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The Currency Spectator

Budget Collapse: Too Much Free Money

By on 12.29.11 @ 6:09AM

It’s past time for Congress to “tear up” the U.S. Treasury’s credit cards.

The super-committee of Congress is the latest group to confess abject defeat by the Treasury budget deficit. Who can be surprised by this total failure? During the past generation Congress has made as many as fifteen legislative attempts to control government spending — aimed ultimately at a balanced budget. The most notable efforts were those sponsored by the all-time budget hawk, Senator Phil Gramm of Texas. But every administrative and legislative effort by the authorities, no matter how well-intentioned, has collapsed. Why is this so?

Nobel economist Milton Friedman believed the solution to the budget deficit problem was to deny Congress tax revenues. So he advised Congressmen and Presidents to oppose all tax increases — thereby denying bloated government the funds with which to increase spending. But Friedman’s advice has failed, too. We know this because marginal tax rates have been reduced from as high as 70% in 1964 to 15-20-39% in 2011 — depending on the type of income. But congressional spending has nevertheless increased every year — such that, today, only 60% of the Federal budget is financed by taxes, the remainder by Treasury debt. Total direct Federal debt is now about equal to total U.S. output.

The intractable budget deficit and the inexorable rise of government spending has a simpler explanation. Congress and the Treasury are in possession of several open-ended charge accounts — “permanent credit card financing” — with no limits. With its charge cards the Treasury can borrow new credit (money) from the banking system — much of what it needs every year to finance the ever-rising budget deficit.

A look at the current Federal Reserve Balance Sheet shows that the Fed has created about $1.7 trillion of new credit (money) with which to purchase Treasury debt. Foreign central banks have created about $2.7 trillion of new credit to purchase U.S. Treasury bonds. This global, electronic, money-printing exercise has financed almost 30% of the total direct debt of the U.S. Treasury. In 2002, Ben Bernanke, now Chairman of the Fed, did not mince words to describe this process:

[U]nder a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero…. [T]he U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.

He might have added that these “no cost” dollars, printed by the Fed, are the enablers of the perennial U.S. budget deficit.

But the Fed is not the only credit card used by the Treasury to finance the budget deficit. Because the dollar is the world’s reserve currency, foreign central banks also finance U.S. budget deficits (as the custody account of the Fed balance sheet shows). Domestic and foreign commercial banks, too, supply vast amounts of new credit to the U.S. Treasury because domestic, foreign, and international bank regulators, such as the Basel authorities, define U.S. sovereign bonds as high quality assets for which bank reserves are not necessary. Therefore financial institutions can qualify their overleveraged balance sheets by loading up on Treasury Securities. Indeed, only 10-20% of the total direct debt of the U.S. Treasury is now owned by the non-bank, non-government private market. In a word, given the reserve currency role of the dollar, the Federal Reserve and foreign central banks have been given every institutional incentive to finance the U.S. budget deficit. Beginning with World War I, every monetary discipline has been removed by domestic and international authorities, such that runaway government spending everywhere relies on the ultimate credit card — newly created money in the banking system.

The simplest solution to the government spending problem in Congress is “to tear up” its credit cards. The way to do this is not with ad hoc and unavailing administrative patchworks, all of which are nullified by world banking system credit made available to the U.S. Treasury. Instead, the effective democratic solution is authorized by the U.S. Constitution — in Article I, Sections 8 and 10: — whereby the control of the supply of dollars is entrusted to the hands of the people — where it stayed for most of American history, especially from 1792 to 1914. This was America’s longest period of rapid, non-inflationary, economic growth — almost 4% annually, with the budget under control except wartime.

Congress need only mobilize its unique, Article I, constitutional power “to coin money and regulate the value thereof.” From 1792 to 1971 Congress defined by law the gold value of the currency such that paper dollars and bank demand deposits were convertible to their gold equivalent — by the people (1792-1914) and/or by governments (1933-1971). Congress should exercise this constitutional power to restore dollar-gold convertibility, because of the proven budgetary and economic growth benefits of a dollar as good as gold.

First, the discipline of convertibility would automatically set the limit on Treasury access to its Federal Reserve credit card. If the Federal Reserve created more money than participants in the market wanted to hold, people would get rid of the inflationary excess by promptly exchanging paper and credit money for the gold equivalent. But under the true gold standard, the Fed and the commercial banks would be required by law to maintain dollar-gold convertibility at the statutory gold-dollar parity — or suffer insolvency. In order to maintain dollar convertibility to gold, the Fed and the commercial banks must reduce the quantity of money and credit, including credit to the Treasury — thus controlling government spending increases and inflation.

Second, the empirical evidence of American economic history also shows that convertibility to gold stabilizes the value of the dollar. The same evidence shows that a stable dollar also stabilizes the general price level over the long run. For example, under the gold standard, the price level in 1914 was at almost exactly the same level as it was in 1879 and in 1834. There was no long term inflation, even over an 80 year period! But from 1971 — Nixon’s termination of dollar-gold convertibility — until 2011, the purchasing power of the dollar (adjusted by the CPI) has fallen 85% in a 40 year period.

Third, gold convertibility of the dollar leads to a vast outpouring of savings from inflation hedges such as commodities, farmland, art, antiques — almost anything perceived to be a better store of value than depreciating paper currencies. Stable money also creates incentives to save from income. Combined with the global release of trillions of hoarded, inert, unproductive inflation hedges, convertibility triggers new savings which would pour into the productive investment market. The new investment would give rise to a general economic expansion — through new business, new products, new plant and equipment, creating thereby a renewed demand for labor to work the expanding production facilities.

The restoration of a dollar worth its weight in gold provides not only a missing and necessary brake on government spending, but a stable dollar supplies the missing steering wheel by which to guide the immense, hoarded savings into long-term productive investment. Dollar convertibility to gold is the simple, institutional financial reform which terminates the fear of rapid inflation — thus transforming unproductive, store-of-value hedges into real investment capital with which to inaugurate a new American era of rapid economic and employment growth.

About the Author

Lewis E. Lehrman is a senior partner at L. E. Lehrman & Co. and chairman of the Lehrman Institute.

Letter to the Editor View all comments (96) |

Bill Hussein O'Stalin| 12.29.11 @ 6:45AM

Thank Richard Nixon for taking us off the gold standard and for the EPA. Two forces at work which are silently destroying America.

Moe Blotz| 12.29.11 @ 9:47AM

Milton Friedman and other economists warned us of the dangers related to removing our currency from the gold standard. Guess who denied that the inevitable would happen. We elected the scalawags, bought the newspapers, and tuned in to the television networks of those who said that we would be just fine. We all know what to do now, don't we?

sane person| 12.29.11 @ 11:19AM

This is the dumbest thing I have heard in a long time. Any attempt to have the US go back onto a gold standard would result in a massive reduction on the money supply, make credit almost impossible to get, and thereby result in a economic collapse far worse than the Great Depression.

This commentator should go back to school and learn the basics of economics theory.

John Navratil| 12.29.11 @ 11:40AM

sane person,

The money supply would be an effect of the value of gold expressed in dollars. What you say would certainly be true if you pegged Gold at $35/ounce and manifestly false if you pegged it substantially above the market price of gold.

George S| 12.29.11 @ 11:52AM

Exactly... but that applies in both directions. Government would never be able to spend the money it does today without fractional reserve banking.

Only seven years after the creation of Medicare and other Great Society programs, it became evident that they were unsustainable without raising taxes. Then the gold standard is history, in favor of the Fed printing money. Now we can "borrow" to pay for entitlements without raising taxes. Isn't that convenient...

This commentator should go back to school and learn the basics of politics.

rhoetus| 12.29.11 @ 12:16PM

Vote buying is "politics as usual" commonly referred to as the "third rail of politics".

Len| 12.29.11 @ 12:25PM

I believe you should learn basic economics. A reduced money supply doesn't make credit almost impossible to get, it merely means that money has greater buying power. That's so simple, so basic, I have to wonder where you "learned" economics".

As far as credit, who loans anything without collateral of some kind, at least expected income?

sane person| 12.29.11 @ 12:31PM

I assume you noticed what happened to credit when the money supply locked up in the recent mess?

I graduated from MIT with a PhD, and you?

Len| 12.29.11 @ 1:01PM

Great, use your PhD and show me where I'm wrong. Love the braggarts who are nothing more than educated idiots.

It's also absurd to speak of one thing "locked up money" as somehow being causal in nature, rather than correlative.

Oh, BTW, I'm merely passing on knowledge learned from a Nobel Prize winner in economics. Yet, other people have won NPs in economics who would assert contradictory theories...shows how much pedigrees and titles mean.

sane person| 12.29.11 @ 1:49PM

Note that I only responded to your question about where I learned economics, I did not brag about where I went to school.

Jeamar37| 12.29.11 @ 5:49PM

Well, yes you did "brag" about where you went to school, otherwise why mention it. Would people be as impressed if you had your PhD from Podunk U? By the way, you didn't mention what field of study your PhD is in. Is it relevant to economics?

sane person| 12.30.11 @ 10:49AM

You must not be able to read since Len asked me where I learned economics. Further, no one should be impressed by me having a PhD from MIT, but I did make my first $1M before I was 30 and have made $10's of M's since, what have you done may I ask?

sane person| 12.29.11 @ 2:16PM

Or perhaps it means that a Nobel Prize is not the true test of a person's ability to predict the future.

Haddit| 12.29.11 @ 3:24PM

Seems to me Obama was an afirmative action Nobeller. Go figure.

BayouKiki| 12.29.11 @ 10:38PM

" I graduated from MIT with a PhD, and you?"

Well I did get my BLT from Mickey D's!

sane person| 12.30.11 @ 1:08PM

And your weight is?

Haddit| 12.29.11 @ 3:21PM

"As far as credit, who loans anything without collateral of some kind, at least expected income?"
Answer: Banks that are told they "must" loan by Liberal's. I hope this helps.........

tradguy| 12.30.11 @ 8:13PM

Absolutely correct. It was the return to the gold standard after WWI that caused the Great Depression. The return contracted the money supply, exactly as you stated.

Jack in Wi.| 12.29.11 @ 12:32PM

Mr. Lehrman wrote a book with Ron Paul called ' The Case For Gold. ' At least I think that is the title.
Well the case has never been stronger then it is today.

PJH| 12.29.11 @ 7:33AM

Sound logic. And in would work. But now the real "Why?" Why won't this country do it? Has socialism's foothold gained such hold that we can no longer reverse uncontrolled social spending? A lot depends on the 2012 election - the insistance by Americnas on rational elected officials. Will we do it?

Barn Cat| 12.29.11 @ 9:17AM

It's way too late. Unfunded liabilities were $5.3 trillion last year. So the real deficit isn't $1 trillion. It's $6 trillion.

KennesawJack| 12.29.11 @ 10:00AM

To your first question, Yes. To your second, No. We are no longer capable of making the hard, albeit correct, choice. Would very much like to be optimistic but no doubt in my mind that Obamarx and Hillary the Red will be elected in 2012.

c. j. acworth| 12.29.11 @ 7:42AM

How do we set the price, I wonder. Do we just declare the rate to be whatever the market says it is on that particular day and hold it there from then on? In other words gold would be exchanged at about $1500/oz.

DTOM| 12.29.11 @ 8:28AM

The same way every other commodity is priced. By a free, open market. There is no other way that will not be corrupted and co-opted. Oil floats - heats your home, makes all sorts of plastics, fuels our transportation system and it floats...

So do agricultural commodities, minerals, etc.

Float or be fooled!

Don't Tread On Me!

VonMisesJr| 12.29.11 @ 8:52AM

Exactly DTOM. A couple good books that are fairly easy reads and informative are Ron Paul's "End the Fed," and Murray Rothbard's "What has Government done with our Money," both available at www.mises.org.

International trade was initially conducted in gold, and contracts later written to be pegged to gold so that one nation could not inflate its way out of its foreign debt. They still move gold among vaults of creditor and debtor nations in central banks.

But all we need to know is that inflation devalues the purchasing power of money equivalents which is mostly what the middle class owns. We have income streams called wages that buy less and savings for retirement/college/etc that buys less during inflationary times. But the wealthy own property, gold, jewels, factories, and other hard assets that generally increase in value as expressed in dollars. It is as Rick Perry explains, the largest redistribution of wealth in history under this current regime. And many dopes don't even understand how they are being robbed.

John Navratil| 12.29.11 @ 9:24AM

VonMisesJr,

I'm not so wild about pegging the dollar to a single commodity, although pegging it to the full faith and credit of Congress seems to be an abject failure.

Gold, has huge commercial uses and tying it, alone, to the value of the dollar freights those commercial uses in ways which can whipsaw markets.

Perhaps a market-basket approach would be a better solution (precious metals, oil, and perhaps a standard investment portfolio, for example). A market-basket would be more difficult to manipulate by policy and the inclusion of a "value of commerce" measure would tend to tie the value of the dollar to the productivity of the nation. It would have the down-side of reducing the money supply during a recession which would not be helpful. Balancing against precious metals would help.

Ultimately, all this hangs on the ability of politicians to keep their meddling hands out of things. We've a lot of work to do there.

PS: While we were on the gold standard we were, with exceptions for jewelry and coins, not permitted to own gold. It wasn't the lost garden.

JohnM| 12.29.11 @ 9:35AM

Gold was consficated and made illegal to own in 1933.

John Navratil| 12.29.11 @ 9:56AM

JohnM,

Not exactly confiscated, but its sale to the Treasury was compelled. In theory one exchanged gold for paper backed by the same value of gold. (I'm not saying the compulsion was right.)

Len| 12.29.11 @ 12:26PM

De facto, de jure, what's the difference?

L. Ross| 12.29.11 @ 1:23PM

Don't forget, immediately after confiscating the gold of the nation, Rosevelt "doubled" the value of that gold, robbing the citizenry of half their wealth.

John Navratil| 12.29.11 @ 3:02PM

L. Ross,

Absolutely. You make the point that the "gold bugs" ignore, that when the Fed is in charge of money, mischief can be made - gold standard or not.

The alternative is to have the private banks print money. We will have Citi notes, BoA notes. Local banks can print their own. It would privatize money and require inter-bank exchange rates. When confidence in one bank waned, the value of its notes would drop, but ultimately each would be backed by the quality of notes they held. It does add a level of complexity. Thanks to the gov't, it's also illegal.

Len| 12.29.11 @ 3:54PM

JN, when you have the chance, look into the Suffolk banking system.

John Navratil| 12.29.11 @ 2:58PM

Len,

Confiscation literally means to sieze for the public treasury. I'm not defending the act, merely pointing out that an exchange (albeit involuntary) for like value was made.

Len| 12.29.11 @ 3:35PM

JN, it actually was not for like value, for instance there was a lawsuit where 170, 000 dollars of gold was compensated for only 100,000 dollars of garbage (fiat money).

Ryan| 12.29.11 @ 12:05PM

This is about where I stand - the main problem with gold is simply hoarding by larger entities, and dumping into a market. A basket-based approach helps alleviate that problem somewhat, and gold DOES have liquidity issues that can contribute to a serious economic downturn.

Len| 12.29.11 @ 4:38PM

Ryan, but how do they accumulate the gold? The prospective "hoarders" must start offering something in exchange at current values to obtain the gold, and continue to do so, which means that in a free market this couldn't be done overnight, and the subjective value between gold and products would naturally equalize. There would also be a natural equalization when people attempted to dump gold. The "hoarder' scenario has been examined and found to be wanting as nothing more than a boogeyman scenario. Please spend some time at mises.org and see what they have to say.

Len| 12.29.11 @ 12:29PM

John, you don't peg the dollar to a commodity, the dollar becomes a measurement of that commodity. Dollar used to be a measurement, not a name. In fact the dollar in the USC was the Spanish silver dollar, a known quantity.

It just shows how far we've gone that people talking tying the dollar to a commodity, rather than the dollar being an expression of a commodity, a thing of value produced by labor.

John Navratil| 12.29.11 @ 3:07PM

Len,

You'll have to explain that to me. It seems when you set a monetary standard, you are bound to exchange money for a like-valued quantity of the standard or officially devalue the money. The money supply is similarly bound by the quantity of "standard" you hold or you wouldn't be able to redeem the paper for the "standard." I'm having trouble understanding your point.

Len| 12.29.11 @ 3:46PM

JN, money is supposed to be under a non-coerced system that which people hold in mutual value, and will naturally cause money to be a commodity that people have produced or attained through labor. The dollar currently is nothing but a piece of paper which we are forced to use as a medium of exchange, but can be increased without backing (other than expected tax revenue) of a legitimate commodity (land, gold, salt,oil, tobacco..whatever). Properly a dollar, or a rial, or peso should merely be a measurement of whatever the commodity it is a note of receipt for. Setting up monetary standard is how we get to economic crises, rather than allowing for a free market to determine the standard(s) of exchange.

I do suggest you read some of my recommended books above, particularly Rothbard who impresses me with his ability to communicate these subjects in so simple and easily understandable manner. Or you could jump into Mises and muddle through his Theory of Credit and Money, but this is a more arduous task.

John Navratil| 12.29.11 @ 4:50PM

Len,

I think we are in more agreement that not. I hold no love for a central bank and would be pleased to replace it. I don't by into a gold standard other than as a modest control on the whims of politicians as, is observed here, when the the state the state holds ultimate regulatory control the money, regardless of standard, is fiat money.

What many appear to miss is that banks are ultimately the creators of money. It remains unclear to me that banks, as chartered by the regulators, are anything more that a single stepped removed from the problem. Witness the fiasco visited upon the economy by the three approved ratings agencies and their AAA rating of mortgage backed securities.

I did study this at some depth when I was an Econ major in the early '80s. That was before the dismal nature of econometrics convinced me that Computer Science and Math Science (my two ultimate majors) were a better fit for me. My knowledge has, no doubt, faded. I'll pick up your recommendations.

VonMisesJr| 12.30.11 @ 8:34AM

Happy New Year, John.
If you read the book by Rothbard "What has Government done with our Money," it tracks the originaltion of money. It could be shells. It could be whale teeth. It doesn't matter as long as people accept it as a medium of exchange. The idea is to break the direct barter so that we can still trade even if you don't have what I want, and I don't have what you want.
So if the government confiscated gold in an otherwise free capital market, we could use anything that had permanence and capable of trading hands to facilitate this and the next trade.

Len| 12.29.11 @ 12:33PM

C'mon VM, make it easier ;)

PDF

http://mises.org/books/whathasgovernmentdone.pdf

also, The Case Against the FED

http://mises.org/books/fed.pdf

Timothy L. Pennell| 12.29.11 @ 8:26AM

47% paying no taxes + No Term Limits for Congress = what we have, today.

If you're not paying any taxes? And, if by raising taxes on the people that are paying them, it's gonna cause some of that new money to come your way? Who are you gonna vote for?

If you can get Unemployment for the rest of your life? Why would you take a job that might only pay a little bit more?

If one Political Party is doing their best to Rob from the Rich, and Give to the Poor, and you're Poor? Who are you gonna vote for.

And, if you are a Slimy Politician, who lost his Immortal Soul, a looooooong time ago? Who are you gonna pander to? And, why would you care if these people EVER got a job?

Term Limits.
Demographics.
Diversity, instead of a Melting Pot.

I don't wanna hear any more of these people talking about SITTING OUT this Election. This is it. This is the Big One. We are not gonna get a 2nd chance. It's either this Election? Or it's Armed Revolution.

Take your pick.

richard ryan| 12.29.11 @ 11:24AM

Yes. Thank goodness our conservative, red-blooded Marine Corp. swears allegience to the Constitution, not our "leaders". That will make their choices very easy in the future.

SGT Baker (native Coloradoan)| 12.30.11 @ 1:49AM

So does the Army (and the other Services)

Boar Hunter| 12.29.11 @ 12:50PM

I want to be on whatever side the marines are playing on.

Drunken Sailor| 12.29.11 @ 4:25PM

Ditto!

Clint| 12.29.11 @ 9:10AM

" Dr. Ron Paul believes that the first step towards monetary freedom is to allow open competition in currencies. Once gold and silver are allowed as legal tender and can be sold without sales tax, everyone can use them to store their wealth and to pay for the things they want to buy. The Federal Reserve will finally have a very compelling motivation to stay honest and maintain the value of the dollar because if they don’t, they will simply lose all their customers."

The Tea Party Rebellion Is Here And In Iowa.

L. Ross| 12.29.11 @ 1:26PM

Clint, I was waiting for you to show up. Enjoy your week of glory in Iowa. After that, the rest of the nation will get to weigh in.

Haddit| 12.29.11 @ 3:33PM

And Newt will go back to the top where he belongs. Face it, He's the only man that doesn't stutter when asked a question. Straight forward answers right here and now. Obama hasn't a prayer against him. His aying he will follow Obama around and shoot down every town hall is fact and he wont need a stinking teleprompter to do it either. VOTE NEWT

Clint| 12.30.11 @ 1:46AM

Thank You.

Barn Cat| 12.29.11 @ 9:15AM

It's not true that the government can borrow as much as it wants from the banking system. The government borrows whatever it can at artificially low interest rates and then the Fed creates whatever the government can't borrow. It's only a matter of time before America has hyperinflation like Germany did in the 1920s.

Kade| 12.29.11 @ 10:17AM

We already have rampant inflation – anyone who pays bills knows this. The ruling Wall Street class has continually jiggered the CPI so inflation artificially appears low. Some wizard poster should use the CPI formula 30 or 40 years ago.

aware| 12.29.11 @ 3:04PM

I'm more pirate than wizard but here you go: http://www.shadowstats.com/alt.....ion-charts

hardcard| 12.29.11 @ 9:16AM

Is that Lou Who ?

Ward Bond| 12.29.11 @ 9:23AM

Exactly.FDR figured it out way back then.President for life.Democrats in power forever.Well,everything comes to a head eventually.Liberalism is a cancer eating at the very core of America.It's a tribute to this great nation that we've lasted this long.2012 or bust.

Kade| 12.29.11 @ 9:33AM

Thanks for this article.

Why hasn’t Rush and his clones also lambasting Helicopter Ben more; he is spending more than Obama, yet these talking heads are silent or tepid at most. Now all the liberal Wall Street pundits are screaming for QE3 while Ben via the IMF is also (backdoor) bailing out socialist Europe, yet the so-called conservative media says little.

I don’t get it. Wall Street, the Fed, and Treasury are all run by liberals and socialists under both Bush and Obama, yet the talk radio guys defend them – it is crony capitalism run amok and this will kill he GOP in the 2012 elections.

A shrewd Obama and the slippery Dems are already planning devastating TV Ads linking corrupt Wall Street to the Republican Party and their presidential nominee and it will be effective even though these limousine liberals are bought out also.

Purp| 12.29.11 @ 10:07AM

Because they work for the media corporations that benefit ... they will not bite the hand that pays them. it's simple logic.
Until we get rid of the corporate money trough by breaking up the corporations, nothing will change. A constitutional Amendment declaring corporations are not persons might just do it too. The Founders never envisioned corporations as permanent entities anyway - one of the reasons for the Rev War was to get away from mercantile system of large enterprises in league with the government which ruled Great Britain then.

Drunken Sailor| 12.29.11 @ 10:33AM

"A constitutional Amendment declaring corporations are not persons might just do it too. "

And wouldn't the Unions love that? The Founders never envisioned Unions either, let alone the political one sided money machines they have become.

Purp| 12.29.11 @ 11:15AM

They were called guilds in the distant past, different than Unions true, but they did exist for the benefit of the workers.
So what's your point? You are a Corporatist?

Drunken Sailor| 12.29.11 @ 4:27PM

Simply that you want to tilt the money back in favor of the Dems. And guilds may have been for the workers. Unions long ago quite doing that and became simply for themselves and use the workers as a means to power.

Purp| 12.29.11 @ 9:07PM

Are you insane? You think Corporations care about Republicans? They use you to pass legislation favorable to them and then screw you and us by shipping jobs overseas, stopping defined benefit pensions, and anything else they can get away with. They are your enemy, not Democrats and Republicans are not the Democrats enemy - we play the same game. But Corporations are out to make a profit at all cost - regardless of the hardships and pain it may cause the American people. They just proved that in 2008. Can you not see that?

jmulcahy| 12.30.11 @ 4:17AM

By your own admission, you are a highly paid "consultant" at a "Fortune 10" company. What other than a Corporatist does that make you?

Shamus| 12.29.11 @ 10:35AM

Historical perspective is not encouraging.

Entrenched monopoly interests rarely just go away. Any attempt to take power from corporation will be met with stiff resistance.

Historical examples where monopolists gave up their power peacefully are few.

Purp| 12.29.11 @ 11:18AM

Correct, however, Teddy Roosevelt did it in the early 1900's with the Sherman Anti-Trust Act and FDR did it during the Great Depression with the NRLB and Collective Bargaining laws. It can be done again, just the political will (people supporting the elected officials to do it) needs to be there.
Only MultiNational Corporations send American jobs overseas - small business does not. That is why India resists corporate power - they've seen what it has done here.

Stan Redmond| 12.29.11 @ 12:18PM

"It's the corporations man."

A boogyman for the lazy. It's not corporations destroying the economy. Corporations ARE people who pool their resources to make something bigger and better than they could alone.

Purp| 12.29.11 @ 12:42PM

There's nothing lazy about wanting to maintain freedom from the shackles of the wealthy, elected and connected. Go read Adam Smith, Thomas Jefferson, Abraham Lincoln, Dwight Eisenhower all warning us about what happens when wealth is concentrated at the top in a democracy - the people with the gold make the rules ("the Golden Rule"). You don't think that is happening today? If you don't see how our politicians are bought to serve the corporate lobbyists and special interests, you are not paying attention. Corporations were never supposed to be permanent entities from the Founder's point of view. Corporations were granted a corporate charter to build a railroad or a canal, and when the job was finished, it was dissolved. Only in the last 120 years or so has a corporation been allowed to be maintained. Once they have enough wealth they buy legislative favors and you should be able to see that everywhere you look in politics, both parties, everywhere. Freedom is limited to what they then will allow.

Boar Hunter| 12.29.11 @ 1:18PM

I have read a lot of intelligent arguments written by very smart people on both sides of the argument today, you sir are not one of them. I like to think I am personally smart enough not to jump into water over my head when I can't swim. You on the other hand have obviously jumped into water where you have no business.

Did your pro-communist college professor teach you this pap? I'm trying to grasp why you retards just want us to go live in the forest and scrounge for berries and wipe our butts with leaves and grass again.

Do you think that everyone can just live off the taxes the rich pay forever? When you morons drive us back to the barter system what will you produce? I would like to know, cause if its anything worth having I will come in the night to beat your ass and take it.

Purp| 12.29.11 @ 9:12PM

Rather than spew a diatribe against me personally, can you refute anything I have said above or not? Show me where Adam Smith did not warn us about the concentration of wealth - The corporate shills of the media will not tell you that - you have to go find out for yourself.
No one said live off the rich - that's in your head, where you get that, don't ask me. You righties always whine about soaking the rich, while at the same time they are stealing you blind. Are you dumb? Who do you work for? What does the head guy make? Do you know or even care? Do you ever question anything about your conditions at work, at home, anywhere?
Go learn something and refute the arguments or stop flapping your jaws ...

Boar Hunter| 12.29.11 @ 11:15PM

Are you gay?

Haddit| 12.29.11 @ 3:36PM

You know? Reed didn't have a pot nor a window to throw it out of till he got to washington. Anyone wish to explain how he's now a millionaire? By getting that palm of his greased and people of inteligence know it.

Purp| 12.29.11 @ 9:14PM

Exactly, R's and D's both do it. And who is paying them ? Not us ... corporations through lobbying and other means. The corporations are the man behind the curtain they don't want the 99% to know about.

cicero| 12.29.11 @ 10:40AM

Phil Gramm, I believe, sponsored the bill that repealedd Glass/Steagal, back in the late nineties. (someone tell I'm wrong on that one.) Glass/Steagal kept the banks from ganbling with other peoples' money. It was put in place because, once the banks were given free rein after WWI, it only took them about 10 years to craash the system. Once G/S was repealed, it took the banks about 10 years to crash the system. The difference is that this time, the taxpayers were forced to make them whole for their losses. The Depression that followed the banks fiasco in the 20s lasted until WWII. We are only about 3 years into this one.
Pegging our currency to gold is pretty much out of the question. However, pegging it to an honest GDP might make sense. However, that would entail taking all bankiong transactions out of and GDP formula, as banking transactions, (especially interbank loans), add nothing to the real GDP.
Once that has been done, Congress has to be put on a really short leash with a balanced budget amendment to the Constitution. Without it, we are going off the cliff. This last little trick, where our dear Leader has written himself a check for an additional 1.4 trillion is a case in point. Unless Congress, which is in recess, repeals it, before they are scheduled to return from recess, he gets the money. And he hasn't even been required to tell us poor schmucks on the ground where the money is going. Has anyone seen a budget lately? Has anyone seen an acounting for Tarp II, or the Stimuli?
WSJ today finally came to the conclusion that it wasn't really the bad mortgages that caused the collapse of the banking system, but the fact that the BANKERS were gambling with other peoples' money. I have been shouting this for about 3 years now. I wonder if the passing of the statute of limitations for the favored few has anything to with the sudden realization.
And nobody is going to jail. What a joke!

Purp| 12.29.11 @ 11:24AM

I agree with a lot of what you say except "This last little trick, where our dear Leader has written himself a check for an additional 1.4 trillion is a case in point. " . This is not money Obama needs to spend, it is spent money on obligations we need to pay up for put into law years or decades ago. Unless America defaults on who it owes - Social Security recipients, China, Japan, Saudi Arabia, UK, and other countries, all sorts of Americans with Treasuries, Veteran's benefits and other pensions, etc, etc - we HAVE to raise the debt ceiling. It is NOT like a credit card. It is more like the mortgage payment is due and we have no income. What do you do? You borrow it or default. That's the choice right now.

rhoetus| 12.29.11 @ 11:08AM

I didn't get any of the free money.

Kade| 12.29.11 @ 11:14AM

Yes it was the repeal of the Glass/Steagal (GS) under Clinton and the GOP that allowed these casino bankers to gamble sacred money and then scream for We-the-People to bail them out via Bush’s TARP, yet there was no demand to reenact GS after the 2008 crash. Now Europe’s banks want a global TARP of more monopoly money from Ben and they will get it with no conservative media outrage.

Why is Rush and company not sounding alarm bells? As a previous poster said it is because they also are in bed with the limousine Wall Street liberals and I might add also that the bailout scams also covers both Bush and Obama administrations. If it were just Obama and Dems doing the bailouts, El-Rushbo & gang would be talking about it non-stop.

Stan Redmond| 12.29.11 @ 12:20PM

You forget the biggest bail out of all time. Another lovely scheme of FDR. The FDIC has ensured banks can be completely foolish with deposits and they will always be rewarded when they lose.

Kade| 12.29.11 @ 12:49PM

Yes but at least FDIC insurance was for We-the-People but now that also is at risk because Bernanke has brought the casino investment (pseudo) banks under FDIC and is printing gads of monopoly money, which effectively dilutes the FDIC.

So why aren’t our talk-radio guys ringing the Fed-gone-wild alarm bells? We know the MSM will not.

rhoetus| 12.29.11 @ 2:56PM

Garrett Garet wrote: "The Bubble that Broke the World" in the 1930's.
http://mises.org/books/bubbleworld.pdf

USSAlabama| 12.29.11 @ 11:34AM

Congress seldom if ever 'returns to the hands of the people' that which they have taken from those hands.

Every power, privilege, and right that they have wrested from the hands of the people remain in the domain of Congress until the generations get used to it and forget.

This Congress has the lowest approval rate in American history. It won't do it. If it were a 1000% guarantee - they wouldn't do it.

Can we elect new Congressmen who would. Maybe, if they understand it...but then the indoctrination of 'being' a Congressman occurs and you can forget any 'power' ever coming back to the hands of any American people.

MM| 12.29.11 @ 5:19PM

The most cogent comment on the page.

cicero| 12.29.11 @ 11:38AM

Purp, you will find that the money you are talking has only been authorized. A huge chunk of it has not been spent, because the system will not, and cannot, absorbe it at the rate that our government spends (authorizes the spending of) it. If our fearless leaders would pass a bill unspending all monies previously authorized, but not yet spent, and accounting for those authorizations, it would be an eye openning moment for us poor taxpayers. There is money that was authorized decades ago that is still on the books that has not actually been spent, just authorized. These folks have lost all touch with reality.
They actually believe that they can solve all the nation's woes by authorizing the expendutures of more and more money. "Look, there's a problem. Throw money at it. Its solved."
Whenever they want to raise the debt ceiling, they say it is necessary, or they will not be able to send out the Social Security checks. What a joke. If they can't find anything to cut, I would suggest that they go and check out the burget for 2006, and just adopt it. We were not undergoverned in 2006.

Indy| 12.29.11 @ 11:38AM

I recommend to readers here the piece posted yesterday at NRO "Repo Men" it addresses the ties between our government and Wall Street, both D's and R's. The piece is long but worth reading.

"What’s worse is that much of official Washington is looking at Wall Street and asking the same question. The answer: Easy. If Wall Street has done pretty well by investing in Washington, the more despair-inducingly germane fact is that Washington has done pretty well by investing in Wall Street. A catalogue of recent congressional insider-trading, self-dealing, IPO shenanigans, and inexplicably good investment luck would fill an entire volume, and in fact it has: The book has the Tea Party–bait title Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison, by Peter Schweizer of the Hoover Institution. That’s a lot of title for a fairly slim book (176 pages of reportage, plus end notes), but, despite its relatively slender dimensions, it cost me an entire night’s sleep: I spent half the night reading it in a single sitting and the other half having nightmares about it. It’s the most offensive and disturbing thing I’ve read since sampling the oeuvre of the Marquis de Sade as an undergraduate."

http://www.nationalreview.com/.....williamson

Reading Repo Men after watching "Margin Call" was exhausting, how sad our country is in such a state.

PattyMor| 12.29.11 @ 2:41PM

We are just kidding ourselves if we think this bloated government doling out favors to just any one who breaths and the corruptocrats in congress who keep the scheme going are capeable of making drastic, corrective changes.

So get your finances in shipshape for the crash (or hyperinflation) which will come eventually. And elect more conservatives and concentrate on taking over the Senate. That should be our ultimate goal.

CrackerHound| 12.29.11 @ 3:35PM

I've not heard this argument put any better (sorry for being o.t.)

"....(snip)the Earth is granted to men in common, one thing is never shared in common -- namely, a man's own physical existence. This is the sense in which the right to life is the fundamental right: a man owns himself, in a manner that logically precedes his ownership of anything else. His living body is his birthright; all else flows from that. And owning one's own living body means possessing the right of self-preservation, which in turn entails the liberty to pursue that preservation through voluntary relationships.

Government-run health care directly violates that fundamental right of self-preservation -- i.e., the right to life -- by limiting voluntary relationships between free men pursued in the name of that self-preservation. Government-run health care means that the state determines the means and methods of preserving your life."


Read more: http://www.americanthinker.com.....z1hxPetpJG

The Big E| 12.29.11 @ 5:05PM

So you think Congress, which cannot muster the discipline to not spend too much money, should act to put us back on the gold standard so as to prevent themselves from spending too much money.

We're more likely to be invaded by Martians.

Pat| 12.29.11 @ 5:42PM

Two deplorable practices within this nation are certain: Dogs will chase cars and Congress will inflate the currency through reckless borrowing and printing more money. For dog owners, the solution is simple – you tie up the dog. Good solution? Maybe. The dog will never stop wanting to chase cars but can’t if you always remember to tie him up. For Congress, putting them on a short leash called the Constitution or the Law doesn’t work. Unlike the average Doberman or Golden Retriever, the average Short Haired Representative or Golden Senator can slip their leash in a variety of ways – and then they’re off like a shot chasing a Buick – or, in their case, chasing Pork or four door Government Handouts down the street.

Nor can we roll up a newspaper and smack these Congressional dogs until they howl, that would be cruel, although eminently satisfying. And we can’t dock their pay if they spend our tax money like a drunken sailor on shore leave in the Philippines. Congress would never vote themselves more personal responsibility and their drinking buddies on the Supreme Court would find voter mandated measures demanding integrity and fiscal responsibility to be cruel and unusual punishment.

Rub their noses in it – won’t work either, our elected employees don’t mind having their noses rubbed in taxpayer money. Shame them into it – sniffing each other under the tail is a normal part of their back room deals – they’re beyond everyday shame.

So, what’s the answer? Why nothing, of course. Governments always grow more corrupt and indifferent to those they govern, they never grow less corrupt according to the history books. Rebellions occur periodically when citizens eventually realize there is no peaceful solution to be had. Remember, our furry friends in Congress will always want to chase cars and there is no leash yet invented which can hold them.

PattyMor| 12.29.11 @ 6:22PM

No you can't roll up a newspaper and smack these people. The "best" you can do is fund conservative alternatives to the party approved political hacks. Pick a conservative Senator and fund one. Or donate to the Tea Party Express or Jim DeMint's Senate Conservatives Fund. You can't defeat them all at once, but eventually they will get the message. And best, fund the guy who is going to run against John Boehner (or is it Bonehead).

Martin Owens| 12.29.11 @ 6:43PM

Going back to the gold standard would be good policy. Ergo, we can be sure that Those Who Know Best will give their heart's blood (and more likely ours) to oppose it.

rhoetus| 12.29.11 @ 8:36PM

Writers at the Weekly Standard and National Review will call you an Extremist.

Oldefarte| 12.29.11 @ 10:18PM

Going back to the gold standard is a grand theretical idea that has 0 probability of becoming law, simply because our defecit/debt problems are simply due to the politically selfish needs of [mostly] the Democratic Party insatiabile appitite for providing governmental welfare in return for the votes for Democrats from its indigent constituents. It's simply the DRUKEN SAILOR WITH THE STOLEN CREDIT CARD SYNDOME. The Democrats will never agree to allow a re-attachment of the money supply to the government's supply of gold, since same would severly restrict their governmental welfare providance. The answer/solution DUH then becomes for taxpayer-voters to get rid of Democrats [it's that simple]!!!!!

POST American| 12.29.11 @ 10:30PM

----AS world government is being, basically,
announced in the Globalist media

-------AS, in the wake of the FUKISHIMA world
nuclear disaster, radiation is being declared
'safe' ---even somewhat desirable

----------AS the Globalist-RED China
world TREASON and EUGENICS OP goes in for the kill

-----------------WHAT WILL YOU DO?-----------------

Dan Mathewson| 12.30.11 @ 5:18PM

Watch more football games. Drink more beer, get a job, drink some more beer.

Heywood Broun| 12.30.11 @ 5:18AM

Mr. Lehrman is absolutely right that returning the USD to a gold standard would have massive benefits in terms of driving growth, capital accumulation and wage increases.

But it would also greatly constrict the power of governments so it is unlikely to be implemented.

So the U.S. government will continue to spend more than it takes in until the markets will no longer buy our debt or accept our debased currency; and it goes bankrupt.

When it does, hopefully the U.S. government will be stripped of its assets (e.g. Federal lands, any gold left in Ft. Knox, etc.), put on a cash-only budget and returned to its proper limits under the Constitution.

tradguy| 12.30.11 @ 8:11PM

"Congress should exercise this constitutional power to restore dollar-gold convertibility, because of the proven budgetary and economic growth benefits of a dollar as good as gold."

Again, we have another call for backing dollars with gold. But, again this is the tail wagging the dog. Such a move would cause catastrophic consequences, i.e., a deflation beyond anything ever seen. The reason: interest rates would rise causing the servicing of the existing public debt to cost even more, while at the same time contracting GDP.

While altering the value of currency is not my favorite thing to do, one has to realize that it is a CONSEQUENCE of a larger problem, which is Federal deficit spending. Until the latter problem is solved, returning to a gold standard is ridiculous

POST American| 12.30.11 @ 11:16PM

------------------FINAL WORD 2011-------------------

--------------'WHAT WILL YOU DO??'----------------

------------------FIRST WORD 2012-------------------

-------------WHAT WILL --YOU-- DO??--------------

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