Here are some appropriate pieces of an article I saw today. I hope Congress gives heed.

WASHINGTON – Federal Reserve Chairman Ben Bernanke is urging Congress and the Obama administration to start plotting a strategy to curb record-high U.S. budget deficits. Failing to do so could eventually erode investor confidence and endanger the economy's prospects for long-term health, he said.

Bernanke's comments, in prepared testimony Wednesday before the House Budget Committee, come as concerns grow at home and overseas about the United States' mounting red ink.


"Even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," Bernanke said.

The White House estimates that the government will rack up an unprecedented $1.8 trillion budget deficit this year. That would be more than four times last year's all-time high.

The recession has taken a bite out of tax revenues paid by people and companies. At the same time, the government's spending has risen, paying billions to shore up banks, help the unemployed and others hurt by the downturn, the longest since World War II.

Bernanke said that such forceful government intervention to fight the worst financial crisis since the 1930s and lift the U.S. out of recession was "necessary and appropriate" even though it worsened the nation's budget deficit.

Bernanke acknowledged that Congress and the administration face "formidable near-term challenges" that must be addressed as they take steps to stabilize the financial system, reduce home foreclosures and spur banks to lend more freely. The success of these efforts will be crucial to turning the economy around.

At the same time, Bernanke warned politicians not to let those challenges "hinder timely consideration of the steps needed to address fiscal imbalances."

He cautioned: "Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth."

(end article)

The numbers I shared in my post regarding the future as it relates to health care reform are not a false alarm. Our country needs to change course or we will all feel the pain that comes from "neither financial stability not healthy economic growth." Now isn't the time to increase the deficit for anything short of self defense & preservation. After all, this was the original & core intent for public credit.

The rest of this article can be viewed by clicking on the link below.

Found on June 3, 2009 at http://news.yahoo.com/s/ap/20090603/ap_on_bi_ge/us_bernanke

In my previous post I shared with you that rational concern that I have for the future of our country based on the unwise financial decisions we are making. Today I wish to share one of the reasons why the government has a legitimate concern in health care costs and some things that can be done to address those concerns.

Health Care cost reform is essential to true advancements in health care for the American people. We have been taught to believe that we have a fair market system and that the one being proposed is a socialist alternative.

Perhaps the issue most overlooked, and quite possibly the most consequential, is the insurance industry's exemption from Federal Anti-Trust laws and how that plays into the rise in health care costs. We have been led to believe that our current system is free market. In reality, it isn't entirely. We are living the third alternative that none of us like. It isn't free market. It isn't socialist. It is essentially monopolistic. The insurance industry is one of only two industries that are exempted from Federal Anti-Trust laws. This exemption provides them with a non-free market control over health care (FYI, the other industry is Major League Baseball) (see footnote 2).

This exemption gives insurance agencies the opportunity to do things that, for every other company in America (besides the NY Yankees), is illegal. For example, they can set policies together, set prices together and gather information together. How is that helpful for us? It isn't (see footnote 4).

Health Care cost reform must tackle this huge issue. If it doesn't, then it has failed. Health Care cost reform should focus on the following areas:

1. As mentioned, bring fair market principles to the insurance industry by repealing the anti-trust exemption and responsibly regulating that industry to ensure that price fixing is ended & monopolies are broken up. Imagine what that alone would do.

2. Introduce true incentives to reduce costs in the industry. Those incentives could take the form of tax breaks, grants, fines, etc.

3. Eliminate the huge divide between what someone without insurance pays versus what the insurance company pays for the exact same services. For example, your insurance company may have paid $3,000 for certain services; but you, however, would have to pay perhaps $5,000 for the same treatment if you didn't have insurance. That divide needs to end, or be brought more closely in line, to give consumers a true choice between self insurance and no insurance. People are FORCED onto insurance because of the monopoly on the payer system. It works to their advantage by reducing the amount that they pay to doctors, clinics, etc. to such a degree that the doctors & clinics, to make up that money, have to charge more to the uninsured in order to recoup some of that lost money. This incentivizes people to buy insurance. Who wins? Not the health care industry - the insurance industry.

4. More closely regulate malpractice lawsuits. Malpractice insurance is a large part of the increased costs.

Notice how #1 & #4 are both related to insurance. There is real work to be done with that industry. I believe it would have a sudden & immediate impact on health care costs nationwide. Insurance & health care cost reform should be the cry. Is this list of mine all inclusive? Not by any stretch of the imagination. This is a huge topic. But I do believe that insurance reform would supply a huge benefit to the public whereas pushing forward with universal care would actually increase costs, increase taxes, decrease individual incomes, lead to a rationing of care, reduce personal liberties and contribute toward the ruin of the country.

Creating a one-payer system only further entrenches the monopoly held by the insurance companies on health care and ensures that there will never, ever be a free market system to help the consumer & tax payer. Sadly, as the AFL-CIO reports, the insurance industry is a huge partner in the current "Health Care Reform" process (see footnote 5).

Health Care Cost reform will only happen with Insurance Industry Reform. Although it is 65 years in the making, it is never too late to start and it is long overdue.

___________________________________________

I attended a webinar yesterday called "Health Reform 2009: Watershed or Waterloo?" It was put on by my broker and after sitting through it, my heart was broken. As a result, I was moved to a state of heightened concern and anxiety for the welfare of my nation. I will share why.

There are a few laws that simply cannot be argued with.

1. You need money to buy things
2. Money has to come from somewhere
3. There isn't an infinite amount of valuable money (See footnote 10)

Knowing how our Congress & President are in a hurry to pass major health care reform because of this new "Crisis," it seems that "reform" is inevitable. For some time now they have been selling the country this line:

1. Millions of poor & uninsured
2. Increasing costs
3. The government will give us the same health care that the President has

They use these three things as a premise to give them authority to step in and reform our system (See footnote 1). The word "reform" itself implies that the system has been in some criminal state and needs to be brought in line with higher norms and standards. I will admit that there are certainly some problems with health care - every American can. But, there are many pricing problems in America (I think the iPhone is too expensive for example. Everything Apple is too expensive for that matter) and we do not want or hope that the government will get involved. It isn't their role - they have no authority, implied or explicit, for price controls.

Here are the facts:

1. Millions of Poor & Uninsured

Of the 46 million uninsured Americans (15%) total (2007 numbers),
• 12 million eligible but not enrolled in Medicaid or SCHIP.
• 8.5 million have household incomes over $50,000.
• 9 million have household incomes over $75,000.
• 9.7 million non-citizens (including 6 million undocumented aliens).
• 8 million college-aged young adults (4.7 million are students).

(See footnote 2)

Outstanding article - I thought you would enjoy.

By George F. Will Thursday, May 14, 2009

Anyone, said T.S. Eliot, could carve a goose, were it not for the bones. And anyone could govern as boldly as his whims decreed, were it not for the skeletal structure that keeps civil society civil -- the rule of law. The Obama administration is bold. It also is careless regarding constitutional values and is acquiring a tincture of lawlessness.

In February, California's Democratic-controlled Legislature, faced with a $42 billion budget deficit, trimmed $74 million (1.4 percent) from one of the state's fastest-growing programs, which provides care for low-income and incapacitated elderly people and which cost the state $5.42 billion last year. The Los Angeles Times reports that "loose oversight and bureaucratic inertia have allowed fraud to fester."

But the Service Employees International Union collects nearly $5 million a month from 223,000 caregivers who are members. And the Obama administration has told California that unless the $74 million in cuts are rescinded, it will deny the state $6.8 billion in stimulus money.
Such a federal ukase (the word derives from czarist Russia; how appropriate) to a state legislature is a sign of the administration's dependency agenda -- maximizing the number of people and institutions dependent on the federal government. For the first time, neither sales nor property nor income taxes are the largest source of money for state and local governments.
The federal government is.

The SEIU says the cuts violate contracts negotiated with counties. California officials say the state required the contracts to contain clauses allowing pay to be reduced if state funding is.

Anyway, the Obama administration, judging by its cavalier disregard of contracts between Chrysler and some of the lenders it sought money from, thinks contracts are written on water. The administration proposes that Chrysler's secured creditors get 28 cents per dollar on the $7 billion owed to them but that the United Auto Workers union get 43 cents per dollar on its $11 billion in claims -- and 55 percent of the company. This, even though the secured creditors' contracts supposedly guaranteed them better standing than the union.

Among Chrysler's lenders, some servile banks that are now dependent on the administration for capital infusions tugged their forelocks and agreed. Some hedge funds among Chrysler's lenders that are not dependent were vilified by the president because they dared to resist his demand that they violate their fiduciary duties to their investors, who include individuals and institutional pension funds.

The Economist says the administration has "ridden roughshod over [creditors'] legitimate claims over the [automobile companies'] assets. . . . Bankruptcies involve dividing a shrunken pie. But not all claims are equal: some lenders provide cheaper funds to firms in return for a more secure claim over the assets should things go wrong. They rank above other stakeholders, including shareholders and employees. This principle is now being trashed." Tom Lauria, a lawyer representing hedge fund people trashed by the president as the cause of Chrysler's bankruptcy, asked that his clients' names not be published for fear of violence threatened in e-mails to them.

The Troubled Assets Relief Program, which has not yet been used for its supposed purpose (to purchase such assets from banks), has been the instrument of the administration's adventure in the automobile industry. TARP's $700 billion, like much of the supposed "stimulus" money, is a slush fund the executive branch can use as it pleases. This is as lawless as it would be for Congress to say to the IRS: We need $3.5 trillion to run the government next year, so raise it however you wish -- from whomever, at whatever rates you think suitable. Don't bother us with details.

This is not gross, unambiguous lawlessness of the Nixonian sort -- burglaries, abuse of the IRS and FBI, etc. -- but it is uncomfortably close to an abuse of power that perhaps gave Nixon ideas: When in 1962 the steel industry raised prices, President John F. Kennedy had a tantrum and his administration leaked rumors that the IRS would conduct audits of steel executives, and sent FBI agents on predawn visits to the homes of journalists who covered the steel industry, ostensibly to further a legitimate investigation.

The Obama administration's agenda of maximizing dependency involves political favoritism cloaked in the raiment of "economic planning" and "social justice" that somehow produce results superior to what markets produce when freedom allows merit to manifest itself, and incompetence to fail. The administration's central activity -- the political allocation of wealth and opportunity -- is not merely susceptible to corruption, it is corruption.
georgewill@washpost.com

Found at http://www.washingtonpost.com/wp-dyn/content/article/2009/05/13/AR2009051303014_pf.html on May 14, 2009

I saw this on the cover the Wall Street Journal last week and had to share it. I think it does a good job of showing how far beyond reasonable government we have gone and are going to. I had no idea that banks were forced to take the loans from the government - both stable and unstable banks were forced to take them. I also think it intresting how the banks were forced to receive the money and therefore they were forced to accept the strings attached as well - such as regulations on executive compensation.

I can understand the need to save the financial system and support certain efforts to do so. However, I can't understand how the Government has the right or the ability to compel institutions and people to receive money and the regulations along with it. This is the equivalent of marketplace emminent domain - a place where they have no emminent domain capabilities. What happened to Freedom? What happened to choice and accountability? Goldman doesn't even have to ask for help now - the government will step right in before they need it. At any rate, I thought it was worth sharing.

By SUSANNE CRAIG, KATE KELLY and DEBORAH SOLOMON

Goldman Sachs Group Inc., frustrated at federally mandated pay caps, has been plotting for months to get out from under the government's thumb.

On Monday, Goldman took fresh steps to break free: It announced, as expected, that it plans to raise $5 billion by selling new common shares to investors, and that it would like to use the money to repay government bailout money received last year. The firm also reported stronger-than-expected first-quarter earnings of $1.81 billion.

Goldman managers have a big incentive to escape the state's clutches. Last year, 953 Goldman employees -- nearly one in 30 -- were paid in excess of $1 million apiece, according to people familiar with the matter. But tight federal restrictions connected to the financial-sector bailout have severely crimped the Wall Street firm's ability to offer such lavish pay this year.

At a meeting President Barack Obama hosted with bank executives at the White House in late March, Lloyd Blankfein, Goldman's chief executive, argued that banks needed freedom to repay the loans the U.S. forced them to accept in October. Eight large institutions received a total of $165 billion in capital, including $10 billion for Goldman. The pay restrictions were tied to those loans. The banks were told then that everyone had to accept the money so it wouldn't be obvious who needed it most.

"Those who could pay it back have an obligation to do so," Mr. Blankfein urged the president, according to attendees. Mr. Blankfein, who was paid $68.5 million in 2007, added that the pay caps and other factors are "going to limit our ability to compete, both here and abroad."

The federal government's management of the financial crisis is entering a new phase. The trillions of dollars Washington has committed to help stabilize companies and thaw frozen credit markets have enmeshed the government deep in the affairs of investment banks, insurers and auto companies. Now that stock and bond markets have rebounded a bit, and pressure is easing for some financial firms, the government has to begin deciding how tight a grip to maintain on some companies, and for how long.

If Goldman is permitted to repay its loan, it would be the first big bank to do so. That would set the stage for the firm to once again pay its executives, traders and bankers -- long among Wall Street's highest paid -- as it sees fit.

But an early repayment could pose a risk to other banks that received government money, by rekindling investor concerns about their health. Morgan Stanley, for example, which is expected to report a first-quarter loss, isn't likely to quickly repay the U.S., according to banking executives and government officials. Will other profitable banks rush to repay, deepening the divide between the haves and the have-nots? And what would happen if there's another financial shock and banks are forced to ask for more U.S. funds?

A handful of smaller banks already have taken steps to repay the government. The U.S. has indicated it won't allow any major banks to do so before the government considers the results of financial "stress tests," which are expected by April 30. The tests measure banks' ability to continue lending through a severe and prolonged economic downturn. Because of the technicalities of the loans, it could take months before Goldman or any other big bank that repays will escape the government's clutches.

The 140-year-old firm long has boasted a culture of lucrative compensation. Although overall Goldman pay fell last year, the firm, which has about 30,000 employees, paid 953 people more than $1 million in salary and bonus, according to people familiar with the matter. No one got more than $1 million in cash; much of the pay was through stock grants that vest in the future, these people say. (At Merrill Lynch & Co., which had roughly twice as many employees, 696 executives were paid more than $1 million last year, according to data released by New York Attorney General Andrew Cuomo.) In 2008, the pay of Mr. Blankfein and three top Goldman lieutenants fell 97%, to a total of $9.3 million.

Firms are chafing under new legislative rules dictating that bonuses can account for no more than one-third of the total annual pay to top earners at companies receiving government money. The Obama administration also has endorsed capping salaries at $500,000 at some firms receiving significant U.S. aid. The government also restricts companies accepting U.S. funds from increasing dividends and from buying back their own stock, among other things.

Mr. Blankfein now uses Amtrak's Acela Express train to shuttle between New York and Washington to make his case with government officials. That's a far cry from the private plane Goldman executives have used in the past. Some Goldman partners, careful not to appear to be spending taxpayer money, now use their personal credit cards when paying for client entertaining. Employees visiting New York now stay at an Embassy Suites hotel rather than the tony Ritz-Carlton where they used to bed down.

Goldman has fared better than most rivals during the crisis, but was hammered nonetheless after Lehman Brothers Holdings Inc. filed for bankruptcy protection in September. Goldman's stock sank to $108 on Sept. 18, less than half its high of more than $247 a share in October 2007.

Even then, Goldman executives didn't believe the firm needed U.S. money. On Sept. 23, as the financial crisis intensified, Goldman raised $5 billion from Warren Buffett's Berkshire Hathaway Inc. Goldman hoped the investment -- preferred stock with a steep 10% annual return -- would reassure investors. Goldman raised another $5.75 billion in a common-stock offering.

Mr. Blankfein spoke up when nine big banks were called to the emergency meeting in October where the Treasury Department unveiled its plan.

"This is pretty vague," Mr. Blankfein told then-Treasury Secretary Henry Paulson, attendees say. "What are the terms?"

The U.S. did more than give the banks money. In exchange for the capital, it also received warrants, a security that gives the holder the right to buy common stock at a certain price. Paying back the money doesn't end the government's ability to exercise those warrants and own common stock in the banks. To formally end the government's involvement, the Treasury must sell the warrants back to the bank or to private investors.

It didn't take long for Goldman investors to raise concerns about Washington's grip. At a Nov. 11 conference at New York's Grand Hyatt hotel, an audience member grilled Mr. Blankfein.
"Some of the politicians are questioning companies who have accepted...money as to whether they should be paying bonuses this year," the attendee said. "And I'm wondering...how you're thinking about your ability to continue to compensate your staff the way you have in the past?"
Mr. Blankfein replied: "We hear those voices and we take it into account."

Six days later, Goldman said its board decided that senior executives would take no bonuses. The numbers were released in mid-December. Money set aside for pay and benefits fell 46% to $10.93 billion. Most partners, the firm's elite, saw bonuses fall by about 70%, according to people familiar with the matter.

All costs were being scrutinized by then, due to heightened public scrutiny and declining profits. Goldman employees working late now are entitled to only $20 in reimbursement for dinner, a 20% reduction. Car-service rides home aren't free until 10 p.m., an hour later than before.
At a Goldman partners meeting in early January, Mr. Blankfein said repaying the federal money was a priority.

The firm took the message public at an investor conference on Feb. 4. "Operating our business without the government capital would be an easier thing to do," said David Viniar, Goldman's chief financial officer. "We'd be under less scrutiny and under less pressure." Goldman's shares rose 6.2% that day, to $87.97.

Goldman aimed to spin the message more broadly at a congressional hearing on Feb. 11. It was Mr. Blankfein's first-ever congressional appearance, and he spent hours preparing.

Mr. Blankfein played diplomat. "When conditions allow, and with the support of our regulators and the Treasury, we look forward to paying back the government's investment so that money can be used elsewhere to support our economy," he testified.

On Feb. 26, the Treasury sent an email to Goldman's finance department containing the financial stress test. Mr. Viniar, Goldman's CFO, ordered his staff to work around-the-clock so Goldman could return the questionnaire by Monday, four days later.

But the Treasury told the firm it had to wait until its review was concluded later this month before the U.S. would entertain a repayment of the money, according to people familiar with the matter.

A public uproar last month over bonuses paid to American International Group Inc. employees only heightened Goldman's urgency. The AIG bonuses prompted a House bill to slap a 90% tax on bonuses for those receiving pay of $250,000 or more at firms that received more than $5 billion in government funds.

Some Goldman executives privately discussed repaying $5 billion -- half its government loan -- or more, say people familiar with the matter. That would have exempted Goldman from the bill taxing bonuses.

The bonus-taxing measure fizzled after President Obama expressed reservations.

Soon, a prominent government official indirectly suggested a course of action that might pave the way for a payback. On March 15, Federal Reserve Chairman Ben Bernanke said in a "60 Minutes" television interview that the day a bank could raise private capital would be an important milestone. "Right now, all the private money is sitting on the sidelines saying: 'We don't know what these banks are worth. We don't know that they're stable,'" Mr. Bernanke said.

Two days later, at a monthly meeting of Goldman's nearly 400 partners, Mr. Blankfein said it may be "prudent" for Goldman to raise capital, say attendees.

He has sought political backing. Mr. Blankfein has met twice with Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee. Messrs. Blankfein and Frank discussed repaying government funds, among other things, says Mr. Frank.

"I think it's a sign of strength" for Goldman to seek to repay U.S. money, Mr. Frank said in a recent interview.

Some Goldman rivals are less likely to repay their loans right away. At the March 27 White House meeting with President Obama, Morgan Stanley's Chief Executive John Mack struck a different tone. Analysts estimate that his firm faces a first-quarter loss of approximately $100 million. A quick payback of U.S funds would "undercut the purpose" of the Treasury's Troubled Asset Relief Program, or TARP, for large banks, Mr. Mack told President Obama, attendees say.

Treasury Secretary Timothy Geithner indicated recently that healthy banks will be able to repay bailout money, and that the Treasury was considering those repayments in its calculations about how much TARP money remains. The Bush administration had said that even healthy banks had to keep the money until the crisis passed.

A provision in the recently passed stimulus bill mandates that TARP recipients be allowed to repay the funds, as long as their primary regulator approves the move.

At least one Goldman shareholder has benefited with the government in the picture. The 10% annual payout Mr. Buffett's Berkshire Hathaway receives on its $5 billion investment earns it more than $1.3 million each day.

As long as Goldman holds the government's money, it can't pay off Mr. Buffett without U.S. approval.—Damian Paletta, Susan Pulliam, Jon Hilsenrath and Aaron Lucchetti contributed to this article.

Found at http://online.wsj.com/article/SB123966372945715013.html on April 20th, 2009.

This is an excellent read from the AEI. I highly recommend it.

In an effort to address the Federal Reserve's ballooning balance sheet, bank officials are arguing for the institution to issue its own debt. While this might effectively curtail inflation in the future, the best way to ensure the bank is on sound financial footing--in a democracy--would be for Congress to appropriate the funds to acquire troubled assets, and for Treasury to borrow the money that it needs.

Senior Fellow Kevin A. Hassett

The wise men of Washington keep finding more core beliefs that we have to give up. First it was free markets. Now it's democracy.

The financial rescue may be the least popular big-ticket government program in history. If the U.S. Treasury decides it needs more money to keep the bailout going, it is anybody's guess whether Congress would provide it.

As a result, Treasury and the Federal Reserve have been running what feels to this lifelong student of fiscal policy like a scam.

Many economists believe that helping financial institutions turn their less liquid assets into hard cash is a key step toward returning them to good footing. The best way to achieve that in a democracy would be for Congress to appropriate the funds to acquire the assets and for Treasury to borrow the money that it needs.

It might be that voters are too stupid to understand that government officials should get as much bailout money as they desire.

But Congress is unwilling to appropriate enough money, so Treasury and the Fed have cooked up a work-around: the Fed buys the assets instead. Since the Fed exists outside of the normal budget process, no permission from elected officials is required.

Here's a sketch of how it works. Many financial institutions have reserve accounts with the Fed. If one of them shows up with an asset it wants to ditch, the Fed takes it and ratchets up the balance in the reserve account. This means that the Fed is effectively summoning cash out of thin air to purchase the assets.

In isolation, such a move might be inconsequential. But the scale of this end-around is enormous. The Fed's balance sheet is closing in on $2 trillion and stands ready to skyrocket above that. Last month, for example, the Fed committed to buy more than $1 trillion in mortgage-backed securities.

Printing Cash

This means that the Fed is printing cash at a rate that, while not threatening historic records set in Weimar Germany, promises to create substantial inflationary pressures once the economy revives.

Therein lies the problem. At some point, when the economy begins to pick up again, the Fed will have to withdraw some of those reserves from the system before they ignite an inflation bonfire.

Traditionally, the Fed might withdraw reserves by selling some of the Treasuries it owns. But the scale of the money creation is so grand this time that the Fed might not be able to sell enough Treasuries to meaningfully affect inflation without running up against the debt limit that Congress sets when it gives Treasury the authority to borrow money.

The Fed could, in principle, sell some of the assets it has been buying--but if these assets were liquid, the Fed wouldn't have been buying them in the first place. Which means it may be extremely difficult to get the cash out of the economy before it is too late.

"Fed Bills"

The Fed has cooked up a solution, though. Vice Chairman Donald Kohn, told an audience at the College of Wooster in Ohio that a possible solution would be for the Fed to issue its own securities, which might be called "Fed bills." Kohn argued that a key attraction of these bills is that they wouldn't be subject to the debt ceiling set by Congress.

In other words, the Fed wants to have unbounded authority to borrow money and buy assets without the inconvenience of having to explain itself on Capitol Hill.

The actions that have been taken already may indeed necessitate granting the Fed that authority. The cash is out the door, and at some point, the Fed will have to rake it back in. Congress may have to choose between giving the Fed the authority it wants, or having the mother of all inflation episodes.

Crowd Out Spending

Should the Fed's balance sheet climb to $6 trillion, then its losses might be enormous and threaten to crowd out spending on defense, education and health care. And it would do so without Congress ever voting on the increase in the debt ceiling that would have been required if Treasury were performing the rescue.

If the Fed receives the authority to issue debt whenever it wants to, then future bureaucrats can, in principle, play whatever financial games they want. The powerlessness of voters will be codified into law.

We can't let that happen.

It might be that voters are too stupid to understand that government officials should get as much bailout money as they desire. The financial rescue might have been precisely what the doctor ordered.

But the public might be right as well. Our founders didn't construct a democracy because voters are always right. Rather, they viewed democracy as better than the alternatives.

While fully legal, the steps that have been taken by Treasury and the Fed have clearly been designed to insulate those institutions from the will of Americans' elected representatives. In that regard, the damage from these actions probably exceeds the benefits. If we accept the view that we can be democratic in some areas but not others, then democracy will wither and die.

Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.

Found at http://www.aei.org/publications/pubID.29695,filter.all/pub_detail.asp on April 13, 2009.

Sorry to post two things in one day, but since I posted about China's currency proposal Geithner has responded about it. Again, very interesting and important knowing that Bretton Woods 2.5 is happening in a few weeks. Here it is:

NEW YORK (Reuters) – Treasury Secretary Timothy Geithner said on Wednesday the U.S. dollar is still the world's reserve currency and will remain so for a long time, though he also expressed openess to expanded use of an IMF currency basket.
Geithner, when asked during an audience question-and-answer period following a speech in New York, whether he foresaw a change in the dollar's global role, he said, "No, I do not."

"The dollar remains the world's dominant reserve currency and I think that's likely to continue for a long period of time."

He also said, "as a country, we will do what's necessary to make sure we're sustaining confidence in our financial markets and in this economy's long-term fundamentals."

The comments came shortly after Geithner, in response to another question, said he was "quite open" to a recent Chinese suggestion to move toward greater use of a IMF-created global currency basket comprising dollar, euros, sterling and yen.

Zhou Xiaochuan, China's central bank governor, earlier this month said the world should consider the IMF's Special Drawing Rights basket as a super-sovereign reserve currency.
Geithner said he hadn't read Zhou's proposal, but added, "as I understand it, it's a proposal designed to increase the use of the IMF's Special Drawing Rights. I am actually quite open to that suggestion."

He also said he had "tremendous respect" for Zhou. China's foreign exchange reserves are the largest in the world at nearly $2 trillion and China is the biggest holder of U.S. Treasury debt.

The U.S. dollar initially fell against the euro on Geithner's remarks regarding China's SDR proposal but pared those losses after the U.S. treasury secretary reiterated his faith in the dollar as world reserve currency.

"Geithner admits to not having read China's proposal, and President Obama's comments on the dollar yesterday -- no need for another reserve currency and that the dollar was fundamentally strong -- was more of the underlying signal," said Marc Chandler, senior currency strategist at Brown Brothers Harriman in New York.

(Reporting by Pedro Nicolaci da Costa)

Found on http://news.yahoo.com/s/nm/20090325/bs_nm/us_financial_usa_geithner;_ylt=AnPmD2xZsAYriXkqxeu3pdp2wPIE;_ylu=X3oDMTJzcW4za2VjBGFzc2V0A25tLzIwMDkwMzI1L3VzX2ZpbmFuY2lhbF91c2FfZ2VpdGhuZXIEY3BvcwM1BHBvcwM1BHNlYwN5bl90b3Bfc3RvcmllcwRzbGsDZ2VpdGhuZXJzYXlz on March 25, 2009.

Governments were instituted by God for the benefit of man. Their proper role is to ensure the safety and domestic tranquility of its citizens, support interstate commerce, and support the general welfare of the People.

Do you believe that?

The goverment has the powers to enact laws that are necessary and proper to ensure that it can fulfill the responsibilities and powers delegated to it (Article 1 of the US Constitution).

Do you believe that?

The survival of the Government at the local, state and Federal levels is tied to the survival of the financial system. Without a functioning financial system public credit would be gone, the money system destroyed and the whole system of our country would be gone thus leaving our country open to foreign invasions, turmoil from within and a cessation of all public and therefore private services.

Do you agree with that?

If you believe these things then you should, in some way, support government intervention in the free market when it's lack of involvement would mean the destruction of the system that supports our government and therefore it would destroy our government as well.

If you believe that, then you must ask yourself, "What level of intervention then is necessary and proper?" Was and is the financial system at that level of risk where it required and requires the government's involvement to keep it from falling apart? Also, at what point does Government involvement increase the likelihood of its destruction?

We must do our research and answer that question for ourselves.

I watched an interview with Ron Paul today and he mentioned how there were only five copies of the final bill circulated among the house and the senate on the day the bill was voted on. Unbelievable.

If you want to be one of the lucky few to actually see what is in the bill for yourself (instead of reading the cliff notes version), click here:

http://thomas.loc.gov/home/h1/Recovery_Bill_Div_A.pdf

As you look through you will be amazed.

Do we need more domestic attention? We do - absolutely. However, you can't cut taxes and increase spending. You can't cut taxes and wage two wars. We can't cut taxes and continue planning yet another $100 billion bailout bill. We can't have it all - we need to sacrifice for our country. We all need to pull together as individual Americans and sacrifice. Some might say that this bill is that sacrifice. However, this bill doesn't require any sacrifice of us - at least not for quite some time. It requires a sacrifice of our children and our unborn and their unborn. This bill also doesn't do anything for them. It arguably won't make things better for them as it doesn't change the fundamentals of what has and is going wrong in America. Taxing the future for the status quo is reckless, dangerous and irresponsible. What is the sacrifice we must make? No one has asked us for one.

In response to a friend's question about what would I do regarding the economic stimulus plan and the current situation, I put this forward as a possible solution. At first pass, this is the direction I think we should go:

Communicate with Hope and Vision

It is the role of all leaders to lead us to a better place. The words we say have a powerful effect on the feelings we feel and the actions we take. If I were responsible for the country, I would hope that I would recognize this important trust and communicate the truth of the present and a vision of optimism and hope for the future.

Understand the Long Term Issues Facing the Country

One of the primary problems I see with the current economic situation is that the TARP and current stimulus plan being debated is, as most legislation is, very reactionary. Politicians are never voted in for their 10-20 year plans. They are voted in for what they can do for the problems people were facing yesterday. As a result, the actions in congress are very reactionary and sadly do little to avoid problems and create strategies for the future.

It is important to note that I believe that for those long term needs for the safety and general welfare of the People that the free market has failed to see profit in, the Government has a role to ensure the need is met. Please know up front that I do not believe that the role of government is to interfere in the marketplace where there is a marketplace but in those places where there is not one. The government cannot be, and should not be, the be all and end all of everything as it is quickly becoming. The place of government is not to prop up crippled institutions, cap executive salaries, flood markets with endless streams of cash, nationalize institutions, purchase private equities in firms or place an impossible burden of debt on the backs of the People for immidiate, short term boosts.

I would therefore not take any short term action that would adversely affect the long term future of our nation's children. Those issues that must be addressed to ensure long term success for the nation are:

1. The Breakup of the Family as the Basic Unit of Society

It is in the interest of the citizens of our nation to help ensure that each child born into our country is born to a father and a mother who honor their marital vows. Children that are raised in a loving home gain the self confidence they need to succeed in life, a foundation of love and respect for their fellow man, and a commitment to generally a sense of personal honor and commitment. The breakdown of the family will be a country of individuals whose hearts have grown cold through abuse and neglect and who will desire love but not know how to find it. The dissatisfaction with this kind of life leads many to a life of a relentless pursuit of selfishness. Selfishness only brings more misery and heartache along with the other ills of an uncivilized people. As a leader I would promote fidelity and the virtues of honor, commitment, love, respect, and forgiveness.

2. The Growing Lack of Creativity

Western civilization has primarily grown out of our ability to create. Inventions that bless the lives of individuals whether for increased work productivity or leisure are desired commodities. The United States is producing fewer and fewer creative inventions. This decline in America's ability to create will cause a real shift in global positioning that is concerning for our children.

The government must actively be finding ways to help more people become interested in engineering and the sciences. The government must understand its place in funding the sciences of all kinds and in removing barriers to the country remaining competitive on this front. Creativity in renewable energies is a key area for our nation to gain core competencies. This leads us to the next long term problem.

3. Education

Natural born citizens have fallen far behind the rest of the world in education. Our children do not learn much in school and our parents are not concerned or trying to help them learn more. Instead, they want their children's lives to be dominated by extra-curricular activities rather than academic ones. Learning must be enshrined as part of our culture - not just entertainment. As a leader, I would work with leading business and education leaders to help re-shape the American education system to help our children be prepared for and to help shape the 21st Century.

4. Immigration Reform

Because our schools are not producing the number of graduates that are needed to fill the creative jobs in our country, we must make it easier and not harder for the dreamers, the creators, the engineers of today in foreign countries to become American citizens. The doors of our country should open to the people of all nations and we should welcome them into our nation and culture.

5. Energy Independence

The long term success of the west is dependent on energy independence. The government must take a strategic role in helping our country leave behind its dependence on foreign oil. The country must enact true, long term energy policy that would greatly reduce or entirely eliminate our need for foreign oil. Just yesterday it was announced that China purchased more cars last month than the United States for the first time. Imagine what a billion more cars on the road will mean for the oil supply. We are in an insecure place if we are all relying on the same source of energy. America must see the greater need for long term energy policy. The safety of our nation largely depends on this one piece - energy independence.

Understand the Short Term Problems Facing the Country

As I see it, the true short term problems of our nation are:

1. The Housing Market

The housing market was one of the primary sources of our current economic problem. In the short term, relief must be given to those deserving home owners who are facing foreclosures. Rather than give hundreds of billions to banks to compensate them for their losses, the government should step in and force a renegotiation of contract and interest rate that ensures the people of this great country are served as well as the interest of the banks.

2. Inflation

The Government and Federal Reserve have already spent or committed nearly $10 Trillion on the economic bailout. That is a lot of extra money that has gone into the economy. Additionally, M2 - the Nation's money supply - is growing at a rate of 24%. That is scary - do you want to see 20% inflation? I don't - that is a very dangerous thing. The Federal Reserve must stop flooding the markets with money and the government must stop this as well or else I fear our economy would be incredibly hurt. So, not just those who have been unwise would be hurt - but those who have been wise as well. As a leader I would make this hard decision.

3. Credit

The lending institutions who have been given money in the TARP funds should be required to use the funds or return them to the government. The only way they will return to solvency is by earning money and they cannot do that by "strengthening their balance sheets" alone. They have to produce something and that "something" is financial services and credit.

4. Reaction

As a leader I would urge Congress to not react with haste but with positive energy and a long term strategy to create the right solutions for our nation's current and future issues.

5. Energy Costs

In reality, many people and businesses were hurt over the recent high energy costs which is a result of the country's complacency in creating alternative fuel sources. The government has a place to ensure that monopolies on energy are charging fair and reasonable prices for the fuel they provide. There needs to be some government oversight for industries where there is not a true free market.

6. Out of Control Government Spending

I need to say nothing more than the banner at the top of this page. By living way beyond our means we are quickly laying the foundation for certain economic, long term doom.

For an infrastructure bill we should understand the key structural issues that need addressing.

I do not believe that roads and bridges are a huge problem to our country's present and future growth. If there are real problems with some roads and bridges we should by all means fix them. However, the current financial crisis is not the time to be working on roads that simply need widening or freeways that need expanding for no real reason other than to create jobs.

The real structural problems that need addressing are as follows:

1. Fiscal Policy

It is my belief that the Federal Reserve Act should be amended to allow the Fed to only increase the money supply according to the increase in productivity. Any exceptions to this should be approved by the House of Representatives. Allowing a private bank to control the wealth of the nation, which is the labor of the people, puts the people at odds with business and slaves almost to the wealth they should own. The People of this nation are the wealth thereof and should be the ones responsible for the money supply.

2. Tax Reform

Our government must look at true tax reform and investigate a more representative tax system.

3. Government Oversight

For the country to not repeat the same problems that led to this, the White House should investigate and find the places where oversight failed or was non-existent and propose corrections. We have laws and police to enforce those laws. This is a place that certainly needs some attention. As a good friend posted a comment on dirivities, this would certainly be the area to monitor that.

4. True government fiscal reform

To save our country we must end the entitlement state, allow market forces and the common descency of our people to fill in the gaps, and restore Government to its proper place. By following the Long Term plan I put forth above, we would be able to better position our country for future economic success and help to create a better and safer world.

Conclusion

If I were responsible for such a monumental task, I would like to think this is where I would start. This is what I feel the proper role of government is. There are those that believe that any government involvement is bad involvement (I have found that to be mostly partisan rhetoric). I disagree and know that history would disagree along with some of our greatest founding fathers. Hamilton, Madison (as they wrote in the Federalist) and Washington would have believed in some limited involvement for the benefit of all in these types of situations.

I do not believe the government should be hands off but I also do not believe it possesses the solutions to the problems. It can only work by communicating with optimism and creating the proper structure for the true creative forces to work - the People of our great land. To do this, the government should avoid destroying the people by stealing their wealth through inflation, taxing them for their whole lives for a benefit that will last a few months, and creating a nationalized system that takes the true creative forces out of the market that blesses our lives.

The answer lies in the People and if we are true to the principles of individual liberty and justice for all, we will make tomorrow better than today for you, me and our children.

A good friend of mine received this letter from Senator Dodd yesterday. It is in response to the Economic Stimulus Bill being debated presently. His response, like that of Senator Lieberman, shows that his mind is made up. Imagine what your life would be like if you, in times of trouble, with your income going way down, took out a massive loan to support yourself and hedge your bets that you would one day be able to pay off the loan. First, no bank in their right mind would loan to you. Second, that was what brought you here in the first place. And third, it wouldn't fix the behavior that got you here in the first place.

I wanted to post the letter I received from Senator Lieberman on the newest economic recovery bill being debated in Congress. My letter to the Senator was urging him to not vote for any bill that increased government spending without having an already present way of paying for the new spending. I cannot see how the mismanagement of our own financial resources at the Federal level will be a tool to creating a sound financial environment for the private sector. I fear that these short sighted measures will cause longer term hardships or disasters. I see the need for help. However, "Disasters" are always causes for (and sometimes caused by) politicians to increase spending, win votes, and cause people to lose their liberties in the name of averting some greater disaster - one that they foresee but that never comes.

Anyways, clearly the Senator never read my letter and he only has one response for every letter and every view on this subject: I agree with you and that is why I am voting for it.

December 22, 2008

Do want to look into the possible, likely future? Do you want to know what kind of world you and your children or grandchildren will possibly living in in 2025? Take the time to read this. Some things may surprise you, others may not. The NIC is part of the Federal Government and reports to the Director of National Intelligence.

GLOBAL TRENDS 2025: THE NATIONAL INTELLIGENCE COUNCIL'S 2025 PROJECT

From the Chairman of the National Intelligence Council

"Global Trends 2025: A Transformed World" is the fourth unclassified report prepared by the National Intelligence Council (NIC) in recent years that takes a long-term view of the future. It offers a fresh look at how key global trends might develop over the next 15 years to influence world events. Our report is not meant to be an exercise in prediction or crystal ball-gazing. Mindful that there are many possible "futures," we offer a range of possibilities and potential discontinuities, as a way of opening our minds to developments we might otherwise miss.
Some of our preliminary assessments are highlighted below:

• The whole international system—as constructed following WWII—will be revolutionized. Not only will new players—Brazil, Russia, India and China— have a seat at the international high table, they will bring new stakes and rules of the game.
• The unprecedented transfer of wealth roughly from West to East now under way will continue for the foreseeable future.
• Unprecedented economic growth, coupled with 1.5 billion more people, will put pressure on resources—particularly energy, food, and water—raising the specter of scarcities emerging as demand outstrips supply.
• The potential for conflict will increase owing partly to political turbulence in parts of the greater Middle East.

As with the earlier NIC efforts—such as Mapping The Global Future 2020—the project's primary goal is to provide US policymakers with a view of how world developments could evolve, identifying opportunities and potentially negative developments that might warrant policy action. We also hope this paper stimulates a broader discussion of value to educational and policy institutions at home and abroad.

Click here to read the full report: http://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf

Click here to read what they said in 1997 what the world would look like next year:
http://www.dni.gov/nic/special_globaltrends2010.html

Click here to read what they said in 2000 what the world would look like in 2015:
http://www.dni.gov/nic/NIC_globaltrend2015.html

Click here to read what they said in 2004 what the world would look like in 2020:
http://www.dni.gov/nic/NIC_globaltrend2020.html

To get the easy read, I suggest just clicking ont he Executive Summary. I think it is fascinating to see the difference that will occur between 2020 and 2025. I hope you enjoy the read.

I received some feedback from a good friend of mine. This is what he said:

"I think rather than initiating a 4th branch, that the other three branches should just get out of the way of economic management. Its not their job to manage the economy. It's their job to make sure people are honest and don't commit fraud. Simple policing."

I agree very much that it is not their job to manage the economy. However, regardless of whether we think it is their job, they have made it their job and will forever make it their job under the current setup. The sad reality of our world is that the government is and will be involved. The Great Depression changed that forever. Nobody wants to be known as the next Herbert Hoover and politicians have put themselves up as the economic saviors of the world. Not only have they put themselves up as that, that is what the people expect of them. The number one issue on voter's minds is the economy. It is political suicide to not acknowledge that.

Here are some articles that show my point:

http://money.cnn.com/2008/07/01/news/economy/election_issue_poll/index.htm
http://www.kirkdorffer.com/ontheroadto2008/2007/12/economy-number-one-issue.shtml

I agree that the ideal role of government is to stay out of the economy and to let the chips fall where they may. However, our economically uneducated politicians can't afford to take that approach. They have to answer their constituent's requests and we can't blame them. Because our people have turned to their government for economic salvation, the government should be altered to meet that need and it should be altered in a manner that economically intelligent and educated persons are able to be placed in the situation to make those recommendations and decisions. Many economists would vote to not have this much government involvement in the economy.

http://www.commondreams.org/headline/2008/10/02
http://www.gather.com/viewArticle.jsp?articleId=281474977460238
http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm
By taking this approach, those who know the economy best would choose to meddle the least. Therefore, the only way to get government truly out of the economy, is to get the government more involved by placing within it the people who know best and are capable of actually making sound economic policies. That cannot be done, in my opinion, in the current system. Therefore, a change of some kind has to happen.

Again, as I see it we have two choices: move ever closer to a dictatorial Executive Branch due to our representative's inability to act forcing our constitution to be null and void or amend our constitution so that we can act - by the people and for the people - for the good of America and for the good of all mankind.

"Let us include in our Constitution for its revision at stated periods. And it is for the peace and good of mankind that a solemn opportunity of doing this every nineteen or twenty years should be provided by constitution, so that it may be handed on with periodical repairs from generation to generation to the end of time, if anything human can so long endure." Thomas Jefferson 1816