by Rodger Malcolm Mitchell, www.nofica.com
Federal Reserve chairman Ben Bernanke is an employee, and like any employee, he also must be a politician. His bosses are the President of the United States and Congress.
In his employee / politician role, he must produce expected results and he also must tell his bosses what they want to hear. But what does one do when producing results requires saying and doing the opposite of what his bosses want?
Have you ever been in that position?
If so, you may have found that one does both. You urge your bosses to do what really needs to be done now, while promising to do what the bosses want, later. You walk both sides of the fence, hoping no one notices.
In The National Memo article titled, “Fed Chair To Congress: It’s All Your Fault,” (May 22nd, 2013, by Jason Sattler), Bernanke is reported to have said:
“Most recently, the strengthening economy has improved the budgetary outlooks of most state and local governments, leading them to reduce their pace of fiscal tightening.
... At the same time, though, fiscal policy at the federal level has become significantly more restrictive....
In particular, the expiration of the payroll tax cut, the enactment of tax increases, the effects of the budget caps on discretionary spending, the onset of the sequestration, and the declines in defense spending for overseas military operations are expected, collectively, to exert a substantial drag on the economy this year.”
Exactly correct. Bernanke is well aware that deficit reduction is economic suicide. He knows Federal tax increases and spending cuts, together known as “austerity” or “deficit reduction,” always exert a drag on the economy. Period.
Those who claim otherwise fall into either of two classes: The economically ignorant or the dishonest.
In the economically ignorant category, you’ll find the vast majority of the American public, who over the years has been brainwashed into believing federal finances are like personal finances.
The American public has been lied to:
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.
It is a sign that the U.S. Government can’t pay its own bills.
It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.
Increasing America’s debt weakens us domestically and internationally.
Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
Whose lies were those? They came to America courtesy of then Senator Barack Obama, in a floor speech, on March 20, 2006. And he hasn’t changed his lies, since.
" . . . it’s time Washington acted as responsibly as our families do. And on Monday, I’m proposing a new budget that will help us live within our means while investing in our future.
My budget freezes annual domestic spending for the next five years – even on programs I care deeply about – which will reduce the deficit by more than $400 billion over the next decade.”
And, of course, Congress says the same things. So unless you believe that among the President of the United States, every member of Congress and all 400 economists in the Counsel of Economic Advisers, there is not one — NOT ONE — person who understands economic fact, you must know they are lying.
And as we repeatedly have said, they have been bribed to lie (via campaign contributions and promises of lucrative jobs later) by the upper .1% income group — bribed to cut benefits to the .99.9% and widen the gap between the rich and the rest.
The infamous Congressional “revolving door” is the notable example of this bribery. And watch carefully, as Barack Obama and family, become multi, multi-millionaires shortly after he leaves office (ala Bill Clinton).
(Obama’s latest nominee, billionaire Penny Pritzker, will help him along.)
So getting back to Bernanke: His bosses want to widen the gap, because that is what they have been bribed to do. But he knows, if he sinks the economy, history will judge him (unfairly) on his failure to grow the economy.
So what’s a guy to do? He straddles the fence. He says:
“Although near-term fiscal restraint has increased, much less has been done to address the federal government’s longer-term fiscal imbalances.
Indeed, the [Congressional Budget Office] projects that, under current policies, the federal deficit and debt as a percentage of GDP will begin rising again in the latter part of this decade and move sharply upward thereafter.”
In short, Bernanke is saying,
“I agree with my bosses, that we have to do something about those “fiscal imbalances.”
But, fixing the economy requires more, not less deficit spending (and I can always say, ‘I told you so.’)
Then later, (preferably after I’ve left office) you can slash spending and increase taxes, which of course will lead to the next depression, but by then it won’t be my fault, especially since I warned you.
In fact, everyone will look back at the ‘Bernanke growth years’ and say what a genius I was, while my successor will be blasted as incompetent.
My predecessor Greenspan almost got away with this kind of double-talk, but he stayed on a little too long."
Yes, Bernanke is a genius — a genius employee and a genius politician. He says that deficit cutting drags down the economy, but agrees with the President and Congress that deficit cutting is necessary — only later.
And there are some who think he’s dumb — right — like a fox.
- The more federal budgets are cut and taxes increased, the weaker an economy becomes.
- Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
- Until the 99% understand the need for federal deficits, the upper 1% will rule.
- To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
- Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
- The penalty for ignorance is slavery.
- Everything in economics devolves to motive.
Nine Steps to Prosperity:
- Eliminate FICA (Click here)
- Medicare — parts A, B & D — for everyone
- Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
- Long-term nursing care for everyone
- Free education (including post-grad) for everyone. Click here
- Salary for attending school (Click here)
- Eliminate corporate taxes
- Increase the standard income tax deduction annually
- Increase federal spending on the myriad initiatives that benefit America’s 99%
10 Steps to Economic Misery: (Click here:)
- Maintain or increase the FICA tax.
- Spread the myth Social Security, Medicare and the U.S. government are insolvent.
- Cut federal employment in the military, post office, other federal agencies.
- Broaden the income tax base so more lower income people will pay.
- Cut financial assistance to the states.
- Spread the myth federal taxes pay for federal spending.
- Allow banks to trade for their own accounts; save them when their investments go sour.
- Never prosecute any banker for criminal activity.
- Nominate arch conservatives to the Supreme Court.
- Reduce the federal deficit and debt
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
- Federal Deficits – Net Imports = Net Private Savings
- Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports