Ilana Mercer, May 14, 2003

Policies of cheap money and credit are, invariably, accompanied by boom and bust cycles ~ilana

When government sports a ‘surplus,’ this implies that the political pickpockets have stolen more funds than they can possibly dream of spending. The property is not theirs to keep! Conversely, when ‘deficits’ are reported, this means that the kleptomaniacs have not been able to steal sufficient funds to cover their profligacy ~ilana

The guy on one of those policy-bereft-of-principle debates plaguing television had me confused. He was saying that the dot-com bust of the 1990s is a big factor in the deficits. Pondering over what he meant, it occurred to me that he was putting the cashless cart before the horse.


The process began with the Chairman of the Fed, also the most revered government lackey, Alan Greenspan. With policies of cheap money and credit, which are, invariably, accompanied by boom and bust cycles, Greenspan, his Federal Reserve System, and the consecutive governments they’ve served created the “irrational exuberance” that typified the times—in cahoots, this cartel created the conditions for the speculative glut that was the dot-com era.


Still, the dot-com bust saw the private sector bite the bullet and undergo the necessary downsizing. Gone are the annoying “wonder kids.” When their business plans proved to be without substance, they, presumably, sold the Porsches and moved back with mom and pop.


How then did this rational, post-hangover, private-sector sobriety contribute to government deficits?


Well, guess who didn’t shrink operations to fit the emptying coffers? When you and I fall on hard times, often due to the policies of plunder, we economize or face the legal and economic ramifications of our excesses. When the parasites who feed upon us exhaust our resources, what do they do?


Answers Rep. Ron Paul: “Congress almost always spends more each year than the treasury collects in revenues.” The budget passed in 2003, says Paul, is 22 percent higher than two years ago, and encompasses all federal programs, not only those concerned with homeland security. In the face of faltering revenues, government has continued to expand, and federal spending to rise.


Because of the oil-and-water relationship governments have cultivated between ethics and political economy, speaking in plain terms—spelling it out as it is—has become foreign to the public. So here goes: When government sports a “surplus,” this implies that the political pickpockets have stolen more funds than they can possibly dream of spending. The property is not theirs to keep! Conversely, when “deficits” are reported, this means that the kleptomaniacs have not been able to steal sufficient funds to cover their profligacy.


The tax cut, which is an agreement by the plundering class to pilfer less, has become a red herring, used for political hay on both sides. Democrats say that reduced revenues will contribute to the deficit, hence tax cuts are bad. Republicans, as unflinching about fleecing the people, say that tax rate cuts will ultimately increase their revenues by stimulating the economy. Each of the morally bankrupt parties has used the tax cut as a decoy to avoid addressing the cause of the deficit: government’s spending more than it steals.


In fact, not only has Congress failed to show the kind of restraint you and I exercise in tough times, it has “magnanimously” raised its debt ceiling by one trillion dollars. Over and above a staggering national debt that now stands at 6.4 trillion dollars, Congress, reports Ron Paul, has also provided in the 2004 budget for an annual increase in the debt limit to 12 trillion over the next ten years!


Figures from the Bureau of Economic Analysis confirm that federal spending under Mr. Bush has indeed reached historic levels, with years of record deficits looming ahead. Our politicians have saddled every American with a debt of $22,000, reserving the option to double that burden.


At best, Bush’s tax cut will see him siphon approximately $35 billion per year less from taxpayers, over a period of 10 years, while simultaneously accelerating federal spending. At worst, the tax cut Bush proposes to phase in over the course of a decade will be repealed by a future Congress after his departure, thus never taking effect. Bush gets to claim he cut taxes without implementing the cut, but all the while spending like there is no tomorrow—for every dollar that may or may not remain with its rightful owner, the president will have blown tens of non-existent bucks on brand-new spending.


How will Bush make the money materialize? There’re a few easy options, chief of which is a tax infinitely more dastardly and damaging than all others: Alan Greenspan has been faithful, as he has been promiscuous, about inflating the money supply. To feed the deficit, government will pressure the Fed to print money. This practice—inflation—raises prices and depreciates the value of the currency. Politicians, first to feast on the new money, get richer; you and I get poorer. 


Here’s another simple truth: A decrease of a $100 billion in government spending would, according to professors Richard Vedder and Lowell Gallaway, authors of Out of Work: Unemployment and Government in Twentieth Century America, lift three million children out of poverty!


In their work on “The Scope of Government and the Wealth of Nations,” for the Joint Economic Committee of Congress, James Gwartney, Randall Holcombe, and Robert Lawson have demonstrated that as government expenditures grow—a trend the United States has adopted for the past several decades—so does the national income shrivel, point for painful point.


Larger government, be it through welfare or warfare programs, spells slower economic growth. Sustained job creation and economic prosperity hinge on slashing federal spending. The degree of economic stagnation currently reached indicates that The Beast has eaten away at the flesh and is now biting at the bone…our bones.



May 14, 2003

CATEGORIES: Debt, Economy, Federal Reserve Bank, Inflation, Republicans, Ron Paul, Taxation