How to Fix America’s Debt

Posted on October 30, 2012 by MN Gordon

Third quarter Gross Domestic Product increased at a 2 percent annual rate, reported the Commerce Department last Friday.  That’s up from the second quarter’s 1.3 percent growth rate.  But don’t get too excited…

According to Lucia Mutikani at Reuters, the economy needs to have sustained growth above 2.5 percent over several quarters to make any real progress cutting the jobless rate.  Moreover, the growth isn’t attributed to real wealth creation…like the kind that comes from savings and investment.  Rather it’s the kind of phony growth that shows up in the GDP numbers when capital is drawn down and wealth is burned up.  Here’s what we mean…

Consumer spending, which makes up about 70 percent of the U.S. economy, increased by 2 percent during the third quarter.  Yet, over this same time, incomes rose just 0.8 percent.  The 1.2 percent difference wasn’t likely made up with savings.

Remember, 40 percent of Americans have $500 or less in savings.  What’s more, 28 percent of Americans have no savings at all.  This means the difference between the 2 percent increase in consumer spending and the 0.8 percent increase in incomes was made up with new debt…it was borrowed from the future. Continue reading →

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Deceptive Schemes to Bailout Unfunded Public Pensions

Posted on October 26, 2012 by MN Gordon

To sharpen the mind and invigorate the spirit we begin with the following riddle…

What does man love more than life;
Fear more than death or mortal strife;
What the poor have, the rich require;
And what contented men desire,
What the miser spends and the spendthrift saves
And all men carry to their graves?

Hint: The answer is not something.

That’s right.  The answer is “nothing.”

Recounting this riddle reminds us that sometimes nothing is something.  So, too, sometimes, for individuals, it’s possible to get something for nothing.  Yet, on the whole, it’s not possible for everyone to get something for nothing.

Nonetheless, there are gobs of people counting on getting exactly that – something for nothing. Continue reading →

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In Mob We Trust

Posted on October 23, 2012 by MN Gordon

“Democracy is a pathetic belief in the collective wisdom of individual ignorance,” – H.L. Mencken

Democratic Collectivism

With the possible exceptions of love and war – or a residential real estate bubble – there’s nothing like the promise of election year populism to infect a man’s brain with notions that are absurd.  The popular delusion of voters these days is that through the ballot box they can get something for nothing.  The effect this has is that the wickedest rascals get elected to office again and again.

Ideas of independence, liberty, and freedom presently exist as mere platitudes.  People like to pretend they still believe in them…but they really don’t.  When it comes down to it, they want bailouts, safety nets, and free drugs from the government.  That’s why the restraint and discipline of a representative constitutional republic was given up long ago for the false security of democratic collectivism.

“Where all think alike, no one thinks very much,” once observed 20th century political commentator Walter Lippmann. Continue reading →

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“The Bank Was Saved, and the People Were Ruined”

Posted on October 19, 2012 by MN Gordon

“The Bank Was Saved, and the People Were Ruined”
By Jeff Thomas, International Man

The above quote is from William Gouge, commenting on the Panic of 1819.  The panic had been caused when the First Bank of the United States had first expanded the money supply dramatically by offering loans, then contracted the money supply by tightening its requirements for new loans, causing a crash.

This is a useful quote, as, in its simplicity, it states the very nature of crashes brought on by irresponsible banking practices.  In every case in which this occurs, it is possible through the complicity of the government of the day.

The origin of this syndrome goes back to Mayer Rothschild, a very clever fellow who, in the late 18th century, offered financial benefits to politicians in Germany in trade for political support for whatever activities his bank might practice.  Rothschild was a long-term thinker; his method involved the offering of regular emoluments to politicians without their having to provide him with anything immediately.  Then, when he needed a large favour, he would call it in. Continue reading →

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