What A Surprise

And we the people were heard mumbling softly in the background.

President Obama guaranteed Americans that after health reform became law they could keep their insurance plans and their doctors. It's clear that this promise cannot be kept. Insurers and physicians are already reshaping their businesses as a result of Mr. Obama's plan.

Politicians always ignore the adjustments that real people always make to the politicians' social engineering laws.  Economics tells us that the unintended consequences are often the most important consequences.  Why can't politicians understand this simple truth?

Just Who Is Elena Kagan?

Greg Mankiw gives us an assist in understanding the answer to this important question here.

Move Over, Greece

Here, Robert Samuelson writes about the folly that passes for fiscal policy in the United State. He notes that

The virtue of balancing the budget is that it forces people to weigh the benefits of government against the costs. It's a common-sense standard that people intuitively grasp. If the Deficit Commission is serious, it will set a balanced budget in 2020 as a goal, allowing time to phase in benefit cuts and tax increases.

And Here, David Ranson explains a very inconvenient truth about tax rates and tax revenue collected. BHO and his crew will do well to learn a bit more about Hauser's Law, even if they are too arrogant to learn anything about reality.

In a fundamental way, the budget is always in balance.  That's just double entry bookkeeping.  The fundamental equation of accounting is Assets = Liabilities + Owners' Equity.  This equation cannot fail to be true, since it is a mathematical identity.  But it can be made to appear to be false through the magic of fiat money, a central bank, and government borrowing.

But still, in a fundamental way, the budget must always be in balance because you cannot borrow what has not already been produced, as I have explained on several occasions in this blog.  Here, for example. In other words, Aggregate Borrowing = Aggregate Saving within any economic system.

So, what gives when the U.S. Treasury (with the help of the Fed) seemingly borrows more than has been produced?  Look at the fundamental equation of accounting for the answer.  If Assets (the value of stuff that has been produced) is any particular number, and if Liabilities (i.e., U.S. Treasury borrowing) rises, then owners' equity must fall.

Whether it's Greece or the United States of America, when governments attempt to borrow what has not yet been produced, owners' equity must fall.  Guess what, folks; it is we who are the owners!  What we think we own is simply stolen.

How, you ask, is it stolen?  Two ways; inflation and falling asset prices.  So far, the Fed has managed to keep inflation slow enough over the past 20 years or so that no one is howling about it.  But inflation has been persistent and serious over that 20-year period.   And people were certainly howling when their 401(k) stock portfolios plummeted in value and when they went upside down on their home mortgage.

Move over, Greece; we are on the way, and we are the big dog in town.

Who Will Regulate the Regulators?

John Taylor explains here why more power for federal financial regulators and the Fed is no answer at all for keeping financial markets healthy.  Just as I've been saying in this blog for months, the Fed is the problem, not the solution.

Some say that the government did not have enough power to intervene with certain firms during the financial crisis. But it had plenty of power and it used it, beginning with Bear Stearns. This highly discretionary power—to bail out some creditors and not others, to take over some businesses and not others, to let some firms go through bankruptcy and not others—was a major cause of the financial panic in the fall of 2008. The broad justification used for the bailout of Bear Stearns creditors led many to believe the government would again intervene if another similar institution, such as Lehman Brothers, failed.

But when the Federal Reserve and the Treasury Department could not persuade private firms to provide funds to Lehman to pay its creditors in September 2008, the Fed surprisingly cut off access to its funds. The examiner's report on Lehman makes it very clear there was no preparation for bankruptcy proceedings before the day the government suddenly cut off the funds. No wonder there was a disruption. Then, the next day, the Fed reopened its balance sheet to make loans to rescue the creditors of AIG, including billions for Goldman Sachs. The funding spigot was then turned off again, and a new program, the Troubled Asset Relief Program (TARP), was proposed. This on-again off-again policy was part of a series of unpredictable and confusing government interventions which led to panic.

Once again, we have a case-in-point illustration of why rule of men fails where rule of law could succeed. But the facts will not persuade; we the people will continue to look to Washington for our salvation, instead of looking to ourselves.

BHO's Search for Budget Cuts

Watch this video if you really want to understand the scope of the problems America faces with entitlements and federal spending.

Limber up you wallets, friends; the tax man cometh.

Free House (and Healthcare, too)

A good friend sent this to me.

FREE HOUSE!

This morning I was seated behind a group of jubilant individuals celebrating the successful passing of the recent health care bill. I could not finish my breakfast.

This is what ensued:

They were a diverse group of several races and both sexes. I heard the young man exclaim, "Obama like Jesus Christ? I mean, after all, he is healing the sick."

The young woman enthusiastically proclaimed, "Yeah, and he does it for free. I cannot believe anyone would think that a free market would work for health care. They are all crooks and thieves and don't deserve all of that money."

Another said, "The stupid Republicans want us all to starve to death so they can inherit all of the power. Obama should be made a Saint for what he did for those of us less fortunate." At this, I had had enough.

I arose from my seat, mustering all the restraint I could find, and approached their table. "Please excuse me; may I impose upon you for one moment?" They smiled and welcomed me to the conversation. I stood at the end of their table, smiled as best I could and began an experiment.

"I would like to give one of you my house. It will cost you no money and I will pay all of the expenses and taxes for as long as you live there. Anyone interested?" They looked at each other in astonishment. "Why would you do something like that?" asked a young man, There isn't anything for free in this world. They began to laugh at me, as they did not realize this man had just made my point. "I am serious, I will give you my house for free, no money what so ever. Anyone interested?" In unison, a resounding "Hell Yeah" fills the room.

"Since there are too many of you, I will have to make a choice as to who receives this money free bargain." I noticed an elderly couple was paying attention to the spectacle unfolding before their eyes, the old man shaking his head in apparent disgust. "I tell you what; I will give it to the one of you most willing to obey my rules." Again, they looked at one another, an expression of bewilderment on their faces. The perky young woman asked, "What are the rules?" I smiled and said, "I don't know. I have not yet defined them. However, it is a free home that I offer you." They giggled amongst themselves, the youngest of which said, "What an old coot. He must be crazy to give away his home. Go take your meds, old man." I smiled and leaned into the table a bit further. I am serious, this is a legitimate offer. They gaped at me for a moment.

"Hell, I'll take it you old fool. Where are the keys?" boasted the youngest among them. "Then I presume you accept ALL of my terms then?" I asked. The elderly couple seemed amused and entertained as they watched from the privacy of their table. "Oh hell yeah! Where do I sign up?" I took a napkin and wrote, "I give this man my home, without the burden of financial obligation, so long as he accepts and abides by the terms that I shall set forth upon consummation of this transaction." I signed it and handed it to the young man who eagerly scratched out his signature. Where are the keys to my new house?" he asked in a mocking tone of voice. All eyes were upon us as I stepped back from the table, pulling the keys from pocket and dangling them before the excited new homeowner.

"Now that we have entered into this binding contract, witnessed by all of your friends, I have decided upon the conditions you are obligated to adhere from this point forward. You may only live in the house for one hour a day. You will not use anything inside of the home. You will obey me without question or resistance. I expect complete loyalty and admiration for this gift I bestow upon you. You will accept my commands and wishes with enthusiasm, no matter the nature. Your morals and principles shall be as mine. You will vote as I do, think as I do and do it with blind faith. These are my terms. Here are your keys." I reached the keys forward and the young man looked at me dumb founded.

"Are you out of your freaking mind? Who would ever agree to those ridiculous terms?" the young man appeared irritated. "You did when you signed this contract before reading it, understanding it and with the full knowledge that I would provide my conditions only after you committed to the agreement." Was all I said. The elderly man chuckled as his wife tried to restrain him. I was looking at a now silenced and bewildered group of people. "You can shove that stupid deal up you're ass old man, I want no part of it" exclaimed the now infuriated young man. "You have committed to the contract, as witnessed by all of your friends; you cannot get out of the deal unless I agree to it. I do not intend to let you free now that I have you ensnared. I am the power you agreed to. I am the one you blindly and without thought chose to enslave yourself to. In short, I am your Master." At this, the table of celebrating individuals became a unified group against the unfairness of the deal.

After a few moments of unrepeatable comments and slurs, I revealed my true intent. "What I did to you is what this administration and congress did to you with the health care legislation. I easily suckered you in and then revealed the real cost of the bargain. Your folly was in the belief that you can have something you did not earn; that you are entitled to that which you did not earn; that you willingly allowed someone else to think for you. Your failure to research, study and inform yourself permitted reason to escape you. You have entered into a trap from which you cannot flee. Your only chance of freedom is if your new Master gives it unto you. A freedom that is given can also be taken away; therefore, it is not freedom." With that, I tore up the napkin and placed it before the astonished young man. "This is the nature of your new health care legislation."

I turned away to leave these few in thought and contemplation and was surprised by applause. The elderly gentleman, who was clearly entertained, shook my hand enthusiastically and said, "Thank you Sir, these kids don't understand Liberty these days." He refused to allow me to pay my bill as he said, "You earned this one, it is an honor to pickup the tab." I shook his hand in thanks, leaving the restaurant somewhat humbled, and sensing a glimmer of hope for my beloved country.

Use reason, it is the closest you are going to get to Godly conduct.

Clifford A. Wright

Here Comes the VAT

Read about it here.  BHO promised the masses that they could have their cake and eat it, too.

He was wrong, of course, as any ECON 101 student can explain with ease.  What about a Value Added Tax (VAT)?  Is that a good idea?  Easy answer:  yes, if we use a VAT to replace the federal income tax and all federal payroll withholding taxes too.  But if Congress piles a VAT on top of the federal income tax, you may want to consider putting on your street shoes and joining a tax revolt.

But maybe you won't mind paying 50% of your earnings in taxes.  If you do mind, I propose that you consider joining the New Blood Party.

Let Sammy Do It

Here, the WSJ gives us an update on results of letting Uncle Sam meddle and muddle in the housing market

A lower mortgage bill is surely a relief to an unemployed worker, but what he really needs is a job, and we see nothing in this plan (or any other Washington scheme) to encourage job creation. To the extent that these payments are merely unemployment benefits laundered through the mortgage system and thus reduce incentives to find work, the jobless rate will stay higher for longer and the entire economy will be worse off.

If every American is entitled to health care, then surely every American is also entitled to good housing, no?  How long will it be before we have a national housing entitlement?  Or do we already have one for people who are upside down on their home mortgage?

New Political Party Forming --- the New Blood Party (NBP)

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Here’s an idea for a new political party.  It won’t cost you a cent to join, but if you do join, it would make a monumental difference in your life and in the lives of all other Americans.

This new political party won’t hold a convention, won’t elect officers, and won’t ask you for money.  All you have to do to join is don’t vote for an incumbent.

This New Blood Party has only one party plank; vote every incumbent out of office in the next elections and in every future election.  You'll get more bang for your buck if you vote with the NBP at every political level --- local, state, and federal.  But it's exceptionally important at the federal level.

In other words, federal politicians would get one term, and one term only.  If you like, we can expand the term for a member of Congress to four years.  One 6-year term as a senator seems just about right as it is, in my judgment.
 

If you're Democrat, vote Democrat. Just don't vote for the incumbent Democrat.

If you're Republican, vote Republican. Just don't vote for the incumbent Republican.  Whatever your political stripe, just don't vote for an incumbent.  Join the NBP

Send a message to all politicians; we're tired of their B.S., and we’re not going to take it anymore. Use the ballot box; make a difference.  Don't simply vote for the "lesser of the two evils" as we've all been doing.  Join the NBP; don't vote for an incumbent. No exceptions.

It's pretty simple. Nobody needs to change parties or political philosophy. A few good politicians would lose their jobs, but don't worry; they probably have better retirement and health insurance than 95% of the American public anyway.  They'll be okay.
 

We’ve all had to struggle for the last five years. Have you had a raise?  Me neither.  Some of you have lost your job and may now be working a lower paying job just to feed your family.  You can thank Congress for that; The 545 have the power, you know.  Recessions don't just happen.  You can read more about that here , and for good measure, here.
 

It really doesn’t even matter who is President of the United States.  It is pleasant to have a President who can make a good speech, but that's not really what matters.  It wouldn't hurt if the President believed in personal liberty and voluntary exchange, either.  But in the end, it isn't who's President that really matters.

It’s the 535 members of Congress who pass laws and control spending that really matter.  Let’s review the record of the Incumbent Party, which is the party we have in Washington today.  Want the facts about that claim?  Check it out here.

       

• The U.S. Post Service was established in 1775. Congress had 234 years to get it right, but it can’t compete with Fed Ex and UPS, but the Postal Service wants more tax-dollar subsidies (and higher rates), just same.

• Social Security was established in 1935. Congress had 74 years to get it right, but everyone knows it will be bankrupt without enormous increases in our taxes.  By the way, lots of us know how to fix Social Security.  Just make it an actuarial annuity program.  But wait; that wouldn't get the Incumbent Party re-elected, even though it would work.  Maybe that explains why we have the Social Security program we have?
   
• Fannie Mae was established in 1938. Freddie Mac in 1970. Any questions about these two financial debacles?  If so, read about it here.  They played a central role in the Great Recession we are still in the grips of today.

• The War on Poverty started in 1964. But even with $1 trillion of our money confiscated each year and transferred to "the poor," all we have gotten is a permanent class of “the poor” who want ever larger handouts.

• Medicare and Medicaid were established in 1965. Everyone knows that without massive increases in taxes, both programs will be bankrupt in 20 years.

• The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000employeeswith a budget of $24 billion a year, but we import more oil than ever before. Congress and its Incumbent Party had 32years to get it right, yet it is an abysmal failure.

Congress and its Incumbent Party has failed in virtually every "government service" it has shoved down our throats; meanwhile, the federal debt has ballooned to more than $12.5 trillion with no possibility of slower growth in sight.  Read about it here. This year's federal deficit alone will top a mind-boggling $1 trillion.  Simply stupefying.

Now, Congress and its Incumbent party want Americans to entrust health care to the federal government and its bureaucratic minions.  Simply unbelievable. 

Join the NBP; don’t vote for an incumbent, regardless of who it is or what she or he has done for you or your state.  If your politician did a great job, fine; thank them and then let’s move on.

If you like what’s going on in Washington, and you think voting out every incumbent is a bad idea, then keep voting for the same folks who are bringing you just what we've got.  But if you're fed up and think getting rid of long-term professional politicians is a great idea, then don't vote for an incumbent ever again.  Join the NBP.

Something Got Reformed, But It Wasn't Health Care

Here, Holman W. Jenkins explains what lies ahead for health care in America.  Read it and weep, for he is exactly right.

If the large health insurance companies had not wanted Obamacare as it got passed and will be amended starting almost immediately, it would never have passed in the first place.

Everyone should already understand that big pharma and big HC insurance are the BIG winners with Obamacare.  Yes, BHO understands all this and more, just as Jenkins says.  BHO isn't dumb; he just doesn't believe in personal liberty and voluntary exchange.

It isn't unusual for a politician to favor socialism.  But it is unusual for so many Americans to follow a socialist down the Road to Serfdom.  Will we the people continue to follow in November 2010, and again in November 2012?  Stay tuned.  I don't pretend to know.