|
President Bush,
Senator Chambliss,
Congressman Linder,
Republican Members of Congress,
Governor Perdue,
Republican National Committee,
Unhealthy economic trends are everywhere. The U. S. economy has never been where it is right now. This includes 1930. Consider the following questions from my friends at the Daily Reckoning1 and CATO2.
How long has it been since stocks fell three years in a row?
How long has it been since manufacturing payrolls dropped 32 consecutive months in a row?
How long has it been since business profits, as a percentage of GDP, declined 4 decades in a row?
How long has it been since a sitting President increased discretionary spending by 18% his first 3 years in office?
Have you ever seen the Fed cut interest rates 12 consecutive times without producing a recovery?
When did the U.S. last run a $500 billion budget deficit?
Have you ever seen the U.S. consumer so completely tapped out--200% of GDP--by debt?
Eric Fry says, "America, land of the free and home of the brave, has become the land of under funded pension plans and home of soaring government deficits." Capitalism is hog-tied and suffocating under blob socialism. The bear market is exacerbating public and private pension liabilities. In the private sector, more and more cash flow is needed to satisfy pension plans and lawyers. Capitalist have taken a back seat to tort lawyers, employees, bureaucrats, and pensioners. This is not a growth environment.
In a healthy economy, private companies and private citizens do most of the borrowing and investing. The reverse occurs during a sick economy. The welfare state is going bankrupt. Attempting to manage economics at the central government level is what destroyed the USSR. It will destroy us as well. Federal, state, county, and city governments are addicted to other people's money.
State governments are facing huge financial problems. Total state expenses are exceeding revenue by $80-100 billion3. The President of the National Conference of State Legislatures says that state governments are under siege. The Bush administration is under siege, but doesn't realize it. The Fed can print money, but the states can't.
Fed governor Ben Bernanke4 explained last summer: "The U. S. government has a technology called a printing press...that allows it to produce as many U.S. dollars as it wishes…."! This speech was made in regard to how the Fed would deal with deflation. Bernanke essentially said the Fed would perpetuate wild swings in the business cycle. He said don't worry about deflation, we'll just debase the currency and inflate our way out of it. Those poor souls with savings will see their purchasing power evaporate right before their eyes. Previous examples are Germany between world wars and modern day Argentina. People lost their savings overnight and needed wheel barrows of cash to purchase basic necessities.
Couple this with the fact that foreigners hold $8 TRILLION5 in U. S. dollar assets, and it is easy to understand how our purchasing power and our standard of living are going to decline. Why would a European or Asian investor want to hold a currency that is being trashed…by government design? Government is destroying prosperity and is lost in the economic wilderness without a moral compass. The only thing it knows to do is get bigger and more powerful. This is exactly the opposite of what it should be doing. Government is beyond our control.
Make no mistake about this. Republicans will be political toast after the next election. Perhaps, just maybe, there is a very small window of opportunity; but time is not on your side. My money says Republicans don't have the stomach or back bone to do what needs to be done. The only way Republicans can retain power after 2004 is to actively support the suggestions below. I doubt you'll be able to accomplish any of these goals by November 2004, so I recommend you immediately codify them into something akin to The Contract with America and pledge you butts off.
Pledge to stop wild business cycle gyrations by getting rid of the Federal Reserve and moving the dollar back to a gold standard.
Pledge to slash government spending and bureaucracy to the bone by getting rid of whole departments (Education, Commerce, Energy, HUD, Labor, and Transportation to name a few).
Pledge to support a federal and state hiring freeze.
Pledge to eliminate ALL discretionary spending,
Pledge to eliminate ALL corporate welfare,
Pledge to replace the welfare state with local nonprofit organizations.
Pledge (again) to become an uncompromising champion of individual liberty, property rights and free enterprise.
Pledge to NEVER raise taxes,
Pledge to abolish ALL federal and state income and capital gain taxes, and
Pledge to NEVER vote for ANY bill that takes property from one and gives it to another. This is immoral theft. Go back to moral principles. They stand up under pressure.
If you do these things, you may have a very long shot at retaining your majority.
Most of the blame for the mess we are in should be placed on the Federal Reserve and ubiquitous ignorance. Ignorant citizens and politicians from both parties are to blame. Unfortunately the voters still believe government will protect them. They still believe government knows what it is doing. You and I know this is not true. But because the voters think these things, somebody will have to take the blame for the economic basket case that we find ourselves in.
Republicans and President Bush6 in particular will get all the blame. We can only hope for total repudiation of both political parties and government incompetence at every level.
Sincerely,
Wes Alexander
1 - Daily Reckoning archives, Bill Bonner, April 7, 2003. Simple Supply & Demand; Retrieved from http://www.dailyreckoning.com/
2 - The Cato Institute, de Rugy and DeHaven, March, 2003. Hey, Big Spender; Retrieved from http://www.cato.org/research/articles/dehaven-030326.html
3 - The Motley Fool, Matt Richey, March, 2003. Record State Budget Deficits; Retrieved from http://www.fool.com/news/take/2003/mft/mft03031105.htm
4 - The Federal Reserve Board, Ben Benanke, November 2001. Deflation: Making Sure It Doesn't Happen Here; Retrieved from http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm
5 - Daily Reckoning archives, Eric Fry, April 22, 2003. Pandemic; Retrieved from http://www.dailyreckoning.com/
6 - USA Daily, Murray Sabrin, April 22, 2003. One Term for George W. Bush?; Retrieved from http://www.usadaily.com/Commentary/Sabrin/030422_one_term_for_george_w.htm
|
