Posts Tagged ‘quantitative easing’

Who Voted For That?

Who voted for an immigration policy whose purpose is to change the racial, ethnic and cultural make-up of the United States?  That is exactly what the Kennedy Immigration Bill of 1965 was designed to do and just what it has done.

Who voted for open borders and constant calls for amnesty for anyone who can drag themselves across the border?  Has anyone else noticed that the estimate of how many illegals are in the United States has been stuck at 11 million for at least the last 11 years?

Who voted for anchor babies automatically gaining citizenship?  This has led to birth tourism wherein pregnant women from all over the world fly in, have their babies, go home, and then Uncle Sugar is on the hook for these babies the rest of their lives.  This entire fraudulent practice is based on a blatant misinterpretation of the 14th amendment.  The correct interpretation based on original intent is readily available for anyone who can click a mouse.

Contrary to the common knowledge of everyone successfully programed by the Corporations Once Known as the Mainstream Media and the public indoctrination centers once known as schools anchor babies are not found anywhere in the constitution.  In fact they didn’t even exist until 1982 when Justice Brennan slipped them into the footnote of a Supreme Court decision.  Notice I didn’t say into a Supreme Court decision it is found only in a footnote.

And contrary to Bill O’Reilly and many other armchair lawyers this could be corrected without a constitutional amendment.  All that is needed is a law which clarifies that Justice Brennan’s footnote does not carry the force of law.  It’s kind of a no-brainer when you think about it.

Who voted for unlimited and unregulated abortion on demand?  In 1973 the rogue Supreme Court out to remake America by fiat declared in Roe v. wade that all state laws regulating abortion were unconstitutional.  Since that red letter day the blood of more than 57 million babies stains the hands of America. Our babies have been dismembered in the womb and had their skulls pierced with scissors as they were being born.  Their bodies have been tossed like garbage into landfills, flushed down toilets, and sold for their organs.

Who voted for restricting the rights of lawful citizens to keep and bear arms?  Over and over we hear about commonsense gun laws.  Every one of these proposals does nothing to stop criminals from getting guns.  They are criminals, so breaking the law is what they do.  All of these proposals have just one result: they restrict the rights of law abiding citizens since they are the only ones who follow the laws.

When the Bill of Rights was added to the Constitution it was because the so-called Ant-Federalists refused to ratify the document without these first ten amendments.  The statements of the Framers as enumerated in the Federalist Papers and the demands of the opposition as enumerated in the Anti-Federalist Papers makes it clear that the 2nd Amendment was meant to give the people the right to defend themselves against personal attack and against tyranny.  Criminals love unarmed victims and tyrants love citizens who cannot resist their authority.

Who voted for Obamacare which destroyed the best healthcare system ever known to man and after six years we are told there are just as many people without insurance as there were before?  Polls before its passage and since have consistently shown that the majority of the American people do not want this train wreck of a law.  Yet despite our best efforts to make our opposition known this is shoved down our throats like a horse pill that chokes a patient to death before we find out it is really a placebo.

Who voted for our president to bow before despots and dictators?  Never before in History has an American president bowed before a foreign leader or anyone else.  Until the revolutionary presidency of Barak Obama it would have been considered shameful.  No one ever imagined it would happen. Under the man determined to take America down a peg or two it hasn’t happened, once or twice or even three times.  On eight separate occasions our president has bowed before foreigners not only showing his respect for them but also showing his contempt for us.

Who voted for the Fed to pump trillions of fiat money into Dodd-Frank banks too big to fail?  Since the crash of 2008 the Federal Reserve has been printing money at an unprecedented rate.  Where has all this monopoly money gone?  To the banks too big to fail, of course, through the happy-go-lucky-how-can-this-ever-fail money machine known as Quantitative Easing.  What a friendly sounding name for a galloping printing press.  All this supposed money is adding to the national debt and still no inflation.  I think someone should tell the geniuses at the Fed what inflation is: more money chasing the same number of goods.  No inflation means no raises for anyone except the plutocrats who run the crony capitalist institutions and the government people who print the money. No inflation, right.  Has anyone been to the grocery store recently?

Who voted for an economy that instead of recovering has plateaued at a new normal with over 90 million able bodied people out of the work force, only slightly more than 122 million working, and a government that calls this full employment?  The government’s own statistics show that approximately 62% of the workforce is working. To me that looks like 36% aren’t working.  Full employment is generally accepted as meaning, “The condition in which virtually all who are able and willing to work are employed.”  Does anyone see a problem with this picture?

Who voted for any of this?

Oh, wait a minute. Anyone who has voted for a Democrat in the last fifty years voted for all of this.

To paraphrase Sam Cooke

Don’t know much about history
Don’t know much biology
Don’t know much about a science book
Don’t know much about the French I took

Don’t know much about geography
Don’t know much trigonometry
Don’t know much about algebra
Don’t know what a slide rule is for

But I do know that if Progressives can fool you
And I know that if Progressives could fool me, too
What a wonderful world this would be

Just don’t take the red pill. Whatever you do, don’t take the red pill.  Take the blue one. You’ll feel much better as we slide into the dustbin of History.

Dr. Owens teaches History, Political Science, and Religion. He is the Historian of the Future @ © 2016 Contact Dr. Owens Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens

Coming soon: The first fiction book by Dr. Owens




Happy Days Are Here Again

So long sad timesHappy Days
Go long bad times
We are rid of you at last

Howdy gay times
Cloudy gray times
You are now a thing of the past

Happy days are here again
The skies above are clear again
So let’s sing a song of cheer again
Happy days are here again

Can you believe it the Bush recession has been over for five years, unemployment is down, the stock market is up, and everything is coming up roses.  There is a flat screen on every wall, a smart phone in every hand, and flying cars just can’t be that far away.  The Bush wars in Iraq and Afghanistan have either been won or soon will be or as the winning slogan said, “GM is alive and Osama is dead.”  The Arab Spring has toppled tyrants and the glory of the administration’s foreign policy savants have ricocheted from the faculty lounge to the UN.  Doesn’t it just feel like another American Century?

The Fed keeps pumping and the Big Board keeps jumping.  The NSA watches us all without a warrant, and the man who tells us about it is a traitor.Congress has to sue the President in an attempt to get him to enforce laws unless of course he wants to change a law unilaterally.  The Court strikes down unconstitutional move after unconstitutional move by the adjunct instructor in the Oval Office.  The IRS is used to suppress the votes of Conservatives, its leaders either lying to Congress or pleading the Fifth while the Attorney General refuses to appoint a special prosecutor just as he refused in Fast and Furious and Benghazi.  Of course if you want to require a photo id to vote you’re a racist attempting to suppress the vote while you need a photo ID to get into the DNC. There’s nothing to see here move so along.

Common Core is poised to take our educational system to higher heights.  After more than 100 years of Progressive Education and generations of Federal intrusions into local school boards America now successfully spends more per capita on education than any other country.  The self-esteem of our students ranks as the highest in the world even as our grades slide.  In other words our students are doing poorly, but they think they are doing well.  It reminds me of a foreman in a factory who was in one of my management classes.  He shared an incident in his shop.  A young man was hired as a material handler who wore his pants down around his knees.  He constantly had to use one hand to hold up his pants while using the free hand to handle material.  When the foreman asked him, “Don’t you think you could get more done if you used both hands?”  The young man answered, “No I’m doing all right.”  The job may not get done but at least he feels good about what he’s doing.  Is this is the American Way in the New Normal?

Russia swallows Crimea, China launches its first aircraft carrier, the Islamic State declares itself to be the Caliphate some were crazy to predict.  Oh Happy Day!  Once again America is respected in the world after that cowboy Bush brought us so low.  Reagan said it was once again Morning in America and now we have Mourning in America as the fruit of Progressive policies, and cum bi ya diplomacy leads us from crisis to crisis.  Then again we should never let a good crisis go to waste said President Obama’s first Chief of Staff before heading to Chicago to strengthen the gun laws.

Looking forward there is good news and bad news.  The good news is that thanks to that paragon of progressivism FDR there are term limits on the presidency.  The bad news is our southern sieve and the import a voter program brings in thousands of undocumented democrats everyday as Flat Broke Hillary and the transition team waits in the wings with self-proclaimed Native American Elizabeth Warren as an understudy.

I used to say, “We made it through the Second World War and we can make it through Bill Clinton.”  Then I said, “We made it through the Cold War we can make it through Bush the Younger.”  Now I wonder, “If we threw away Iraq and we’re about to throw away Afghanistan, Texas, New Mexico, and Arizona how will we survive two more years?”

We may not be in Kansas anymore and we may have followed the white rabbit through the looking glass but at least illegal immigrants can now get drivers licenses in Arizona.  Can anyone say “Motor Voter” orcoming to a neighborhood near you soon.

Altogether shout it nowHappy Days 2
There’s no one
Who can doubt it now
So let’s tell the world about it now
Happy days are here again

Your cares and troubles are gone
There’ll be no more from now on

Happy days are here again
The skies above are clear again
So, Let’s sing a song of cheer again

Happy times
Happy nights
Happy days
Are here again!

Dr. Owens teaches History, Political Science, and Religion. He is the Historian of the Future @ © 2014 Contact Dr. Owens Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens


The Question is, “What’s the Answer?”

In politics and economics as in everything in life there always seems to be more questions than answers.

Some answers previously shared:

Politically speaking, I have said before in these columns that I no longer consider myself to be a conservative because there is nothing left to conserve.  Instead I consider myself a Liberal in the classical sense: in the tradition of Jefferson and Paine a believer in human liberty.  The once proud name of Liberal has been coopted and fundamentally transformed by the Socialists who have followed the advice of one of their early leaders, Norman Thomas, “The American people will never knowingly adopt Socialism. But under the name of ‘liberalism’ they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.”

I say it is time to reclaim the name.

In the economic realm, I am unabashedly a believer in capitalism.  The reason for this is that it is the only system ever devised by man that requires freedom as a foundation for it to exist.  Every other economic system ever tried is a centrally-planned command system.  The king, the dictator, or the politburo decides how many widgets the country needs and that is how many widgets the country gets and everyone works at the widget factory.

As a child of the Cold War who had Marx shoved down his throat by Socialist teachers from grade school through college, I rebelled when one of my History professors told me that economics was the lynchpin of History.  It wasn’t until after the fall of the Evil Empire that I was able to appreciate this truth.  It is interesting to note that before we adopted the German style of College education in the 1890s Economics, History and Political Science were all one discipline.  How can we understand any one of them without the others?  One legged stools do not stand very well.  Information in a vacuum is still a vacuum.

So what is the question?

How can America continue to exist politically as a Republic with a constitutionally limited government dedicated to personal liberty, economic freedom and individual opportunity if our central government destroys competition?

The support of competition does not make someone an anarchist as Senate Majority Leader Harry Reid accuses.

The use of competition as an organizing mechanism in society precludes the use of certain types of coercive regulations.  However, it does not preclude the use regulations or guidelines.  There are important reasons why the negative aspects of this statement have been stressed by the advocates of competition while the positive have been neglected by its opponents.

It is necessary that all parties in the market place must be free to buy and sell at any price which they can agree on. It is also necessary that everyone should be free to produce, sell and buy anything that can be produced or sold.  It is also necessary that everyone has equal and free access into the trades.

Any attempt to control or regulate prices or quantities of commodities deprives competition of its ability to bring about the effective coordination of individual efforts because price changes then are no longer able to correctly act as a reliable guide for an individual’s actions.

This is not an iron-clad rule.  As long as any restrictions placed on all potential producers affect all producers the same and are not used as an indirect method for controlling prices and quantities.  All such restrictions impose extra costs however if they are imposed evenly competition can survive if not thrive.  For example, it is generally agreed that regulations to control the use of poisonous substances, to limit working hours, or to require sanitary conditions are both desirable and necessary.

The only question here is: are the social advantages gained by these regulations greater than the economic costs they impose.  Neither is the existence of social services incompatible with freedom as long as their organization and operation is not designed to restrict competition.

Thus it is shown that the advocates of competition and economic freedom are not anarchists demanding a Laissez-faire anything goes free-for-all.  They admit the need for safety and agree that as long as things are equal things are fair.

The fairness of competition is shown in one of its primary foundational principles: that the owner of private property benefits from all the useful services rendered and is liable for all the damages caused to others by its use.  When it becomes impossible to make the enjoyment of certain services dependent on payment or if the damages from its use are deflected then completion is ineffective as a social organizer because the price system has been disrupted.

Thus both restrictions on the use of property and bailouts which transfer the cost of failure from those who made the bad decisions to the taxpayers cause the market to become unhinged from reality and the creature of government direction.  We see licenses, permits, and other regulations control who can engage in what economic activity.  Look at the stock market.  Does it rise or fall because of innovation?  Do the efforts of people to create and market new products lead the DOW to new heights?  No.  The market rises and falls on whether or not the Fed is going to continue pumping fiat money into the system.

The rules of the game have been so distorted by the government that honest and open competition is almost impossible.  This is why the underground economy flourishes, because it the only place where free competition still exists.  And people will always yearn to be free.  No matter how governments try to chain their citizens down with webs of regulations and nets of laws Gulliver will always struggle and strain against the ties that bind until he breaks free.

It is obvious to all that President Obama has succeeded in his goal of fundamentally transforming America.  For example, his massive stimulus that paid off campaign debts to unions and donors and his mountains of new regulations on everything from banking to coal to student loans. There is the never-ending FED pump which just keeps pouring more money into an already bloated bubble in an effort to make a socialized crippled economy at least look like it works. And of course there is Obamacare which effectively socializes 1/6 of the entire economy.  The combination of these policies breaks the back of competition and sound the death knell of the great experiment in freedom begun in 1776.  Drip by drip, inch by inch we have been moved closer to the goal.  Now it is the Health Care take-over and the flood of fiat currency that are leading to a terminal case of bankruptcy, a systems collapse, and as our Progressive leaders hope the dawn of a new day.

When the invisible hand has been tied and competition weighted in favor of government chosen winners and losers, when the electoral game has been stacked in favor of a two headed Progressive Republicrat party of unlimited power, pride and ambition, when equal justice under the law applies only to citizens and not to officials, the Question is, “What’s the Answer.”

That answer might be, “How long?”

How long before we the American people demand that our nation founded in revolution against tyranny reject the empire and restore the Republic?  We can all see that the emperor has no clothes.  We all know the deck has been stacked, the game rigged, and the winners chosen.  How long before we demand that we are allowed to live in a nation where we will be judged by the content of our character and not by our membership in a protected or favored group, our political contributions or whether or not we have saluted the party line?

As we watch our beloved nation transformed it might be well to remember what our second President John Adams once said, “a Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever.”  Then again he also said, “Remember democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.”

Dr. Owens teaches History, Political Science, and Religion.  He is the Historian of the Future @ © 2013 Robert R. Owens  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens


If We Blow It Up Again It Will Blow Up Again

Back in 2007 when I was speaking of the crash to come I noted that we really didn’t have to worry because our fearless and infallible leaders intuitively know the remedy.  When the bubble bursts they will blow up another bubble.

The absolute triumph of Keynesian economics in America and the West has never been more on display than during our rocky journey through the Great Recession.  An economic contraction which our leaders say is over and those of us who work and live in flyover country know is still grinding us down to the new normal.  TARP was going to save the economy.  It didn’t.  President Obama’s porkulus stimulus was going to save the economy.  It didn’t.  QE 1 and QE 2 were going to save the economy.  They didn’t. 

Then along comes QE 3 with an open ended commitment to pump 85 billion per month into the economy, and presto-changeo alakazam and miraculously the stock market is breaking new highs and the real estate market is beginning to revive.  Unemployment keeps inching down and even the Neocons over on Fox are telling us the cratered economy is showing signs of life.  It turns out if you magically create trillions of dollars and drop them from helicopters across the country there seems to be more money blowing in the wind.  As one very profitable prophet once said, “It doesn’t take a weatherman to know which way the wind blows.”

Hang on to your hats because a booming economy has to become part of the Obama legacy so that the transition to a centrally-controlled economy can ever be hailed as the prescription for success.  Just as the booming economy of the 90s is constantly brought up as “The prosperity we experienced during the Clinton years” so to if any politician ever attempts to restore economic freedom, or when there is another crash it can be blamed on too much regulation, a pathological fear of deficits, and return to the old days of greed and avarice.

Those of us old enough to remember the Clinton years should know that it was the peace dividend and the Tech Boom Bubble which fueled the prosperity of the 90s.  We should also remember that it was a phony peace dividend since our military was engaged in interventions around the world during Clinton’s depredations in the oval office.  We should also remember that the Tech Boom flew through the air with billions in stock values for companies that made no profit and eventually delivered not prosperity but the crash of 2000.

Our Constitution was not written to be not a living document that evolves over time.  The words were never meant to take on new meanings with every passing generation.  The accumulation of case law and judicial proclamations was not meant to supplant the written political contract that the Sovereign States individually decided to ratify.  However, contrary to the oft stated desires of the Founders of our nation and the Framers of the Constitution the United States has evolved into a behemoth bureaucracy.  In all bureaucracies instead of the best and the brightest rising to the top those who learn to pull the levers the best end up controlling the machine.  Often the official leaders are merely telegenic front men for the powers behind the throne.   The grifters who have gained power through elections filled with ineligible voters, outright fraud, gerrymandering, and a two party system where-in Progressives control both parties use the living document ruse to turn the Constitution into a dead letter.

Crony capitalism has replaced free enterprise.  Just watch the big gaming table at the New York Stock Exchange.  Its volatile swings are dictated not by innovation, profits or production they are instead moved by real or projected government actions.  Will the Fed keep creating money out of thin air?  Will the EPA impose Cap-N-Trade?  Will the imperial presidency use a foreign adventure to grasp more power?  The banks act as willing accomplices of the Fed borrowing money at 0% interest and buying Treasuries at 3% helping to maintain the fiction that we aren’t monetizing our debt and printing our way to prosperity.  The foreigners who used to crowd the treasury auctions know what is going on.  Today the biggest purchasers of American debt are American banks using the Fed’s funny money.

How many times must this Ponzi scheme economy show itself for what it is?  How many times must this self-serving Progressive cabal be exposed for the hypocritical central-planning neo-fascists that they are?  How many articles like this must be written before enough people wake up and do something?  We glory in the American Revolution.  It overthrew tyranny and established personal independence, individual freedom, and economic opportunity on a scale that had never before been seen in the world.  This is something worth celebrating.  However, the counter revolution has been in progress since Hamilton founded the first bank and John Adams threw his opponents in jail.  The cost of freedom is eternal vigilance, and today’s generation may be too busy watching the game to notice their country is being transformed into something they won’t recognize by the time they get up for their seventh inning stretch.

Any semblance of a freely functioning economy has vanished since Progressive leaders like FDR, LBJ, and BHO birthed government control and intervention as an 800 pound gorilla on steroids.  The mirage of false prosperity is once again raising its crowned head out of the sea of financial calamity it created with the last bubble.  A new bubble is forming and happy days will soon be here again with a chicken in every pot and a flat screen in every home.  How many of our fellow citizens will be swept up in the coming Obama Boom?  How many will be devastated when it all comes crashing down again?

The too-big-to-fail friends of the government will be made whole.  The perpetually re-elected and their handlers will have their golden parachute pensions and plush jobs on K-Street and at Fannie, Freddie, and crony filled board rooms across the country.  The only ones hurt will be those who do the real work, those who play by the rules.  When the new bubble blows up the remedy is ready made: we’ll just blow up another bubble.  How could this ever go wrong?  

Dr. Owens teaches History, Political Science, and Religion.  He is the Historian of the Future @ © 2013 Robert R. Owens  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens


Economics 102

People avoid silence because they’re afraid of what they might hear.   Although we value our freedom of speech, polite conversation in America is subject to one crushing rule, “Don’t talk about religion or politics!”  Most of us were raised with this stifling warning in our ears.  The purpose was to avoid arguments at the dinner table but the result is a population unconcerned in the two subjects affecting life the most.  I can only talk about the weather for so long which displays the wisdom of memorizing sports stats and watching American Idol.  With the two biggest topics off the table we’re faced with either trivial pursuit or silence.  Bored with the weather and having neglected my memorization and viewing options I propose a topic to stimulate vigorous conversation without causing any bickering: economics.

Barry, Harry, and Nancy knew they had to take us through-the-looking-glass in four short years.  With no effective break on their power for the first two years, Congress moved so fast their yesterday became our tomorrow.  That tomorrow is now today.  The ruling party rammed their agenda through without one opposition vote.  Every revolution needs an emergency to justify radical surgery and the economy is the emergency available. Consequently, these descendants of FDR and LBJ shoved a raw deal down the throat of a great society.

Almost everyone is in agreement that the first stimulus failed.  According to MSNBC, “In January, Obama’s economic team predicted unemployment would rise no higher than 8 percent with the help of $787 billion in new government spending.”  However, according to the LA Times the unemployment rate in May reached a 25-year high of 9.4 percent.  The President may see glimmers of hope but Say-it Ain’t-So Joe said he couldn’t rule out a second stimulus telling us the administration which ran on the slogan, “The worst economy since the Great Depression” misread how bad the economy was.  How bad is it?  What’s worse than the Great Depression?  What’s their answer to this baddest of bad economies?  What’s their Plan B?  Try Plan A again, and again, and again?  I think what our leaders need as they drive the largest economy the world has ever known over the cliff is Economics 102, Macroeconomics or how an economy works.

Most people, including the best-government-money-can-buy, look at the economy as if it were controlled by magic having no idea where the rabbit goes or where the doves come from, and since I doubt I’ll convince any of our all-knowing leaders to enroll in freshman macroeconomics I want to offer a crash course in Economic Reality.

  1. Government regulations distort markets and inflate bubbles.
  2. Every generation experiences at least one bubble and at least one bust.
  3. Every bubble bursts.
  4. Every burst bubble is followed by a panic.
  5. Panics inspire economic regulations.
  6. Economic regulations reflect political ideologies not economic realities.
  7. Economic regulations always regulate the excesses of the last bubble.
  8.  Economic regulations are always blind to the excesses of the next bubble.
  9. Since consumption is the purpose for production any economic regulation that ignores this fact always leads to the misapplication of resources and the misdirection of effort.

10. Depressions are recessions with government help.

11. It is impossible to spend yourself into prosperity.

12. It is impossible to tax yourself into prosperity.

13. Higher taxes lead to smaller revenue and black-markets.

The New Economy leads straight to the Second World, from freedom to conformity from capitalism to Obamanomics.  Instead of a fair race with the rapidly transforming economies of Asia, America runs hobbled like a child in a three – legged race strapped to the stiff-legged ideas of collectivism.

Why would our leaders want us economically hobbled?  What would they gain if we fall into the swamp of poverty engulfing most of the world?  Wouldn’t they be right there with us?  Go to any Second or Third World country and you’ll see the rich and powerful behind walls in gated-communities where they live in the First World while everyone else sits in the dust eating leaves.  In America, we avoided this fate with the growth of a massive middleclass.  Under assault with stagnant wages, rising prices, and disappearing jobs the middleclass is being outsourced.  How is this being accomplished?

Remember the mantra of the Clintons?  “It’s the economy stupid!” That’s still the Liberal’s strategy, riding like a flea on a rat cradle-to-grave social engineering in the guise of economic policy.  The Progressives drive the economy into the ditch all the while saying it is someone else’s fault and shrieking that we need more of what is causing the problem: bloated government and runaway spending.  A lack of basic economic understanding is destroying the greatest economy ever forged.  A zero sum game causes divisions and arguments about who gets what when we used to all strive for the same thing: success.

America is splintering as the melting pot becomes a smelting pot.  What is its cause?  The divisiveness of class-warfare encouraged by the only people who win through America’s split between red and blue, rich and poor, us and them.  Who are they?  If it isn’t us I guess it’s them.

Dr. Owens teaches History, Political Science, and Religion.  He is the Historian of the Future @ © 2013 Robert R. Owens  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens




Fed's Warsh Plans To Leave His Post

The Wall Street Journal FEBRUARY 11, 2011 By JON HILSENRATH And LUCA DI LEO
Federal Reserve Board Governor Kevin Warsh, a close associate of Chairman Ben Bernanke, will step down around March 31, giving President Barack Obama a chance to deepen his imprint on the central bank after the financial crisis.

Mr. Warsh submitted his resignation to Mr. Obama Thursday. He was appointed to the Fed in 2006 by George W. Bush, whom he served as an economic adviser. His departure will leave just two Bush appointees on the Fed’s seven-member board of governors—Mr. Bernanke, who was reappointed by Mr. Obama, and Betsy Duke. It will also leave two empty spots on the board if Nobel laureate Peter Diamond isn’t confirmed by the end of March.

The 40-year-old Mr. Warsh, a former investment banker, made his mark at the Fed, which is dominated by Ph.D. economists, as a “markets guy” with a long list of contacts on Wall Street and in the banking community.

While deeply involved in the Fed’s crisis decisions, he was also a skeptic of some of its big market interventions, most notably the “quantitative easing” program in which it is purchasing $600 billion of U.S. Treasury bonds and an earlier program of mortgage bond purchases.

Mr. Warsh formally voted for the Treasury purchases in November but also spoke out against the program in the days following the decision.

With his departure, “we’ll probably end up with a little more dovish Fed”—meaning one that isn’t as worried about inflation—said Michael Feroli, an economist at J.P. Morgan Chase.

It may be a while before Mr. Warsh’s spot is filled. The Senate hasn’t confirmed Mr. Diamond, a Massachusetts Institute of Technology professor whom Mr. Obama nominated in April for an open seat on the Fed board of governors.

Another Fed opening has been unfilled for more than four months—the presidency of the Federal Reserve Bank of San Francisco. Janet Yellen, who last held the post, was picked in April by Mr. Obama to become vice chairman of the Fed board in Washington. She was confirmed in September.

The 12 regional Fed bank presidents are chosen by the banks’ private-sector boards of directors, subject to approval by the Fed board in Washington. Initially, the San Francisco Fed sent only one candidate to Washington—not two or three as is the custom. Fed officials in Washington were unimpressed, according to people familiar with the matter.

Among the candidates the San Francisco board interviewed but rejected was Christina Romer, a University of California at Berkeley economist and former chair of Mr. Obama’s Council of Economic Advisers. Ms. Romer was passed over at least in part because the San Francisco directors wanted someone with business experience rather than an academic. Ms. Romer, a specialist in monetary economics and history, had backing from some Fed officials in Washington. Some Fed officials have become frustrated that the process is taking so long. “From the beginning we have said it will take as long as it takes,” said Carol Eckert, a spokeswoman for the San Francisco Fed.

Behind the drawn-out selection process is a broader question about the ideal mix of Fed decision-makers. The Fed system is dominated by macroeconomists. Eight of its twelve regional Fed banks are now run by Ph.D. economists. The San Francisco Fed’s board has been looking for more diversity of views. With Mr. Warsh’s departure, two of the five Fed governors in Washington are macroeconomists, Mr. Bernanke and Ms. Yellen. Mr. Diamond, if confirmed, would add another.

The Fed’s top policy-making body, the 19 member Federal Open Market Committee, comprises the seven Fed board members and the 12 regional bank presidents.

Mr. Bernanke and Mr. Warsh have remained close despite their disagreements about the bond-buying program. Mr. Bernanke said in a statement that Mr. Warsh’s “intimate knowledge of financial markets and institutions proved invaluable during the recent crisis.”

Mr. Warsh is likely to pursue a job in the private sector, though he announced his resignation with no firm plans, according to people familiar with his thinking.

“I am honored to have served at a time of great consequence,” Mr. Warsh said in a statement.

He is married to Jane Lauder, granddaughter of the founder of the Estée Lauder cosmetics company.

In recent days, Fed officials have reappointed other regional Fed bank presidents to new terms. Among them was New York Fed president William Dudley, who has developed an influential voice on the FOMC.

Obama's Toxicity Index

By Jed Babbin

11.22.2010 @ 6:09AM

Too many pundits and pols are trying to tell us how tough it’s going to be for Senate Democrats in two years. They’ll have to run with Barack Obama hugging the line next to them on the ballot. And we’ll be able to forecast the results by measuring how toxic their relation with Barry was.

In Jimmy’s time, when you added the inflation rate to the percentage of Americans who were unemployed, the sum was what Carter called the “misery index.” Carter so pursued disaster so conscientiously that by the time he was tossed out, the misery index was over twenty. Reagan cut it in half. It shrank to single digits under W, but Barry has boosted it back over 10.

Fed Chairman Ben Bernanke has decided to slip a new “stimulus” package past Congress — it’s called “quantitative easing” — which will drive inflation up by pumping more fiat currency into the system. So we can look forward to Jimmy’s misery index rising inexorably at least as long as Barry is in the White House.

But Jimmy’s misery index is not an adequate measure of American misery brought about by Obama’s economic and foreign policy disasters. How can we derive a 21st century measure of just how much worse — and how much weaker — we are?

It appears that Obama is literally driving us crazy. According to the federal Substance Abuse and Mental Health Services Administration, 20% of Americans had some form of mental illness in 2009. Which they attribute to unemployment, not the accumulated effect of listening to Barry’s teleprompter speak almost daily.

The craziness will precipitously increase because — only days before the Thanksgiving holiday — the Touching Sensitive Areas gangsters are hanging a sign at all airports that reads, “Abandon all Hope, Ye who Enter Here.” The choices are X-ray scanning, grope-a-dope frisking by its goons, or fines of up to $10,000. Whatever number of Americans were driven nuts in 2009 is going to double in 2011.

But those numbers are subjective. We can’t trust Obama’s index to shrinks or the TSA. We need an objective measurement. Maybe taken from a different viewpoint.

How about looking at it from the standpoint of the Democratic senators who will have to face the voters in 2012? This unfortunate group — including Missouri’s Claire McCaskill, Virginia’s Jim Webb, Florida’s Bill Nelson, Nebraska’s Ben Nelson, and Montana’s Jon Tester — are going to have to run with Obama’s name next to theirs on the ballot. How can we create an objective measurement of their political misery?

It’s impossible to measure it by what they say behind closed doors, even though remarks such as Nelson’s in last week’s meeting of Senate Dems often leak out. According to a Politico report, “Nelson told colleagues Obama’s unpopularity has become a serious liability for Democrats in his state and blamed the president for creating a toxic political environment for Democrats nationwide.” But leaks are an unreliable basis for an objective measurement.

There is an alternative, one which can provide a good scale against which we can measure the next two years. Call it the Obama Toxicity Index.

The OTI is measured by which of Obama’s worst initiatives they have already voted for (Obamacare, the “stimulus”, etc.) and by how many more votes like that those senators make.

We already know that Obama isn’t going to follow Clinton’s example and move toward the center. He’s insisting on ratifying the awful “START” arms control agreement with Russia and repealing “Don’t Ask, Don’t Tell” both in the lame duck session. And Obama is also unwilling to compromise on maintaining the Bush-era tax cuts.

No wonder that Webb and North Dakota’s Kent Conrad are rumored to be considering retirement. But McCaskilll — having called the TSA’s intrusive friskings “love pats” — isn’t retiring. She’s apparently aiming at political suicide.

Both Nelsons, McCaskill and Tester are going to have a very hard time explaining away their votes for Obamacare. The Nelsons — Ben, recipient of the infamous “Cornhusker Kickback” – and Bill, whose electorate is disproportionately older, will have a lot of trouble explaining that.

And how will they vote on a House bill to repeal Obamacare? Will they help Harry Reid to block it from coming to a vote? That will be one big data point that the Obama Toxicity Index will measure.

And they’ll all have to face up to the votes they cast from now on.

Harry Reid insists on raising the Defense Authorization bill during the lame duck session, despite the fact that it contains both an entirely ridiculous illegal immigration amnesty provision and the repeal of the “Don’t Ask, Don’t Tell” law that prevents homosexuals from serving openly in the military. He may try to jam ratification of START through as well.

So, Sen. Tester, a year from now as you launch your reelection campaign at local picnics how much will you enjoy answering questions about why you believe that the DADT repeal is just great when the Commandant of the Marine Corps, Gen. James Amos — as well as his immediate predecessor – said it’s a terrible idea? Do you think you’re a better judge of the effect on the Corps of repealing DADT than the Commandant?

Senator Webb, you’re a highly decorated combat Marine, a hero awarded the Navy Cross. The House Armed Services Committee may hold hearings about the pressure put on military offices to change their views on DADT? Last September, Lt. Gen. Thomas Bostick, Army Deputy Chief of Staff in charge of personnel, called those who oppose repeal of DADT “bigots.” Do you agree? How will you answer questions from veterans groups and the Knights of Columbus about the issue?

The biggest element of the Obama Toxicity Index is reflected in the Republicans’ electoral mandate for the 112th Congress: to reduce the size and spending of the federal government. How many times will the Senate Dems follow Obama off the deficit spending cliff, voting to increase the debt limit, voting to increase spending, and refusing to reduce spending by the hundreds of billions of dollars that can and must be saved?

Each time these Democrats vote for more spending, each time they vote against cuts, they will be voting for Obama and against their political futures.

Just keep it up, ladies and gentlemen. What happened to House Democrats this year is waiting for you just 24 months from now.

Jed Babbin served as a Deputy Undersecretary of Defense under George H.W. Bush. He is the author of several bestselling books including Inside the Asylum and In the Words of Our Enemies.

Germany Criticizes Fed Move

The Wall Street Journal
NOVEMBER 8, 2010.


Finance Minister Says Policy ‘Doesn’t Add Up,’ Sees U.S. Model in ‘Deep Crisis’ .

BERLIN—German officials, concerned that Washington could be pushing the global economy into a downward spiral, have launched an unusually open critique of U.S. economic policy and vowed to make their frustration known at this week’s Group of 20 summit.

Leading the attack is Finance Minister Wolfgang Schäuble, who said the U.S. Federal Reserve’s decision last week to pump an additional $600 billion into government securities won’t help the U.S. economy or its global partners.

The Fed’s decisions are “undermining the credibility of U.S. financial policy,” Mr. Schäuble said in an interview with Der Spiegel magazine published over the weekend, referring to the Fed’s move, known as “quantitative easing” and designed to spur demand and keep interest rates low. “It doesn’t add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank’s printing presses, artificially lower the value of the dollar.”

At an economics conference in Berlin Friday, Mr. Schäuble said the Fed’s action shows U.S. policy makers are “at a loss about what to do.”

Berlin’s eagerness to scold the U.S. appears driven in part by a desire for payback after suffering persistent criticism this year for the German economy’s reliance on exports. German officials have been on the defensive since French Finance Minister Christine Lagarde suggested in March that German trade surpluses were hurting the competitiveness of weaker euro-zone members and contributing to the bloc’s debt crisis. That argument was reinforced as German gross domestic product surged an annualized 9% in the second quarter on improved demand for its manufactured goods abroad. The government now believes the economy will grow 3.4% this year.

Mr. Schäuble hit back at critics in the Der Spiegel interview. “Germany’s exporting success is based on the increased competitiveness of our companies, not on some sort of currency sleight-of-hand. The American growth model, by comparison, is stuck in a deep crisis,” he said. “The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base. There are many reasons for America’s problems—German export surpluses aren’t one of them.”

Pressure continued at the G-20 finance ministers’ meeting last month in Gyeongju, South Korea, where U.S. Treasury Secretary Timothy Geithner urged countries to commit to keeping their current-account imbalances below 4% of gross domestic product over the next few years.

The measure was aimed at China as part of U.S. attempts to nudge Beijing to let the yuan rise, but Germany, whose current-account surplus is about 6% of GDP according to the International Monetary Fund, also vehemently opposed the plan. The result was a general commitment among G-20 members to keep trade balances at “sustainable levels” and to avoid a cascade of competitive currency devaluations.

“Germany’s reliance on exports rather than domestic demand may be a successful short-run strategy, but it is very hard on its trading partners and shortsighted,” said Christina Romer, a professor of economics at the University of California, Berkeley, and until recently the head of President Barack Obama’s Council of Economic Advisers. “It is in Germany’s interest for its neighbors to prosper because of the interconnectedness of their economies and, especially, their banks.”

The Fed’s most recent round of quantitative easing also offends German officials’ commitment to sound public finances and low inflation. As the global recovery took hold this year, German Chancellor Angela Merkel introduced €80 billion in budget cuts and urged other major economies to undertake their own fiscal consolidation. Mr. Schäuble said last week that he doubted the U.S. would live up to a commitment world leaders made this summer at a G-20 summit in Toronto to halve government deficits by 2013.

The aggressive monetary policy in the U.S. runs counter to the strategy of the European Central Bank, whose institutional thinking reflects a German abhorrence of high inflation that goes back to the country’s financial ruin in the depression of the 1930s.

The rancor from Berlin has left U.S. officials wondering whether the Germans are going to push their frustrations into the heart of the summit discussions in Seoul or whether their objections are largely posturing.

In Washington, the German rhetoric seems particularly shrill at a time when the euro is trading at a lower level against the dollar than it was a year ago—though the euro has risen in value in recent months.

U.S. officials are expecting complaints from emerging markets, which are dealing with a flood of money from investors in the U.S. and Europe in search of higher yields. Interest rates in Europe and the U.S. are much lower than in emerging markets, which creates an incentive for investors in both Germany and the U.S. to turn their attention overseas.

Mr. Schäuble, who will accompany Ms. Merkel to the G-20 summit Thursday and Friday in Seoul, South Korea, may have his own motivations for making bold statements and policy proposals that will keep him in the spotlight. Confined to a wheelchair since he was shot in an assassination attempt 20 years ago, Mr. Schäuble, 68, has been in and out of hospital care this year after a routine operation in February related to his paralysis left him with a wound that failed to heal. He missed key meetings last spring as European governments fought to keep Greece out of insolvency, prompting persistent questions over whether he was healthy enough to represent Germany at a crucial time.

After spending three weeks at a clinic for treatment. Mr. Schäuble made a cantankerous return to German public discourse late last month. In addition to spearheading the government’s hard line against U.S. monetary policy, he publicly reprimanded a spokesman for fumbling the release of tax-revenue estimates to reporters—an episode that became a popular Internet video.

In Berlin on Friday, Mr. Schäuble said his focus on his job had never flagged. “From a hospital, you can make telephone calls perfectly well,” he said.

—Bob Davis and Jonathan Weisman contributed to this article.

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