Posts Tagged ‘deficit spending’

Our Subhuman Elite

Monday, July 31st, 2017

Dear Friends,

It seems to me, even a cursory glance at the news, highlights the terrible situation we are in and that it is getting worse by the day. Not just Americans or Europeans, not the riots and runaway hyperinflation of Venezuela, nor the threat of nuclear war with North Korea, or even the genocide of Christians… but all of us, every man woman and child on the planet, we are in deep trouble. So… why is it that our leaders, who are undeniably the reason the world is in the horrible shape it is in, distract, lie, steal from us, connive against us, vilify each other and make the situation worse, rather than try to improve it? The tired old adage they have differing views on how to solve the problems they created is too shopworn to take seriously. The elite act like children. If you or I did a tenth of what the elite do, and get away with, we would be fired, prosecuted and jailed. Make no mistake, those who run the world are basically, subhuman. A subspecies that lacks the morality of the herd, don’t have the intellect of a jack rabbit nor the backbone of a snake, they destroy everything they touch, and like a child who’s fingers are covered with sugary goo, they touch everything.

You really couldn’t make this stuff up. Had a writer written a century ago… that in 2017 in the US, babies would be slaughtered faster than the Nazis did Jews in the extermination camps, then sell their parts, the people who exposed them are tried and may go to jail, the government would establish atheism as the state religion, monuments to Jesus would be replaced by monuments to Satan, pedophilia would have an advocacy group, the government would sell guns to Mexican drug cartels then blame gun shops in an attempt to undermine the second amendment, the attorney general would lie to Congress without consequence, we would be taking in tens of thousands of people who openly despise us and our constitution, illegal immigrants would be above the law even allowed to rape and murder with only a temporary ostracism as punishment, our politicians would be above the law and care not who knows it, our money would be fiat, we would have to get used to terrorism to prove how inclusive we are, our children would graduate high school unable to read, write or make change for a dollar but know everything there is to know about how to have gay sex, even as we are facing dozens of potentially existential threats the government spends billions to prove a hoax, etc… the story would have been called too absurd to print!

To the elite, what is theirs is theirs, and what is our is theirs too. They have set up dozens of scams to steal from working people. From the monthly fines of the politically connected big banks to the tune of billions of dollars, where no one goes to jail but the shareholders are fleeced, by the executives as well as the government, where our earnings are stealthily whisked away by inflation due to the printed fiat currency, where our jobs are undermined and sent overseas by regulations designed to prop up politically favored derelict firms to the detriment of growing entrepreneurial firms, while our children’s money is stolen by deficit spending before they even get to grade school, as the elite cast a greedy eye on our bank accounts and 401Ks to “balance the budget,” and our real property is subject to forceful seizure for whatever reason the elite want it for. The elite, around the world, are criminals who in a sane world would be cooling their heels in prison, continue to destroy all that is good and prop up all that is bad.

The deep state war on Trump is only a symptom of the underlying problem not the cause. Trump derangement syndrome is a very real thing and can be seen in real time by watching any major news outlet. It is obvious they have gone completely insane. Those who have created this dire situation, are intent on pointing the finger at someone else, anyone else. The elite have shown themselves to be untermensch in the worst sense of the word. They are the underlying problem. The elite today are the epitome of every bad trait humanity has ever created. The problems we face today are mere symptoms of the evil of our leaders. It is past time for us to recognize our leaders only have their own narrow interests in mind as they rule. If we don’t act now, and demand the elite follow the law and especially our Constitutions, all will be lost. To borrow a phrase… You don’t have to be a weatherman to know which way the wind is blowing, especially when it is a typhoon wind.

Sincerely,

John Pepin

Austerity

Sunday, July 12th, 2015

Dear Friends,

It seems to me, the new class tosses words around like bombs, they are intended to blow up, terrorize and distort the perceptions of people, tricking us into believing a thing is bad, when it is in fact good. There is no end to the examples, but I want to focus in on the term, “austerity.” Most people had never heard the word, austerity, five or ten years ago. That is one of the advantages of using it as a political bomb, the usage and meaning are fluid in the minds of those who have never heard it. Since we use context to understand words we don’t know the meaning of, and in that context we assign them a definition in our own mind, we can be manipulated by them. Often that definition is based on a false premise. These properties of human language are exploited by the new class to motivate us into doing damage to our own self interests while advantaging them. Your self interest and that of your children are profoundly effected by such chicanery.

Governments, from time immemorial, have over spent. It is the nature of government. The reason is that those who get to spend the money are never the ones who had to work for it. They take it, often at gunpoint, and spend it to enrich themselves, their cronies and expand their power over the people. Such a situation works fine for awhile, but eventually the economy that supports the spending must become hollowed out and collapses. As the economy gets closer to the eventual fall, the elite become panicked that their gravy train might not pull into the station tomorrow, and use every trick in the book to make sure it does. They sock as much money away as possible, to protect themselves from the calamity they created, while gutting the people they are supposed to serve. To do that they have to manipulate us into allowing them to continue the spending until the whole thing collapses.

So, what does “austerity,” really mean? It has basically two meanings, the first and the one most people today assign to it is; “sternness or severity of manner or attitude,” the second and the one that makes the most sense in usage as it pertains to government is, “extreme plainness and simplicity of style or appearance,” and the third which is related to the first is, “conditions characterized by severity, sternness, or asceticism.” You see, what the elite are trying to make you believe by using the term austerity, is that severe, hard, and by association, mean… measures are being taken by government, for no reason other than to make poor people suffer. The reality is far different however.

Using words with a negative connotation like austerity is a way of fooling us into going along with the elite’s wants. Notice how whenever the word austerity is used… it is aimed at our interests? Moreover, when austerity is actually implemented, it is always tax increases and never meaningful spending cuts? The elite, who don’t have to pay taxes but do get the primary benefit of spending, always fall on the side of tax increases. When those tax increases lower Gross Domestic Product, they point to that evil austerity as the reason, never at the spending, it’s pernicious incentives or the negative effects of taxing an economy to death. Remember, tax is synonymous with friction and burden. They want to keep the gravy train rolling so they terrorize us with words.

Real austerity, austerity that is of the second definition, “living in a Spartan like manner, austere, eschewing comfort, living simply, etc…” would be cutting spending. That is never the way it is used though, is it? The word is tossed out like a mad anarchist bomber throws an explosive into a crowd. It is used to terrorize and disperse people. Real austerity in Greece, Argentina, Venezuela, Spain, Italy, the US and elsewhere, would be to cut spending. That spending will eventually have to be cut, because sooner or later there will be no one left, stupid enough or rich enough, to cover it. The people will become impoverished, the banks will go belly up and those elite who have made the most, will have their money in an ivory tower… guarded by people who’s allegiance is guaranteed by the fact they would die if they were thrown back into the burning building that will be our economy. Until then, austerity will be a dirty word, after that, real austerity, cutting spending, would have been the only thing that could have averted disaster.

Sincerely,

John Pepin

Should GDP Include Government Spending?

Monday, January 19th, 2015

Dear Friends,

It seems to me, to bring sanity into economic figures and government decision making, government spending should not be considered part of gross domestic product. Gross Domestic Product, (GDP), is a measure of national income. The number is used in a variety of ways… to determine the wealth of a nation, the prosperity of it’s people, it is a way to compare the efficiency of various nation’s economies against each other, ETC… Basically, GDP is a benchmark of a country’s economy. GDP is figured by adding together all government, consumer and business spending, investment, and exports then subtracting imports, and you have the expenditure method of calculating GDP. Which is to say, it uses national spending as an indirect means to estimate national income. Why should you care how it is calculated? Because GDP is used for so many economic policy decisions that directly effect your personal financial well being.

Government’s addition to GDP is problematical, because government doesn’t really produce anything, it only consumes. As such, government doesn’t add to national income and does not support the economy… it is supported by it. You can’t say borrowed money should be added to a person’s income, but economists do, when it comes to government spending. Welfare spending is one example. If I take a dollar from you and give it to someone else, does that make two dollars of income? No, it still only one… counted twice. If any government spending is included, it should only be that portion taxed and spent that year, and even that would distort the real picture due to the debt that has piled up, the service on that debt, welfare spending and the negative incentives government largess creates.

If the economy outside government folds, government spending must stop as well, because it is in fact spending and not income, but if government went away the real economy would hum along fine. Oh, government alone can go on a while by printing money and buying bonds, (monetizing debt), essentially stealing the wealth of everyone who holds the currency, but even that extraordinary measure must end in hyper inflation and the repudiation of a fiat currency, as in Argentina, Hungary, Yugoslavia, Zimbabwe etc… If the currency is backed by gold or some other commodity however, government cannot print money to keep up spending, because it would have to create that backing commodity out of thin air, which is why economists and politicians hate gold backed currencies, it limits their ability to fudge the numbers.

GDP is supposed to be an analog of a nation’s economic income and so adding in what should be subtracted distorts the picture. A nation’s real economic growth cannot be effectively measured when a drag is called a boost. In the most simple terms, if you are driving to a place, and want to know how long it will take to get there, normally you would discern the distance and your speed, divide the distance by your speed to get the time it will take to get there. We have all done similar calculations in our heads when the kids in the back seat say, “Are we there yet?” But what if we stop to eat? The calculation then would have to add in the time you spent at the restaurant, what if you subtracted the time you spent at the restaurant instead? Your calculation would be very different than reality wouldn’t it? Adding in government spending is like subtracting the time you spend eating instead of adding it, performing the opposite function than is called for, it gives a very distorted idea of what is really happening.

This provides a pernicious incentive for politicians to spend more to make GDP appear higher than it really is. Let’s say a nation is experiencing a recession and it is an election year. Government officials could borrow money and increase money printing to raise government spending, making the economy appear to be growing, even as it is really shrinking. Moreover, that raise in debt and corrosion of the currency to fund the spending, actually lowers real economic growth! That might help with an election campaign but it is certainly not a real calculation of that nation’s economy or income. Further, it skews the incentive for politicians from helping the real economy with actual reforms, to fudging the numbers with government spending, to make it look better. That is a recipe for eventual economic disaster.

Take GDP per person, a typical use of GDP to figure the income of each person on average. A nation with 10 people with a GDP of $10.00 a year would have GDP per person of $1.00 a year. What if in one year, a country’s government increased borrowing and spending an equal amount to the rest of the economy? Since that spending is included in the GDP figure it would make GDP appear to grow 100 percent in a single year! Would an average person’s income double though? Of course not, they would be poorer, because they would have to carry that debt… and if the scheme went on, that country would sooner rather than later go belly up, destroying all the prosperity of the people.

In the pseudo science of economics the wants and desires of those who do the measuring are included in their measurements. Unlike a physicist weighing the mass of a particle, the economist put’s his or her wishes into the measure, because they lack the perspective, testability and observability of the assumptions of real science. An electron has a testable verifiable charge that is consistent anywhere it is done, while no economic theory can be tested, they cannot be verified and are not universal. We all have egos and want to be more important than we are. None of us have a real perspective on ourselves, it goes back to Jung’s theories, that there is that we know about ourselves, that which everyone knows, that which others know but we don’t and that which no one knows. New class economists want government spending to be included in GDP, because they can effect government spending with their theories and assertions, therefore, adding government spending to GDP makes them more important. It serves their egos and the egos of those in political power. Sadly, it doesn’t serve us at all. That is why government spending should not be included in GDP… it calculates borrowing as income and calls a drag a boost, creating pernicious incentives and distorting the real picture of an economy.

Sincerely,

John Pepin

Deflation and Deficit Spending

Monday, May 26th, 2014

 

Dear Friends,

 

It seems to me, the real reason economists, politicians and Central Bank Presidents are so terrified about deflation, has nothing to do with any pernicious incentives deflation would introduce into the economy, but actually because it would hamper the ability of governments the world over, to deficit spend. Deficit spending has become so entrenched in our political systems that most people don’t give it a thought, and when they do, they grumble but consider it a necessary evil. The ability to deficit spend gives politicians extraordinary power, over the economy, our lives and political evolution. The political elite exploit their ability to spend huge sums of money, to reward their political cronies aka crony capitalism, they “stimulate” the economy with deficit spending and they get and hold office, by promising this or that constituency a hand out if they get elected. All of which are pernicious and destructive of our economies, our Rights and our personal standard of living.

 

John Maynard Keynes aggregate supply aggregate demand model of economics gives politicians an imperative to deficit spend. In the aggregate demand aggregate supply model, if aggregate demand exceeds aggregate supply the economy grows, but if aggregate demand falls below aggregate supply then the economy shrinks, resulting in recession. Keynes made no distinction between consumer demand, business demand or government demand. In fact, he is famously known for saying, if the government buried money in the bottom of a mine, and let firms use the market system to get it out, that would stimulate the economy. This shows he made no distinction between productive uses of money, and schemes that use money to draw people into non productive actions, actions they otherwise wouldn’t engage in.

 

One of the fundamental reasons the aggregate supply aggregate demand model is deficient, is that it doesn’t make distinctions between productive spending, where productivity is increased by upgrading plant and equipment or where someone’s needs or wants are being met, and schemes where money is wasted to draw in other money, which is then also wasted, to increase aggregate demand. When government spends money to stimulate the economy, it takes money that otherwise would be used for productive purposes, and wastes it.

 

The more money that is wasted the lower real economic output will be. Every government today counts government spending as a part of Gross Domestic Product. Therefore, as they deficit spend to draw in other money to gin up the economy, using aggregate demand aggregate supply, the money that is wasted feeds a system where government must have more deficit spending, to offset the loss of market efficiency that is the inevitable result of government “stimulus.” In other words, government spending is increased, to increase GDP, where the market has been so damaged by deficit spending and stimulus, it cannot increase GDP itself. Where government doesn’t deficit spend sufficiently to raise GDP, outside of actual economic growth, economists call it fiscal headwinds.

 

Crony capitalism around the world is fueled by deficit spending. The political elite use it to reward their half witted brother in laws and political backers. In many countries it is impossible to get a permit to do business unless you have political backing. No one can get licensed in those countries to compete with the political hacks. If the power to deficit spend were limited, that would also limit the ability of the politically favored, to reward their backers and half wit relations, for their own illegitimate purposes.

 

The first goal of any political party is to get and hold power. Deficit spending allows the faction in power at any time to hold that power. Further, it allows that faction that is willing to damage the interests of society as a whole, by deficit spending, to get that power they so covet. This is a pernicious incentive for political factions each trying to out promise the other. The party offering the most rewards to the people will be the one to get and hold office. This has the tendency to ratchet up deficit spending to ever higher extremes while lowering outcomes. Simply because, that party which has the least scruples to protect the public purse is rewarded, while the party that practices the most fiduciary responsibility, is punished.

 

All of these things rely on deficit spending and deficit spending needs inflation. Inflation is a hidden tax on the accounts of savers. As a government’s deficit gets ever larger, if the value of the money that the deficit is counted in gets smaller, that deficit also shrinks. If however, the value of the money a deficit is counted in goes up, savers and consumers are rewarded, but government deficits become more problematical. Therefore, governments, central banks and their dependent economists cannot allow any deflation. Deflation would explode the huge deficits governments have built up over the years… to reward their cronies, buy power and “stimulate” the economy. Deflation would show in stark contrast the fiction that deficit spending can go on indefinitely and the system of political favor would come crashing down. Make no mistake, they couldn’t care less about the good to society, in fact the ability to deficit spend rewards those who care the least for the public good, so next time you see a central banker weep at the possibility of deflation remember, those are crocodile tears.

 

 

Sincerely,

 

John Pepin

 

The Deflation Bugbear

Sunday, November 10th, 2013

Dear Friends,

 

It seems to me, when economists worry about deflation it is like a doctor worrying about a runny nose, they both are concentrating on a symptom, not the underlying disease. The consensus among economists is that deflation is so bad a little inflation is needed to insure no deflation occurs. The possibility of deflation is why most economists agree we cannot go back to the gold standard, and why all the proven dangers of fiat money must be tolerated, else we would get the dreaded deflation. But, as we all know putting leaches on a patient because he has high blood pressure is not a viable solution, persistent inflation is as bad and probably worse than a little deflation. The safety of your IRA account and job security depend on this question.

 

The economy of a country is like the body of a person. The corpus economic is a complex system that reacts to stimulus as is the human body. If we give a person lead oxide, (as they did in the Roman times) it may have a temporary palliative effect but the long term effects will be profoundly negative. The state of modern economics is about where the Romans were in medicine. Our very limited knowledge gives our economists the hubris to prescribe lead oxide when penicillin is what the patient needs.

 

The argument against deflation is this; if a person knows his money will be more valuable in the future, a rational maximizer will not spend money and instead save it. Using the aggregate supply aggregate demand model as described by John Maynard Keynes, this incentive to save instead of spend, lowers aggregate demand below aggregate supply and this results in economic recession. This logic depends on the aggregate supply, aggregate demand model being an effective analog of how an economy works, it also presumes the incentives will outweigh the needs of individuals.

 

So, what he is saying is that we wont spend our money, if we know it will be more valuable later. Let’s look into this presumption. If I have a dollar in my pocket, and I know that next year it will be worth one dollar and one cent, is that sufficient incentive against my rumbling stomach? Further, if my washing machine breaks down today, is it logical that for the gain of a penny or two in a year, I will put off buying a new one, and instead wash my clothes in a creek with a washboard? Moreover, if we take the opportunity cost into consideration, in other words the good I could have today weighed against the good I could have tomorrow, it only makes sense to buy the things I need today.

 

Deflation does provide a greater incentive to save just as inflation does a disincentive to save. If we consider the effects of a greater savings rate in a country, say, the US, we can see a lot of good that can come of it. The balance of trade is effected by the savings rate in a country. Balance of trade is both in goods and money. If the demand for money, capital, exceeds the savings rate money will flow into that country. This importation of money is counted in the balance of trade. If the savings rate exceeds the demand for capital then money will flow out, again effecting the balance of trade, but for the good.

 

Another effect of a greater savings rate is that more capital would be available for entrepreneurs to invest in ideas, small businessmen to invest in equipment or start businesses and more money available to build homes, cars and washing machines. A greater availability of capital means lower capital costs. But this doesn’t come at cost to savers because the money they have put away is growing both by compounded interest and deflation. There is no need for government to use lead oxide to gin up the savings rate against the disincentives inflation creates.

 

Economists will scoff at he idea pointing to the Great Depression as historic proof that deflation is a bad thing. In doing so they will confuse the fact that deflation was a symptom not the cause. The cause was government’s tampering in the economy. Price controls, regulations about what farmers could plant, how much any given product could be made, what could be made and making it nearly impossible to start a business. The result was the lowering of the demand for labor, this caused high unemployment and lower wages, lowering demand below aggregate supply. The government poisoned the patient and economists blamed the symptoms not the cause.

 

Some of the times where growth was highest was in times of deflation. During the 1800’s there were times where the Dollar was deflating… but the economy was growing. This further undermines the historical argument that the consensus of economists use. Economists use this spurious argument against deflation while ignoring the pernicious effects of inflation, negative incentive to save, negative balance of trade that the low saving rate creates, perpetual lowering of wages through the devaluing of the wages that are paid, allowing government to run up huge deficits, all the negative effects of fiat currency… among many others.

 

Inflation is simply a modern form of seigniorage. Seigniorage is where kings would collect all the money, shave a bit from them all and reissue the coins a little smaller. Inflation allows Governments to rack up huge deficits and have confidence that those deficits will evaporate due to inflation. History shows us that where deficits were too big and money printing got out of control the effect has always been runaway inflation, or in other words, hyper inflation. This is far more destructive of the wealth of a nation than anything proposed by economists about deflation.

 

So, when you hear that government must do this or that, to defend against deflation, (like monetizing the debt), you will know they are engaging in group think. Today economists are giving the corpus economic lead oxide and leaches when what the economy really needs is the penicillin of deregulation and the nutrition of lower taxes. This doesn’t serve the interests of the elite however, who want more control, not less. So we will continue to be bled, suffer heavy metal poisoning and all the while our leaders will claim it has to be done. To the destruction of the wealth of our nations… and by extension, us.

 

 

Sincerely,

 

John Pepin