great depression (2)


Is Trickle-Up Poverty the New Prosperity?


           While being assaulted on all sides with Barack Obama’s “trickle-up poverty” and other progressive government boondoggles like Obamacare on top of trillion-dollar national deficits as far as the eye can see and well beyond . . . a strange new phenomenon has emerged to further muddy the waters already obscuring our future hopes. China is now selling off American debt and ridding itself of dollars so that now the largest holder of American debt is . . . drum roll, please, Maestro! . . . the United States Federal Reserve Banking System. Yes, you read that correctly. Federal Reserve Chairman Ben Bernanke is now in the voodoo economics business all the way up to his fuzzy skull.  

           Over the last three months, China has sold roughly $19 billion in treasury bonds and other U.S. debt instruments. China, in other words, has become concerned about the sheer size of the U.S. overall debt and the high probability that the Federal Reserve’s unceasing money printing for the last twenty-nine months has debased and devalued the world’s reserve currency for ‘lo these last 60+ years: the American Dollar. Looking back in history that’s exactly what happened to the British Pound Sterling which had been the World’s Reserve Currency for over two hundred years until the Brits ousted Winston Churchill with World War II still not entirely won and brought in their Labour (progressive-liberal) Party to run the show. Labour inflated their once proud currency so much that the citizens and nations of the world began dumping the Pound and fleeing for gold, silver, the gold-backed Swiss Franc and most commonly for the American Dollar.

            The American Federal Reserve now standing as the largest holder of U.S. Treasury debt means that financing Obama’s third trillion-dollar federal budget deficit in succession has become something the rest of the world has begun to shy away from. China is still the largest foreign-holder of American debt, but the Chinese seem determined to remove their names from the top of that dubious list (other top foreign holders of U.S. debt instruments include: Japan, Russia, Brazil, India, Korea, England, France, Germany and Saudi Arabia). It also suggests that faith and trust in the “Almighty Buck” may be reaching a low-ebb.

            Unlike hard money (gold and silver) and all hard-money backed currencies such as the Swiss Franc and the Kruggerand-backed South African money . . . paper money has zero intrinsic value . . . it only exists and continues to serve so long as people trust the government issuing the paper bills (and that goes double for a nation’s paper debt instruments).    Bernanke has run the printing pressings so long that on a sheer mathematical basis the dollar of today is technically worth only as much as 3.4 pennies compared to the dollar of late 2008 when the financial crisis reached its low spot and the U.S. government started stepping in. What’s going on here? Why is Bernanke printing so much money?

            Bernanke is a well-known student of the Great Depression and has written numerous articles suggesting that the reason the Great Depression turned from a “little-d depression” into a “capital-G/capital-D Great Depression” is because there was never sufficient money in circulation to head off relentless deflation. That is, he believes a vicious-circle of deflation was created and that the continuous dropping of prices fed off itself and destroyed jobs which destroyed buying power which destroyed businesses which destroyed more jobs, etc., etc. 

            There is some truth to what Mr. Bernanke suggests . . . but it’s a lot like yanking your starting pitcher off the mound with the score going from 2-1 in the 6th to 8-1 against you in the 8th . . . once so much damage has been done . . . almost nothing will work. Perhaps the twirler should have been sent to the showers when he looked tired after 120 pitches before the start of the 7th?  Or after he’d allowed a home run and walked the next two batters with no outs in the 7th? Poor decisions early in a process can make finding good decisions later . . . very, very difficult.

            Rajjpuut suggests a different reading of history is more accurate.    Almost precisely a full decade before the infamous 1929 stock market crash we had a depression start-up that 98% of Americans never heard about. Progressive Woodrow Wilson’s so-called “Invisible Depression” started in late 1919 and was full-blown by the time Warren G. Harding was elected in November, 1920; and much worse when Harding took office in March of 1921 (they had a four-month Lame-Duck session in those days). Production had already dropped nation-wide by 26%. Ignoring the suggestions of his Commerce Secretary Herbert Hoover for immediate implementation of numerous government aid programs and other subsidies . . . Harding did only four things:


1.       Cut government spending by 48%

2.      Cut taxes by 49%

3.      Paid down the nation’s debt by 30%

4.       Slashed government regulatory interference across the board


            In fifteen months the economy had rebounded mightily (just a couple months later,  Harding died in office so he barely got to enjoy his success). The United States was now well into the “Roaring Twenties” the most single prosperous rebound of any economy in the recorded history of the planet. Calvin Coolidge, Harding’s vice-president continued the Harding policies faithfully, but chose “not to run” in 1928.   One of the most popular men in America and a famous philanthropist and author, Herbert Hoover ran for the presidency for the Republicans and won in a landslide over Democrat Al Smith.  Only three men in history have become president of the U.S. without extensive military or business executive or elected experience: Taft, Obama and Hoover.

            Hoover was a famous geologist and mining engineer who married the daughter of a rich banker.  He believed mightily in the “Efficiency Movement” (if you’ve read Cheaper by the Dozen, the father, Frank Gilbreth, was founder of the Efficiency Movement) and believed that the economy was riddled with waste and inefficiency which could be dramatically improved by “experts” like him once they identified the problems and solved them. Hoover became, according to the New York Times “one of the Ten Most Important Living Americans” for his charitable and humanitarian work during World War I.  

            Hoover administered distribution of over two and one-half million tons of food to nine million war victims and was later named head of the brand new U.S. Food administration by Woodrow Wilson when the country entered the War. A member of the Supreme Economic Council after the war, as well as head of the American Relief Administration he continued organizing shipments to millions of starving people in Central Europe.  A well-known philanthropist, Hoover like Teddy Roosevelt and Woodrow Wilson was like them a self-described “Progressive and Reformer.”

             He came to be known as “Wonder-Boy” during the Harding-Coolidge administrations for his notorious and comical lust for expanding portions of everybody else’s bailiwicks into new roles for the Commerce Department. The reporters of his day called Hoover, "the Secretary of Commerce... and Under-Secretary of Everything Else!" Long before he had entered politics he had abandoned laissez-faire economic thinking. Outside of engineering and charitable work he was a terrible micro-manager always on the look out to fix what wasn’t broken.  History shows that Hoover did one very important thing as Commerce Secretary:  he codified and standardized traffic lights across the nation. 

              As soon as he was elected president Hoover set about planning the undoing of much of the good work created by Coolidge and Harding.   He raised government spending and taxes and debt.  He initiated numerous “eleemosynary” style federal activities (reminiscent of his charitable work in World War I) to protect workers and farmers and businesses from the natural vicissitudes of the free market economy. His biggest mistake was instituting a huge tariff designed to protect American farm workers from foreign competition but remove such protections from business; the Smoot-Hawley Tariff Act was to cause great consternation in the business world. The agricultural tariff increase was the second highest in U.S. history and put a lot of people out of work. Overall, once the stock market crashed in 1929, Hoover instituted the biggest big-government policies the nation had ever seen.

             Franklin Delano Roosevelt (who had once praised Hoover in 1919 and tried to get him to run as the Democratic presidential candidate) and his v-p running mate Garner accused Hoover of being a socialist and promised that when elected they would:


1.      Cut government spending severely

2.      Cut taxes dramatically

3.      Pay down the nation’s debt

4.       Slashed government regulatory interference across the board and eliminate many of the socialistic programs of Hoover


          Since these amounted to little more than promises to do what Harding had succeeded with in 1921, people embraced FDR and he won in a landslide taking office in March 1933. History shows that the bottom of the Great Depression was reached in July, 1933, and the bottom of our own “Great Recession” was reached in March, 2009, in each case shortly after the new president took office. Ordinarily the expectation is that after the bottom is reached, prosperity begins to return within six months. In both FDR’s and Barack Obama’s cases, however, government interference made things much, much worse.

          FDR, of course, did exactly the opposite of what he promised. He dramatically raised taxes and government spending and debt and deficits. He expanded all of Hoover’s social and economic programs and added 40 of his own (just one law in 2010, Obamacare, created 384 new government agencies, so FDR was a piker compared to Barack) and made big government a way of life. He also confiscated gold coinage and then instituted an overnight inflation of 69% by pegging the dollar to gold at $35 per ounce (he’d given the citizens just $20.76) impoverishing the taxpayers while enriching the government. Of course doing what Harding did and avoiding what Hoover and FDR did is just common sense . . . something seemingly beyond Obama and Bernanke . . . .

          In June, 2009, when the full-folly of the Obama policies began to outline themselves in sharp contrast to common sense . . . the Chinese held $896 billion in American debt; today they hold $764 billion a 15% reduction in greenback holdings. Since an outright flooding of the market with U.S. debt notes would destroy China as well as the U.S., it seems the Chinese are now buying up gold and silver in large quantities and making an orderly retreat from the dollar – leaving our suspect currency in the hands of less astute nations and of Ben Bernanke. Since the American trade deficit with China alone reached a record $273.1 Billion in 2010, the Chinese are going to have to work awfully hard to keep lowering their dollar holdings . . . so one suspects that gold and silver will continue to rise quickly.

          Bernanke’s monetary policy, known as “Quantitative Easing” a.k.a. “irresponsibly printing money,” has seen the Federal Reserve recently buy up $600 billion worth of Treasury debt. Big Ben’s plan is to hold down interest rates and thus help lower the cost of federal government borrowing (to cover the Obama deficits) and incidentally increase inflation which he believes will stimulate economic growth and create jobs. This is a very Keynesian economic philosophy. In the months prior to his death in 1946, John Maynard Keynes (as the ending of the British Pound Sterling’s  200- year reign as the world’s reserve currency approached) who had long preached against the classical economic wisdom of Adam Smith and Smith’s “invisible hand of the marketplace,” like an atheist seeking God at the last hour repented . . . .

          As Britain’s economic hole under the progressive Labor Party deepened, and his own death drew near, Keynes told Henry Clay of the Bank of England of his hopes that Adam Smith’s “invisible hand” would somehow save the English economy and yank Britain out of the economic swamp it found itself in: "I find myself more and more relying for a solution of our problems on the ‘invisible hand’ which I tried to eject from economic thinking twenty years ago." The inflation destroyed the Pound Sterling as the Labor Party continued with government largesse and Keynes’ deathbed conversion went to naught.

          Here in America recent spikes in food prices and energy costs are a direct consequence of Bernanke’s unofficial devaluation of the dollar. The government continues under-reporting of inflation assisted by the Labor Statistics Bureau’s refusal to include fluctuations in prices of food and energy. Bernanke, however, believes that deflation is still the rule and continues to inflate the currency to avoid a second Great Depression. Since job creation by the private sector is the key, perhaps the government ought to try: cutting spending; cutting taxes; eliminating debt; and getting the government out of the way of the free market . . . oops, that’s been mentioned before . . . .


Ya’all live long, strong and ornery,



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Boobus Americanus Understanding Little
Believes History’s Biggest Lies,
Do We Need a Negative Stimulus Package?
The great cynical journalist H.L. Mencken often talked about that utterly strange creature he called “Boobus Americanus.” Mencken would be greatly heartened to know that in this era of “endangered species” Boobus Americanus has multiplied twenty-fold thanks to cross-breeding with Couch-us Potat-us Americanus and Sitcomus Addictus. Here are four great myths from the 20th Century spread by Progressive historians (“we must progress beyond the outdated ill-conceived Constitution”) and Progressive politicians . . . myths that Boobus Americanus believes with all his heart and soul.
I. Progressive Woodrow Wilson was one of our greatest presidents
II. Warren G. Harding was one of the worst presidents and a crook
III. Herbert Hoover, who did nothing to head off the Great Depression, was a conservative who “fiddled like Nero while Rome burned.”
IV. Progressive Franklin Delano Roosevelt was our greatest president and he saved us from the Great Depression.
Here are the facts:
A. Democrat Progressive Woodrow Wilson was, among other failings, a racist who premiered D.W. Griffiths’ racist classic “Birth of a Nation” in the White House and instigated segregation in government hiring from the White House. He was also our first true tax-and-spend President. He left behind a much worse recession than G.W. Bush did. He also wrote a history of America that called into question virtually everything noble about the country and the founding fathers. He was definitely a progressive and tried to change history to move things more along the progressive path with much greater government size and control of our lives. As Wilson’s last year, 1920, ticked away the economic situation was grim . . . unemployment had jumped from 4% to 12% and GDP dipped 17%. It would get worse.
B. Things got so bad that new president Warren G. Harding’s Secretary of Commerce Herbert Hoover (falsely characterized as a do-nothing laissez-faire conservative) urged Harding to consider a huge array of interventions in order to turn the economy around. Harding ignored Hoover and calmly paid down the national debt by 33%.
Harding facing a GDP drop of about 25% because of Wilson’s policies, also cut taxes and spending both between 45%-49% and the recesssion became known as the “Invisible Depression” because it ended within 15 months. Indeed within six months signs of recovery were already visible. In 1922, unemployment was back to 6.7% and had dropped to 2.4% by 1923. His vice president Calvin Coolidge continued Harding’s policies and the resulting “Roaring 20’s” was the single most prosperous decade in American history as the standard of living rose dramatically. For the first time Americans in large numbers owned automobiles, indoor plumbing, electric lighting, and appliances like the ice box and radio and took yearly vacations. The Teapot Dome scandal that’s been blamed on Harding by the Progressive historians occurred after his death and was created by fraudulent dealings initiated by his Secretary of the Interior Albert Fall.
C. Hoover, who replaced Coolidge in 1928, was a Republican Progressive and up until FDR was the most interfering president in American History. Almost as soon as he took office he abandoned the business friendly policies of Harding and Coolidge and jumped in to interfere in agriculture and business. To be specific:
Hoover . . . .
1) increased taxes on top wage earners from 25% to 63%
2) increased government spending by 47%
3) ran a deficit of 4.5% of GDP
4) against the wishes of over 1000 economists, he signed the Smoot-Hawley Tariff, effectively shutting down international trade
5) established the Reconstruction Finance Corporation to make loans to the state governments
6) appropriated money for public works construction (Hoover Dam among others)
7) met with major industry leaders and put significant pressure on them to maintain wages at current levels, despite the amount of money in the economy falling by one-third. This led, predictably, to massive unemployment thanks to those first wage controls in American history.
8) the myth or misconception of Hoover’s non-interference gets so absurd it’s almost unbelievable. The truth is diametrically opposed to that myth, for example, during the 1932 campaign, Franklin Roosevelt’s first vice president, John Garner, accused Herbert Hoover of “leading the country down the path of socialism.” Furthermore, FDR brain-truster, Rexford Tugwell admitted that, “most of what (Hoover) began would be taken over by Roosevelt and renamed the “New Deal.”
D. Progressive Democrat Franklin Delano Roosevelt campaigned against virtually everything Hoover did. He promised to return to the policies of Harding and Coolidge (low taxes, low spending and non-interference), but once elected continued Hardings policies with a vengeance. Higher taxes, much higher spending. He also confiscated gold and then soon changed the exchange rate from $21.76 per ounce of gold to $35 per ounce, effectively robbing all savers and investors of 61% of the value of their holdings. FDR made even Hoover’s interference look like penny-ante stuff . . . among other things he created 40 brand new federal agencies. Far from saving the country from the depression, he and his policies turned a little ‘d’ depression into the Great Depression which the rest of the world suffering a little ‘d’ depression avoided. In fact, except for the outbreak of World War II, almost nine years after he was first elected, the Great Depression showed no signs of ceasing under FDR.
E. Just for comparison, Barack Obama is making Hoover and Roosevelt both look like pikers. Imagine this, in just one law (Obamacare), Obama has created more than 385 brand new government agencies about ten times what FDR did in 12+ years . . . in just one law. And, of course, like Hoover and FDR, Obama is raising taxes, raising spending, raising deficits, and raising the national debt while doing nothing about unemployment.
So what’s to be learned now that real history’s been unearthed? Well, the very first time (under Hoover and FDR) that government involved itself seriously in intervening to stop an economic downturn . . . just happens to coincide with the onset of the greatest downturn of all . . . almost as if government interference made things much worse, do you think? In comparison Harding 12 years earlier did what any sensible family or business would do in hard times . . . took in the belt a few extra notches. According to the Cato Institute:
“Harding inherited (Woodrow) Wilson’s mess—in particular, a post–World War I depression that was almost as severe, from peak to trough, as the Great Contraction from 1929 to 1933 that FDR would later inherit. The estimated gross national product plunged 24 percent from $91.5 billion in 1920 to $69.6 billion in 1921. The number of unemployed people jumped from 2.1 million to 4.9 million.”
So what did Harding do? He cut government spending from $6.3 billion in 1920, to $5 billion in 1921, and then again to $3.2 billion in 1922. This would amount to a negative stimulus package! Income taxes were left as is and corporate taxes were cut. There was no push for new regulations and the Federal Reserve did nothing.
What was the result of Harding’s negative stimulus package? By 1922, unemployment was down to 6.7% and the Roaring Twenties had begun. The economy set new production records year after year until the infamous Black Tuesday on October 29th, 1929 created by Hoover’s profligate policies.
Of course the Progressive historians have altered the facts significantly and made FDR a hero and Harding a villain. And befuddled by their own histories, they’ve made all the wrong conclusions over and over and over again and the country enamored of the false-legacy of FDR has eagerly joined them . . . .
Ya’ll live long, strong and ornery,
My friend Tish Gance forwarded me the following which explains perfectly how false history comes to dominate our reality . . . .

Monkeys --

Start with a cage containing five monkeys. Inside the cage, hang a banana on a string

and place a set of stairs under it.

Before long, a monkey will go to the stairs and start to climb towards the banana.

As soon as he touches the stairs, spray all the other monkeys with cold water.

After a while another monkey makes the attempt with same result, all the other monkeys are sprayed with cold water.

Pretty soon when another Monkey tries to climb the stairs, the other monkeys will try to prevent it.

Now, put the cold water away. Remove one monkey from the cage and replace it with a new one.

The new monkey sees the banana and wants to climb the stairs.

To his shock, all of the other monkeys beat the snot out of him. After another attempt and attack,

he knows that if he tries to climb the stairs he will be assaulted.

Next, remove another of the original five monkeys and replace it with a new one.

The newcomer goes to the stairs and is attacked.

The previous newcomer takes part in the punishment with enthusiasm.

Likewise, replace a third original monkey with a new one, then a fourth, then the fifth.

Every time the newest monkey takes to the stairs he is attacked.

Most of the monkeys that are beating him up have no idea why they were not permitted to climb the stairs

OR even why they are participating in the beating of the newest monkey. Finally, after replacing all of the

original monkeys, none of the remaining monkeys have ever been sprayed with cold water.

Nevertheless, no monkey ever again approaches the stairs to try for the banana.

Why not?

Because as far as they know, that is the way it has always been done around here.

And that, my fellow monkeys, is how Congress operates -

And precisely why we need to REPLACE all the original monkeys this November

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