The Pointless Impasse Between Big Government Democrats and Military-Industrial Republicans

The pointless battle and impasse between big government Democrats and military-industrial Republicans is constructive for Federalism, but destructive for society. Never before have the interests of Federalism and society been so far apart. Herein lies the dilemma for the future -- how to reform Federalism into a system that maintains capitalism while serving society’s needs.

In my view, neither the big government Democrats or military-industrial Republicans have a complete policy platform and approach to meeting those dualist needs. Only the minimum government and maximum liberty Libertarians have solutions that meet the future needs of both capitalism and society. Either the US turns to Libertarianism, or the USA may not make it through the 21st century. I’m sorry I do not have better news or advice for the nation.

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A Message for Monetary and Fiscal Policy-Makers

Main Street USA remains mired in economic depression as evidenced by: a) the long-term decline in real working wages; b) the long-term decline in real home values; and c) the long-term decline in the employment to population ratio. These indicators need to become the urgent focus of both monetary and fiscal policy in the US, or Federalism will risk decay or decline in detail. I urge everyone who knows someone who works in monetary or fiscal policy formation to forward this message to them in an effort to avert the end of Federalism as we know her. The US is running out of time...

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US Federalism on the Ropes

The epic battle between big government Democrats and military-industrial Republicans over scarce sovereign borrowing rights to fund their mutually exclusive "guns or butter" approach to Federalism is at the root of everything evil about America and her empire. What we need instead are fresh ideas that only Libertarians can deliver at this point. The continuing efforts of Democrats and Republicans to hold Main Street (and the construction sector) hostage to big government and military-industrial spending initiatives assures that Main Street will remain marginalized and mired in economic depression, as evidenced by the long-term declines in real working wages, home values, and the employment-to-population ratio. Nevertheless, the big government Democrats and military-industrial Republicans are now on the ropes, despite their best efforts to form a fascist union in American. More at:

Libertarian Party

The people are not happy; the future of America will be Libertarian.

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A Bold Idea for US Tax and Currency Reform

The demand for Federal Reserve Notes for Federal transactions has never been greater. The result is a shortage of dollars along Main Street USA. What is needed in response are alternative currencies that can be used for commerce without tax consequences. In other words, any transaction completed with other than Federal Reserve Notes would be non-taxable as income or capital gains. Tax reform would then focus on regulating the use and flow of Federal Reserve Notes exclusively. Only earnings and trades transacted in Federal Reserve Notes would be reportable and taxable. Business transacted using alternative currencies would be considered "blind events" for tax purposes.

US tax and currency reforms are urgently needed if Federalism is to save itself as a form of governance...

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What Derailed the Recovery?

An interesting question was posed in the Wall Street Journal (2011) this morning under the title, What Derailed the Economic Recovery? Three Possible Explanations. I provided my own short explantion as a posted comment in response:

The economic recovery was "derailed" by the myopic response of the Federal Reserve and Congress -- when the crisis began, the US embarked on efforts to save Federalism as the first priority, which meant bailing out or protecting "too big to fail" banks, automobile manufacturing, the defense industry, and government salaries -- unfortunately, those efforts ignored the problems on Main Street, including comsumption -- reality to date is that consumption has not been restored, probably because consumers have no money -- any money that was dispersed went to Federal and state workers, defense, and the automobile industry -- but nothing whatsoever has been done to put money directly into the hands of consumers -- at this point, Federalism is consuming all the nation's resources and then some -- anything left is being consumed by state workers and programs -- nothing is left for the consumer-at-large in America -- the US has become a safe-haven for the largest "too big to fail banks," government workers, unionized manufacturing, and the defense establishment -- public employees are a protected class, while small businesses and consumers have been "written off" in a misguided effort to save Federalism from itself...

Source: What Derailed the Economic Recovery? Three Possible Explanations (2011, July 21), Wall Street Journal.

Geithner on Default

What follows is Congressional testimony by Treasury Sec Tim Geithner regarding his views on Federal default:

Default by the United States would precipitate a crisis worse than the one we just went through. I think it would make the crisis we went through look modest in comparison. It would force us of course to cut critical payments to our seniors and it would be a reckless, irresponsible act to this country. I find it inconceivable that the Congress would not act to increase the limit.

It would be catastrophic. I mean, if you call into question the willingness of the government of the United States to meet its obligations, you will shake the basic foundation of the entire global financial system. It is inconceivable that America would do that. And of course I am totally confident that Congress will act to avoid that.

It will raise dramatically the borrowing costs permanently for all Americans. Every business for a very long period time would face a much higher cost of borrowing. Every family would face a much higher cost of borrowing. Unemployment would rise dramatically. Thousands if not hundreds of thousands of businesses would fail. And of course you would shake the confidence of the world in U.S. financial assets and Treasuries. It would be a deeply irresponsible act, again inconceivable.

Clearly, Tim Geithner is not in favor of a national default -- that leaves austerity measures (as in spending cuts and tax increases) and monetary expansion (as in inflation) as the only remaining courses of action for fiscal policy-makers. The future of Federalism hangs in the balance...

Source: Geithner: Raise Debt Ceiling or Risk Another Financial Crisis (2011, April 5), Martinsville Media.

PS: I suppose the US could instead "eat" its way out of this economic crisis by building new businesses that can compete in the global marketplace, but that's just a suggestion...

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America's Main Street Depression

I regret that while public corporations in the US have been experiencing a profit rebound in recent months, Main Street America remains in economic depression. The decoupling of our nation's largest "too big to fail" public corporations from Main Street has created widespead economic turmoil and hardships for small companies and familes in America. The continuing demise of Main Street began when US monetary and fiscal policy-makers unwisely posited "too big to fail" as a governing principle.

Treasury Sec Henry Paulson and Federal Reserve Chief Ben Bernanke (2008)

Keep in mind that "too big to fail" was the conceptual argument invoked back in 2008 by the US Federal Reserve lead by Dr Ben Bernanke, and the US Treasury lead by Treasury Secretary Henry Paulson. Today, gigantic "too big to fail" public corporations enjoy tacit financial guarantees from the Federal government, while small companies and businesses along Main Street are essentially left out in the cold.

America's emerging consolidated banking system is now laced with systemic risks extending from Wall Street into every facet of regional banking. In my view, the nation's banking needs would be better served by many thousands of smaller community and regional banks, instead of a few "too big to fail" financial institutions aligned with Wall Street. The economic risks associated with building and maintaining "too big to fail" corporations are not well-understood. Nevertheless, our nation's central banking system continues to grow larger while Main Street America is left to languish.

I cannot help but think that the powershift from Main Street to America's center will eventually lead to new unforeseen difficulties for America. History tells us that over centralization carries risks. Recall that the former Soviet Union was never able to marshal the human know-how and technical resources to manage and direct a massively centralized command economy. Is capitalism somehow different? I doubt that the US will be able to manage from the center indefinitely.

Years from now, a comfortably retired Dr Ben Bernanke will write in his memoirs something like this:

"...I wish we at the Federal Reserve would have paid closer attention to the impact of monetary policy on small businesses and community banking in America -- in reflection, I would have been more attentive to the plight of small businesses and regional banking across the nation -- however, we had no choice but to save the largest "too big to fail" institutions in America because we felt that saving Federalism was our mandated priority..."

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The Repeal Amendment

The so-called "Repeal Amendment" is a bold proposal by states' rights advocates to thwart the growth of Federalism and to protect the prerogatives of states through an amendment to the US Constitution. What is interesting about the proposed amendment however, is that the conservative Tea Party movement seems to be leading the initiative. Keep in mind that Republicans have generally been advocates of Federalism and the transfer of power from the states to the Federal government. Indeed, Abraham Lincoln was a moderate Republican throughout his political career, and eventually lead the US through the Civil War (1861-1865) as President, the result of which was the onslaught of radical Federalism at the expense of states' rights.

The proposed text for the Repeal Amendment follows:

Any provision of law or regulation of the United States may be repealed by the several states, and such repeal shall be effective when the legislatures of two-thirds of the several states approve resolutions for this purpose that particularly describe the same provision or provisions of law or regulation to be repealed.

Follow the link below to learn more:

The Repeal Amendment

The Price of Federalism

Saving Federalism from itself will apparently require deep economic sacrifices and austerities from states, cities, towns, small businesses, and families – such is the price of Federalism…

The Capitol Building

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Federal Reserve Bank Smugness

Capitalism or Federalism...?

Capitalism or Federalism...?

California's financial crisis will be an interesting test for Washington and the future of Federalism. Here's my question: How can Washington deny California after saying yes to General Motors, AIG, and dozens of banks?

Comments welcome...

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Greece: What Economic Austerity Looks Like

How Would Californians React to Economic Austerity...?

How Would New Yorkers React to Economic Austerity...?

Challenging Commoditization and Monopolization

I recently responded to an article by Max J Pucher entitled, “The End of Capitalism," and I wanted to share that response here in order to introduce my views about how economic reform must subordinate to political reform in order to resolve our society’s economic woes:

I have to agree that “capitalism” is not what I see operating the new economy. In fact, governments long ago rallied in support of two opposing themes that are rank with proximity to the economic crisis. These two contradictory themes are monopolization and commoditization. Everyone knows what a monopoly is, and it is evident that enterprise-scale monopolies such as government and healthcare are thriving in the new economy. The second theme of the new economy has been the rampage of commoditization through major industries, whereby goods and services become undifferentiated resulting in loss of pricing flexibility. Lower prices is good news for consumers, but often results in lower wages for workers. Two industries that have been ravaged by commoditization are financial services and automobile production. That these industries would become the leading scapegoats of the expanding economic crisis is of little surprise.

The global economic system has become a corrupt choice of supporting either “big government” or “big business,” making the real losers the people and society. This polarization of the political economy is untenable. Society’s only hope is that the electorate reframe the debate from “economic” to “political” reform, whereby we the people accept that elitism (which advocates extreme commoditization of industries) and populism (with its relentless and expanding commitment to government sponsored monopolies, including national security and healthcare) should now yield to pluralism, and devote instead the energies and resources of government toward the broader needs of a more active and relevant citizenry, albeit at the expense of “enterprise” scale designs. Indeed, it may be time to relook the notions of republicanism and federalism as the political systems upon which to ground capitalist society. We, the people, have much work ahead of us in order to reinvent our world into pluralism in our time. Let’s hope it’s not too late.