatives, Paul Ryan, has called the President “Untrustworthy.”  After the Thanksgiving Recess the House of Representatives plans on twelve more days of business this year.  In that time they will have to pass a bill funding the government.   Next year looks to be a very light legislating time.  The Senate plans to spend 143 days in session and the House of Representatives is planning only 111 days in Washington, D.C.

 

I would assume that there are numerous other problems that have not been mentioned that Congress will and/or should probably be dealing with.  Fiscal policy laws are still needed both to enhance employment within the country and modernize the infrastructure.  Emergencies may well come up in terms of the security and safety within the United States.  Sequestration, in those many areas that have not so far been removed from the sequester in 2015, will automatically come up in early 2016.  They will present additional hardships as funds in entitlement and other programs diminish.  Will Congress ignore these problems or make adjustments in some of them?

 

The country needs a Criminal Justice Reform Bill to lighten the load on the over-filled prisons in the United States.  Presumably both parties agree on this.  Will any action be taken?  Will there be time to take any action?  A Mental Health Bill is needed to deal with, at least, a part of the current surge in violence in the nation.

 

The Republicans will have to give the impression that they have a positive program if they are to maintain their majority in both houses of Congress.  They also have to support the policies of whoever is their final choice of a Presidential Candidate.  It could take some tricky maneuvering to achieve all this.

 

To also be fair, all the members of the House of Representatives and 1/3d of the Senate will be running for reelection next year.  Presumably they will need more time in order to campaign even though in the prior year the 114th Congress had shortened its term in Washington, D.C.

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In the oncoming election year early national party conventions will mean that the Congressmen will be taking the second half of July off without giving up their traditional August recess.  October through mid-November will be cleared for campaigning for the November 8th general election.  Will they have time to deal with any of these problems?

 

The Congressional behavior also reflects the tensions between President Obama and the GOP Congressional leaders.  There are, of course some necessary bills that will have to be passed like funding the government so it can pay its bills for the oncoming year; but outside of that Congress may plan to do almost nothing, strongly hoping for a continued majority in both Houses of Congress in 2017 plus a Republican president.

 

For close to seven years President Obama has bent backwards trying to get some cooperation from the Republicans in Congress.  In this he has largely failed.  Under Paul Ryan’s inspiration they have attempted to force him to support their agenda by tying bills necessary for the functioning of the nation with causes they wished to become part of the laws.  This has resulted in a government shutdown and a number of bills going to the brink, generally being passed on the last possible day.  This has lowered the credit rating of the United States and cost additional billions of dollars.

 

At this point, with a little over one year left to serve as President, I would imagine Barak Obama has had it.  He will play no more games with Congressional shenanigans.  The government has to be funded for the oncoming year well before December 11, 2015 or the dollar may again be downgraded and interest rates for loans may unnecessarily jump.  This bill was pushed up to December in October and the President said he will veto any more short term passages.  He wants a clean two year bill.  What will happen?

 

The Republicans, who prior to October wanted to defund Planned Parenthood in order to fund the government now have threatened to add a section to the bill requiring that every Middle East refugee be personally approved by a high official in the U.S. government before they can be accepted into the country.  President Obama has stated that the current screening system is adequate for all immigrants from the Middle East.  Currently it takes 18 months to two years for a Syrian to be allowed to settle in the U.S.  While he has not specifically stated it the probability is that he will veto the spending bill if it contains that measure.  And there is also the probability that he will veto this specific bill, which recently was passed by the House of Representatives that requires a guarantee from a high government official for each Syrian emigrating to the U.S., if it is passed by the Senate and comes up before him.  It seems that the President is no longer open to attempted blackmail in order to get necessary legislation passed.  The person who came up with this tactic is now Speaker of the House of Representatives.   It should be an interesting 13 months!

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As a footnote: In just about every occupation the employee is continually evaluated as to how well he or she performs on their job.  If they are continually below a certain level then they are terminated.  This seems to be true for all occupations except for those Republicans elected to Congress, particularly for those elected to the House of Representatives which has been essentially nonfunctional since 2011 when they achieved a majority in the House of Representatives.  This is the period during which we’ve had gridlock in Washington, D.C.  Here inefficiency or inability to function seems to be the quality needed to function and keep your job.

The Weiner Component #140D – Congress: Fiscal Policy & the Infrastructure

Dwight D. Eisenhower, official portrait as Pre...

Dwight D. Eisenhower, official portrait as President. (Photo credit: Wikipedia)

One of the greatest problems facing the United States today is the fact that most of its infrastructure was built in the late 19th and early 20th Centuries.  By definition the infrastructure is the basic physical systems of the cities, states, and country.  Largely our local cities, states and nation have acted as though they will last forever with little or no maintenance, repair, or modernization.  If something breaks down it is generally fixed.  In essence this nation has taken a Band-Aid approach to maintaining our infrastructure and as a result yearly the country falls farther and farther behind as its infrastructure slowly rots or becomes obsolete.

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It should be noted that when an individual buys a new automobile he knows or will quickly learn that the vehicle will need constant maintenance over its lifetime or it will stop functioning.  The same can be said for the basic apparatuses of our cities, states, and country as a whole.  Their roads, bridges, water supply, school buildings, transit systems, sewerage disposal facilities, electric grid, ports, airports, dams, etc. also need occasional replacement as they become obsolete or continual maintenance over their lifetimes otherwise they will eventually grow out of date or stop functioning, or, for that matter, both of the above.  All of these are called the infrastructure that allows the community, cities, states, and nation to function.  When they partially or completely break down there is chaos.  How come most people are responsible when it comes to their individual possessions but irresponsible when it comes to their communities of nation?

 

Specific responsibility for these entities can be local government or privates industry or a combination of these.  It can also be state government.  In the final analysis the ultimate responsibility rests with the lawmaking body of the National Government, the Congress.  They are responsible for the overall functioning of the nation.  They alone have the resources available, financial and otherwise to modernize, repair, or rebuild parts and pieces of the infrastructure, to provide for the needs of the entire nation.

 

Cities and states follow a system of microeconomics.  They have an income, the fees and taxes they collect.  If they have to spend more than they collect then they can issue tax-free long term, bonds to finance the project, usually a 30 year low interest, tax-free bond.  They are limited as to how many of these they can issue by their projections of their incomes over the next three decades.  The Federal Government does not have this problem.  They utilize macroeconomics and can issue money as needed.  They are also limited as to how much they can issue, but their limitation goes far beyond what any state or city can do.

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Because the problem currently seems insurmountable it has been largely ignored on virtually every level of government and keeps getting worse with each passing year.  In the third Republican 2016 Presidential Debate in early November of 2015 several of the potential candidates commented on the infrastructure, stating that it was the responsibility of the states and local governments to solve these problems, that the Federal Government should not be involved.  This is passing the buck or dropping the rock.  The cost of solving this problem is in the trillions of dollars.  No city or state can afford to do more than light maintenance of this problem.  The statement itself by potential candidates like Ted Cruz denotes total ignorance of the problem or total cynicism toward it.  No city or state can sell trillions of dollars’ worth of tax-free 30 year bonds and hope to be able to pay them off and operate the government at the same time.

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The city of Pittsburgh is known as the city of bridges, both highway and railroad bridges.  Most of them are old, nearing the end of their useful lives.  There are over 4,000 bridges in the city.  Over 20% of them are structurally deficient.  This includes one located as part of the city’s main arteries.  This bridge was built in 1928 when cars and trucks were lighter.  It was designed to last 50 years.  It is now 86 years old.  Five million people use it daily.  The bridge connects the northern and southern sections of the city.  It should have been replaced years ago.  At one point structural damage was discovered on the bridge.  It was closed for two weeks while structural repairs were made on that section causing great hardship to the people of Pittsburgh.  An arch bridge in the city had a platform type structure built under it to catch falling concrete which would otherwise hit traffic underneath it.

 

In Minnesota in 2007 a bridge collapsed, that was over 50 years old, killing 13 people and injuring another 145.  The antiquated Skagit River Bridge in Washington State collapsed last year after a truck hit one of its trusses.

 

The overall cost of repairing and replacing the needed bridges in Pittsburgh has been estimated at being over two trillion dollars.  It has been estimated that about one of every nine bridges in the country, about 70,000 of them are considered structurally deficient.  Some have had a section collapse.  Essentially repair has been done on a band aid basis, just repairing the damaged section.

 

The majority of airports in the United States are out of date.  They need to be modernized.  The majority of seaports are in danger of becoming obsolete as the ocean going ships gradually increase in size and number.  A report from the American Society of Civil Engineers states that 32 percent of the main American roads are now in poor condition and in need of major repairs.

 

In 1956 Congress passed and President Dwight D. Eisenhower passed a bill establishing the Highway Trust Fund.  The law directed federal fuel tax to the fund to be used exclusively for highway construction and maintenance.  Over the years both Democratic and Republican presidents have increased the tax to 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel.

 

In 2008 the fund required an additional $8 billion dollars from general revenue funds to cover shortages brought about by the recession of that year and higher gas prices.  It seems that from that year on there has been less driving and more efficient vehicles that used less gas for greater mileage.  Since 2008 Congress has authorized $65 billion from the General Fund of the U.S. Treasury to keep the Trust Fund solvent.  These monies go to all the individual states in the form of block grants and are more or less matched by state spending.

 

The Highway Trust Fund is only authorized to spend money through November 20, 2015.  In August of 2015 the Senate passed a six year highway bill.  The Republican House of Representatives ignored the bill and went into recess.  During the summer a short term $8 billion spending bill was passed by the House extending infrastructure spending until November 20th. Early in November the House passed a six year highway bill which they only funded for three years by a bipartisan vote of 363 to 64.  It was the new Speaker, Paul Ryan’s, first major accomplishment.  The bill has to be reconciled in a Conference Committee with the Senate or voted on by that body as it stands and signed by the President before it becomes law.  One comment on the bill is that it is a six year bill that is only funded for three years.

 

The basic problem with this bill, as with most bills dealing with the infrastructure is that the funding is mostly inadequate; it helps more or less maintain the system but it is never adequate to bring about the fully needed repairs or replacement.  If we take Mississippi as our example then in 2012, a national report found that that state had an estimated $30 billion in highway and bridge needs but had at most $15.3 billion to meet these expenses.  This is true for every single state in the nation.

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Today public spending on infrastructure has fallen to its lowest level since 1947.  The U.S. which used to have the finest infrastructure in the world is now ranked 16th according to the World Economic Forum.  It is behind Iceland, Spain, Portugal and the United Arab Emirates.  Many large corporations like Caterpillar and GE have complained that it’s hurting their ability to compete abroad.  The conservative U.S. Chamber of Commerce at a Senate hearing early in 2015 expressed strong business support for raising the gasoline tax.

 

In addition to roads and bridges and the gas tax there is aviation.  Throughout the United States there is a shortage of airport runways and gates along outmoded air traffic control systems.  These have made U.S. air travel the most congested in the world.

 

Around the industrial world there are over 14,000 miles of high speed railroads operating around the world but none in the United States.  In Chicago it can take a freight train nearly as long to go across the city as it would take a high speed train to go from Chicago to Los Angeles.

 

In New Jersey there is an old railroad bridge, the Portal Bridge, going over the Hackensack River that was built in 1910.  It gets almost 500 trains a day and is one of the busiest bridges in the country.  The bridge was based upon a design from the 1840s and was obsolete shortly after it was completed over 100 year ago.  It is a swinging bridge that needs to be opened several times a week to allow river traffic to pass.  Its major problem is that it doesn’t always lock when it is swung back and rail traffic can back up infinitely in both directions while is being made usable again.  The bridge has to be replaced.  The project would cost just under a billion dollars.  A new bridge was designed two years ago in 2013.  Everyone agrees it has to be replaced but there is no consensus or political support from Congress to raise the necessary funds.  Its eventual failure could stop traffic in the Northeast.

 

As far as the seaports go we now have a new generation of large cargo ships that will be going through an expanded Panama Canal in another year or so.  On the East coast only two ports of the 14 major ports will be dredged deep enough to accommodate these ships.  Do we then limit all foreign traffic to these two ports?  And if we do then how rapidly can these ships be unloaded and reloaded?

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We have mostly looked at forms of transportation that are a major part of the infrastructure but far from all of it.  There is also maintaining drinking water quality throughout the nation, dams and dikes that are essentially obsolete, extension of power grids, modernizing public school laboratories and structures, plus a number of other factors that allow the society to function.

 

In the winter of 2014 – 2015 a section of the national power grid froze and ceased functioning.  A section of this country was one step away from losing electric power.  We have not been that lucky in the following year.  A section of the northwest, Washington State, lost power during a period of freeze.  Conditions could still get worse in the near future.  Do we have to wait for additional crises before any action is taken?

 

Actions will have to occur at some point.  Now is considered a good time since interest rates are low and estimates indicate that these projects would generally pay for themselves in the near future.  This will be increased employment, there will be more productivity, a greater GDP, and more collected in taxes on every level of government.

 

Some of it can be done by having local and state governments team up with the private sector.  There are currently such projects in 33 states.  These arrangements are called P3s (public-private partnerships).  They are popular abroad.  But their financial effect is limited according to the extent of the infrastructure needs.  Only Congressional action can bring about substantial improvement.

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The two major weapons that the Federal Government has to fight economic recession or a major depression are Fiscal Policy and Monetary Policy.  Fiscal Policy is carried out by the Congress and Monetary Policy is done by the Federal Reserve.  Since 2011, when the Republicans gained control of the House of Representatives, there has been no real Fiscal Policy.  If anything, with one exception in late 2015, Congress has largely ignored this responsibility.  The Federal Reserve, under the leadership of its former Chairman, Ben Bernanke, with support from the President, had used creative Monetary Policy to move the country toward economic recovery from the late 2008 Real Estate Crash.  The country is still in the process of recovering.

In March 2012 the Treasury Department published, “A New Economic Analysis of Infrastructure Investment.”  This multipage document explained all the advantages of infrastructure investment, also detailing programs the President was trying to initiate.  From what I understand the issue was never even raised in the Republican dominated House of Representatives.

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In the 19th Century being a Congressman was a part time job.  The Congress met for only a few months and passed all the necessary laws for the year and then adjourned.  The President spent the entire year running the country but Congress only met for a few months.  The House of Representatives have again reached that point except that they have stretched it out over the entire year.

 

The current schedule calls for the House of Representatives to meet for 111 days over their fiscal year.  They work three days a week and take a four day weekend.  They have extended all their holiday breaks by half again as many days as they used to take.  And for this they are paid $170,000 per year.  All this at a time when the nation is seething in problems, many of which they have no time and probably no inclination to consider.

 

The new Speaker, Paul Ryan, has a bed in his office and lives there the short week he is in Washington and, from what I understand, spends his four day weekends home in Wisconsin with his wife and young children.  That was part of his agreement in becoming Speaker.  The rest was to pacify the conservative elements in his party.

 

What will happen in Congress is anybody’s guess.  I would suppose the country is stuck with these Republican majorities for another full year.  How much will this Congress achieve?  To me that’s an interesting and frightening question.  I don’t expect much.

 

What happens in the 2016 Presidential Election is up to the public voters, whose vote has not been suppressed in Republican dominated states.  We know in a recent Midterm Election the Democrats cast more votes for members of the House than the Republicans did but through earlier gerrymandering the Republicans were still able to maintain the majority in the House of Representatives.

 

What will the attitude of the current Congress be toward the infrastructure?  Ted Cruz and some of the other potential Republican Presidential candidates stated in their third debate that it should be the province of the states.  The states are investing less and less money into infrastructure as their other costs increase, especially their unfunded retirement costs.  Hopefully no additional major infrastructure disasters will occur during the winter of 2015 – 2016.

 

If we ask ourselves how Congress does get away with its current attitude or attitudes?  The answer is quite obvious.  This action and a number of other things Congress does is essentially invisible to the general public.  The media does not consider these items as newsworthy.  They are not really dealt with or dramatically brought before the public.  The concept of the infrastructure itself tends to be more abstract than concrete.  If something specific happens and there is a public hue and cry about it then something is quickly done to resolve the problem.  But as a small piece of information that can be dug up with some effort it is not that important.  While Congress should be concentrating on all these problems they ignore them until they are specifically brought to their attention.  Basically the thinking is that the country has done well and will continue to do so if left alone.

 

An example of this was sequestration, a law passed two years ago to cut government spending across the board.  An immediate result was enhanced waiting time at all the airports as the number of air controllers was immediately cut back.  The complaints were loud and vociferous.  Within a day or so

Seal of the United States Department of the Tr...

Seal of the United States Department of the Treasury (Photo credit: Wikipedia)

Congress had passed a law exempting the air traffic controllers from sequestration.  The military in late 2015 had reached a point where its efficiency was drastically effected by sequester cuts.  This problem was resolved when the debt limit was raised.  Refunding the military became part of that deal. Generally once members of the public are inconvenienced or the change will obviously effect the country change is quickly brought about.  But until that time nothing is done.  In a sense we are waiting for obvious crisis to occur before positive change is brought about on parts of the infrastructure.