The Weiner Component Vol 2 #1 Part 2 The Introduction

Deviations from the long term growth trend US ...

Deviations from the long term growth trend US 1954–2005 (Photo credit: Wikipedia)

Business Cycle

Business Cycle (Photo credit: Wikipedia)

To avoid the vicissitudes of the business cycle and the inequality of the distribution of the National Income, the Gross Domestic Product, we need a new economic model or we have to make intensive changes in our present system.  If we stay essentially with our present model then the government has through a tax and redistribution system to balance incomes. A realistic minimum standard of living has to be set.  Those earning more than this level will have to be taxed on a realistic graduated level.  Those earning less would receive transfer payments from the government to bring their standard of living up to the minimum level which has to allow for a decent standard of living.  With this system, which more or less exists today in many European nations, we can keep the profit system and have all its so-called advantages.  But would this end the vicissitudes of the Business Cycle?

 

The amount of productivity today per working unit/person is constantly increasing.  One individual working continually provides for more and more people.  In order to keep constantly producing goods and services this productivity must be continually used up so more is always needed.  Consumption now becomes as important as production if the economy is to continually grow.  Therefore the consumer whether or not he/she is employed is needed as much as the producer.  This system can only flourish through government taxes and a redistribution of the National Income.  The producers can earn assorted amounts of surplus income which they can spend, save or invest while the unemployed or underemployed population can receive government transfer payments which will allow them to properly consume the necessary goods and services to both keep production going and have a decent standard of living.

 

Of course if we can create a new economic model which would allow for a fair distribution of goods and services without using the profit system then we would be far better off.  But this would probably require a complete change in our overall thinking and value systems.  We would also have to deal with the issues of what to produce and how to produce it without the motivating force of the profit system. 

   

Is it possible?  We would have to separate production of goods and services from money and find another reason to labor other than individual profit.

 

There is a disparity between the use of money as income, a means of exchange, and storage for labor and profits.  The distribution and expenditure of money determines where we are on the Business Cycle.  This, in turn, can throw the economy into recession or depression and cause a breakdown in the production of goods and services and partial or massive unemployment.  The extent of the distribution of money can cause a partial or full cessation in the distribution of goods and services.  They are two separate entities that are tied together in an unwholesome relationship.  If they were separated the economy would be far better off.  The problem, of course, is how to separate them.

 

Generally speaking, the overall public reaction to all of this is to return to the thinking of the late Nineteenth Century: the “safety” of the profit system. This, I believe, President Donald J. Trump will attempt to do; and this, seems to be today, the basic Republican value for economic growth.

 

     MONEY: ITS HISTORY AND USE:  The two entities which keep any economy functioning are self-interest and money.  Self-interest would affect every working individual from owner, entrepreneur, to physical laborer who wants the greatest return he/she can get from their endeavors.  Money is the grease that operates the economy: it is wages, salaries, profits, rents, interest, and dividends.  The spending of money determines demand, production, and also the phases of the Business Cycle.

 

The entrepreneur, factory or store owner will charge the greatest amount they can legitimately and pay his employees the least amount they can get away with.  Thus prices will be as high as possible while money paid to worker will be as low as it can be.  The producer will maximize production to increase profits; the workers will not be able to purchase all the goods and services produced because of low wages and over-production will eventually result.  This will lead to recession, unemployment, business failures, and depression.  Self-interest, which is the major motivating force of the economy, also tends to eventually cause the economy to malfunction into depression.

 

What is the problem?  It is the process of the distribution of money throughout the economy.  Whenever the distribution breaks down the economy goes into recession and depression.  It ceases to operate for the benefit of its members.

 

The use and distribution of money becomes the problem.  What then is money?

 

To understand what it is and its use(s) we need to have knowledge of how money was used both historically and at present.  Presumably, at first, man begins with barter: goods and services were directly exchanged for goods and services.  At some later point in time these were exchanged for their exact value, generally, in precious metals.  Rather than continue using scales to weigh the metal one group of traders, probably the Phoenicians, began stamping the weight on the metal piece.  This became the initial use of money.  The idea was then picked up by other groups or nations and coins came into being: an exact weight of a precious metal with the country or ruler or some symbol stamped on the metal to guarantee its value.  What happens here is that a good is exchanged for its exact value in the metal: equal value for equal value.  This allowed for free trade throughout the Mediterranean several thousand years ago.

 

Money, as it existed at this time, was labor or a good whose value was exchanged for its equivalent in gold, silver, or cooper coins.  Similar worth was exchanged for similar worth.

 

As time proceeded the coins became more ornate.  Rulers images were stamped on the coins, various designs were used.  Different denominations appeared, allowing coins to be minted in different sizes and weights; and also in different metals.  And thus was value exchanged for value, money for goods and services.

 

Of course, into this economic system occasionally various enterprising individuals and/or governments began a process of “watering” some of the coins minted; that is, mixing base metal with the gold or silver, thereby hoping to get more goods and services for less gold or silver.  This process would be done on a large scale by such individuals as the Roman Emperor, Nero; who tended to need more money than he could collect in taxes.  The result was to cheapen the value of the specie bringing about inflation which also resulted in a lowering of overall wages and other disruptive problems to the economy.

 

However, this economic system worked and continued to work successfully as long as conditions in the society(ies) were stable; that is, there is no rapid infusion of massive amounts of gold or if large amounts of money don’t have to be transferred over distant areas.

 

The discovery of the New World by Christopher Columbus brought into Europe, in the Sixteenth Century, massive amounts of gold over a fairly short period of time.  The Americas were systematically looted.  The gold passing through Spain and went on to the Netherlands, which was ruled by the same person as Spain, and then into rapid circulation throughout Europe.  This caused, what has been referred to as, “The Gold Revolution” which decreased significantly and continually the value of gold in its relationship to goods and services, and brought about unbelievable economic hardships to the wage earning working classes of Europe.  Wages remained essentially fixed while the value of the money dropped continually in a never ending cycle of inflation; thus bringing about a tremendous drop in standards of living.  It took about a century for a new reasonable balance between the value of gold in relation to the cost of goods and services to come about.   

 

Another problem which could upset the economies was large scale trade over great distances and/or between different nations. There was great danger from bands of thieves on land or pirates when shipping gold over bodies of water.  A safe way had to be found to ship gold. 

 

During the late Middle Ages different cities, city-states, provinces, and countries became known for producing certain products.  These were desired throughout Europe.  Also some of the Italian city-states, after gaining control of the Mediterranean Sea, gained a monopoly of trade with the East for spices and other products.  (It was the search for a new route to the East that brought about Columbus’ expedition.)  This and other factors brought about a need for the safe transfer of specie over long distances.  In addition the breakdown of Feudalism and the rise of Kings brought about a necessity for the availability of large amounts of money for the payment of armies and other large scale projects.

 

To offset these economic needs there arose in various cities: first in the Germanies and then in the Italian city-states merchant families who eventually traded in money as a commodity.  These became the merchant bankers of the Hanseatic League and the Italian city-states.  They set up branches of their banks in different countries which allowed for immediate transfers of gold; and they became in many cases the new nobility: the merchant princes.  Of the Medici family of Italy two of the women became queens in France and one of the Medici became a pope.  Cosimo, the founder of the family had been a money lender whose symbol of trade was three brass balls.

 

From the Italian Renaissance on (Fourteenth Century) banking was fully developed with the banking families, in many instances, ruling the Italian city-states.  The goods of the East came to Europe by way of the eastern Mediterranean, through the Italian city-states, and on to the general population of the continent.  The fleets of ships plying that sea were controlled by the merchants of the city-states; who also controlled banking and, among other enterprises, made high interest loans to the emerging kings.

 

It was the potential profits from the trade that caused the new nations like Spain, Portugal, England, and France to explore, searching for a new route to the East.  This was the justification for sailing west to get to Asia and thus discovering the Americas.  Prince Henry of Portugal began sending expeditions south, exploring Africa trying to find a river crossing Africa west to east.  Eventually one of the expeditions rounded that continent and was able to bring back to Europe a cargo of spices worth many times the value of the ship and cost of the expedition.  Portugal controlled that trade for about fifty years. 

 

With the new routes and the emergence of pirates in the eastern Mediterranean, Italy lost control of that body of water and the trade and profits moved to the new emerging nations.  Incidentally the Renaissance now became the Northern Renaissance and banking and trade moved to these countries.

 

Money, during this period, remained as it had always been: equal in value to the goods and services for which it was exchanged.  Spain’s looting of the gold from the New World and having it pass directly into the European economy brought about a 90 year period of inflation in the Sixteenth Century but did not change the concept of value for value.  Actually by making gold more plentiful and less expensive it allowed for a more rapid economic growth.

 

With the coming of the wonders of the Industrial Revolution (the development of machines going from wood to metal, transportation: put a steam engine on wheels and you have a train, advances in medicine: ever increasing abilities to fight the assorted diseases, phenomenal population growth, advances in metallurgy, gas and electric engines, etc., etc.) the nations of the planet underwent massive changes: national populations went from the low millions to the high millions approaching and exceeding in one or two cases a billion people.

 

As we moved into the Twentieth Century (in addition to the major wars which wiped out millions) with the tremendous growth of business, of  the needs for ever increasing goods and services there were not enough precious metals to allow for an exchange of goods and services based upon value for value.  For this and other reasons in 1929 we have the Great Depression.

 

Paper money when it was first used consisted of silver and gold certificates which supposedly could be exchanged for actual specie at any time at one’s bank.  (However, if everyone were to do it at the same time there would be a run on the banks and they might well become bankrupt because there was never enough metal to satisfy everyone’s needs.)  In point of fact the Industrial nations eventually got off the direct gold standard by collecting and storing the gold bullion and printing paper money supposedly based upon the value of this stored bullion.  Silver coins would maintain a certain amount of precious metal for a while.  Later in the Twentieth Century virtually all nations will go off the gold standard basing the value of the money on the prestige of the particular country. The remaining silver coins became copper sandwiches.  By the beginning of the Twenty-first Century money is, in all cases, devoid of any precious metal or anything else of real value except the credit of the nation issuing it.

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Since 2008, when the United States went through what is generally called today The Great Recession the country has been recovering from what could have easily been The Greatest Depression in its history.  This economic condition had been building rapidly since the presidency of Ronald Reagan in the 1980s, when all government restrictions on trade, many of which were developed by the Roosevelt administration during the Great Depression, had been done away with by the Reagan administration.  The banking industry in the country had a free hand to do whatever they wanted.  And what they wanted was to increase their profits astronomically.

 

The banking industry convinced a large percentage of homeowners to turn their homes into bank accounts by a process of continually taking equity funds out of their homes.  They did this by constantly refinancing their properties.  In the process of doing this the paper value of the homes continually increased.  Presumably people were spending what they believed was their never ending increases.

 

This became rampart from the Reagan administration on.  By 2007 the oncoming crash was apparent but the banking industry was in denial.  At that point mortgage refinancing was raised to 125% of the appraised value of the home.  In 2008 the crash came and the Housing Industry collapsed.  Many of the banking houses were overextended and also at the point of collapse or bankruptcy. 

 

Since the basic financial structure of the entire economy or nation is based upon the banking structure and their functioning the Bush administration in 2008 lent large amounts to the banks.  This, however, was not enough money and the incoming Obama administration had to make more massive loans to the banking houses in order to save them.  The Obama administration also set conditions about massive remunerations to executives which the Bush people had not done.

All of this was in 2008 and 2009.  The trillions of dollars the Federal Government spent at this time saved the country from going into a more massive depression than that of 1929.  In fact we would still be coming out of it if the government had not jumped in. 

 

What emerged instead has been called The Great Recession.  In 2009 the unemployment rate had risen to 7.6%.  By 2010 it had reached 9.8%.  Thereafter it began to fall, reaching 4.6% by November of 2016.

 

In this process millions of people were underwater in their homes, suddenly owing more on the house than it was worth.  The banks, with aid from the government, largely recovered, with some being taken over by other banking houses.  Even with virtually no regulation some of the banking actions were illegal.  No one went to jail.  Instead the banks paid fines, which taken together were in the billions of dollars. The banks eventually repaid their government loans and executive pay rose to new heights.

 

We are still in a recession, with unemployment at the tail end of December 2016 at 4.5%.  For recovery, on the business model to occur, the range of people not working would have to reach 2.5%.  Is that a future possibility with President Donald Trump?  Probably not.  Since the Republican image of creating jobs has nothing to do with current levels of economic understanding.  They believe that jobs are created by doing away with government regulation.  It would seem that by their way of thinking as pollution increases and so do jobs.

The Weiner Component #169 – Part 1: The Third & Final Debate & Beyond

On Wednesday, October 19th 2016 Hillary Clinton and Donald Trump did their last Presidential Debate.  They spent a little over 90 minutes in Las Vegas Nevada essentially insulting one another.  Trump called her a “nasty woman,” a liar, and a failure.  Clinton called Trump a greedy misogynist and bully who used his public prominence to enrich himself, take advantage of women, and exploit employees of his business empire.

 

When the Fox news moderator, Chris Wallace, asked Donald Trump if he would give a concession speech if he lost the election Trump refused to give an answer.  He said he would keep the moderator and the public in suspense until that moment arrived.  The implication being that he would not concede the election if he lost.  The next day at a rally Trump stated that he would give a speech if he won the election.

 

The press and many others were shocked by Trump’s comments and attitudes.  Presumably no one in the entire history of the United States has ever not conceded the election they lost.  Trump was presumably either going against precedent or setting a new precedent.  He was basically upsetting the passage of power from one president to another.  And in the process questioning the entire Democratic System.  He was placing himself ahead of his country.

 

Wallace and the press reacted as though a concession speech by the loser is an absolute ritual in passing power from one president to another. By not doing it the entire process is questioned.  The feeling among many is that Trump is placing himself before the good of the American Republic.  His ego is more important than the welfare of the United States.

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If we go back in U.S. history and look at the Election of 1824 we find that at that time there was only one political party, the Democratic-Republican Party.  There were initially five candidates for the presidency that year.  Each was from a different section of the United States and was their section’s favorite son.  One of the candidates suddenly died before the election; consequently the country ended up with four candidates from the same political party.  Andrew Jackson, the Western candidate received the most votes.  John Quincey Adams came next.  None of the four candidates had enough votes to win the presidency.  According to the Constitution in such instances the choice fell to the House of Representatives.  They, in turn skipped General Andrew Jackson and chose John Quincey Adams as the man best equipped to become President of the United States.

 

Andrew Jackson felt that he should have been chosen, as he had the most popular votes.  He, with the aid of his followers, began an anti-administration newspaper which attacked everything the Adams administration did over the next four years.  In 1828 he again ran for the presidency and won the election.  By then, there was the Jacksonian Democrats and a new political party, the Whigs, which consisted of most of the elements within the society that opposed the Jacksonian Democrats.

 

Their name came from the antimonarchist party in England.  They stigmatized the seventh president as King Andrew and were derided by Jacksonian Democrats as the party devoted to the interests of wealth and aristocracy.  They won the election of 1840 with James Polk as well as several other presidential elections.  By 1860 they had, with other political groups, coalesced into the new Republican Party that elected Abraham Lincoln in 1860.

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Trump has had one of his sons investigating to see if he could gain control of a television network.  If he succeeds he may plan to oppose everything that President Hillary Clinton does over her four years in office.  Trump would run again as the Republican candidate in 2020.  He would be 74 years old at that time.  That is the same age at which Ronald Reagan began his second term in office, January 20, 1985 to January 20, 1988.

 

Will this happen?  Probably not.  Donald Trump claims to have over ten billion dollars but his web site is continually asking for contributions, no matter how small.  Also he has continually refused to disclose his income tax data, and that is even after it has been proven that he paid no income taxes for the last 18 years.  The factors, which it seems very important to him to keep secret, are his actual yearly income and the real extent of his wealth.  He certainly doesn’t want it to be known that he is just a plain millionaire and not really a billionaire.  With secrecy he can claim anything and no one can prove otherwise.  And Trump loves to exaggerate everything, including the size of his body parts.

 

Before the election, Trump has put together a TV program which will support his run for the presidency for the last two weeks of his campaign.  On Monday, October 24, fifteen days before the Presidential Election Donald Trump launched what is supposed to be the first of a nightly Facebook Live Program on Facebook.  His campaign sent an email to his supporters around 6:30 Eastern Time to alert them that “Trump Tower Live” would describe nightly coverage from Trump Tower.  The program, which consisted of discussion essentially by key members of his staff, attacked mainstream media accusing them of intentionally misleading voters about the closeness of the race, accusing them of promoting “phony polls.  Apparently this is supposed to continue every night through the election.

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It should be noted that the Constitution says nothing about concession speeches.  All that is required today is 270 electoral votes out of 538 possible votes. 

 

The Constitution, Article II, states that: “The executive Power shall be vested in a President of the United States of America.  He shall hold his Office during the term of four Years. . . . Each State shall appoint, in such Manner as the Legislators may direct, a Number of Electors, equal to the Number of Senators and Representatives to which the State may be entitled in the Congress. . . .The Electors shall meet in their prospective States, and vote by ballot for two Persons. . . . And they shall make a List of all the Persons voted for, and of the Number of Votes for each; which list they shall sign and certify, and transmit to the Seat of Government of the United States, directed to the President of the Senate.  The President of the Senate shall, in the Presence of the Senate and House of Representatives, open all the Certificates, and the Votes shall then be counted.  The Person having the greatest number of votes shall then be President, if such number be a majority of the whole Number of Electors appointed.”

 

The 12th Amendment to the Constitution, passed in 1803, has the electors vote separately for the President and Vice President.  In the Presidential Election of 1800 both Democratic-Republican candidates received the same number of electoral votes and the election was thrown to the House of Representatives.  They chose Thomas Jefferson, who had run as the Presidential candidate.  The Vice Presidential candidate, Aron Burr would later kill Alexander Hamilton in a duel.  He had swung the election to Jefferson. After 1803 that problem never arose again.

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Even though, on the election ballot, we vote for a presidential candidate, we are not actually voting for him or her.  We are, in fact, voting for an invisible elector who will vote for the specific candidate.

 

The Founding Fathers did not quite trust the property owning masses to vote directly for the president.  Also the Senate was originally elected by the legislators of each particular state.  The people did not directly vote for them until the passing of the 17th Amendment in 1913.  The people of the country did directly elect the members of the House of Representatives and because of that, they were given the “power of the purse;” all money bills have to originate in the House of Representatives.

 

It is an interesting bit of irony that the Republican majority in the House of Representatives over the last six years has been the major impediment in the functioning of the Federal Government.  By their inactivity they have been able to maintain to a certain extent the conditions of the Great Recession.  They have successfully, even though many Republicans disavow him now, made Donald Trump their candidate.

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If Trump were to be successful in gaining full or partial control of a TV station after losing the election and runs that station daily over the next four years opposing everything President Hillary Clinton attempts during her turn as President, could he then be successful in a Presidential Election in the year 2020?  The answer to that question is possibly.

 

The Republicans have been successful in controlling the House of Representatives since 2011.  They have been able to do this because in the Election of 2010 they gained a large number of state legislatures and governorships.  2010 was a census year and new voting districts were drawn in all 50 states.  These state election victories allowed them to gerrymander the boundaries of all the states they controlled.  In 2012 there were about one-and-a-quarter million more Democratic votes cast in the nation for members of the House of Representatives than the Republicans but the Republicans still retained control of the House.  This may well continue through the Elections of 2016 and 2018.

 

The probability is that the Republicans will maintain the majority in the House of Representatives under President Clinton and, if the present is any indication, continue behaving there as they have for the last six years.  We will continue to have gridlock and virtually nothing will happen.  There will continue to be war between the two political parties.  The Republicans will continue attempting to force their will upon the Democrats through their normal form of blackmail, adding riders to necessary bills in order to forcibly bring their agenda about.

 

Trump’s base, his followers, will continue to become frustrated and disillusioned with Washington, D.C.  They may well be joined by many of those who have not registered with either party.  Consequently they could well make up fifty percent of the voting population.

 

One commentator came out with the comment that the word Trump more and more reminds him of the Nazi symbol.  I suspect over the next four years Trump could become even more rigid in his demands.  And the primaries are open elections in which Trump could easily run again to be chosen the Republican presidential candidate.

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The Republican dominated House of Representatives has again begun playing its old games with the Federal Budget.  They have refused to pass a yearly budget for the United States.  Currently the country has a budget until the middle of December 2016.  The temporary law will then be revisited with all sorts of new demands by the current House of Representatives before they go out of existence and a new House comes into being.  They will, in all probability, pass another three month temporary extension of the budget.

 

The money appropriated for the Zika epidemic was 800 million dollars short of what was requested by the assorted medical facilities that are dealing with the problem.  This will be revisited by the next House of Representatives long before the end of 2017.  The general public will become even more frustrated with Washington. 

 

Basically the Republican House by its actions will create a very solid base for Donald Trump to run as their candidate in 2020 for the presidency of the United States.  Paul Ryan, the Speaker of the House of Representatives, who has refused to campaign with Trump because of Trump’s crassness against women, will be the one who is creating the setting that could well make Donald J. Trump the President of the United States in 2020.  And all this is being made possible because the Republicans cannot communicate and negotiate with the Democrats.

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Trump has loudly and continually accused the media, which he considers partisan of releasing “rigged polls” that place Hillary Clinton ahead of him.  It seems he knows he has won all three debates with her and is sure he is ahead of her with the voters.  I seem to remember that in 2012 the Republican leadership did not believe the polls because they favored Barack Obama and not Mitt Romney.  They were shocked when Obama won the election.  The polls were correct.  For inaccurate polls we have to go back to the Election of 1948, when Dewey ran against Truman.  Presumably the pollsters have made massive corrections in their polling techniques since then.

 

We will wait for the results of the 2016 Election before evaluating this election.  I suspect Trump will lose by quite a large number.  This is true even with the new release of non-information by the head of the FBI to Republican members of the Senate and House of Representatives about so-called new Clinton emails.

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It is also interesting to note that with the Electoral System, depending upon the population of the individual states, every vote is not equal.  In the heavily populated states like California and New York the individual vote is worth far less than in the sparsely inhabited states like Alaska, Rhode Island or Delaware.

 

To date there have been two elections where the man chosen by the Electoral College did not receive the majority of the popular vote: the first was the Republican, Rutherford Hayes in 1876, who became the United States President even though the Democrat, Samuel Tilden, won the popular vote; and the second was the Republican, George W. Bush in 2001, who became President even though the Democrat, Al Gore, received the majority of the popular vote. 

 

We can certainly use another Amendment to the Constitution.  It would be worthwhile to pass such an amendment before the situation arises again and also it would be fairer for all the American people to make each vote of equal value.

speaking at CPAC in Washington D.C. on Februar...