Tom Watson: Of Sidewalks and Fairy Tales

» Daniel Petry on 06.05.10 @ 07:43 PM

Well said Tom.

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» Ezzyme on 06.06.10 @ 11:53 AM

Since no economic slow down since the great depression has gone without greater government spending and we have emerged from all of those downturns - especially with the great government spending of WWII - the opposite is proven.

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» Daniel Petry on 06.06.10 @ 02:20 PM

That’s OK Tom.  Let me handle this.  Keynesian theory sounds good, and it would be nice if it made sense, but it has a rather glaring logical fallacy. It overlooks the fact that, in the real world, government can’t inject money into the economy without first taking money out of the economy. Put more bluntly, Keynesianism only looks at one-half of the equation. It conveniently ignores the fact that any money that the government puts in the economy’s right pocket is money that is first removed from the economy’s left pocket. As such, there is no increase in what Keynesians refer to as aggregate demand. The bottom line is that Keynesianism doesn’t boost national income, it merely redistributes it.

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» Ezzyme on 06.06.10 @ 08:44 PM

“» Daniel Petry on 06.06.10 @ 02:20 PM

That’s OK Tom.  Let me handle this.  Keynesian theory sounds good, and it would be nice if it made sense, but it has a rather glaring logical fallacy. It overlooks the fact that, in the real world, government can’t inject money into the economy without first taking money out of the economy. Put more bluntly, Keynesianism only looks at one-half of the equation. It conveniently ignores the fact that any money that the government puts in the economy’s right pocket is money that is first removed from the economy’s left pocket. As such, there is no increase in what Keynesians refer to as aggregate demand. The bottom line is that Keynesianism doesn’t boost national income, it merely redistributes it.”

And redistributes it very well, from those with so much excess capital that they would stash it away in government bonds to those so broke they spend every cent and more. Voila, increased demand.

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» SB Common Sense on 06.07.10 @ 07:18 AM

Well said Tom.

Lois and Nancy Pelosi want to do for us what the Leftists did for Greece- Lots of government inspired spending and government union jobs. All the debt finally catches up with the economy. If you want Greece’s future, vote for Lois. If you want to avoid an even worse financial disaster, vote for Tom Watson…Its pretty simple…

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» AN50 on 06.07.10 @ 09:24 AM

Ezzyme, your response to my post indicates a common lack of comprehension. Wealth in the context I have used it is not personal wealth. The wealth I speak of is economic wealth or the value of your whole economy. Certainly a bank can generate an enormous amount of personal wealth while the entire economy is going broke (such as is the case right now). The personal wealth that bank has made is at the expense of other parts of the economy just as Dan’s comment about the government removing wealth from the economy through taxes to have something to spend. The case I am making is we as a sovereign country must start making wealth, not personal, but value added. We are not $50 trillion in the hole because we are prosperous and adding economic value. We are in the hole because we, as a country, spend more than we earn, period.
The only way to earn more is by producing our own cheap energy, materials and goods as well as food and fiber. All else is your dribble. You are just moving around a dwindling wealth and at some point you have nothing left. Read your history. It is quite glaring in its accounting of past empires gone bust. Once you farm out the wealth generation to other sovereign nations, it’s only a matter of time before your economy shrinks down to insignificance. The wealthy in this country did not get that way by ignoring history’s lessons. Don’t be a fool.

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» Daniel Petry on 06.07.10 @ 10:23 PM

Oh so wrong…and ignorant.  The real-world evidence confirms that Keynesianism is a failure. Indeed, it was a failure even before Keynes published The General Theory in the mid-1930s. Herbert Hoover was a poster-boy for big government, like our current poster-boy. He increased taxes dramatically, including a boost in the top tax rate from 25 percent to 63 percent. He imposed harsh protectionist policies. He significantly increased intervention in private markets. Most important, at least from a Keynesian perspective, he boosted government spending by 47 percent in just four years, our current poster-boy has done it in 18 months.

And he certainly had no problem financing that spending with debt. He entered office in 1929 when there was a surplus and he left office in 1933 with a deficit equaling 4.5 percent of GDP, now we are at 90% and climbing.

Needless to say, Hoover’s big-government Keynesian experiment was not very successful since growth went down and unemployment went up.  And Bamas won’t be either.

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» Ezzyme on 06.07.10 @ 11:12 PM

Sorry, GDP increased 300 times.

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» AN50 on 06.08.10 @ 02:49 PM

Ok let’s try this again Ezzyme. If your annual family income was, let’s say, $75,000 last year but you spent $85,000 how did you make up the difference? Like most people you zipped down to the bank and borrowed the $10,000 and promised the bank repayment over time. Now comes this year. Your income was more this year because you earned more so you brought home $80,000. However your expenses are now more (had a baby, decided to clean up the trash in the yard etc.) so you spent $95,000. The bank, being very generous and believing in your earning power loaned you the $15,000 difference. The problem is each year you have less earning power proportional to your family size due to more restrictions and each year your expenses go up because you want to do more for your expanding family, so each year you borrow more and more to make up the difference.  Get the picture? That is America for the last 50 years.

You point out that we make more electricity than anyone else, but fail to say that we use more than we make and borrow the rest from Canada. You point out that we are the third largest producer of oil, but fail to mention that we are the number one user of oil and buy the difference from others. You also point out that we are the 3rd largest automobile manufacturer, but fail to realize we consume more automobiles than we produce. In each case you point out the very weakness in our economy that I tried desperately to get you to see and that is we consume more than we make and that ends up as our accumulated public and private debt. Do you get that?

Keynesian economics proffers that moving money around stimulates economic growth. That is a bold faced lie. Economic growth can only come from adding value to your economy and just moving crap or transfering wealth adds no value and actually consumes it. Resource extraction on your own soil, agriculture on your own soil and manufacturing on your own soil are the three ways to add more value to your economy. But in the end you need to make more than you consume and have to have a market outside your economy to sell the surplus. That surplus is real wealth added. It expands the economic pie and makes for more all around (need an example, look at China today or OPEC, both examples of surplus economies).

Note to you partisans, nothing here suggest a favorite economic system (publicly owned or controlled versus private), just the simple truth of the bottom line. We need as a sovereign country and economy to make more wealth (added value) than we consume. Now of course we can consume quite a bit less and balance the payments that way. That of course means a much sparser and harder life for most. You can keep kicking the crap out of our ability to make wealth (insane regulations, environmental nonsense and anti competitive market rigging) and do with way less or you can help our industrial base make us prosperous and have more for all.  But in the end you have to earn what you spend because there ain’t any wealth left to borrow. Is that clear enough for you Ezzyme?

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» In Peace on 06.24.10 @ 03:16 AM

First off, putting in a sidewalk is a one time event, meaning there are no lasting jobs created by this phony “stimulus”.  Capps is blowing smoke screens.

Second, both sides of the debate on this thread re the economy has missed a very important fact:  the U.S. economy is a debt based economy simply by the fact that the U.S. government basically borrows all of the money it spends from others, including the Federal Reserve Bank.

It’s my understanding that the Federal Reserve Bank is a private, for profit institution.

While the U.S. Constitution states that only Congress can coin money, Congress gave that authority away thru the Federal Reserve Act of 1913.  Since then, every dollar that the U.S. government puts into circulation is actually borrowed from the Federal Reserve Bank - at interest - which is not printed.  So if the Federal Reserve Bank loans the U.S. government $100.00 at 1% interest, where is the U.S. government going to get the $1.00 to pay the interest due?  The $1.00 bill was never printed, it doesn’t exist, so it can’t be used to pay the interest.

Also note that the U.S. Mint prints all currency, but ever since 1913, it prints it at the request of the Federal Reserve Bank, not Congress.  So when Congress decides to spend more U.S. dollars, it needs them printed, so it goes to the Federal Reserve Bank and says, we need $100.00.  The Federal Reserve says, OK, we’ll loan you $100.00 at 1% interest and goes to the U.S. Mint and puts in their order to have the Mint print $100.00 for them.  The Federal Reserve Bank pays the U.S. Mint for printing the $100.00 but only pays them what amounts to the cost of the paper and ink, that’s it.  So they’ve basically printed money out of thin air, as it’s not backed by anything of tangible value, and then turns around and loans it to the American people at interest. Great money-making scam, isn’t it?  Pay out maybe .02 on every piece of paper - could be $1,000. bills they’re printing, but only pay for the cost of the paper and ink, yet collect $1,000. + interest in return.

They’ve got a great scam going, and there is absolutely no way for the American people to get out of debt in this type of scenario.  In other words, the Federal Reserve Bank owns and runs this country as the interest due to the Federal Reserve Bank keeps growing and is approaching the GDP.

Now who owns the Federal Reserve Bank?  That’s an interesting question.  Let’s see, their meetings are private, and according to Greenspan’s own admission, they are not regulated by any laws the U.S. government puts forth - yes, he said that on national television, you can watch it on YouTube - http://www.youtube.com/watch?v=ol3mEe8TH7w . Anyway, it’s my understanding that most of the shareholders of the Federal Reserve Bank are old European bankers, including the British Crown.

So to all those who think this debt has been acquired in the last 50 years, it’s really been over the last 97 years.

I urge people to read Reagan’s Grace Commission Report.  He requested an investigation into how our tax dollars are being spent and the answer is:

“The first 2/3 of the income tax is either wasted or lost. Of the remaining 1/3, every dime of IRS income tax goes to private lenders for interest only on the exponentially escalating national debt. This fact was revealed by the Grace Commission (PPSS) in the Reagan Administration. Not one dime goes to reduce the national debt or run our government. Therefore, Congress must borrow more to pay for its ways to help the people by helping them out of their money. Congress does this by borrowing from the unconstitutional Fed, raising taxes to pay the debt to the owners of the Fed, and raiding the Social Security Fund, which is now missing $4 trillion. Clinton stole $10 billion from the Social Security Fund to bomb Kosovo. That could have given the retired people a nice raise. Those people did not pay into Social Security all their lives to enable Clinton to bomb Kosovo, or to raise the national debt by letting Congress cook the books.

Common sense reveals that the national debt continues to increase, since nothing goes to reduce it.”  http://www.uhuh.com/taxstuff/list-gra.htm

Congressman Ron Paul has introduced H.R. 1207 to audit the Federal Reserve Bank - which has never been audited in it’s entire 97 year history of existence.  Interesting how they can audit us through the IRS to make sure they get their interest payment, but no one can audit them, isn’t it?  While Congressman Paul has been able to get 320 co-sponsors, both Republican and some Democrats, Ms. Capps is not one of them, and I say, “shame” on her.

It’s blatantly clear to me that anyone who does not support this piece of legislation has not taken their oath to defend and support the U.S. Constitution seriously, nor do they take their job of working in the best interest of the American people and the U.S. government seriously as they must be thinking of what’s in the best interest of the privately owned Federal Reserve Bank and its shareholders, who are foreign bankers.

Bottom line, Ms. Capps needs to go home and stay away from politics forever.  I consider her nothing more than Pelosi’s pawn/vote and has never truly worked in the best interest of me, or of anyone I know personally.  Her photo op smiles, even in the midst of natural disasters, are juvenile and an insult. It appears she takes nothing seriously and does what her boss Pelosi tells her to do.  I find her absolutely incompetent.

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