"...an utterly corrupt new religion called environmentalism..."
If the history of this planet's climate over millions of years is any guide, we are about to enter a new ice age.
CAIR spokesman Ibrahim Hooper indicated in a 1993 interview with the Minneapolis Star Tribune that he wants to see the United States become a Muslim country.
Federal Reserve's NewSpeak
By Tom Brewton (09/12/07)
Like Big Brother in George Orwell's novel, the Fed chairman uses words to mean the opposite of reality.
The Wall Street Journal reports that Federal Reserve chairman Ben Bernanke, speaking at a German central bank conference, stated:
...my reading of recent developments is that although some of the details have changed, the fundamental elements of the global saving glut remain in place.
There is no such thing as a "global savings glut." There is, however, a global, inflationary over-expansion of the money supply, by the Federal Reserve itself, to fund the Federal government's always-growing welfare state and pork-barrelling by individual politicians.
The current bust in the real estate market and the implosion of the subprime mortgage market are examples of what former Fed Chairman Alan Greenspan called "exuberance" in the marketplace, induced by the Fed's excessive expansion of the money supply over the past several years.
If one reads chairman Bernanke's statement literally, he equates Federal spending with saving. If that were true, each of us could become rich by spending to the max on our credit cards. In that lexicon, the more you spend, the more you save.
As non-Marxian economists will tell you, a "savings glut" is nonsense. Savings, in an economy not distorted by government taxation or regulatory intervention, must always equal investment. What is not invested is spent on consumption goods.
Investment is money put to use in productive enterprises for the purpose of increasing the output of goods and services that people value and are prepared to spend consumption dollars to acquire.
The income that people do not spend on current consumption (i.e., savings) winds up in financial instruments such as savings deposits, mutual funds, hedge funds, or pension funds. Institutions receiving those savings then lend to businessmen who present economically sound proposals to start or to expand businesses.
In the unlikely event that not enough sound lending or investment opportunities can be found to absorb the full amount of individuals' savings, interest rates on deposits, along with distributions on mutual funds and interest rates on bonds, will decline. If those rates of return go low enough, individual savers will increase their consumption and decrease their savings, until available savings come into equilibrium with investment opportunities. At the same time, as interest rates fall, sound business investments that produce lower returns than those of the first category can be funded out of savings.
In recent years, however, the Fed over-inflated the money supply, and financial institutions became anxious to lend money on any deals available, sound or purely speculative. Hence the declining credit standards in the subprime mortgage market and the proliferation of untested, complex derivative securities.
With the supply of money artificially boosted, the price of money (interest rates) has been abnormally low, leading to low personal savings and massive consumer spending funded by credit cards and so-called home equity loans.
A "glut of savings" exists only in the phantasmic rationalizations of Keynesian economic doctrine, which is still the orthodoxy of liberal-Progressive-socialism. Keynes's hypothesis that excessive savings caused the Depression, in practice, was nothing more than a pretext for socialistic collectivism under Franklin Roosevelt's New Deal. Keynes and his American acolytes preached that, individuals having saved too much, the economy could recover only with ballooning and never-ending Federal spending.
The record of history belies Mr. Keynes's theorizing.
Higher taxes and higher government spending produce recessions or, in the case of the Depression, prolong them. Higher government spending, funded by Treasury debt, produces inflation, leading ultimately to conditions similar to the 1970s stagflation – recession, high unemployment, and hyper inflation.
Lower taxes lead to business booms. If Federal spending is reduced to balance lower taxes, the result is a non-inflationary boom in which the whole economy benefits. But, if Federal spending continues to rise after tax cuts, we suffer inflation, distortions of investment, and eventually painful economic collapses of the sort now besetting the housing industry and housing lenders.
For more details regarding Federal spending and savings, read Is Social Security a Form of Savings?
Thomas E. Brewton
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Native of Louisiana; graduated from Louisiana State University in 1956. While there had the good fortune to study political science under Eric Voegelin and Constitutional law under Walter Berns.
Graduated from the Harvard Business School in 1958, then worked in the Wall Street financial community for thirty years. After retiring, surrounded by liberals in Scarsdale, New York, began writing op-ed pieces for local newspapers and essays for my children, aiming to counter the barbarism of liberal-socialism. From this came my website, The View From 1776 ( http://www.thomasbrewton.com/ ). A staff writer for the New Media Alliance, Inc.
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UPSSA
United Progressive Socialist States of America
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