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Bernanke’s Fed Bails out Obama’s Deficit
Spending Why aren’t there more of us asking the rather obvious question, ‘when will the government’s printing press run out of ink’? – or – more simply said ‘when will Bernanke’s Federal Reserve Bank (FED) stop bailing out the President’s deficit spending’? Obama obviously is able to keep pushing deficit spending because the FED is increasing the money supply $85,000,000,000 per month by buying Treasury Securities issued by the Treasury and Mortgage Backed Securities (MBO’s). The funds from these purchases are deposited in the banking system. In turn, banks are legally able to make loans or invest up to ten times the face value of these deposits. It should be no surprise that the earnings of the nation’s biggest banks have shown incredible increase. When they pay near zero interest on deposits and can leverage high multiples of them into high potential return securities such as derivative and hedging types. Why make low yielding related business or property loans? Of course, they will make loans when they are riskless government guaranteed such as FHA backed real estate types. It is obvious that “to big to fail” for these banks is indeed proceeding big time. The general public, in viewing the stock market’s run up to new highs, may believe it is because the economy is on its way to greatly improving. However, very low interest rates, the unattractive risk involved in bonds and liquidity risks in other types of investments, is what is making investments in stocks most attractive. The following formula that applies to business, as well as, governments, provides the parameters concerned people need to understand. The formula is followed by graphs of the Money Stock and Velocity (turnover) from 1950 to 2013. M x V = P x T = GDP (gross domestic product) M = money supply (stock)
By dramatically increasing the Money Stock, the FED is attempting to counter the drastic historic fall in velocity. One could reasonably conclude that the reason for the low turnover of the Money Stock is the uncertainly felt by the private business sector as to increased future costs cause by factors such as tax increases, new health care costs and new regulations. Unfortunately, by increasing the Money Stock Bernanke’s FED is providing the funding for the President and his administration to continue to increase in deficit spending. If at some time velocity starts to increase, prices (other side of equation) would be inclined to increase along with inflationary pressure. Bernanke has pledged to keep interest rates low, requiring increases in the money supply, until unemployment falls below 6.5 percent and inflation tops 2.5 percent. It has always been difficult to meet targets of both unemployment and inflation since they by their nature do not run in tandem. In addition, Bernanke’s Fed has no control over the fiscal economic policies determined by the Executive and Legislative branches of government. Thus, since the turn of the Century it is apparent that the FED’s actions are reactionary to those economic changes effected by the actions of the respective President’s and Congressional bodies. The actions of our present President have been especially egregious in this regard but has been aided and abetted by the FED. Anyone who has viewed Bernanke’s testimony in Congressional hearings must be aware of the fact he avoids, as much as possible, any commentary or recommendations relating to fiscal matters. Yet they measurably effect the actions of the FED. Of course, when and if the increase in the money supply (M) finally takes hold and velocity (V) accordingly starts to increase, prices (P) will tend to increase creating inflationary pressure. To counteract this the FED , as has happened in the past, will surely start to cut back on the money supply (M), however selling the inordinate huge amount of Bonds and MBO’s will be much more difficult than buying them. Buyers for distressed MBO’s for instant will likely be less incentivized to buy as they were to sell. The last time this action was taken we experienced our most recent economic crisis. Decreasing the money supply will cause interest rates to increase with an accordant increase in inflationary pressures and our economy will again be entering into what we would hope will only be a recessionary period but could again be more severe and long lasting. With all of this in mind, the conclusion can be made that rather than being independent as has been claimed by the FED since its inception, it is not in reality. To be truly independent the FED should not allow itself to feed the central government’s malignant like budget deficit but rather act as a responsible parent like entity. It should limit the expansion of the money supply in order to place a tether on wasteful spending habits detrimental to the country and its people. Noted economist Milton Friedman recommended that the money supply’s growth should limit its increase in proportion to population increase. Over time this could eventually be accommodated if the obvious need to do so was recognized by the powers that be. Unfortunately, the only hope for this to happen may require economic conditions caused by economic insolvency. By Ben Cerruti Today President Obama used his 'bully pulpit', as he
does regularly, to beat up on the GOP without any effective counter
response. Why? The accepted rationale has been that the President
has the 'bully pulpit' because he is the President. Apparently no
consideration has been given to the possibility that other elected
government leaders, such as the House Speaker, could create a 'bully
pulpit' of their own With the
advent of technological advancements we find the media
seeking audio and visual content to attract their audiences. There
should be no doubt that the President utilizes the media to the nth
degree to make his points. Why then must opposition leaders not
have similar opportunities to express their
position by utilizing the media in a similar manner?
Unfortunately, when Speaker Boehner appears to make
a statement, it is usually short and to the
point, and is not sufficient in breadth and scope to
compare with that of the President. He rarely takes questions
and frequently dilutes his presentation by having
other house leaders make their short statements. Perhaps
the time has come for the GOP to take the bull by the horns and
create a 'Congressional Bully Pulpit' with media
professionals to help with effectively setting it up. It could be
similar to the Presidential Press Briefing with Q and A's. The GOP
is losing the media battle because they are not utilizing the media
effectively and there is no valid reason why it has to continue. Our
country requires a healthy two party system. Just because one party
has control of the White House and the 'bully pulpit' doesn't mean
the opposition party cannot create one of their own.
March 1, 2013
Sequestration reduces but doesn’t cut deficit
spending
By Ben Cerruti The propaganda emanating from the President, members of Congress and the media regarding the impending negative effects of so called "sequestration" is all but deafening. It is deceiving because rarely does one hear about "base line budgeting", which is the built in annual increases in government spending. From Wickipedia: "The Deficit Control Act of 1985 provided the first legal definition of baseline. For the most part, the act defined the baseline in conformity with previous usage. If appropriations had not been enacted for the upcoming fiscal year, the baseline was to assume the previous year's level without any adjustment for inflation. In 1987, however, the Congress amended the definition of the baseline so that discretionary appropriations would be adjusted to keep pace with inflation. Other technical changes, annual increase of now approximately 3% plus inflation, to the definition of the baseline were enacted in 1990, 1993, and 1997. Presently, the automatic annual] Baseline Budgeting increase is about 7%." Thus it is important to recognize that when people hear the words "budget cuts" that it doesn’t mean that less is being spent than in the previous period. Rather it is a reduction in the automatic increase included because of base line budgeting. So in considering the effects of sequestration should it take place the following facts supported by data from the Congressional Budget Office (CBO) must be understood:
*https://www.cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf
From the foregoing factual data we can calculate that the $44B reduction is only 1.7% of the $3,600B amount and much less than the 7% baseline increase. Thus it is not a cut but simply a small reduction in the baseline increase. Since sequestration does not apply to mandated Healthcare and Social Security budget items, reductions will apply disproportionally to discretionary and defense spending. Thus, discretionary spending will be reduced by 5.3% or $28.7B and defense spending will be reduced by 7.9% or $42.7B. Thus, the only real cut from spending from fy2012 to fy2013 will be in defense by less than 1%. It is obvious that more selective reductions to meet ‘sequestration’, as would be the procedure used by private sector businesses, would spread any adverse effects. Also, there is so much waste in government that offsetting revenues can be readily found as was done by the GAO to the tune of $77B. Click on the following link to view the details. This amount alone could match the ‘sequestration’ . http://cagw.org/media/wastewatcher/it%E2%80%99s-d%C3%A9j%C3%A0-vu-all-over-again-gao-exposes-government-waste-and-duplication-itsOf course,the long term solution would be to reform the Medicare, Medicaid and Social Security programs that account for the majority of deficit spending. A need to abolish baseline budgeting was recognized in early 2012 by GOP members of the House and it passed HR 920, "The Baseline Reform Act". The bill would institute zero-baseline budgeting which starts from a "zero base," forcing budgets to be built around what is needed, regardless of whether the budget item goes up or down. Unfortunately, it was not taken up in the democratically controlled Senate. Any references to reductions in GDP because of the implementation of ‘sequestration’ is misdirected since it is government spending not private sector spending that is being reduced. The private sector, the government’s revenue source, has the advantage of being productive spending an equivalent amount of its own money since it does not have to travel through the government’s wasteful bureaucracy. So without the relatively minor deficit reduction of ‘sequestration’ it would be allowed to continue to balloon out of control without any other apparent government attempt to curb and reverse its course. It must be allowed to be implemented if only to pressure all branches of federal government to act to avoid future economic chaos. February 27, 2013 The U.S. is a Republic not a
Direct Democracy February 13, 2013
Yesterday, in his State of the Union address, I was again appalled to see President Obama act as if Congress was subservient to him. He should know that the Constitution created a representative form of government wherein the people vote for individuals to represent them not only in Congress but also in the executive branch. A Republic is designed to protect the minority from the majority. In a Direct Democracy, the 51% majority are given the power to do whatever they desire. Obama was not elected directly by the voters but by Electors as a result of a majority of their votes in their respective States. Obama received 51.1% of the popular vote, obviously less than an overwhelming mandate. So claiming that the electorate gave him the right to shove down all our throats his idea of responsible fiscal economics is patently false. He, with the collaboration of solely the Democrats in Congress, already did this with the "Affordable Health Care Act’, a misnomer to be sure. This President acts more like a dictator than a leader of a Republic as defined by our Constitution. He ignores the legal duties and responsibilities of Congress by circumventing them with a train of non-ending executive orders. He has appointed over 30 czars, without legal consent of the Congress to enact rules and regulations that have the power of law unless challenged in Court. As an example the EPA led by such a Czar is and has skirted Congressional approval by issuing unjustifiable restrictive rules and regulations that are limiting our energy production. For instance, the Coal producing industry is being regulated out of business as Obama has stated he desired. In addition, he has refused to allow construction of the remaining leg of the pipeline from Canada. He willfully makes recess appointments to key positions such as the National Labor Relations Board wherein partisan, rather than bi-partisan, decisions are made. Decisions that have pronounced negative economic effects that are obviously not in the best interests of the American people. His apparent abuse of the power to issue ‘executive orders’ further demonstrates his tyrannical propensities. As an example, last night he used it to threaten the Congress when he said he would issue such an executive order if Congress did not act to address climate change. In fact the claim of man made climate change has been found to be false, click on the following link for a report that provides evidence in detail, www.cfact.org/pdf/ClimateDepot-ExtremeWeatherReport2012.pdf . The report thoroughly debunks extreme weather propaganda and lays open the hypocrisy of those who exploit natural tragedy for ideological and financial gain. It is hard to conceive of executive orders that bypass the approval of Congress. Isn’t Congress supposed to be an equal branch of government? These orders would appear to defy the Constitution regardless of which President and how far in the past that it began. Precedent is no excuse for not following the tenets of the Constitution. It appears that there does not exist in the Constitution any specific provisions that directly allows executive orders. However assumptions have been made that the following provisions provide for that power. Article II, Section 1, Clause 1 states "executive power shall be vested in the President" and Section 3, Clause 5 states "he shall take Care that the Laws be faithfully executed". It doesn’t take a law degree to see that past President’s have progressively taken greater and greater liberty in issuing ‘executive orders’ using this weak constitutional justification. Obama apparently is continuing this practice to the limits the legal system will allow and will continue to do so if not called to task by some entity. During his time in office he has never shown any inclination to negotiate in good faith. He has demonstrated the use of his powers to the nth degree, over and above what the founders of our Constitution ever intended. We know from his past that during his life he has been indoctrinated into an ideology that fits the Marxist model and hence the failing of the Capitalistic economic model is to his liking. One would have to be blind not to see that what is happening to destroy our economy is what Obama desires. This creates the opportunity for his transformation of our country. As was so aptly stated by his former Chief of Staff Rahm Emanuel, "you don’t ever want to let a crisis to go to waste", and Obama utilizes crises regularly to trumpet his ideology by disingenuous but effective rhetoric. Those in our country who do blindly follow his rhetoric and ‘from cradle to grave’ creed will one day find themselves as the lemmings, led off the cliff by the Pied Piper. Hopefully, there are still enough to heed that which is conveyed in this writing and that written by others who also have strong belief in the tenets of our Declaration of Independence, Constitution and Bill of Rights. Our country’s founders fought hard to provide this country with the freedom to participate in an economy that provides for a minimum of government interference. The people of this country should be ashamed to let that great effort be wasted by allowing a gifted oratorical disingenuous tyrant to lead them off the cliff of freedom into a valley of totalitarianism. Find the Cause, Effect the Cure
By Ben Cerruti Over my lifetime of 87+ years I have found that when
a troublesome incident occurs that most often the effect of it is
addressed rather than the cause. Having a technical background I
have found in trouble shooting an equipment failure, there was no
way to effect a permanent repair without finding the cause. Whenever
patches were used their effect was temporary and soon the failure
reoccurred. The same logic is self evident for dealing with any
trouble that may occur in government.
The following list illustrates how our government is addressing the effect rather than the cause of troublesome issues and possible effective solutions; Federal Deficits/Deficit Spending – Rather than cutting back on spending, which is causing the deficit, it is being heavily financed by the Federal Reserve System (FED) by essentially printing money akin to counterfeiting. Reining in the FED by setting a money supply that increases only in proportion to population growth, as recommended by noted economist Milton Friedman, would effect a cure. The government would have to act responsibly without the FED to bail them out. Pursuing present fiscal policy can only lead to the eventual negative effects of currency inflation to pay off the debt with cheaper dollars and potential collapse of our economy. Health Care – Rather than addressing the increased costs that are caused by the source of funding, the ‘deep pocket’ of the government, more money is being authorized by way of the new federal health care act. Whereas, allowing the free market to determine the cost by removing government price setting would address the true cause and provide for financially viable health care. Gay Marriage – It would appear that the problem is the need for any two people who wish to live together to have the same legal and financial rights whether legally married or not. Thus, the cause of the problem could be effectively addressed by way of a civil union for all couples wherein the present laws for married couples would apply. The government would not be involved in dealing with marriage. The civil union could be created at the same place that a license is issued. Subsequent marriage that may be desired can be accomplished outside the edict of government, in Churches or elsewhere. Countering Crime by Banning Guns – Rather than addressing that which causes criminal behavior involving the taking of a life, or many lives, there is the rush to ban firearms that can be and are used for individual defense against it. It should be obvious that our founders understood the need to insure that the people would have the means to defend themselves, not only from criminals, but future potential oppressive governments. There appears to have been an evolutionary change in the mores of our society over time and a lack in our public schools of a moral compass covering all its aspects. Accordingly we have seen the negative influence of violent entertainment content and the causal effects of mental illness. Banning guns is a dangerous band aid in dealing with effect whereas dealing with what are the causes of criminal behavior is the rational way to address the issue. We must be aware of the special interest groups that lobby members of Congress and the President. Whether it be for personal gain or ideological reasons, negative effects result from a large centralized government that is by its nature prone to this influence. The cause is obvious, the cure should be obvious. Returning the power of the purse to State and Local Governments is the only possible real cure. London Gets First Atheist
Church
By Tad Cronn - January 5, 2013
London’s first atheist church is ready to open its doors for its first “service” this weekend, and Londoners don’t quite know what to make of it. Founded by comedians Sanderson Jones and Pippa Evans, the church service is described as more of a “foot stomping show.” A speaker and band are planned for each monthly service. The notion of people who don’t believe in God having a church was too much for some people to wrap their heads around. The Rev. Saviour Grech, of St. Peter and St. Paul Roman Catholic Church, said, “How can you be an atheist and worship in a church? Surely it’s a contradiction of terms. … It is important to debate and engage with atheists but for them to establish a church like any other religious denomination is going too far.” Rev. Grech, like many people, misses the point. Atheism is and always has been a religion. Establishment of the London church is, if anything, a refreshing dose of honesty. In the U.S., atheist churches and church-like groups are nothing new. FirstChurchofAtheism.com, based in Pennsylvania, is one example. According to the website FAQs, the site was founded in order to ordain atheist ministers so they could perform marriages, funerals and other ceremonies. The site’s operators claim to have legally ordained more than 6,900 ministers. The modern atheist movement likes to call itself a “nonbelief,” a phrase that has been widely picked up by non-atheists. The implication is that atheism is somehow different from all religions, that it is unique and therefore requires special treatment. The Freedom From Religion Foundation and other atheist groups have gotten a lot of mileage out of that spin in courts. But atheism isn’t a “nonbelief.” If it were, then other people’s religious expressions wouldn’t torment atheists the way they claim in their myriad lawsuits. Rather, atheism professes a very active negative belief that produces atheists’ worldview and motivates their activism. As the First Church of Atheism site states: “The First Church of Atheism is formed around the belief that the mysteries of life can be explained through science and reason. We aim to provide a place for atheists to become ordained, for free, as well as a hub for atheists to find ministers to perform their ceremonies. This is our doctrine: “Nothing exists besides natural phenomena. Thought is merely a function of that natural phenomena. Death is complete, and irreversible. We have faith solely in humankind, nature, and the facts of science.” Pretty strange for a “nonbelief” to have ordained ministers and use words like “belief,” “doctrine” and “faith,” huh? The word “atheism” simply means “without God.” The word “religion” comes from the word “religare,” meaning “to bind.” “Religion” therefore is the state of being bound to an idea and the worldview, beliefs and morality that idea generates. Other religions such as Buddhism and Taoism don’t require or encourage any belief in God, yet no one disputes they are religions because they do indeed “bind” their followers to a central belief about the nature of the universe. And so it is with atheism. But point that out to one of the “nones,” and you’ll likely get a bumper sticker response, such as “calling atheism a religion is like calling bald a hair color.” Bad analogies don’t change the facts. Atheists have ordained ministers, churches, a worldview, beliefs, doctrine and a throbbing need to proselytize about the superiority of their religion. Pretending to be a “nonbelief” has given atheist activists a political advantage in establishing theirs as the de facto view of government, effectively a state religion that is actively forcing Christians out of public life in increments. It’s time atheists ‘fess up and join the rest of the world’s religions. How much dumber can the GOP
get?
By Ben Cerruti When will the GOP legislators
come to their senses and realize that President Obama has followed
Marxist ideology all his life. When he said just prior to his
inauguration in 2009 "you are going to see a fundamental
transformation of the United States of America" he meant it. They
must realize that over and above any negative effects of the
expiration of the ‘Bush Tax Cuts’ on our economy, his desire is to
have results that meet his views of social justice and fairness. He
obviously has no interest whatsoever at this point in time in
dealing with the reformation of any entitlements.
Therefore they must accept the fact that he will get what he desires before or after the end of the year. Regardless of what they do they will likely be blamed more-or-less for the tax increase on those earning less than $250K. They could make it less at this point in time by declaring that regardless of what they would propose, it is to his advantage to allow the Bush tax cuts to expire. Therefore, they should emphasize in strong rhetoric to the media and electorate that he is going to shove his position down the throats of the American people as he did with Obamacare. They do have an effective counter if they wish to use it and that is denying approval of the debt ceiling unless meaningful deficit cutting changes are made to all the entitlements. Now is the time to do it, early in Obama's new term and two years before the mid term congressional elections. They must proceed with conviction that any short term negatives that may occur resulting from possible government shut down will be reversed by results over time, aided and abetted by a constant and rational rhetoric from accomplished oratorical leaders like Marco Rubio and Paul Ryan. The GOP must develop an organized strategy providing their own bully pulpit by utilizing these leaders. They must attract media coverage to offset that, which is provided to Obama, which he uses to extreme, campaigning against Republican members of Congress continuously. It must be pointed out to the media and electorate that Obama should get an F for the Clintonian arithmetic he flouts. The tax rate he wants to impose on the top 2% wage earners would provide tax revenue for only an incredible 8 days of federal government operation. Anyone with a grade school education would understand this fact if the GOP bigwigs would take the time and effort to explain it to them. Obama justifies this increase by saying he wants to tax the rich because they don't pay their fair share. In fact they already pay their fair share and it should be repeated ad infinitum that the top 1% of taxpayers pay 38% and the top 5% pay 58% of all federal income taxes. Emphasis should be made that dividends and capital gains are returns from after tax invested income which is thus taxed a second time. Reasonable people could determine that there is already shared sacrifice and how has that helped our economy. Not only that but what guarantee can be given or has ever been given that the revenue wouldn't be applied to wasteful spending such as the bailouts and failures of company's like Solyndra, A123 Battery and many others. In addition, by virtue of base line budgeting automatic spending increases are already lawfully imposed to further add to the demand for more revenue. It certainly seems apparent that the GOP has to establish a sales training course for its legislators. In these days the American people have to be sold through good solid honest and meaningful rhetoric. The donkeys seem to know well how to sell their evil messages. They make sure that all their spokesmen utter the same talking points. Repetitiveness works. The GOP has very good talking points that they rarely use. For instance, tax cuts that occurred under President's Coolidge in the 1920's, Kennedy in the 1960's and Reagan in the 1980’s resulted in marked increase in tax revenue over the ensuing periods proving their merit. In fact in 2010 President Obama signed an extension of the tax cuts because he thought it wasn't wise to cut taxes during a weak economy. It should be apparent that caving in to Obama will only act to make the GOP a participant in the economic downturn that is sure to occur if he gets his way. So it is completely rational to not cave. Thus, holding a principled position would provide for an outcome that will improve the opportunity for the GOP to increase its size in both houses of Congress in 2014. That should be the objective because without a Republican led Congress the American people really don't have a chance. December, 2012How dumb can the GOP get? The GOP leadership in its attempt to understand why it lost the Presidential election has been coming up with everything but the actual obvious cause. They simply have to look back to 2010 and the Congressional elections wherein Tea Party candidates, supporting the repeal of Obamacare (The Affordable Care Act), were elected increasing their numbers in both houses. It should be so apparent that Mitt Romney was a candidate who was carrying the heavy weight of Romneycare around his neck. As Rick Santorum stated in the primary election, "When he was governor of Massachusetts, he put forth Romneycare, which was not a bottom-up free market system. It was a government-run health care system that was the basis of Obamacare, and it has been an abject failure. And he has stood by it. He’s stood by the fact that it’s $8 billion more expensive than under the current law. He stood by the fact that Massachusetts has the highest health insurance premiums of any state in the country. It is 27 percent more expensive than the average state in the country". So let’s get it right! It is reasonable to assume that the primary reason the GOP candidate did not win the last Presidential election was that he was unable to credibly convince the electorate that Obamacare would be repealed. How could anyone reasonably believe that a Governor whose health plan was used as a basis for Obamacare, sincerely and honestly carry through convincingly the repeal of a law whose substance he previously had advocated himself? The GOP has far too long wavered in supporting the basic principle that the opposition party must sturdily maintain to provide the electorate with a true choice. The basis principle stresses the importance of the individual person and the family structure. That it is the responsibility for the individuals within each family to do as much as they can for themselves before asking for assistance. When assistance is needed the route taken is community, city, county, state and federal, in that order, with the federal government the avenue of last resort. Thus a belief that the least government possible is desirable. This has been espoused but all too often crudely modified and added on to with peripheral controversial social issues that cloud the simple fundamental tenet. It is unfortunate that we usually find the GOP leadership following rather than leading. During my long 87-year lifetime I have found that compromise always seems to occur on the GOP side and it ends up giving up on the basic principle. Government has grown larger, administering programs whose intent runs counter to what the basic belief of the opposition party should be. This has culminated in having our country that was founded on the tenets of the Declaration of Independence and Constitution, being transformed by a Socialistic/Marxist ideology. Unfortunately, it will probably take the next severe economic collapse that will surely result from the present economic policies of our government, to arouse the electorate and lead to a complete regime change. However, this also requires the arousal within the ranks of the GOP and its establishment the need for unwavering support for the basic principle stated. To actually convey this they would have to advocate the enactment of accordant legislation, including the repeal of the 16th and 17th amendments that weakened State’s Rights and run counter to the basic principle. Unless the GOP in itself finds a strong backbone and selects a candidate who believes in and vociferously promotes those tenets, on which our government was founded, our country will fail and fall as did the Roman Empire. December, 2012The liberal left and John Maynard Keynes It's ironic that those on the left who regularly
articulate with free license that which they believe to be the views
of John Maynard Keynes, neglect to mention his quotation that
follows. In it he supports the conservative position that lowering
tax rates increases tax revenue. Although Keynesian economics did
support government spending to counter recessions it also advocated
that in times of prosperity, incurred borrowing should be repaid.
"Nor shall the argument seem strange, that taxation would be so
high as to defeat its object and that given sufficient time to
gather the fruits, a reduction of taxation will run a better chance
than an increase of balancing the budget. To take the opposite view
today is to resemble a manufacturer who, running at a loss, decides
to raise his price. And when his declining sales increase the loss,
wrapping himself in the rectitude of plain arithmetic, decides that
prudence requires him to raise the price still more. And who, when
at last his account is balanced when naught on both sides is still
found righteously declares that it would have been the act of a
gamble to reduce the price when you were already making a loss."
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By Ben Cerruti - December, 2011 On last night’s edition of 60 Minutes, President Obama showed his complete ignorance of basic economics. Evidently he has not been exposed to the following simple economics equations that apply to both businesses and government. For Business: Capital X Turnover = Gross Income For Government: Money Supply X Velocity (turnover) = Gross Domestic Product (GDP) Obama ignorantly intimated that the overall income tax revenue collected was static so that for those Americans with lower incomes to benefit from tax cuts, more taxes had to be collected from those with higher incomes. Hence, he completely ignored the fact that the increased turnover (velocity) of capital can increase income with accordingly increased collected tax revenue. Thus by not raising higher marginal income tax rates the capital allowed to remain in the private sector can be utilized to expand businesses that will create additional income and attendant increased tax revenue. Relative to Government, the following charts vividly show that GDP has only been able to show growth because the Federal Reserve Bank pumped up the money supply. This was done in order to try to offset the decline of velocity which is at its lowest level in decades. Common sense should tell us that it is necessary to increase the turnover (velocity) of capital in the private sector to create desired prosperity. The only way this can be done is to provide certainty to the business community that marginal tax rates will at least stay where they are for the present and foreseeable future. (charts follow) Why Medicare and Medicaid are going broke By Ben Cerruit - May 30, 2011 A recent government report estimated that Medicare will run out of money in 2024. It should be obvious that Medicare and Medicaid are going broke simply because the prices for medical services are set artificially. It is an established fact of economics that the only way to establish the real price of any product or service is in the competitive market place where consumers pay directly to a supplier. Please note the following excerpt from Wikipedia (http://en.wikipedia.org/wiki/Health_care_prices) which describes the present pricing method used. “Medicare and Medicaid are managed at the Federal level by the Centers for Medicare and Medicaid Services (CMS). CMS sets fee schedules for medical services through Prospective Payment Systems (PPS) for inpatient care, outpatient care, and other services. [19] As the largest single purchaser of medical services in the US, Medicare's fixed pricing schedules have a significant impact on the market. These prices are set based on CMS' analysis of labor and resource input costs for different medical services. MOREHow Socialism Works By Ben Cerruti There are those in the USA that are attracted to the idea that government should be utilized to equalize the wealth and income of a society. In their eyes the governing class could altruistically act in determining that which should be taken from those determined to be the haves and distributed to those determined to be the have-nots. The governing class is evidently presumed to have morals and ethics beyond reproach and not influenced by their own parochial interests. Of course, such an Utopia would only be possible if human beings were perfect and so similar as to be robotic. In actuality, we find when those human beings in government are given the authority to redistribute wealth and income they never neglect to serve their own parochial interests in the process. They insure themselves a comfortable income and other benefits including generous pensions, health care along with the perks that go with their elected or appointed office. Given the power to allocate tax revenue for purpose of redistribution they routinely use it in a manner to gain from recipients something in return. For those who are considered the haves by virtue of their wealth and income, depending on the degree, they look for ways to protect the wealth that they hold and to limit the taxation on their income. Income can be derived from invested wealth so minimizing the tax levied on it would be a major consideration. Using wealth to invest in businesses that create income that will be confiscated by way of taxation deters from that utilization. Accordingly, without that incentive wealth is left to derive income from investments elsewhere such as from securities or from areas provided by the imperfect utopian desired government to serve its members interests and perpetual existence. Winston Churchill's opinion of the Islamic Religion in 1899! The speech below was written in 1899! (check Wikipedia - The River War) Winston Churchill delivered it in 1899 when he was a young soldier and journalist. It probably sets out the current views of many but expressed in the wonderful Churchillian turn of phrase and use of the English language, of which he was a past master. Sir Winston Churchill was, without doubt, one of the greatest men of the late 19th and 20th centuries.He was a brave young soldier, a brilliant journalist, an extraordinary politician and statesman, a great war leader and Prime Minister, to whom the Western world must be forever in his debt. He was a prophet in his own time; He died on 24 January 1965, at the grand old age of 90 and, after a lifetime of service to his country, was accorded a State funeral. Here is the speech. "How dreadful are the curses which Mohammedanism lays on its votaries! Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia in a dog, there is this fearful fatalistic apathy. The effects are apparent in many countries, improvident habits, slovenly systems of agriculture, sluggish methods of commerce, and insecurity of property exist wherever the followers of the Prophet rule or live. A degraded sensualism deprives this life of its grace and refinement, the next of its dignity and sanctity. The fact that in Mohammedan law every woman must belong to some man as his absolute property, either as a child, a wife, or a concubine, must delay the final extinction of slavery until the faith of Islam has ceased to be a great power among men.Individual Muslims may show splendid qualities, but the influence of the religion paralyses the social development of those who follow it. No stronger retrograde force exists in the world. Far from being moribund, Mohammedanism is a militant and proselytizing faith. It has already spread throughout Central Africa, raising fearless warriors at every step; and were it not that Christianity is sheltered in the strong arms of science, the science against which it had vainly struggled, the civilization of modern Europe might fall, as fell the civilization of ancient Rome." It was the only reasonable thing for the President to
do
By Ben Cerruti V.P. Joe Biden in introducing President Obama, using obvious political rhetoric, told service members at Fort Campbell, Ky. that the decision made by Obama to raid the Bin Laden compound in Pakistan was a "gutsy" one. This, of course, provided Obama the opportunity to bask in that adulation in his following remarks. The fact that his decision was the only reasonable decision to make seems to have been completely ignored. From what we know, the only other choices he had was to monitor the compound and wait for more intelligence essentially doing nothing - or - to bomb the compound which would was not likely to provide proof Bin Laden was killed. In addition, bombing would likely have caused collateral death of civilians. It should be apparent that the only reasonable choice was the one he selected. Perhaps one might consider from what we know about the long Marxist trail in Obama’s past, and his far left policies which include appointments to match, the importance to base any evaluation on the actions that he takes as following the Marxist credo "the end justifies the means". It follows that his objective is to transform our country into that which is Marxist like. This means he must do everything possible to stay in office another term. Hence this opportunity allowed him the opportunity to be viewed as a competent ‘commander in chief’ providing impetus towards his reelection. This accomplishment would allow him to continue the implementation of his ideology through whatever means possible, including the bypassing of Congress by way of executive orders and regulations, created out of agencies and imposed as if they were enacted laws. Wealth and State Capitalism By Ben Cerruti Just preceding his recent visit with wealthy west coast executives of several high tech firms and a venture capitalist, President Obama had elevated Jeffrey Immelt, President of GE to Chairman of the President’s Council on Jobs and Competitiveness. Subsequently, he appointed AFL-CIO President Richard Trumka to the Council. These actions are not a coincidence. Trumka has ties with Communist Party USA and Immelt, prior to his previous appointment to be a member of the Federal Reserve Bank of New York, wrote a letter to his shareholders that provides us with an insight as to what is occurring. In this letter Immelt states "We are in a recession and, at times like these, it is difficult to predict how bad and for how long. We are running GE to 'weather the cycle'. However, I believe we are going through more than a cycle. The global economy, and capitalism, will be reset in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner." The last sentence of this statement succinctly tells it all. Government as a regulator, creator of industrial policy, financier and key partner smells to high heaven of ‘State Capitalism’ or as less fashionably said, a form of Socialism. As has been pointed out previously, being wealthy and having a high annual income is not necessarily the same. Most executives of high tech and venture capital firms hold much of their wealth in ownership of the firms with which they are affiliated. It may be that their annual income is relatively high but it generally is a small fraction of their overall wealth. It stands to reason that they would have great interest in protecting the wealth they have accumulated. It is exactly that motivation in which those wishing to impose Socialism on our society use to achieve their ends. What affect will this movement towards State Capitalism have on the individual in our society? If the government finances, creates and regulates industry it is more than a partner, it becomes the de-facto owner of it. It does this by controlling the banking system, regulating industry and awarding government controlled business to favored Corporations if not, in essence, owning them. The path of least resistance for private industry is to succumb to the temptation of a secured favored future. The incentive for entrepreneurs of new ventures to bootstrap their enterprises to wealth becomes continuously diminished and high productivity and efficiency cannot survive for long in this environment. It should be apparent that when Government exerts its power in controlling any aspect of our society it diminishes individual freedom. Encroachment on freedom by the movement towards State Capitalism is already on its way. Look at the Ethanol subsidy to corn grower and regulations restricting drilling for oil and construction of new Nuclear power plants that has caused an increase in food and energy costs. In addition the subsidy for a supposedly environmental friendly electric powered automobiles to create an artificial market for them is a non-productive indirect tax. The power to charge the batteries is derived mainly from coal and oil fired power plants. By its nature State Capitalism creates a two-class system. One class being the government and its employees partnered with those who control large corporations and people of great wealth. While the other class being those in the private sector. In our traditional economic system the private sector has been the source of funding for the public sector. One must consider that increasing the size of the governing public sector that will include large corporations will accordingly shrink the size of the private sector and its ability to contribute to that funding. The revenue derived from the inordinate taxation of the income of the highest income earners over time has been shown to be unreliable. Hence it becomes counter productive to business growth and maintenance of high employment. Inevitably it will be taxes on whatever income is left in the entire private sector that will be required, further exacerbating a downturn in the economy. It is unfortunate to see an apparent public misconception that members of the Federal Government are at odds with large corporations including banks and Wall Street securities firms. The obvious truth is that they are not unwilling bedfellow when their respective interests are complementary. So what must happen to stop and reverse this movement to take away the freedom our forefathers provided to us in our Constitution? Perhaps we should look at the basic cause of that which we are now experiencing. In enacting the 16th Amendment in 1913, the federal government abrogated the provisions of the 10th Amendment in usurping powers that should have been "reserved to the States respectively, or to the people. This was done by essentially removing these words in Section 9 of the original Constitution "no Capitation, or other direct, tax shall be laid, unless in proportion to the Census or Enumeration" meaning taxes could not be taken from taxpayers of one State to be distributed to other States. Happening concurrently was the passage of the Federal Reserve Act that allowed the artificial creation of money to supposedly deal with the vagaries of recessions but led to disastrous effects with which we are now living. Establishing a plan to gradually shut down the Federal Reserve System along with the repeal of the 16th Amendment would be in order. This would take away the means which Congresses and Presidents have used wantonly to serve their own and special interests. Later on, the repeal of the 17th Amendment would allow the appointment of Senators by the respective State legislators providing for complete return of State’s rights as originally intended by our nation’s founders. Hopefully, there still exist in our land and in Congress those patriots who have the wherewithal to initiate the process to effect this happening. Abortion, Euthanasia and the Hippocratic Oath By Ben Cerruti A few years ago a U.S. District Judge's ruled
constitutional a Oregon voter-approved law allowing doctors to
assist in the death of terminally ill patients. I wonder if this
Judge is aware of the contents of the Hippocratic Oath. The
Hippocratic Oath is what historically was taken by those entering
the medical profession upon graduation from medical school. At one
time all reputable medical men considered themselves bound by this
oath yet its use seems to have disappeared. In further thought I
realized that there could be a reason and it might be in the oath
itself. I believe I was right and it is in the following explicit
excerpt from that oath.
"I will give no deadly drug to any, though it be
asked of me, nor will I counsel such, and especially I will not aid
a woman to procure abortion." This leads me to the following thoughts. There is a commonality in the view of advocates for
both euthanasia and abortion. That is that it should be legal to
have either act be aided, abetted or performed by a Doctor. Both pro
and con arguments that have been broadly expressed have seemed to
disregard the fact that, in both cases, another person is involved
in an act that ends a life. A New World Order Guide By Ben Cerruti Suppose that there might exist on our planet elements that wanted to establish a single world government. Such a single centralized entity would obviously require individual countries to relinquish their individual sovereignties. Americans would have to accept a world constitution whose provisions would supercede those existing in the constitution on which the country was founded. The provisions of the world constitution would make the freedoms provided in the Bill of Rights moot. What better way to condition people to accept diminution of their freedoms than to create a potential world calamity that gives license for government to impose freedom limiting regulations. Such has been done by the United Nations’s Intergovernmental Panel On Climate Change (IPCC). Its 2001 report stated "human activities have altered the Earth system" and predicted potential catastrophic changes on our planet in years to come. The very fact that it was found necessary to study ‘climate change’ by the United Nations and attendant funding was provided for the necessary research should make one suspect. It smells to high heaven of an international conspiracy to create dominance of the activities of the world’s people by a single governing power.Thankfully the IPCC report was found to have scientific data that was rigged. See http://assassinationscience.com/climategate/ By Ben Cerruti We have
been witnesses to a continuing use of class warfare by those in
government, abetted by the media and an assortment of special
interest groups and individuals. In this essay we will consider the
methods they use to establish the terms relating to redistribution
of income.
Utilizing effective divisive tactics they initially
obfuscate their intentions by using the term "wealth" in place of
"income" when proposing material changes in the income tax code.
Taxing income derived from accumulated wealth does not alter that
wealth. They next establish three main category of classes; rich,
middle class and poor. If one were to pay close attention, he or she
would find that they rather conveniently alter the dividing lines to
suit the subject for which they are advocates.
It
should be apparent that attempting to establish classes by
simplistic definition is ludicrous. Is a person earning
$1,000,000 a year in his twenties as rich as one earning the same
amount in his or her sixties? The person in their sixties may
have had to spend many years working up from under six figure annual
income to reach this income level and the person in their twenties
may find that in later years his or her income may fall to sub six
figure level. A poor person at a young age may become affluent
with time and an affluent person may suffer financial reverses that
will throw him or her into what is presently considered the poor
class.
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Hard for
Conservatives to be nominated under the present system
By Ben Cerruti - November, 2011 Rationality makes it difficult to believe that the decisions made by the voters in just a few smaller States can be justified in determining a nominee for President. Yet since the evolution from political conventions we have seen this blatantly unfair practice prevail. It happens to be a fact that the northeast coast of New England has been the center of Progressive political persuasion for many decades. This has existed with both political parties and is represented in the Republican party by Senators Susan Collins, Olympia Snow, and Scott Brown who are generally typed as moderates. In regard to Presidential candidates we have had GHW Bush, GW Bush and John McCain who are not conservatives although they claim to be. Why then must New Hampshire be such a determining factor in the fate of a candidate? It must be recognized that the total number of delegates constituted by Iowa and New Hampshire are only 40 out of 2286 nationally. Yet every four years we find the media and pollsters insidiously using the results of the Iowa and New Hampshire primaries to catapult the winner to be the national party candidate. How can the views of conservative voters throughout the country be represented in such an obviously flawed system of determining a candidate for the most important position of President? Unfortunately the Republican establishment, although not as prone to centralized government as their counter party, is still generally politically progressive in nature. This position is not in line with the Conservative movement which ultimately desires to dismantle the centralized power structure and return it to the individual States by eviscerating the federal income tax and diminishing the power of the Federal Reserve System to essentially print money. Conservatives are now hampered in their desire to nominate a suitable candidate representing this position and this must be addressed. There have been proposals made to change the primary system to allow for a broader number of voters to be involved in the determination of a candidate. One such proposal is a rotating regional primary system . It is time for a serious movement to rid ourselves of an outdated and unfair system of nominee selection. If a change is not made it is unlikely a true conservative will ever be nominated. Unless this occurs it appears that our country will continue down the road to become a socialistic one with dire consequences. By Ben Cerruti Whether it be countries or individuals, the same economic principles apply. When expenditures are expected to exceed income, credit is sought to cover the difference. Creditors expect that principal and interest payments on loans will be made in a manner that will insure the ability to pay them off at an agreed upon time. With governments of countries, this credit is provided by the issuance of bonds that are secured by the full faith and credit of the country’s taxpayers. These bonds are usually sold auction style to investors that are predominantly banks, at a predetermined interest bearing rate based on expected market demand. Thus, the actual auctioned price may differ from the face amount of the bond based on the actual demand. After being auctioned the bonds are usually traded on bond markets where the traded price becomes dependent on general market rates and the considered ability of the country to pay off the bond when it matures. Shared sacrifice doesn't create jobs
By Ben Cerruti
Warren Buffet recently stated that the 'mega' rich should pay higher taxes. He suggests raising progressive tax rates for those earning annual incomes of over $1 Million and $10 Million respectively. That this would show the shared sacrifice of the mega rich. Evidently Buffet doesn't recognize the fact that such additional tax revinue have never been applied to decrease the budget deficit. It simply allows the government to spend more. Hence, why should we believe that the extra tax revinue collected would be applied to the deficit rather than to maintain the ever increasing level of spending we have experienced in the past? In addition, presently the top 1% of taxpayers pay 38% and the top 5% pay 58% of federal income taxes. Reasonable people could determine that there is already shared sacrifice and how has that helped our economy? Taking revinue from the private sector simply removes capital that can be utilized to create jobs through both investment and consumption. Our President is promoting the taxing of high income wage earners as a necessary part of any plan to address the need to increase the federal debt limit. A review of the facts make it difficult to support any such approach. The following table from the IRS shows that confiscating all the income from the top 5% taxpayers would realize an amount less than the multi trillion dollars being sought. Obviously, taking all the income would eliminate any incentive for these people to continue to earn income and result in no income to tax whatsoever. When profitability is taken away from those who create businesses, the funds available to employ people disappears. The ‘shared sacrifice’ socialism Obama promotes negatively affects the lives of those he purportedly wants to help.
Why do Billionaires support Obama?
By Ben Cerruti Barack Obama has kicked off his campaign for
re-election in 2012 looking to raise close to an estimated one
billion dollars towards that end. Now ask yourself, why would
extremely wealthy people want to contribute funds to someone who
wants to take more of their income by increasing taxes on it?
One could reasonably visualize the possibility that these billionaires would consider their contributions, including the increase in their taxes on income as an investment. The return on this investment being what they would derive in an increase in their overall wealth along with the benefits that would accrue with being in a de-facto relationship with the government. It must be understood that income and wealth are not the same.
Wealth can be created by accumulated income over time or by
increased value of assets such as security holdings and real estate.
Income, of course, can also be derived from wealth by way of its
investments. But Obama disingenuously says he desires to
redistribute wealth when he really means
income.
The Case Against Public Employee
Unions
By Ben Cerruti In Wisconsin the government has reacted to the adverse effect on the finances of government by flagrant public employee benefits derived from one-sided collective bargaining. Private sector unions have two adversarial parties at the bargaining table to negotiate a bipartisan agreement. Public sector unions are essentially bargaining with their own ilk. The parties on the other side of the table are derivatives of the political system. The taxpayer is left out of the process. In addition, agreements that include forced union membership fly against the freedoms provided by the Constitution. It follows that allowing employee union dues to be used for political purposes is a blatant abuse of the system. Taxpayers do not have similar organization funding representing their interests. Despite the fact that their own pension benefits are far less than most public sector employees they are left with the burden of funding the public sector. Does that sound fair or even viable when State budgets are growing and threatening the possibility of insolvency? Life expectancy has risen dramatically in our lifetime and pensions based on a ‘defined benefit’ rather than ‘defined contribution’ have resulted in huge unfunded benefits. Certainly public sector employees who are retired or nearing retirement are fearful of losing their benefits if and when reforms occur. It also stands to reason that if they fairly look at the financial predicament that exists in the State and a major effect that the ‘defined benefit’ pension plans have had in its making, they must conclude that reform is necessary. It would seem that any reform should include the elimination of ‘defined benefit’ leaving ‘defined contribution’ as the means for funding. One would assume that the benefits of the present and soon to be retirees would not be affected in such a reform. However, it surely would need to happen for younger employees. Public sector employees generally enjoy comprehensive peripheral benefits, with little or no cost to them. Such benefits including coverage in the areas of health care, disability, sick leave, life insurance and the like, that few private sector employees enjoy. They are also not confronted with the type of competition for their respective jobs that exist in the private sector. Further, they can exert inordinate pressure, including the threat of a strike, with little chance of being penalized or replaced. When thrust on the electorate, the threat of closing down public schools, ceasing to provide government services including garbage disposal and the like, government officials have the tendency to cave in to demands. After all the least path of resistance for them is to dip into the public coffers to satisfy the claims and calm potential public discontent with the results of a strike. Fairness alone dictates that public sector workers should not have such an advantage over private sector workers. It should be apparent that the taxes from the private sector provide the funding for the public sector. Any taxes that the public sector pays are just recirculation of the taxes paid by the private sector. Too long have taxpayers been unfairly saddled with the payment for ‘defined benefit’ public sector employee pensions that should have been funded over the years by means of ‘defined contributions’. Allowing the pension plans to exist in their present form will continue to perpetuate that which cannot financially survive. The need for these unions is in question. Perhaps the responsibility for the benefits of public sector employees should return to solely the legislative and executive branches. Wisconsin’s electorate evidently has provided its Governor and Legislature with the mandate to effect beneficial changes in the conditions of public employment. They should be supported by all freedom loving Americans. By Ben Cerruti In order for socialism to function in a society its tenets require the forcible redistribution of income and wealth. In practice this has never been able to be accomplished since much of wealth is the accumulation of income over time. Once established its owners have always found ways to retain that wealth by way of the power it wields. However, since income is derived in a current time frame, governments have been able to succeed in taxing higher income owners more than those earning lower incomes. This is not the same as the taxing of wealth. The fact that it takes the inordinate force of government to effect the tenets of socialism is evidently not readily apparent to those who seek fairness in the redistribution of income and wealth. They seem to be unaware that the government bureaucracy does not really redistribute the income taxes it collects but utilizes them to further its own individual and collective interests. Tax income is not redistributed but rather allocated. Special interests and government employees hold special importance in this allocation. Those that provide for the re-election of legislators are well taken care of as are those that execute for them as employees in the various branches and departments of government. This is also absolutely necessary for a socialistic government to do in order to insure that any chance for insurrection by the people is minimized. Guaranteed lifetime employment for public sector employees that provides for a high wage, health and retirement benefits insures that the government over time will become an ever-larger dominating force. What is not understood by many is that the private sector financially supports the public sector (government). Even though public employees pay taxes, the money they use to pay them comes from the private sector wage earners. In essence, the private sector is also paying their income taxes. The more that the government sector collects from the private sector the less the private sector has to grow the economy. The very nature of socialism is based on government sector growth in order to implement its tenets and that is in direct contradiction to the growth of an economy that requires private capital and investment better left in the hands of the private sector than that of the government. Those with great wealth always fare well in a socialistic system for a very obvious reason. Those in government must have financial support to attain their socialistic ends. Therefore, rather than a truly sharing of wealth and income the country becomes a two class system. One class being the government and those with established wealth, while the other is the working class. When the incentive for entrepreneurial endeavors begins to vanish because of confiscatory taxation the government and established wealth take over in an attempt to provide for the working class. Lacking the private sector entrepreneurial ventures that create jobs and new wealth, economic growth declines and eventually the country loses its prosperity and economic position in the world Socialism is evil because it gives government power to regulate virtually every facet of the lives of people. It compounds its evil because it uses force to achieve its objective and usurps from the people the divine guidance endowed to them by their creator. The inspiration to accomplish one’s purpose in life. Divine guidance unshackles each person to follow their own free will and utilize their unique talents towards their own desired ends without infringing on the rights of others to do the same. Doesn’t this follow a better path to the ultimate purpose of life than the government determining what is uniformly best for a collective mass of people? Unfortunately that which has actually caused our present economic crisis is not even being given lip service by anyone. It is hoped that which is contained herein will help fill that void for the reader.
As every family knows, when it spends more than it earns it can only make up the difference by borrowing or increasing income. It is the same for the government except they also have the power to essentially print money. Let's look at how government appears to get away with running continuing deficits while any of us who did the same thing would eventually be forced into bankruptcy. Letter to a Student
By Ben Cerruti
Dear xxxxx: Relating to your recent comments
concerning the effect of government directed tax cuts vs. spending
on the economy. I have material to present to you in this regard but
I would like to preface that with the following.
As I mentioned yesterday my daughter has gone through her first
year pursuing her MBA. She just finished a course in Macroeconomics
and passed on to me her textbook by N. Gregory Mankiw, a Professor
of Economics at Harvard. I told her that this textbook would never
have been written if the Federal Reserve Act of 1913 had never been
passed since there would have been no basis or need for it. My point
being that government itself has created most of the economic
problems that it subsequently has attempted to correct. In fact,
most of the economists of the 20th Century would have had to turn to
other professions in order to survive.
I also believe that people are too ready to believe those
academic & government elitists just because they carry advanced
degrees and aura's of importance. In fact, economics in its essence
is a simple subject and can easily be related to ones own income and
expenditures. However, the reality is that the Federal Reserve
System and what has evolved from it is presently alive and kicking
albeit to its possible own demise. The following quotations from
noted economists clearly provide factual evidence that
lower taxes are more likely to promote increased GDP than
increased government spending.
Milron Friedman - Along with Anna Schwartz, extensive empirical
research was done covering many decades and presented in their book
"Theory of the Consumption Function". "The central theme of the book is
embarrassingly obvious. People do not decide how much to spend on
consumption each day or week or year by how much they receive in
income on that day or week or year but on some longer term
expectation of the amount that they will have available to spend.
Similarly, the flow of consumption services that people enjoy during
any day or week or year does not depend on how much they spend that
day or week or year but on the accumulated stock of goods providing
services (such as owned home, car, refrigerators, etc)."
Hence, the assumption is that
for income received, whatever form it takes, it cannot be effective
unless it is on a considered relatively permanent basis. This stands
to reason for businesses who are more likely to plan for growth of
their company by purchases of goods and hiring of people when they
know that they will be able to retain funds that they would
otherwise have to pay in taxes.
John Maynard Keynes - "Nor shall the argument seem strange,
that taxation would be so high as to defeat its object and that
given sufficient time to gather the fruits, a reduction of taxation
will run a better chance than an increase of balancing the budget.
To take the opposite view today is to resemble a manufacturer who,
running at a loss, decides to raise his price. And when his
declining sales increase the loss, wrapping himself in the rectitude
of plain arithmetic, decides that prudence requires him to raise the
price still more. And who, when at last his account is balanced when
naught on both sides is still found righteously declares that it
would have been the act of a gamble to reduce the price when you
were already making a loss."
Professor Mankiw - "When John F. Kennedy became
President.....in 1961, he brought to Washington some....bright young
economists...to work on his Council of Economic Advisors........One
of the council's first proposals to expand national income by
reducing taxes. This eventually led to a substantial cut in personal
and corporate income taxes in 1964....When a reporter asked Kennedy
why he advocated a tax cut, Kennedy replied, 'To stimulate the
economy. Don't you remember your Economics 101?' As...was predicted,
the passage of the tax cut was followed by an economic boom. Growth
in real GDP was 5.3% in 1964 and 6.0% in 1965. The unemployment rate
fell from 5.7% in 1964 to 4.5% in 1965."
I am certain that at your stage of education the foregoing will
simply act to stimulate your interest in learning more about the
subject matter. At my stage in life I feel that I have been
stimulated to learn so much that I find those who have provided me
the material from which to learn are not that much smarter than
I am - and - in some respects may be considered to have been
employed in a profession that has possibly created more harm than
good.
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How to Cure Health
Care
By Milton Friedman The United States
spends a mind-boggling percentage of its GDP on a health care system
that virtually everyone agrees is a disaster. Is there any way out
of this mess? There is-and Milton Friedman has found it.
Since the end of World War II, the provision of medical care in the United States and other advanced countries has displayed three major features: first, rapid advances in the science of medicine; second, large increases in spending, both in terms of inflation-adjusted dollars per person and the fraction of national income spent on medical care; and third, rising dissatisfaction with the delivery of medical care, on the part of both consumers of medical care and physicians and other suppliers of medical care. Rapid technological advances have occurred repeatedly since the Industrial Revolution-in agriculture, steam engines, railroads, telephones, electricity, automobiles, radio, television, and, most recently, computers and telecommunication. The other two features seem unique to medicine. It is true that spending initially increased after nonmedical technical advances, but the fraction of national income spent did not increase dramatically after the initial phase of widespread acceptance. On the contrary, technological development lowered cost, so that the fraction of national income spent on food, transportation, communication, and much more has gone down, releasing resources to produce new products or services. Similarly, there seems no counterpart in these other areas to the rising dissatisfaction with the delivery of medical care. These developments in medicine have been worldwide. By their very nature, scientific advances know no geographic boundaries. Data on spending are readily available for 29 Organization for Economic Cooperation and Development (OECD) countries. In every one, medical spending has gone up significantly both in inflation-adjusted dollars per person and as a fraction of national income. In 1997, the United States spent 14 percent of gross domestic product on medical care, the highest of any OECD country. Germany was a distant second at 11 percent; Turkey was the lowest at 4 percent. A key difference between medical care and the other technological revolutions is the role of government. In other technological revolutions, the initiative, financing, production, and distribution were primarily private, though government sometimes played a supporting or regulatory role. In medical care, government has come to play a leading role in financing, producing, and delivering medical service. Direct government spending on health care exceeds 75 percent of total health spending for 15 OECD countries. The United States is next to the lowest of the 29 countries, at 46 percent. In addition, some governments indirectly subsidize medical care through favorable tax treatment. For the United States, such subsidization raises the fraction of health spending financed directly or indirectly by government to more than 50 percent. What are countries getting for the money they are spending on medical care? What is the relation between input and output? Spending on medical care provides a reasonably good measure of input, but, unfortunately, there is no remotely satisfactory objective measure of output. Ultimately, the purpose of this article is to examine the
situation in the United States. I have mentioned the data on the
OECD countries primarily to document the two (related?) respects in
which the United States is exceptional: we spend a higher percentage
of national income on medical care (and more per capita) than any
other OECD country, and our government finances a smaller fraction
of that spending than all countries except Korea.
By Thomas Sowell (TownHall.com) Those of us who are
getting on in years can remember a time when most people had no
health insurance, when we simply paid the doctors or the pharmacies
and went on our way, without giving it a second thought. I have
especially painful memories of having a hospital bill of $50 for the
treatment of a baseball injury back in 1949. You have no idea how
big $50 was for me at that time. It was the most money that I had
ever paid for anything. But the bill got paid off, a few dollars at
a time, over a period of months. When and why did health insurance,
paid by third parties, become widespread in the American economy?
Like so many things that the government does, third-party health
insurance grew out of problems created by previous government
policies.....
Talk by Israeli scientist, Haim Harari (honoraria
and bio), at a meeting of the International Advisory Board of a
large multinational corporation, April, 2004.
As you know, I usually provide the scientific and
technological "entertainment" in our meetings, but, on this
occasion, our Chairman suggested that I present my own personal view
on events in the part of the world from which I come. I have never
been and I will never be a Government official and I have no
privileged information. My perspective is entirely based on what I
see, on what I read and on the fact that my family has lived in this
region for almost 200 years. You may regard my views as those of the
proverbial taxi driver, which you are supposed to question, when you
visit a country....
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WORLD
ISSUES click on titles to read complete essay Why would world leaders support
falsification
of United Nation’s climate change report? By Ben Cerruti One would assume that the greater majority of Americans, regardless of political persuasion, want as clean and environment as is economically possible. There are those who sincerely believe what has emanated from the Intergovernmental Panel On Climate Change, http://www.ipcc.ch/organization/organization.htm , established by the United Nations and there are those who sincerely believe that the IPCC has purposely falsified the information provided in their report and have evidence to prove it, see http://assassinationscience.com/climategate/ . It stands to reason that those on either side of the issue of validity base their positions on what they understand the facts to be in that regard. This then poses the question, ‘why would the IPCC falsify
their report’? There are those who believe the motivation for
this falsification is much larger than the issue itself. It does
relate to verbiage in the Kyoto Protocol and Copenhagen Accord.
Written into both of them is the subjugation of sovereign
governments to "global governance", see http://cei.org/op-eds-and-articles/chirac-kyoto-first-step-toward-global-governance
and http://www.prisonplanet.com/copenhagen-accord-establishes-global-government-framework.html
. This would put us on the road to a single world government. This
would mean that our Constitution would be superceded by a World
Government Constitution. The cherished individual freedoms we have
had would become collective freedoms and no longer be guaranteed
under a socialistic form of government.
Why are our leaders ‘Islamic’
ignorant? The present brouhaha over the proposed construction of a Mosque near ground zero provides reason to view many of our leaders as ignorant, especially those in New York and Washington. They obviously are not knowledgeable with the tenets of the Quran that comprise more of an ideology such as Marxism, Fascism or Capitalism, than a religion. Cloaked in the cover of a religion, Islamism is being treated as just another spiritual entity. In fact it is a socio-political movement whose purpose is to convert society to its conformed totalitarian way of life. This website has had posted a poll question relating
to Islamic beliefs and recently also posted an essay by 'A Rational
Advocate' whose content was related to that subject matter. The
following is an email dialog that developed from the initial
comments made by a visitor whom shall be called Ms X. The
commentary provides an interesting insight to the rationale of some
non-Muslims relating to the subject matter....
Madrassas and American Public
Schools
By Ben Cerruti Madrassas, Islamic Schools, and American Public
Schools do have a similarity. This similarity lies in the fact
that they both graduate students that have been indocrinated with a
unilateral social ideology. Some may argue that Madrassas deal
with religion but, in fact, the tenets of the Koran that are taught
include much involving the manner in which the society must
function....
Will Al Qaeda Terrorism Go Away By
Itself?
By Ben Cerruti Evidently there are some
in the Western World that think the answer to this question is
yes. In the U.S.A. we find among them many candidates vying to
be the Democratic candidate for President, acting as if we should
have continued passively after 9/11 and our military activity in
Afghanistan, waiting for the next attack by the terrorists on some
target within our 50 states. In Britain, where our President
has visited recently, they attack the actions of Tony Blair and the
Coalition of the Willing in their effort to bring democracy to
Iraq. Their actions convey the feeling that they seem to be on
the side of the terrorists and thus to support the longevity of
terrorism.....
This is a World War
By Ben Cerruti Many pundits,
politicians, members of the press, and others in our society,
maintain the view that the armed conflicts existing around the globe
are not necessarily connected. However, this view does not hold up
when the obvious facts emerge to show that there is a common thread
that exists to tie them together. This thread is
terrorism.....
By Ben Cerruti It is apparent
that there is confusion in the mind of many people. It lies in the
view that they think we have engaged in a war in Iraq that is
winding up with the U.S. as winners. The events that have transpired
involving mid-east terrorists over the last 20 plus years,
culminating with the events on 9/11/2001, can only lead any rational
person to the conclusion that our war is against terrorism and we
are far from winners of that war yet......
TRUMAN WAS WRONG
By Ben Cerruti What with all the
hoopla over the North Koreans recent nuclear saber rattling one
would think that some mention would be made of what got us here. We
hear nothing about the Presidential decision that led to the
permanent separation of Korea into two states. Fifty two years ago a
confrontation between President Truman and General Douglas
MacArthur, over far east policy leading to this decision, dominated
the news. It resulted in the removal of MacArthur from his position
as Commander of the U.N. armed forces then fighting the North
Koreans.....
ARE WE BEHOLDEN TO OIL PRODUCING NATIONS?
By Ben Cerruti A view appears to
exist that America is more dependent on the receipt of mideast oil
than the supplier is dependent on the revenue from its sale. As a
result we find contentious argument both inside and outside of
government as to the need and methods for making our economy less
dependent on foreign oil....
ATTEMPTING TO UNDERSTAND ISLAMIC
TERRORISM
By Ben Cerruti The following burning question, I would think, should
rationally enter the minds of the greater majority of civilized
people in this country and world. Why would educated young Muslims
take the lives of innocent victims along with their own in the
conduct of suicidal missions in support of a cause? It would appear
contrary to any religious belief, including that of
Islam.....
CAUSES OF ISLAMIC TERRORISM
By Ben Cerruti This morning I
posed myself the following questions. (1) Why can’t the causes
behind the acts of terrorism on our country dating back a decade be
determined by a rational analysis? (2) Why can’t we wean ourselves
away from dependence on the resources of the region of the world
that threatens us?......
What
motivates a person to seek high public office?
By Ben Cerruti It would appear to be that the rational reason to seek high public office is the desire for one to have a degree of influence in enabling changes they desire in government? In order to gain this position a person must do that which is necessary to gain the attention of those who would make it possible. This may be accomplished through obtaining favor from enablers by way of voluntary personal contribution and support to them, or taking employment offered from these entities, that implies quid pro quo from them – or – by appealing to voters in running for lower level public office along the way. What may start out to be an idealistic endeavor usually results in one where moral and ideological beliefs become compromised. Those who help one to achieve higher public office usually are looking for something in return. Whether it is an elected office holder or one seeking office, they both require funds to support their respective campaigns. The position on issues that the office seeker actually takes in order to gain the approval of a majority of the voters may not always conform to that which is personally desired or even that desired by the financial supporter. Thus the pressures involved cause the office seeker to often compromise the true positions initially held. What
is the 'middle class'?
By Ben Cerruti Why isn’t there anyone in politics or the media that questions the use of the term ‘middle class’ as it is being applied relating to the expiration of the ‘Bush tax cuts"? It appears that the ‘middle class’ is being defined by the income people earn in any given year. This doesn’t make sense. Is a person earning $1,000,000 a year in his twenties as rich as one earning the same amount in his/her sixties? The person in his sixties may have had to spend many years working up from under six figure annual income to reach this income level and the person in his twenties may find that in later years income has fallen to a considerably lower level. A poor person at a young age may become affluent with time and an affluent one may suffer financial reverses with age. There are many factors, such as age, education, marital status, number of dependents, physical capability, race, national prosperity, war or national emergency, that affects the financial status of any person at any given time during a lifetime. It should be apparent that because of these factors any fair and effective redistribution of income is impossible. The common practice by those in government to use class to define who receives favors or penalties is divisive and counter productive. It pits citizen against citizen and serves to only benefit those in government utilizing these tactics for political advantage. Why do so many seemingly
good people with a liberal bent become pent up with rage when they
read or hear the word "Christian" in a conservative context.
In their diatribe they invariably relate the word to their
villainous foe "the religious right", or as it is sometimes called,
"the Christian right". Regardless of the possible merits to be
found in the presented material, they lose rationality when they see
the word "Christian" even though it may only be referencing the most
positive moral virtues and perspective.....
State’s Rights – What happened to
them?
By Ben Cerruti The creator’s of
our Constitution were so concerned that the Federal Government would
usurp the powers of State Government that they included provisions
to lessen that possibility. However, time has taken its toll
on these provisions and the politics they had hoped to minimize has
reared its ugly head in the Supreme Court to further erode the
powers of State Government.....
By Ben Cerruti In general
elections should a person vote for a candidate or his party
affiliation? There are various reasonable arguments that can be
proposed to justify voting in either manner. Perhaps it would be
well to look at the motivation for voting.......
THE UNREASONABLE POWER OF
PUBLIC EMPLOYEE UNIONS By Ben Cerruti President Bush had
threatened a veto if the Homeland Security Act did not include
provisions that would allow the new department flexibility in
dealing with employees. Such provisions to include the right
to waive collective bargaining rules and to eliminate the lengthy
and difficult procedures to move or terminate federal employees now
existing in federal law. With difficulty, and some compromise
with members of Congress, the Act was finally enacted with
provisions that somewhat minimzed the ability for public employee
unions to adversely affect homeland
security........
A visitor to this
web site recently had comments to make about the essay “Are You
Conservative or Liberal?” written by “A Rational Advocate“. As a
result, an interesting dialog developed that should be of possible
interest to other visitors and it follows.....
ARE YOU LIBERAL OR CONSERVATIVE?
By Ben Cerruti The answer to this
question, as used in political connotation, requires an
understanding of the respective terms. This process involves the
semantics of their use in discourse. It stands to reason that a
mutual understanding of the words and terms when utilized in
discussions is required for communication between the parties
involved to convey true meaning to the
discourse.......
REDISTRIBUTION OF
INCOME
By Ben Cerruti We have been witness to a continuing use of class
warfare by those in government, abetted by the media and an
assortment of special interest groups and individuals. In this
essay we will consider the methods they use to establish definitions
as it relates to the redistribution of
income......
TRUE CAMPAIGN FINANCING
REFORM
By Ben Cerruti What are the reasons for contributors to provide money to
candidates for public office? Common sense tells us that they are as
follows:
1. Ideological, meaning to promote the ideals in which the contributor believes. 2. Self-seeking, meaning to gain from the candidate commitment to actions that will be economically beneficial to the contributor..... THE CASE FOR TERM LIMITS
By Ben Cerruti There are those that claim that elections are the most
effective method of holding legislators accountable for their
actions. In a truly democratic system this might be possible
but unfortunately ours is not such a system as experience tells
us....
MISUSING THE ENGLISH
LANGUAGE
By Ben Cerruti There is a great misuse of meanings of certain words and
phrases by many in our society, with the greatest abusers being many
media and political persona and social opportunists (self-serving
individuals and groups). It is especially disingenuous when
this practice takes place in the categorization of people for the
purpose of pitting one category against the other....
SOCIAL
ISSUES click on titles to read complete essay In terms
of objective consideration it surely can be agreed that secular
belief and religious belief are both beliefs. If this is the case it
would rationally follow that religious belief should be given an
accordant status as secular belief in the application of government
laws.
Relating
this to our public educations system, this would mean that educators
have no right to treat religious any different than non-religious
expression. As an example, in the recitation of the pledge of
allegiance students have the right to have the opportunity to speak
the words "under God" should they wish to do so. Of
course, other students not wishing to speak those wordsl have
that right as well. This of course also would apply to
graduation ceremonies where both secular and religious related
presentations should be allowed.
Rather
than divide our citizenry by pitting secular vs religious,
why not bring them together by allowing all to participate in
Government related activities regardless of their personal
beliefs. There is nothing in ou nation's Constitution that
prohibits this from happening. Let's get on with it.
BO's speech at
Notre Dame completely ignored the role of the Doctor in abortions,
as did Notre Dame's administration
BO's
speech to the 2009 Notre Dame graduating class amplified the sounds
of those on both the pro-life and pro-choice sides of the abortion
issue. No one seems to view this issue as having what can be viewed
as another position based on who are those who are committing the
abortions. The Doctor performing the act is getting away with what
some would call murder. If reason was used it could be held that the
expectant mother is asking someone to commit this act and the very
acceptance of a Doctor to do so could be considered an illegal act
under the Constitution. Hence if it is the Doctor who is
committing an illegal act that should be prosecutable.
The following article I wrote a few years
ago addresses the personal responsibility issue and the fact that
the expectant mother does have a choice but that it does not
include a third person to commit the act. It would not
mean that a Doctor should not be able to administer to her
after she has opted to find a way to induce the abortion herself,
including possibly taking a pill prescribed by a Doctor. The point
being morally and ethically shouldn't she be responsible for
performing the physical action of inducing the abortion?
Having to make such a decision in which she is physically initiating
the act makes it more likely that she would more seriously examine
her options. Those being to keep the child or to
offer it up for adoption. Being more personally
responsible could cause those thinking of practicing
unprotected sex to think twice about it and possibly consider a
degree of abstinence. Of greater possible importance would be
that a third person, the Doctor, would not be taking
a life and violating moral and ethical tenets..
In
regard to BO's position on stem cell research, he has authorized use
of our tax dollars similar to those provided for foreign abortion
clinics, to fund embryonic stem cell research. The government
should not be in the business of funding these programs on
which our society is divided. However, the private sector is
free to spend their research dollars as they wish. In fact, positive
results of adult stem cell research has recently shown that that
embryo's need not be used and thus destroyed.
By Ben Cerruti A few years ago
a U.S. District Judge's ruled constitutional a Oregon
voter-approvedlaw allowing doctors to assist in the death of
terminally ill patients. I wonder if this Judge was aware of the
Hippocratic Oath. The Hippocratic Oath, of course, is what
historically was taken by those entering the medical profession upon
graduation from medical school........
A visitor to this
web site recently had comments to make about the essay "Homosexuality Is Not Normal" written
by “A Rational Advocate“. As a result, an interesting dialog
developed that should be of possible interest to other visitors and
it follows...
Homosexuality Is Not Normal
By Ben Cerruti Why do homosexual couples who wish to establish a
union between themselves insist on having the government allow them
to be endowed with the same marriage title provided to heterosexual
couples? Why are they not satisfied with being provided the same
legal provisions in the form of a title called "civil union"? A
single answer to both questions is obvious. They want society to
consider their relationship normal. The reason the government should
not concede to their demands is also obvious. Their relationship is
not normal because man and woman were put on this earth with
complementary sex organs meant to procreate the
species....
Another visitor to this website recently had
comments to make about the essay "Homosexuality
Is Not Normal" written by “A Rational Advocate“. As a
result, the following dialog developed between the visitor, who is
given the name Mr. H, and A Rational Advocate
(ARA)....
WHY GO TO
MARS
By Ben Cerruti The Space program
had become another humdrum government program to the average
American before the tragic loss of Columbia. It took that event to
awaken us to think about this program and the reason for its
existence at this point in time......
LEGALLY HACKING YOUR COMPUTER
FILES
By Ben Cerruti The 4th
Constitutional Amendment states:
"The right of
the people to be secure in their persons, houses, papers, and
effects,against unreasonable searches and seizures, shall not be
violated, and no Warrants shall issue, but upon probable cause,
supported by Oath or affirmation, and particularly describing the
place to be searched, and the persons or things to be seized" -
Recently Representative Howard Berman, Democrat from California,
introduced HR5211,a bill to indemnify holders of copyrights on files
who use technological means to enter one's Computer and disable the
use of such files.......
ALTRUISM IS AN ACT NOT AN INNATE
VIRTUE
By Ben Cerruti Altruism is defined
as regard for and concern for the welfare of others. An Altruist is
defined as one who adheres to the practice of Altruism. A problem
exists in our society in the interpretation of actions versus
intentions. The premise I take here is that a person cannot
perform an altruistic act that does not fulfill a personal intent to
commit it. Thus the definition of Altruism contradicts
itself.
By Ben Cerruti Published in 1932, a novel by Aldous Huxley, entitled “A
Brave New World”, described a fantasized society of the far future
which has, as time progresses, becomes less a fantasy and more a
possibility. This society controlled by an authoritarian centralized
government practices mass breeding of humans in laboratories, called
hatcheries, replacing normal maternal reproduction......
By Ben Cerruti Love is a most misused word. Saying things like “I
Love Cookies” or “I Love It” or “I Love to Ski”, when the word
that should be used is “like”, is innocent enough....However, the
word love also has another common misuse, with which we are also all
familiar, but this misuse sometimes gives the user of the term a lot
of grief....
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