A military crisis? and Benghazi

If you want to figure out Benghazi, connect the dots on the following 2 questions:

1. Why was General Ham, head of African Command arrested by his 2nd in command for conduct unbecoming an officer?

2. Why was the Admiral Gaouette of the US Navy carrier task force in the Middle East relieved of his duty for “inappropriate leadership judgment?”

Dean Kalahar

The female wage gap myth

By Dean Kalahar

We constantly hear that discrimination and exploitation force women to make 77 cents for every dollar a man makes. It’s time to end the wage gap myth with a dose of common sense economics.

First of all, the wage gap is based on inappropriate use of data and statistical analysis. In the U.S. the 77 % number is calculated by looking at the median yearly earnings of women to men. The median is defined as the middle value of all the wages in a given sample. Using the median is useful if we are comparing winter temperatures between New York and Tampa, where one dimensional data has validity, but applying it to humans that have free will and biological differences proves nothing except that demagoguery works.

Is the median wage lower for women, absolutely, but the statistic is not an apples to apples, job for job comparison and thus has nothing to do with “paying women less than a man for doing the same job.” Using the median without taking into consideration specifics of individuals in the workplace is intentionally misleading or ignorant.

So what causes the variation in pay? Personal and workplace choices account for much of the gap. Labor Department research shows that men choose more dangerous and high stress jobs. Men choose higher paying career fields. And men hold more full time jobs, and work longer hours, weekends, and nights than women. All these factors lead to higher wages regardless of gender.

Stanford economist Thomas Sowell shows that “women are typically not educated as often in such highly paid fields as mathematics, science, and engineering, nor attracted to physically taxing and well paid fields as construction work, lumberjacking, coal mining and the like.” All these factors create differences in pay that have nothing to do with the exploitation of women.

Maybe the biggest reason is biology. Women make up 50% of the workforce but give birth to 100% of the babies. And if women choose to have children, their incentives change and this affects their choices of jobs, careers, continual service and hours spent on the job. The New York Times reported that among Yale alumni in their forties, ―only 56 percent of the women still worked, compared with 90% of the men. It goes without saying that traditionally men do not face the same incentives of biology and child rearing as women.

When these variables are included to the unadjusted 23 cent wage gap difference, the gap falls to 5-7 cents; according to a 2010 study by The United States Congress Joint Economic Committee’s Comprehensive Review of Women in the US Economy. Thomas Sowell concurs showing that “Women who remain single earn 91 percent of the income of men who remain single, in the age bracket from 25 to 64 years old.” And what’s left of the 5% gap is bridged by systemic socio-cultural factors, not by intentional causation based on discrimination.

If we actually compare apples to apples in the workforce, the facts will disturb those who are married to the vision of women victimization.  According to Marty Nemko and data compiled from the Census Bureau, unmarried women who've never had a child actually earn more than unmarried men. In a 2010 study of single childless urban workers between the ages of 22 and 30, Reach Advisors found that women earned an average of 8% more than their male counterparts. And according to the Labor Department, “of men and women who work 30 to 34 hours a week, women make more, 109 percent of men’s earnings.”

Sowell backs up these findings “comparing never-married women and men who are past the child-bearing years and who both work full-time in the twenty-first century shows women of this description earning more than men of the same description.”

Basic economics tells us that it makes no sense for an employer to pay a man more than a woman, if they can get the same productivity out of hiring the woman; unless the employer likes discrimination more than they like profit. To believe that women are paid 75 percent of what men receive for doing the same work is to believe employers can afford to pay 3 male workers the same as they pay 4 female workers that would produce 25 percent more output, and stay competitive in a economy that sees most businesses last less than ten years.

Even prior to all the hand wringing about pay inequality, free markets proved there was no pay discrimination. Sowell’s research shows that single women in 1971 who had worked continuously since high school earning slightly more than men of the same description. This fact was conveniently missed in 1972 when an executive order was signed creating affirmative action for women who were being underrepresented in the workplace.

The facts just don’t add up in the wage gap argument. To say that men are paid more than women for the same job is an attempt to redefine the laws of supply, demand, profit motive, and human nature. Class, gender, and racial victimhood pay big dividends for politicians, but only if gullible, ill-informed citizens buy false rhetoric like the female wage gap. 

Thanks Ben for the stagflation.

Why do we have stagflation? Because the FED views money as simply a numerical unit to be manipulated, not a representation of productive wealth creation and economic efficiency.

Excerpts and edits of a piece by Jeffery Snyder writing about: Central Banks Gone Wild: Money Is Now a Total Fiction

For all intents and purposes, global central banks view "money" as nothing more than "charta", a Latin word for "token"… 

Chartalism in this form is nothing more than a theory that capital can easily be replaced by mere monetary units, as if there is no information content relevant to economic efficiency stored in the flow of capitalized money. Past success in the form of stored "earnings" or "money" is, following this line of inquiry, eminently replaceable by determined government planning. In that way, money is now flowed or channeled on the basis of poor past performance rather than on the basis of good expected future performance. 

Fresh capital in the modern monetary sense is a unit on an accounting statement, devoid of any larger connotation. For investors and the process of investing, however, accounting should have meaning - where a business gets its money matters greatly in the process of investment analysis.
This philosophy thoroughly upends capitalism…

The entire premise of capitalism is the efficient deployment of capital; capital having full meaning absent in the sense of modern money. Capitalists create capital through successful deployment of "money", turning that "money" into true wealth of productive enterprise. That successful deployment of money creates additional capital that can be "monetized" in asset markets, but the number of new monetary units has no basis in trying to predict or determine successful business acumen. That is the traditional role of intermediation. 

In the past four years, central banks have attempted to resurrect economic health by adding new charta to the system with perfect exclusivity biased to institutions and businesses that have destroyed their past stores of capital, despite the very visible fact that said destruction of capital is the quintessential measure of real economy inefficiency.

If the destruction of money has meaning, then so does the creation of money, or at least the methodology of determining how money is acquired. Bernanke's theory, shared by all the major central banks on this globe, is that economies can only recover when capital is disadvantaged in favor of meaningless money. 

The primacy of meaningless money is such that the entire system of savers, the majority of which have created actual capital and acquired value, need to be hamstrung by (zero interest rate policy) ZIRP in favor of institutions that destroyed real capital in the inefficient pursuit of the very policies that central banks directed in the first place. Success is to be shunned and disfavored in the socialized and institutionalized process of debt creation from the very firms that have proven beyond a doubt that they are not capable of maintaining economic efficiency. The ascendancy of chartalism is the only manner in which such a backward system could actually exist. 

Unfortunately, real economies run not on meaningless money, but on sustainable and efficient success. All of these banks and central banks need to emulate the ideals cleverly conjured and portrayed in the Smith Barney TV commercials of decades past, when firms used to "earn" their money. The capital on a bank's balance sheet at one time (before fiat money and transcontinental wholesale money markets) denoted success at intermediating the pool of savings, turning past success into additional future success in a virtuous circle that is the hallmark of every thriving economy in history. In short, money is supposed to be about winners and losers. Economies need to reward the virtue of economic winners and delete the societal and systemic cost of the losers. 

Without monetary meaning, there is no sorting process of winners and losers; there are only losers that are supposed to take comfort in the vacuous experimentations of academic central bankers that passes for progress and evolution. 

More than anything, human nature needs value and meaning in money. Maybe central bankers should try their hands at investing without any meaning to money and capital - it doesn't work. Try as they might, particularly with reducing economic agents to mathematical equations and models, modern mainstream economics has tried to dehumanize the economic and financial system. It certainly makes economics appear more scientific, but ultimately that is just the cloak of self-delusion - models are not science. 

Perhaps central banks have re-invented an achievable means to a healthy economy with meaningless, inhuman tokens, but the results of the past four years, particularly 2011 and so far in 2012, are rather conclusive and unambiguous doubts. It's easy to blame fiscal profligacy for all the current ills, but such bad habits were borne and nurtured by money without any real meaning in the first place - intermediation removed from its eponymous task.

The word debasement itself is not just a semantic accident; it literally means to reduce status or esteem - very human concepts. Welcome to the world where capital, in a still nominally capitalist system, is as pliable and fictionable as TV advertising.

The dollar is just paper

Understanding destructive monetary/fiscal policies(increasing the supply of dollars without a proportional increase in productivity/GDP growth)

Or how the FED and Obama administration have devalued the dollar causing inflation now with hyperinflation to come.

What is it about fiat currency debauchery that makes it so hard to understand? Imagine the mockery Michelle Obama would get if she announced plans to cure the country's obesity epidemic by changing the number of ounces in a pound. Wow, I'm down to 175 without dieting! Yet this is exactly what is happening to the dollar, with much worse to come.

 -Bill Freeza

The value of the dollar, in other words, has collapsed to less than half of the number ounces of gold it was worth when President Obama acceded to the presidency and to less than a sixth of what its value on the day, say, George W. Bush acceded. -Editorial, New York Sun

Idle dollars will become inflation drivers

If Mitt Romney wins the White House an unintended consequence will loom large on his presidency. With a Romney win, optimism and confidence will in all likelihood roar back into the market. Unfortunately this will unleash the trillions being held by banks and corporations. As a result, we can expect to see substantial inflation and a sharp rise in interest rates. In short, idle dollars will become inflation drivers.

This inflow of new cash will bring about yet another round of resource misallocation and the creation of the next asset bubble. You see, instead of cleaning out the previous misallocations of easy money, weeding out inefficiencies, and creating incentives that push markets forward; the FED's monetary and government fiscal policies have stepped in to soften the blow every time the results of their previous meddling of the economy have gone south.

The next bust but will be the result of the FED's handling of the housing bubble. Of course the housing bubble was caused by the FEDs actions after 911 and the Dot com bubble along with legislation like the Community Reinvestment Act and public risk taking by Fannie Mae and Freddie Mac.You get the picture.

In short, the multiple boom bust cycles have been created and exacerbated by the central planners who are unable or unwilling to admit their vision of a command and control economy is fatally flawed..The next bubble will not be caused by a President Romney but you can be sure he will be blamed.

The Bernanke / Obama team know that providing fluffy landings by removing the pain of tying costs to choices made in the free market inflate egos, score politically in the short term, and hide the evidence of their failures. Unfortunately, warm fuzzy rhetoric has ever growing consequences in the long term.

Well folks, the long term has arrived. If you need any proof, look at the $16,000,000,000,000 we are in debt, that's 12 zeros. This time however, the sharp cuts and stings of a crash  landing will be felt. The fuse has been lit, the inflation bomb is primed and the FED can't put salve on the injury any more. Of course asking the Obama administration to step in and solve our looming crisis is like giving a crack addicted accountant the company credit card.

It is too late to stop the inevitable inflation that is heading our way. And the only way to muffle the blast of the next bubble is to allow the productive entrepreneurial market economy and its people the freedom to minimize its effects. One specific suggestion is to unleash America's existing energy resources and technology to counteract the effects of damaging inflation.

Will we see more pain, yes. Should we run from the free market, no. We have to, for once and for all, trust fundamental principles of capitalism that as Nixon said "works better than it sounds," instead of chasing the utopian fallacy of socialism "that sounds better than it works."

Buckle-up, it's going to be a rough ride.

Michelle's strange psychology

I am confused. If Michelle Obama was raised by her father Fraser Robinson,..

Who according to Rich Lowry in National Review, citing Michelle Obama’s DNC speech, had an: 

insistence on paying his small portion of her college-tuition bills on time, because “that’s what it meant to be a man.” 

Who led a life of self-sacrifice. He was a working-class father who raised two Princeton University graduates. 

Who was a high-school-educated man who married and stayed married, who worked and kept working despite considerable adversity. Whatever his relative lack of education and skills, he was a hero of character, shaped by mores that have been eroding for decades. 

(Who) according to Michelle’s convention speech and to published accounts, her father was a pump operator at the city water plant in Chicago. He was diagnosed with multiple sclerosis as a young man and still got up to work every day. The first lady described how she watched him “grab his walker, prop himself against the sink, and slowly shave and button his uniform.” When he came home, he’d reach down to lift one leg after another to make it up the stairs and greet his kids. 

It’s difficult to imagine a more affecting depiction of everyday dutifulness than that. With his wife of 31 years, Marian, Robinson built a family deeply invested in his children’s future. 

Too few men in his position now do the same. Forty years ago, Fraser Robinson left for work in pain every day — walking on two canes — and now a small army of his fellow Americans schemes to get paid for doing nothing. 

Through his faithfulness, Fraser Robinson gave Michelle and her brother an incalculable gift. That being according to Susan Meyer, “The parental characteristics that employers value and are willing to pay for, such as skills, diligence, honesty, good health, and reliability, also improve children’s life chances, independent of their effect on parents’ income,”

…then why would Michelle marry and tolerate her husband, President Barack Obama’s actions and record in office; which goes against everything she was taught by her courageous father she so obviously admires and loves? It really is a confusing nature/nurture question that offers what I am sure is a fascinating answer.

Generational consistency strengthens a nation. In this case much of it must have been lost.

I’m saddened for the culture of our nation to lose such values. It's a shame her two children may never get to learn the lessons from their father the first lady should have learned from her's.

Machiavellian danger

Regarding the DNC:

What I am hearing and seeing are speakers looking directly into the camera and flat out lie about who they are, what they believe, and where they want to take the country.

It really is a stunning display of ignorance or hubris.

They are either pathologically unfit to serve, or are driven by the most dangerous of motives, that being the direct undermining of the American way of life.

The old Machiavellian game of saying one thing so as to gain power and do the opposite is the fountainhead of totalitarianism.

They have decided their self-anointed central planning trumps the most fundamental of natural laws, FREEDOM.

God help us all.

Get ready for poverty

Peter Schiff sends a clear warning based on facts and reasonable assumptions:

On the current trajectory, the national debt likely will hit $20 trillion in a few years. If, by that time, interest rates were to return to 5 percent (a low rate by postwar standards) interest payments on the debt could run around $1 trillion per year. Such a sum would represent almost 40 percent of total current federal revenues and likely would constitute the single largest line item in the federal budget. A balance sheet so constructed would create an immediate fiscal crisis in the United States.

The depression that will follow will not be called “The Greatest Depression,” it will be called “The End of America.”

Read more: SCHIFF: The real fiscal cliff - Washington Times 

Dean Kalahar

Bernanke is not the Chair, he sits on a throne of his own making

Chairman Bernanke and the FED either have their heads in the ground (or up someplace else), or are intentionally destroying the economy of The United States so that it can more resemble the rest of the wretched world. The ideology is to redistribute the wealth worldwide by bringing down America.

The main policy paper at the FED’s Jackson Hole conference was: William White’s, Ultra Easy Monetary Policy and the Law of Unintended Consequences.

The paper and warnings are obviously being ignored.

Some excerpts:

“Ultra easy monetary policies have a wide variety of undesirable ... unintended consequences. They create malinvestments in the real economy, threaten the health of financial institutions and the functioning of financial markets, constrain the ‘independent’ pursuit of price stability by central banks, encourage governments to refrain from confronting sovereign-debt problems in a timely way, and redistribute income and wealth in a highly regressive fashion.”

Using monetary policy, White concludes all the central banks have done is “to buy time” for governments: “If governments do not use this time wisely, then the ongoing economic and financial crisis can only worsen as the unintended consequences of current monetary policies increasingly materialize.”

Dean Kalahar

Source: Niall Ferguson

Back to school: How about showing up?

By Dean Kalahar

It’s that time of year again when we assume children are back in school and that being absent is only due to illness or extraordinary events.

How many absences do you think a teacher has to deal with in the course of a year; 200, 500? If you said that sounds about right or even high, go to the back of the class.

Data shows that last school year, this humble teacher had 1793 absences! That is not a typo, and means the average number of days missed per student was 13.7 or almost 3 weeks of instruction. It goes without saying the extra work load and loss of academic potential is monumental. If we extrapolate these numbers over a k-12 education, the average student misses 178 days or a full year of instruction over their school career.

The crisis of these numbers is not an aberration. Chronic absenteeism (missing 10 percent or more of school or a month or more per year, which translates into 18 days a year) is prevalent in our schools.

The reason these numbers are not reported is because attendance statistics only show average daily attendance. Sarasota County reports a 95.5% average daily attendance rate, but that means that as many as 40 percent of its students may be chronically absent because on different days different students are in school.

It does not take rocket science to know that being in school leads to succeeding in school while poor attendance affects standardized test scores, graduation rates, and teacher effectiveness.

The Georgia Department of Education found “that just a 3 percent improvement in attendance – five additional days -- would have led more than 55,000 students to pass end-of-year standardized tests in reading, English, or mathematics in grades 3 to 8. The biggest impact was for students who missed between five and 10 days of school, suggesting that missing even a week to two weeks can have a significant negative impact on achievement.”

A study by Douglas Ready showed that “compared to children with average attendance, chronically absent students gained 15 percent fewer literacy skills and 12 percent fewer mathematics skills in first grade.” Multiplying these losses over the k-12 experience has devastating consequences on learning.

And this epidemic of absenteeism is nationwide says a report on Absenteeism in the Nation’s Public Schools, by Robert Balfanz and Vaughan Byrnes from Johns Hopkins School of Education. They conclude that “a national rate of 10 percent chronic absenteeism seems conservative and it could be as high as 15 percent, meaning that 5 million to 7.5 million students are chronically absent … with significant numbers of students (are) missing amounts of school that are staggering: on the order of six months to over a year, over a five year period.”

The report states that “chronic absenteeism is typically based on total days of school missed, including both excused and unexcused absences. This is critical because the evidence indicates that it is how many days a student misses that matters, not why they miss them.”

Findings from the report are sobering:

• There is essentially a linear relationship between each missed day and lower test performance. Through the first 20 days missed there is a greater than 1 point decline in mathematics performance per day and three-fourths of a point in reading.
• During the critical middle and high school years, 46 percent of students in at least one of those years missed a month or more of school and 18 percent missed two or more months of school.
• In 2009-2010, Florida’s reported rate of 10 percent translates into more than 300,000 students a year missing more than a month.
• Data from Florida following a group of all first-time sixth-graders in the state over seven years showed almost half the students in the Florida sixth-grade cohort had been chronically absent in at least one year; with one in five students severely chronically absent in at least one year (missing two or more months of school).
• The Florida cohort data suggests that in most cases chronic absenteeism is not an isolated occurrence but a frequent and recurring one with cumulative effects for such students.

Notwithstanding the fraud being committed on the tax payer who is funding empty desks; if we want high stakes testing to close achievement gaps, tie teacher pay to performance, and foster academic excellence through discipline from our children, dealing with absenteeism must be a priority.

Parents and educators must be willing to defend sound educational principles regarding attendance. These principles include high expectations and accountability for parents, students, and teachers with a steadfast application of the highly specific laws regarding attendance. Anything less is educational malfeasance and parental negligence.

Politics or power

Did the President indirectly try to bribe Reverend Jeremiah Wright to keep him quiet during the 2008 Presidential campaign?

Here are the facts:

Reverend Jeremiah Wright was a liability to Barack Obama’s Presidential run in 2008. On audio tape Reverend Wright said he was offered $150,000 bribe to stop talking during Obama 2008 campaign. Eric Whitaker was the person Wright said made the offer.

Whitaker has been very close friends with President Obama since their time together in the early 1990s at Harvard. He has joined the first family on every single one of their August and Christmas vacations since 2008. He’s also been involved in official capacities with the Obama campaign. He and his wife, Cheryl, hosted a Chicago fundraiser for the president in January. Convicted felon Tony Rezko, on Obama’s recommendation, hired Whitaker in 2003 to run the Illinois Department of Public Health.In 2010, Whitaker working as chief of the DPH was the subject of a federal probe. Whitaker was also closely involved in the Senate-seat-selling Blagojevich scandal. According to the president’s own report on the issue, Blagojevich’s deputy governor contacted Whitaker in early November 2008 to ask “who spoke for the president-elect” on the question of who should be appointed. Whitaker then went to Obama, who said he had no interest in the issue — thereby insulating himself from the scandal.

 If it looks like a duck and walks like a duck, at worse, it might just be a crime; at best, it is a transparent window into the Presidents character and political power aspirations.

 Looks like it’s time for further investigation.

 Dean Kalahar Sources: Patrick Brennan, National Review Fox News Edward Klein, The Amateur

Is it "fair" President Obama

'
President Obama,

Is it “fair” that a team lost by 1 point?
Is it “fair” for a child to be born in Rwanda?
Is it “fair” that J.W. Booth shot Lincoln?
Is it “fair” to have been Jackie Robinson?
Is it “fair” a child’s pregnant mother was on crack?
Is it “fair” a tornado touched down?
Is it “fair” that some kids’ parents get divorced?
Is it “fair” that Armstrong was the first on the moon?
Is it “fair” that free people make choices?
Is it “fair” that OJ was acquitted?
Is it “fair” when someone is born blind?
Is it “fair” to be Orville or Wilber Wright?
Is it “fair” to be afflicted with ALS?
Is it “fair” to get pregnant while in high school?
Is it “fair” some decide to save?
Is it “fair” to ride a plane that landed on the Hudson?
Is it “fair” that someone gets the last piece of pie?
Is it “fair” to work in the World Trade Center?
Is it “fair” Solyndra couldn’t compete?
Is it “fair” your Kansas born mother had a Ph.D.?
Is it “fair” that you went to Harvard?
Is it “fair” that Malia and Sasha’s dad is the President?
Is it “fair” that the $787 billion dollar stimulus passed?
Is it “fair” the Democrats hold the Senate?
Is it “fair” you get to ride on Air Force One?

You’re incessant call for society to be “fair,” sounds like a “tween” who does not have the cognitive capacity to even understand the basic realities of life in a dynamic universe of possibilities.

Life is not “fair” or “unfair,” it is the systemic results of infinite combinations of scientific and social circumstances, interactions and choices.

Anyone attempting to tell you otherwise is immature, foolish, or dangerous.
'

She's a seductress

By Dean Kalahar

Did you know you are about to be robbed of your hard earned property by the most diabolical criminal you have never met?

You will know it is happening but will be powerless to stop it.

Well, the suspect has been identified.

Her name - “Inflation.”

People don’t know much about her because she is usually tame. But don’t be fooled, she can be one nasty woman. It would be prudent if you understand her nature because Inflation is about to commit the biggest crime never reported.

Inflations basic temperament is a rise in prices. She also has a duel personality, so to truly understand her we need to ask which persona acted to make prices rise. Once that is answered, we can determine if we are faced with normal healthy Inflation or if we are facing her alter ego also known as “Miss-allocation.”

On her good side, natural Inflation is a market phenomenon in terms of productivity and/or price that increases sharing and economic efficiency in moving scarce resources to their most efficient use. Natural Inflation does not hide from the public and we can identify her in several ways.

· A rise in prices and corresponding loss of purchasing power due to an increase in the money supply with a corresponding increase in output of goods and services.
· A rise in prices due to the multiplier effect of economic expansion via real credit wherein people are saving money so others can borrow money.
· A rise in prices due to an increase in demand for goods, services or the currency.
· A rise in prices due to a lack of supply or a rise in raw material costs.
· A rise in prices as the result of demand pull and cost push inflation forcing wages higher.

On her bad side, “synthetic” Inflation caused by government intervention into markets decreases sharing efficiency. This evil Inflation is shady because she hides herself from the public while acting as a seductress to the government. And when the government indulges her, and believe me policymakers can’t resist her, she robs us of vast amounts of our wealth. We can identify her by this specific action.

A rise in prices due to the expansion of the money supply by government deficit spending of artificial credit; or Federal Reserve policy that tries to stimulate lending by lowering interest rates, reserve requirements, or when the Federal Reserve Bank purchases government bonds in return for Federal Reserve Notes, a.k.a. money via open market operations.

Inflations dark side increases the number of dollars in circulation, which reduces the purchasing power of each dollar without a corresponding increase in output of goods and services or a decrease in demand for the currency.

To make matters worse, some people do not trust or want inflated and devalued money. This can make the value of the money decline even further; sometimes ending in economic collapse.

The irony here is that expansionist monetary policy intended to help the economy will actually create a boom bust cycle. Synthetic Inflation forces people to suffer needlessly at the hands of those who believe they can manipulate the economy better than the invisible hand Adam Smith so eloquently explained.

Why do governments get in bed with Inflation and employ such insidious policies?

As Milton Friedman has explained, Government borrows in dollars and pays back in dollars. But thanks to inflation, or the simple act of printing money, it can pay off its debts without raising taxes because the government does not care if the dollars it pays back have less worth than the dollars it borrowed.

The problem is the dollars you have earned and saved are also now worth less in terms of purchasing power. In short, the government pays off its debts on the unknowing backs of the saver who has their currency’s purchasing power stolen.

Friedman points out that legislator’s have resorted to financing spending through “inflation, a hidden tax that can be imposed without having been voted, taxation without representation.”

Some of Inflations worse offenses and the destruction she can create can be seen in historical terms. Thomas Sowell reminds us of post WWI German history.

“In July 1920, 40 marks were worth one dollar; but it took more than 4 trillion marks to be worth one dollar by November 1923. People discovered that their life savings were not enough to buy a pack of cigarettes… During the worst of the inflation, in October 1923, prices rose 41% per day! ... The German government had, in effect, stolen virtually everything they owned by the simple process of keeping more than 1,700 printing presses running day and night, printing money.”

When Inflation strikes dollars are worth less than before. Worse yet, the entire currency can become worthless. In Zimbabwe, their 100 trillion dollar bill is not worth enough to buy a loaf of bread. The current exchange rate is 300 trillion Zimbabwe dollars for 1 US dollar.

How does Inflation create economic chaos?

Ludwig von Mises and F. A. Hayek both pointed to artificial credit expansion, normally at the hands of a government established central bank like the FED, as the non-market culprit that fuels synthetic inflation.

When the central bank expands the money supply by lowering interest rates, lowering reserve requirements or when it buys government securities, it creates the money to do so out of thin air. Meaning the FED expands the money supply not with real tangible dollars but with “reserve balances” or “bank money” that is nothing more than an electronic transfer of numbers into a ledger.

The added currency the banks hold and will lend is not the result of people saving and putting more of their money in the bank; it is from an intervention into the market. Without the equal counterbalance of savings and the slowing of other spending, the new money is just looking for trouble with Miss-allocation.

These additional “synthetic” dollars force lower interest rates and stimulate investment into speculative projects, or other non market driven investments. We have seen this happen historically with inefficient spending on internet start-ups (dot coms) houses, gold, oil, and other speculative ventures that disrupt and distort the natural mechanisms of the free market.

With all this liquidity, the players in the market are enticed to find places to invest the money they would normally not be interested in. But herein we see a paradox. Why would self interested individuals working with sound free market mechanisms become afflicted by incentives that are inefficient, create inflationary boom bust cycles, and cause financial pain? Why do we see so many entrepreneurs making the same errors in misjudgment every time they are seduced into a relationship with synthetic Inflation?

Something outside the principles of the free market must be at play to create such delusional actions. Economist and historian, Thomas E. Woods Jr. explains that the inflated supply of money interferes with the market’s freely established structure of interest rates and disrupts the usual incentive system that coordinates the market and keeps inefficient decisions from being made.

In Human Action, Ludwig von Mises offers a great analogy regarding artificial credit expansion showing how “entrepreneurs, misled by the artificially low interest rate, behave as a master builder who lays too large a foundation for a house, because his subordinates incorrectly tell him how many bricks and other materials he has.”

Woods explains, “The sooner he discovers his error the better. The longer he persists in this unsustainable project, the more resources and labor time he will irretrievably squander. Monetary stimulus merely encourages entrepreneurs to continue along their unsustainable production trajectories; it is as if, instead of alerting the master builder to his error, we merely intoxicated him in order to delay his discovery of the truth. But such measures make the eventual bust no less inevitable – merely more painful.”

As the economy busts and is saddled with imbalances due to fiscal stimulus, it will suffer until the imbalances are corrected. The people will also have to suffer the cost of being held accountable for their decisions; even though the incentives came from a government and FED seduced by the political expedience of synthetic Inflation.

If a Laissez faire approach is taken and the market is left alone, freedom, choices and costs will allow the allocation of scarce resource to move back to an efficient equilibrium in the shortest period of time. A look at any number of recessions including the depression of 1920 legitimizes the market’s ability to recover and heal with a speed and ease unknown to those who believe they can micro-manage the economy.

Unfortunately, this simple solution to the bust cycle is often ignored as we have seen with the FED and Feds propping up Miss-allocation after the internet bubble,911, today’s housing bust, and predictably tomorrows gold bust. It is just too easy to employ another round of fiscal stimulus to avoid the pain of readjustment and admit of their torrid relationship with Inflation.

What’s more shocking are the policy actions we most often see after the bust. As the economy goes into a nosedive as a response to the artificial and unsustainable boom, policy makers step in and suggest a solution that created the problem in the first place, more fiscal stimulus! Can you say: $787 billion bailout, QE1, QE2, and Operation Twist?

The idea of government stepping in to solve an economic problem they created by instituting the same policies they used to create the problem in the first place is madness. Why should we believe the government now when the government did not know where to allocate the simulative money the first time around, or the second, or third.

Remember governments are not incentivized by any profit or loss system and their decisions are far more arbitrary than the decisions made by free individuals. Government obsession of synthetic Inflation is like a stalker addicted to a love gone bad. Unfortunately the government won’t place a restraining order on itself.

As far as bailouts, Woods again helps us understand that “Emergency lending to troubled firms perpetuates the misallocation of resources and extends favoritism to firms engaged in unsustainable activities at the expense of sound firms prepared to put those resources to more appropriate use. . . Bailouts merely freeze entrepreneurial error in place, instead of allowing the redistribution of resources into the hands of parties better able to provide for consumer demands in light of entrepreneurs’ new understanding of real conditions.”

All of this just postpones the inevitable. Because like a drunk, you can avoid the hangover costs of drinking if you just keep drinking, but you can’t keep drinking forever.

In short, as economist Roger Garrison states, “Savings gets us genuine growth; credit expansion gets us boom and bust.” Easy money leads to boom which is unsustainable which leads to bust which brings in even more easy money which leads to a bigger boom and thus a bigger bust until eventually the boom will lead to a complete breakup of the economy. And that is where we are heading after mismanaging the internet, 9/11, and housing boom and busts.

What is the current problem?

Today, the housing bust and the following gold boom have created the next wave of disaster. As International economist David Malpass explains, the FEDs near-zero interest rates penalize savers and channel artificially cheap capital to government, big corporations and foreign countries. As previously noted, low rates encourage excessive risk taking which fuels bubbles. This stimulus, however, has not shown up in the marketplace with Inflation, yet. At some point, as we have seen with all artificial economic growth, an increase in interest rates will fuel the bust.

Our current boom bust cycle has been covered up right under our noses by arrogant and dangerous actions taken by the Central Bank and Executive branch.

The Fed has been fully sterilizing its asset purchases, meaning all the cash it has used to buy bonds to fund the government’s deficit spending and stimulus is still contained at the Fed, not multiplied in the private sector. The Fed has accomplished this through bank regulation and by borrowing from banks at above-market interest rates—$1.5 trillion as of Jan. 18, 2012.

The FED buys US government bonds and then they -as well as the government, via Dodd-Frank and other statutes- regulate member banks so as to keep the money that was used to buy the bonds from being lent to consumers. The FED then borrows money from these same Federal Reserve banks and pays them interest greater than the rate set by the FED which is zero. Thus the FED soaks up the potential liquidity and the reserve banks make “no risk” money. Dollars are thus not put into circulation but the banks become very profitable on their balance sheet which creates a multiplier effect in expanding the number of dollars without printing more dollars and without having to lend dollars to consumers or cause Inflation to strike – yet!

The result is a vacuum of tremendous subdued Inflation. As economist John Taylor of Stanford has noted; “ before 2008 reserve balances were 10 billion, at the end of 2011 when QE1 and QE2 ended they were 1600 billion. This money will “eventually pour into the economy causing inflation.” “The FED is distorting incentives and interfering with price discovery with unintended consequences throughout the economy.” The lack of transparency keeps the scheme all but hidden from the general public while in the meantime, investors flock to gold and other resources as they know their currency is being devalued by the Treasury Department and the FED.

Even though we don’t fully see her yet statistically, common sense screams that a massive outburst from Inflation is coming. At some point, as all schemes do, the vacuum seal will be broken, the Inflation bomb will be unleashed, and the people will have to pick up the bill for the government prostituting Inflation.

In short the government is monetizing their debt under the cover of the FED who is creating a monetary bubble to prop up and profit their banks that upon its “pop” will make the housing bubble seem like a snap.

What do we do?

As you can see, Keynesian stimulus strategies do not work while Austrian models define why they are failures. The solution then is for the FED and policy officials to understand, as Taylor states, “that rules based monetary policy works and unpredictable discretionary policies do not.” The goal then should be long run price stability, also known as a sound dollar. This means it is the job of the FED to maintain the stability and purchasing power of the dollar and thus keep Inflation’s evil side in check by minimizing her seductive lure.

The FED should get rid of its current dual role of maximum employment and price stability as it is working at cross purposes. What good is the expansion of the money supply to foster employment when it destroys the currency stability which acts as a break on hiring?

One idea offered by Taylor is to design a gold standard that requires no physical gold to operate, and that is not subject to speculative attack. The idea is to develop a policy that would automatically adjust the size of the money supply either up or down mirroring the price of gold. Another important step is for the government to get its fiscal house in order and stop borrowing money.

As you can see natural Inflation is not a worry, but when money is effortlessly stolen by Inflations dark side the crime is immoral by definition. This is made even more maddening when the theft is the result of a government and central bank that have, as their very reason for existence, the job of protecting you and your property.

Of course their betrayal at the hands of a seductress should not surprise anyone. Thomas Jefferson said: “To preserve our independence, we must not let our rulers load us with perpetual debt… And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale … (Where) private fortunes are destroyed by public as well as by private extravagance.”

It's not about me means it's all about me

An open letter to President Obama,

Is your cognitive “house of cards” so shaken by the realities of energy creation and consumption that the only way to protect your fragile sense of self is to call those who live in the real world “flat earth society” members? Your rhetoric is a classic example of the “it’s not about me” line where everyone knows it’s actually all about them.

In other words, you are the one who believes in fairy tales and “flat earths,” that, like a chess board made from sustainable wood, can be controlled by the well intentioned pixie dust of green technology and your self-aggrandizing narcissism.

You spend your time smugly creating straw men and decrying capitalism as piggish. These projections are simply a defense mechanism to defend your blind perceptions. In reality, your mind is a straw house that desperately is trying to protect its frailties and global warming fantasies (or is it climate change?) from the winds of a big bad wolf known as self-actualization, common sense, and capitalism.

Heaven forbid your self-anointed ivory tower be blown away by the dissonant cognition found in the enlightened reason of a systemic and dynamic universe beyond the pale of mere mortals. Unlike yourself of course, who reached demigod status when you proclaimed upon your exultation, “the moment when the rise of the oceans began to slow and our planet began to heal.”

I am saddened by the outward expressions of inner turmoil you exhibit without even a hint of humility or ability for self awareness. Your maladaptive coping strategies directed towards reasoned yet conflicting points of view is beneath a man that is supposed to be the leader of the free world.

How about doing the American people a favor, grow up, find yourself, and lead; otherwise step aside so America can prosper in freedom.

Respectfully

Dean Kalahar

The Afghan thank you

By Dean Kalahar

In its war effort to stop international terrorism, the United States has given Afghanistan

1906 US fatalities to date.
500 billion dollars
Security and Protection
Built 608 schools
Improved women’s rights
Built 670 health care clinics
Trained nearly 17,000 health workers
Built Islamic centers of worship
Vaccinated nearly 7 million against polio
Worked to Control TB and AIDS
Built 3000 miles of roads
Expanded agriculture
Spread democracy and liberty
Gave healthcare to 750,000 patients
Economic growth
Increased the standard of living
Lowered poverty rates
Saved countless lives
Built and repaired infrastructure
Bent over backward to be culturally sensitive
And other immeasurable acts of goodwill, support, and humanitarianism

The thanks America received for its efforts?

Afghanis murder US citizens and protest America after some Korans were burned that had been defaced and used as a means of illegal communication by Muslim prisoners.

“Priceless”

Intolerance guised under the cloak of tolerance is abhorrent. Let’s cut the nonsense and realize we are not dealing with humans who want to live in a civilization.

The U.S. should end all aid, pack up the troops and leave Afghanistan immediately under a new Doctrine of Ungratefulness.

“The US will bomb and eviscerate to dust any and all suspected al-Qaeda, Taliban, or Afghan activity that might be seen as a threat to US national security at anytime and in any place without warning and without apology.”

The Florida Exit Exam in American History indoctrinates children into a progressive and revisionist model critical of America, Part II.

By Dean Kalahar

Last year it was brought to your attention that a crisis in education was being manufactured.

Florida is currently moving forward with the creation and implementation of exit tests in the public schools. This is an important reform effort and Florida should be applauded. In a turn that can only be called outrageous however, the process for developing these tests has been hijacked. In teaching American history, the exit exam process is being used as a legal tool for student indoctrination into a progressive and revisionist model that is critical of America.

While exit exams are a vital tool in evaluating student knowledge acquisition,they force very specific aspects of curriculum into being taught as accurate and factual. Teachers, who will now be evaluated and paid according to the exitexam’s specific details and student performance therein, are all but forced into teaching children “what to think

This report is a more detailed followup to thatinitial finding.The good news is the early predictionshavebeen confirmedand legitimized. Thebad news is the exit examis worsethanpreviouslydetailed.

What exactly will the exit exam focus on? Copies of the sample questions and key concepts to be tested have been released by the state. In short, out of the 18 sample questions given, all but 3 had a distinctive bias toward a worldview that portrays America in a negative way.

The test focus seems to be on making sure Florida’s schoolchildren believe that America has been a nation of bigots, racists, greedy collusive poverty creating capitalists, war mongering imperialists, anti-immigrant, segregating, discriminating, and disenfranchising racists and farmers; and that kids should be an anti-war peace loving through diplomacy, diversity and immigration seeking, tolerant through racial identity politicking citizens of big government spending through redistribution of wealth and regulation providing Medicare, minimum wage, civil rights and affirmative action powered by the auspices of globalization and the United Nations.

The proof is not hidden from view but is easily seen in the documents the FDOE has issued. An analysis of the sample questions and key concepts underscore a negative if not hostile view of American Exceptionalism. Even when the topics of questions are appropriate, the questions are packaged in a way that takes liberty with selective facts to offer an anti-American interpretation of history that is at best not balanced and at worst an outright distortion of the truth.

Sample question topic: tone/angle of question

African American oppression: American bigotry, racism

Monopolies oppressing workers: anti-capitalism

Child labor oppression: anti-business

US was forced into WWII: neutrality, peace, anti-war protest, immigration

International peace: anti-war, isolationism, pro League of Nations, U.S.is imperialistic

Harlem Renaissance: Race inhibits success in America, passive resistance, racial tolerance, celebrate racial identity

Franklin Roosevelt and Depression: Government as care giver, prexpanded executive branch/government, increased regulation, increased federal spending

Cold War with USSR: Alliances based on political philosophies created the problem

Cold War with China: Diplomacy works

GI Bill of Rights: Government provides the means for economic success, anti-business, anti-farmer

Great Society: Government provided Medicare, minimum wage, civil rights, reduced poverty, monitor race relations

Jackie Robinson: America is bigoted and racist, redistribute wealth

Brown v. Board of Ed: America segregates, discriminates, disenfranchises. Pro affirmative action and racial quotas

Oil and US foreign policy: Oil guides our decisions in Middle East, US over consumes oil

Immigration: Debate on immigration is over “foreign-born people in US” not illegal immigration

210 of the 264 curriculum concepts that make up the exit exam standards are legitimate and do not raise much concern if taught historically and honestly. But that means that 54 standards or 20% of the curriculum that has been chosen is suspect at best. This begs the question, with a history as rich as America’s, why would any part of the curriculum raise an eyebrow? The answer, it’s a deliberate attempt to infuse an anti-American worldview so as to indoctrinate students.

The exit exam also conveniently fails to include the principles that built America into a great nation. Most notably freedom, private property, representative democracy, opportunity, free will, entrepreneurialism, and capitalism to name a few. Of course critics will say that it is impossible to get everyone to agree on the 200+ concepts that should be on the test. But one does not need to have a PhD. to determine that some historical facts are more significant than others.

The following benchmark concepts should not be included in Florida’s exit exam because they are not significant enough, can be misused, are vague, or no counter concept is provided for balance.

Ostend Manifesto, Purchase Act (1894), Everglades, Gentlemen’s Agreement, impact of climate and natural disasters, Election of 2000 –only election listed., social movements, globalization, Big government, government regulation, planned economy, Apartheid, Equal Rights Amendment, settlement houses, Wounded Knee (1973), Fundamentalist Movement, Nativism, United Farm Workers, Chinese Exclusion Act, anarchists, American Indian Movement, Social Gospel movement, reparations, Southeast Asia Treaty Organization (SEATO), Mary McLeod Bethune, Rosewood Incident, Agricultural Adjustment Act, Relief.

Counter to these included historical references, other vital pieces of American history are left in the dustbin so as not to get in the way of the tests radical agenda. According to historian Robert Shackelford, here is just a small dose of American History since 1861 the exam does not include.

Habeas corpus, Robert E. Lee, Ulysses S. Grant, Sherman’s March to the Sea, Election of 1864, Appomattox Courthouse, Homestead Act, Trans Continental Railroad, John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, Thomas Alva Edison, Alexander Graham Bell,, Economies of Scale, Free Enterprise, Corporation, Boxer Rebellion, Open Door Policy, Roosevelt Corollary, Rough Riders, Ellis Island, Progressive Party, Woodrow Wilson, The Federal Reserve Act, 16th Amendment, Federal trade Commission, Bolsheviks, Vladimir Lenin, The Election of 1924, The Mellon Program, Mass Production, Managerial Revolution, Model T, Airline Industry, The Radio Industry, Court packing Plan, The Broker State, Keynesianism, Safety net, The Roosevelt Recession, Henry Morgenthau, Fascism, Communism, Mein Kamp, Axis Powers Nazi-Soviet Nonaggression Pact, The Four Freedoms, TheMunich Crisis and Appeasement, Militarist Gain Control of Japan, Manhattan Project, George Patton, George Marshall, Dwight D. Eisenhower, Korematsu vs. the, United States, Alger Hiss, The Rosenberg’s, Advances in Electronics/medicine, Rock“n” Roll,Cuban Missile Crisis, Warren Court, Engel v. Vitale 1962, Sputnik, NASA, John Glenn, Neil Armstrong, The Geneva Accords, Viet Cong, Ho Chi Minh Trail, Department of Energy, Iranian Hostage Crisis, Election of 1980, Strategic Defense Initiative, Conservatism Supply- Side Economics, The Reagan Doctrine, Bill Gates, Steven Jobs, Monica Lewinsky Scandal, Welfare Reform Act, Contract with America, NRA.

If all this was not outrageous enough, it needs to also be noted that, by law, the American history course for high school students begins with the Civil War time period and thus excludes any history of America prior to 1861. Students will not be studying and or tested on such pivotal pieces of knowledge such as the Declaration of Independence, Revolutionary War, or Constitution. Proponents of the exam will say that early American history is taught in elementary and middle school, but does anyone believe a 7 or 13 year old can analyze the intricacies the Enlightenment had on the Second Continental Congress or the economics that lead to the “starving time” in Jamestown?

Ask yourself; are the following topics that are included in the exit exam more important than what has been left out of the lessons that will define American history to our children? Furthermore, in reading this list, do you see a pattern that overemphasizes a worldview that could be easily be manipulated through a politically correct anti-American slant?

Anaconda Plan, reservation system, Henry Flagler, political machines, Social Darwinism, transportation, urbanization, Expansionism, imperialism, entangling alliances, Espionage Act, Hispanics in WWI, militarism, Selective Service Act, Fortney-McCumber Act, demobilization, disarmament, Washington Navel Conference, Women’s International League for Peace and Freedom, Neutrality Acts, Quota system, Seminole Indians, Universal Negro Improvement Association, Nationof Islam, loyalty review program, Salerno, Tehran Conference, Dumberton Oaks Conference, Golf of Tonkin Incident, Hawks, Grey Panthers, Superpower, Nuclear Proliferation, Vietnamization, North America Free Trade Agreement, National Woman’s Suffrage Association. child labor.

Looking at the questions, concepts, and worldview projected on the test and only one conclusion is possible. The exit exam is an anti-American tract. The conclusions stated last year are even more legitimate today.

The new Florida exit exam standards are a shocking move toward what one can only equate to soviet style propaganda to create a monolithic citizenry. In the case of high school American history, a look into the specifics of the exit exam is all that is needed as proof to an agenda directed in a planned process by groups that have no problem using whatever means necessary to acquire power and promote a twisted vision of America. Florida exit exams in the social sciences need to be stopped immediately and there needs to be a serious reconsideration of the entire process before moving ahead.

All Floridian’s are now aware of this educational malfeasance. Turning a blind eye to this overt attempt to usurp our children and undermine American history and culture is no longer an option. Now is the time for action.

Homeless in Sarasota

By Dean Kalahar

Back in the days of TV’s Andy Griffith, Otis Campbell, the town drunk, would put himself in jail so as not to bother anyone in Mayberry. The sensibilities back then were straight forward, show compassion to Otis’s humanity, but hold him accountable for his decisions and behavior while protecting private and public property.

Today this idea is anathema to many homeless advocates in Sarasota who favor more government support and protections. Others however, are concerned about the unintended consequences of allowing people to live at will on the streets. Let’s take a closer look.

According to The Heritage Foundation, homelessness is usually a transitional condition; with individuals who lose housing typically residing in an emergency shelter for a few weeks or months before re-entering permanent housing. In 2009 only one out of 180 poor persons was homeless in the literal sense of being on the street and without shelter. Studies also show that on a typical night shelters have an average vacancy rate of 10 percent so there are enough beds to meet the need.

Since more people become temporarily homeless over the course of a year than are homeless at any single point in time, most homeless people are one time victims. Trumped up homeless totals are actually describing different people at different times, not a monolithic group of downtrodden as reported.

As you can see “the homeless” is a poor description of the individuals the community is concerned about. A more accurate description would be: vagrants, bums, beggars, or pan handlers. Granted, some individuals are wandering the streets due to psychiatric or substance abuse problems and many avenues of help are offered in the community. No one is begrudging private charities, churches, and families that have historically took the lead in offering assistance and hope to those whose free will is broken.

But it is unacceptable to defend those who defecate in public, commit crime, and engage in behaviors that violate property rights. Advocates who demand loose non-judgmental public policies out of a sense of guilt, pity, and self promoting compassion only lead vagrants into dependence and despondence in lieu of personal responsibility and dignity.

The role of government is to protect people and their property so their responsibility in addressing the vagrant issue must defend a larger moral principle. Morality is based on the simple idea that anything that harms a person or his property is immoral. For example, murder, rape, theft, or vandalism is immoral and there are criminal laws against such acts. Even behaviors that cause property values to be diminished can be seen as immoral so consistent laws must also be applied to protect abuses that are seen and must be foreseen.

The private property of people, homeowners, and businesses have the right not to have their persons or property harmed, damaged, disrupted, and capital destroyed as a result of the free choice made by vagrants. Citing and arresting vagrants who cause property to be harmed by direct or indirect means is morally right and as such is lawful policy.

Likewise, public property also has a moral component attached. The government has the responsibility to regulate and protect public property so it can be used and enjoyed equally. Vagrants that behave in ways that negate this social contract should be cited and removed just like any other citizen who is violating the rule of law on public land.

In short, vagrants have the right to their persons and property under the rule of law, but they do not have the right to harm the property of others.

Soaring rhetoric to protect “the homeless” based on feelings of social justice violates the very rights and moral basis do-gooders claim they want to protect. Oxymoronic policies that create the incentives for more dependency and despondence epitomize what can only be called immoral compassion.

T.S. Eliot summed up the psychological reality of those who want government policy to embrace vagrants. “Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.”

Even Barney Fife understood these lessons.
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The "pop" that will make the housing bubble seem like a snap.

The government is monetizing their debt under the cover of the FED who is creating a monetary bubble to prop up and profit their banks.

By Dean Kalahar

January 27, 2012

David Malpass in the Wall Street Journal zeros in on a very complex and troubling situation going on within the Federal Government and the Federal Reserve.

Near-zero interest rates penalize savers and channel artificially cheap capital to government, big corporations and foreign countries. One of the most fundamental principles of economics is that holding prices artificially low causes shortages. When something of value is free, it runs out fast and only the well-connected get any. Interest rates are the price for credit and shouldn't be controlled at zero. It causes cheap credit for those with special access but shortages for those without—primarily new and small businesses and those seeking private-sector mortgages.

The economy's exit from Fed dominance of bond markets wouldn't be traumatic. The Fed has been fully sterilizing its asset purchases, meaning all the cash it has used to buy bonds is still contained at the Fed, not multiplied in the private sector. The Fed accomplishes this through bank regulation and by borrowing from banks at above-market interest rates—$1.5 trillion as of Jan. 18.

So the Federal Reserve (FED) is buying US government bonds and then they -as well as the administration, i.e. Dodd-Frank- are regulating member banks so as to keep the money that was used to buy the bonds from being lent to consumers.

The FED then borrows money from these same Federal Reserve banks and pays them interest greater than the rate set by the FED which is zero.

The FED thus soaks up the potential liquidity and the reserve banks make “no risk” money without having to lend dollars to consumers or cause inflation.

Since the member banks own the FED, the central bank also shares in the member banks profit. Dollars are thus not put into circulation but the banks become very profitable on the books/balance sheets which creates a multiplier effect in expanding the number of dollars without printing more dollars.

The result is tremendous hidden inflation as the purchasing power of each dollar declines as the number of dollars on paper goes up. As Malpass states, “the FED balance sheet is up 250% since 2008.”

The lack of transparency keeps the scheme all but hidden.

In the meantime, consumers/the market flock to gold as they feel their currency is being devalued by the Treasury Department and the FED.

At some point, as all schemes do, this will collapse and the inflation bomb will be unleashed.

In short the government is monetizing their debt under the cover of the FED who is creating a monetary bubble to prop up and profit their banks that upon its “pop” will make the housing bubble seem like a snap.

As Dennis Miller once said: “that is just exquisite bull s__t.”
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President Obama and the Magna Carta

By Dean Kalahar

The Magna Carta ended the idea that anyone, especially monarchs, are above the law.

Unfortunately. President Obama has appointed Richard Cordray to run the newly formed Consumer Financial Protection Bureau, part of the Dodd-Frank law passed to regulate Wall Street. Under this law, executive appointments must be approved by the Senate unless the senate is adjourned.

The problem is the so called “recess appointment” was made while the Senate is in pro forma session not recess. This is in direct violation of Article 2, section 2 of the Constitution. A pro forma session satisfies the constitutional obligation that neither chamber can adjourn for more than three days without the consent of the other.

Why would a supposed Constitutional scholar like President Obama even think to agree to such a process?

Because if anyone raises a concern to the illegal appointment, and the President has calculated a Republican running for President will object; he will turn it around and say those against the appointment are “against consumer protection.” He will go to say the GOP only want to protect “rich fat cats” on “wall street,” while he, of course, is fighting to protect the “little guy.” In short he will all but parrot the tired and hackneyed liberal rhetoric that evil Republicans want to hurt their fellow Americans.

This is in line with the class warfare tactics being used by the President to divide and conquer in hopes of being re-elected. The ends justify the means, even if the means ignore the Constitution and tear apart the country.

Opponents of Obama will probably say nothing and allow the abuse of power to go unchecked. Instead they should be clearly explaining the political game in simple terms, exposing Obama’s condescension toward Americas limited Constitutional governance, and holding the executive branch accountable to the rule of law. Supporters of the president who claim to defend the Constitution will be mute.

This may be exquisite Machiavellian politics on the part of an Imperial President who has acted as if he is above the law, but it is an unprecedented abuse of power. With the exception of Marbury v. Madison or the court packing of FDR, our nation has not encountered such willful disregard of the Constitution that all elected officials swear under oath to uphold.

When the rule of law that has been defended with American blood is held in such low regard and politicized for personal gain to increase the power to rule over the people, the Republic is on shaky grounds. The administrations clever use of politics has gone too far this time. Undermining the Constitution in order to gain additional power is tyranny in its purest form.

Government by the consent of the governed must not be manipulated. The appointments must be rescinded, thrown out by the courts, or the President must be Impeached by the House of Representatives in accordance with the Constitution.

The Great Charter, signed in 1215, has served us well up to this point. Principles must trump politics.

What is “rich” in Sarasota?

By Dean Kalahar

Class warfare and income redistribution rhetoric has always been fashionable among self anointed protestors and politicians who play the old game of divide and conquer, telling us the greedy “rich” need to “pay their fair share.” This would be tedious if it did not have serious implications for tearing communities apart, including our own. Let’s take a look.

According to IRS data, there are 1.38 million Americans in the top 1% earning at least $343,927 a year. This is a generous living but hardly the cash flow to purchase a corporate jet and luxury yacht. There are 138,000 Americans in the top .1% earning over 2 million a year. They more truly represent the vision we have of “rich,” but only equal .04% of the population.

Going even further, we can say “rich” and attach images of Oprah and Gates, two of the 5,309 people who make over ten million a year, but comparing .004% of the population to the 330 million other Americans to define the economic fabric of our nation is statistically meaningless.

What do Americans earn? 91.7% make less than $100,000 a year, with 71% making between $0 and $50,000 and 20.7 % making between $50,000 and $100,000. Only 8.3% of Americans earn over $100,000 year while 1.8% earn over $200,000. Good incomes to be sure but hardy “rich” once Uncle Sam takes his cut.

Focusing on the extreme ends of the earning scale to define “rich” versus “poor” is like comparing Warren Buffet to a homeless person. Elites who smugly spew indignation to protect a frail sense of self may create moral melodrama, but choosing the vivid exception to statistical truth does not trump demographic realities. In short, the vast swath of Americans make between $25,000 and $75,000 a year. Instead of being a nation of “rich” and “poor,” we are a nation of income equity and mobility.

Sarasota County is no different. The average adjusted income per household is $55,157. So why do we see opulence here in Sarasota? Because the so called ‘rich” spent the better part of a lifetime working hard at building a business or career, saving and investing for a rainy day, paying off a home and planning for their future. They no longer work, and live off their investment income and social security, but they certainly have paid their “fair share” along the way.

Many locals may live well now, but what is unseen are the years of scrimping and saving that went towards the ability for Sarasota seniors to live out their retirement years with some degree of comfort. Contrary to the static class system argument of neo-hippy malcontents, there is an easy explanation for America’s narrow income variations.

Experience, time, and age must be factored into any income analysis. Young people have fewer skills and earn less; older people have more skills and earn more. Incomes increase over time.

The “have” and “have-nots” are not different people, just people at different stages of their lives. The top 20% retire while the bottom 20% increase their human capital and move up while younger workers enter the workforce and continue the cycle. $66 thousand a year gets you into the top 25%.

Likewise, the bottom 20% does not mean “skid row.” There are the painfully poor 3.5%, but most of the people in the bottom 20% in America do not live on the streets or remain there for very long.

The “poor” in America are far richer in real economic terms than the rich in many places around the globe. Defining poverty and affluence is difficult when the bottom 20% in America has a higher standard of living than the top 20% in many other countries.

Income and class mobility is also a dominant feature in America. An absolute majority of people in the bottom 20% move into the top 20% in less than twenty years. Treasury Dept. studies show incomes in the bottom 20% grow at a much faster rate than in the top 20%, while the top1% actually move down in income and bracket over time. Factoring for inflation, the median income of all tax filers increased 24% over the ten year period studied.

The economy is not a zero sum game where the benefit of one comes at the cost to another. The class warfare attack on the “rich” is really an argument against free markets, wealth creation, and life saving economic growth. Polarizing citizens based on highly subjective emotional terms like “rich” and “poor” is counterproductive at best and immoral at worst.

Free market entrepreneurial capitalism allowed for the success of Apple’s Steve Jobs. Attacking the “rich” to pay their “fair share” through forced income redistribution will mean less Apples, jobs, and prosperity.
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