Wednesday, March 25, 2009

Shit Sandwich

How else do you describe it? The biggest shit sandwich ever conceived of, ever made, and ever force fed to the American public. If you've been following along you've known that I don't approve of our newly minted and esteemed president, the one, high holiest, the anointed one, Barak Hussien Obama. McCain sucked, Obama is a nuclear powered Hoover. Sometimes I'm so sick of being a Libertarian (especially an Objectivist), I can't see straight. Anyway, on two the doodoo snack.

How do you go about destroying the most power free economy the world has ever know? Just watch TV, we're seeing a demonstration right now. First, when banks and businesses act like morons and become insolvent, continually throw billions of dollars at them and claim they are too big to fail. Second, threaten to raise taxes during a recession, and actually do it. Three, when no one will buy your increasingly worthless bonds to finance the biggest spending spree in world history, just monetize the debt! Tada! What is monetization? Well, when no one buys your worthless bonds, why you just buy them yourself! While the press has carefully been keeping your attention to the BS issue of a few million in bonus paid to a company execs (a company that should be in bankruptcy right now), the Fed (Federal Reserve) ordered the printing of a TRILLION is cash reserves, and then bought the bonds to coner that money. This is the real world equivalence of loaning yourself a hundred bucks, and writing a check from the same account to cover the withdrawal. The money doesn't exist, it's a paper trick.

So what does this mean? On it's surface, not too much. We've done it before for a few billion here and there. But for trillions? Never. Monetizing is extraordinarily inflationary by nature. Big surprise, when you dump super tanker loads of cash on the market, it gets less valuable. Worse in this case, the money is being printed to make it cheaper and more available for banks to borrow that money, but none of them are interested. They're driving up inflation for nothing. Banks won't start loaning money until the bleeding in the monetary and insurance market stops. And thanks to bailout after bailout, that won't happen any time soon. AIG is likely going to die anyway, the sad truth is their liability is in the trillions, not hundreds of billions. They ran up this debt by underwriting everything from toxic housing loans (you listening democrats?), to monetary hedge funds (and you too Republicans?). Like Madoff, it was a smooth gig until the markets went into the toilet.

To stop this decent into hell and save us all from ourselves, our illustrious prez, he who can do no wrong, is throwing trillions at the problem. We who studied economics even a little figure that lesson was learned by FDR and Johnson, namely you can't spend your way to prosperity. But suggesting FDR's spending was akin to a drinking problem, you'd have to say Obama is a remake of Leaving Las Vegas. He's determined to spend us into oblivion. Honestly, I'm at a loss for which scenario is more likely. Is he just trying to save us by spending the next five generations savings, or is this the classic example of a generation of pent up ultra liberal socialistic wet dreams come true? Either way, it ain't good kids. OMB guesstimates the deficit this year with Obama's first budget to be 2.5 TRILLION. One year. He is at a pace to double the entire national debt in one year. In never agreed he was the first black president, and many historian agree with me. But in this way, he is going to be historic, fo sho.

I've written about a tipping point, how far off can it be? Who guessed that Ayn Rand had is to right, and so wrong. The only thing she didn't take into account was the ability for a government to just run up debt until it all comes crashing down. If they'd been forced to actually generate revenue for all this bull shit, they'd have taxed this nations producers into Galt's Gulch a decade ago.

I've never been more happier to be living fifty miles from a major city. It all feels like a city of glass, built on a major fault line, right next to an active volcano. Oh boy.

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