I read Mister Stockman's editorial with interest. I agree with him on much of it, but there are some things that I must take issue with. First, however, I must say that I think that he is right about the current stock market boom.
Stocks are about the only place left wherein one may put his/her money and realize a profit rather than a loss. It is difficult to merely sit on cash as he suggests because our currency is so rotten that its value drops with each passing day. Soon, it will lose value by the hour. Real estate is making what I believe to be false comeback, but most people have already been burned by their real estate holding and are afraid of real estate and are therefor reluctant to get back into it, or they are too broke to buy real estate or their credit is ruined and they can't buy real estate. As I said, I think that the current recovery in real estate is phony. Banks are not paying you any interest on your deposits right now, so simply stashing your money in a bank is worse than useless. That leaves equities as the only available investment that can give an investor a return on money invested. This is what happens when your currency will not serve as a store of value, which is one of the things our currency has been incapable of for decades.
Mister Stockman also said some things that I strongly disagree with and some are simply contrary to facts. Here I have quoted the editorial:
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Instead of moderation, whats at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices a form of inflation that the Fed fecklessly disregards in calculating inflation.
It is not the Federal Reserve that has say over how the Consumer Price Index is calculated, it is Congress. It was Newt Gingrich who encouraged the Clintons to change the way the CPI is calculated, by dropping the price of fuels and groceries out of it. His excuse was that the fuels and groceries were too volatile and subject to influences other than the value of the dollar for their prices. It was the Congressional instruction to the Bureau of Labor Statistics that changed how the CPI is calculated. The Federal Reserve has nothing to do with it.
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All this would require drastic deflation of the realm of politics and the abolition of incumbency itself, because the machinery of the state and the machinery of re-e******n have become conterminous.
True, but Stockman suggests a solution that I cannot live with.
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Prying them apart would entail sweeping constitutional surgery: amendments to give the president and members of Congress a single six-year term, with no re-e******n; providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks); and prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll.
I dislike the idea of upsetting what the Framers laid out for us. Mister Stockman wants to increase the term of the President two years, making it six years and then restricting the president to one term. He also wants to increase the terms for members of the House of Representatives by four years and limiting them to one term in office. Our senators would get to keep their six year terms, but would be limited to a single term in office. No one of them would ever be allowed back into the political arena at all, not even lobbying. I can understand the call for term limits and the readily apparent need to forbid members of congress from lobbying, but this latter step would be a violation of their first amendment rights.
As for the hundred percent public financing for candidates, how does one choose which candidates to give public money. How does one decide whether candidate A is viable and that candidate B is not? Worse, who do we choose to do the choosing for us? How do we set about doing such a thing? It raises so many unanswerable questions that I fear that we would rapidly get back to what we have now; a government of the government, by the government for the government and the people be damned.
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It would also require overturning Citizens United and mandating that Congress pass a balanced budget, or face an automatic sequester of spending.
By Citizens United Stockmam means the Supreme Court case that overturned the McCain-Feingold Act. I happen to agree with the Supreme Court on this. McCain-Feingold does indeed violate the first amendment.
Mandating that Congress always pass a balanced budget or face sequester is laudable, but ill-advised after you think about it for a few minutes. The possible outcomes frighten a screaming budget hawk like me witless. There could be any number of events that would require congress to pass a budget that is out of balance in any give year. The problems arise when passing budgets that do not balance becomes a habit. Such problems are up to the e*****rate to solve and we should do that by electing only candidates who promise to
reduce spending.
More importantly, if David Stockman was truly sincere about addressing our budget woes, he would be demanding the recall of the
Congressional Budget and Impoundment Control Act of 1974 along with its subsequent amendments:
The Balanced and Emergency Deficit Control Act of 1985, The Budget Enforcement Act of 1990 and the Balanced Budget Act of 1997. The
Congressional Budget and Impoundment Control Act of 1974 requires congress to use the entire budget of the previous year as a base to build the next budget. It adjusts the previous year's budget for both inflation and population growth and then Congress starts loading new spending on top of that. The baselines are not adjusted properly so the budget almost always grows by seven percent per year. This is compounded growth. I will spare the readers the necessary math and point out that this will double any given number in ten years. Little wonder then that we are in the bind we are in now.
I shall quote Stockman's editorial one more time.
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It would require, finally, benching the Feds central planners, and restoring the central banks original mission: to provide liquidity in times of crisis but never to buy government debt or try to micromanage the economy. Getting the Fed out of the financial markets is the only way to put free markets and genuine wealth creation back into capitalism.
As I see it, the Federal Reserve Bank, which is a privately held concern and not part of the United States Federal Government, is a major part of our trouble and should be replaced by the Department of the Treasury. The Federal Reserve is not constitutional because it has allowed Congress to abrogate its responsibilities for our currency. The currency we are using now is based on our debt to the Federal Reserve Bank and not anything of genuine value. When your currency has no inherent value of its own, it cannot serve as a store of value. If it cannot serve as a store of value, it is incapable of being an adequate exchange of value because its very nature makes it inflationary. This is where we are today.
That emergency liquidity that Mister Stockman is wont to hang onto in the form of the Federal Reserve Bank has a price and that price is constant incessant and debilitating inflation. It also lulls our legislators into a false sense of security so that they spend like madmen. There is nothing good about the Federal Reserve Bank.