That is the nightmare in the headline news; the reality is much worse.

The Social Security Trust Fund does not exist in any meaningful way. What happened was this: Over the past years, the Social Security Administration collected more in payroll taxes (often listed as OASDI on your pay stubs) than it needed to collect to pay out the benefits of those on the Social Security rolls at the time. These surpluses were then “invested” into the “Trust Fund,” which is statutorily required to consist of securities that are backed by the full faith and credit of the United States – that is to say, government bonds.

To summarize, the Social Security Administration used tax dollars (from OASDI) to buy government bonds. Congress then used that money as part of the general budget, just as it would do with any other proceeds from income taxes or the sale of a savings bond.

What this means is that the Social Security Trust Fund (currently estimated at about $3 trillion) is marked as a liability to the general government budget, and is included in the calculation for the national debt. The $3 trillion of bonds that make up the assets of the Trust Fund, are part of the liability of the national debt, and the only way for those bonds to be redeemed is for Congress to raise income taxes or borrow even more. The government borrowed from itself, and promised to pay itself back.

Imagine that instead of saving for your retirement, you wrote out an IOU to your retirement fund every month or so, and then spent that money on something else. After a while, you will have a stack of IOU’s that you owe to yourself. You wouldn’t have saved any actual money for your future, and those IOU’s aren’t real assets; nor are the bonds held by the Social Security Trust Fund.

But not to worry. We are told that even after the fund has been depleted, the Social Security Administration will still be collecting revenue from payroll taxes, and is expected to be able to pay out about 75 percent of scheduled benefits. Unless they raise payroll taxes to avoid spending less.

So, there you have it. You paid payroll taxes to fund an entitlement surplus, and the

money collected was borrowed by Congress and became a debt liability to the general budget, which will now have to be paid back by raising income taxes to redeem the bonds bought with the payroll tax proceeds. Then, when that process is complete, payroll taxes will have to be increased because cutting Social Security by 25 percent will likely be as politically popular in 2033 as it would be today. Money collected through taxes thus becomes debt, and debt leads to more taxes.   The professional political class needs another crop of taxpayers to keep the cycle going – somebody needs to pay the payroll taxes for the Social Security program, as well as the income taxes needed to redeem the bonds held by the Trust Fund and bought with payroll taxes collected decades ago.

In other headline news, around half of recent college graduates are either unemployed or underemployed.

The following words were spoken on the floor of the U.S senate by Illinois Senator Dick Durbin in the heat of the recent debate on The Fairness Doctrine:

It takes away the authority of the Federal Communications Commission to basically determine that radio and television stations use their Federal licenses in the public interest.  What does this mean?  It means that the FCC can tell a television station it cannot put on a violent movie early on Saturday morning when kids are tuning into cartoons.  It cannot put on something with sexual tones in it at a time when children and family are watching.

Heartwarming isn’t it.   Well it seems Mr. Durbin has not taken a look at his local T.V. menu lately.  On my T.V. menu, here in Ankeny, Iowa, on the very day that Mr. Durbin spoke the above words, this is a sampling of what I found in the after school time slots of 3:00 to 5:00 p.m.

At 3:00 p.m. on MTV (Direct TV channel 331) we have a program called “Sex…With Mom and Dad.”  On today’s episode of this show we meet Natasha, a nineteen year old California girl who is self-described as a “party girl who is not afraid to experiment.”  She tells us that she ********************************************** at fifteen, and is having problems in her relationship with her single father—wait for it . . . —because she slept with one of his co-workers!

At 4:00 p.m., also on MTV (DTV channel 331), we have a show called “Room Raiders” where another nineteen year old girl is going through the bedrooms of three guys to decide who she is going to go out on a date with.  In the first guy’s room we all have a good chuckle when she finds some female oral contraceptives in his night stand.  In the second guy’s room she takes a magnifying glass to his bed sheets to find and then comment on the ********************** she sees.  Fantastic.  So maybe this is not your thing.  Never fear you can also turn over to the gay, lesbian and trans-gendered network LOGO (yes, you do likely have this channel-DTV ch.272), whose midday offering is a 12:30 to 4:30 marathon of “RuPaul’s Drag Race,” in which a variety of gay and trans-gendered contestants vie to see who is the best drag queen.

This is but a small sampling of content that parents must be made aware, I could go on ad nauseam with examples but it’s safe to assume the point has been made.  When we dig a little deeper into this we find every one of these shows comes from the same source, a company called Viacom.

Allow me to do the honors and introduce you to one Sumner Redstone.  You likely are unfamiliar with him, but if you have any pre-teen or teenage children he has been trying to familiarize himself with them for years.

You see Mr. Redstone is the owner of Viacom, and thus is singularly responsible for a jaw-dropping amount of immoral garbage, not just in the aforementioned time slots but, unmercifully, around the clock.  Also disturbing is that along with owning CBS, Paramount Pictures, Blockbuster Video (majority stock holder), MTV, MTV 2, VH1, CMT, and the gay, lesbian, trans-gendered LOGO network, Viacom, ironically, also owns Nickelodeon.  Making matters worse is the fact that the stated demographic audience for MTV, MTV 2 and VH1 is 12-34 years of age (yes this is not a misprint, I said 12 years old).  This age group is deemed very valuable to marketers because – you guessed it, they are by nature very impressionable and have a longer future consumer life.

Shining the light on Viacom and these types of shows is long overdue, for only with knowledge can we have action.  I have a feeling the average American parent has no idea that this is going on, that a broadcaster would or could so brazenly put on shows, squarely aimed at their children,  in after school time slots that teachers would get fired for putting on at school.  Though it seems hard to believe I assure you that it is in fact occurring.  Even if it means recording these shows with your DVR, I encourage parents of any aged children, not to take my word for it but to go to these channels (all of which are provided above) and become aware of this content themselves.

It is not my purpose to blame anyone for ignorance on this matter, and to the contrary maybe we all deserve a break on this one.  Looking back at what was on the air when many of us were coming of age is very interesting.  Those currently around the age of 70 had “The Whistling Wizard” and “Howdy Doody,” those around 60 had “The Millionaire” and “American Bandstand,” 50 or so saw shows like “The Beverly Hillbilly’s” and “The Andy Griffin Show,” and if you are between 35-40 you had choices such as “The Love Boat” and “The Jefferson’s.”  Quite a far cry from “Sex…With Mom and Dad,” wouldn’t you say.

Since I suspect most of you parents out there do not condone sexually-charged, immorally bizarre programs being offered up to your children by Viacom and others, and clearly the regulating bodies are not looking out for your “public interest,” I urge all of you to contact your cable providers and, in the least, use your remote control’s parental blocking features.  In many ways this is a unique opportunity.  In a climate that too often finds us deeply divided on one political issue or another, this might be about as close to a shot at consensus as we get. Let us not lose the ability to at least stand up, and stand together when we can.

Finally here is a chance to act in the interest of not only our children, but plain common decency.  Finally, here is something that we don’t get much of these days…something we can agree on.

Back in 2010 Alliant Energy was petitioning to be allowed to increase the rates they charged for electricity, and one of the supporting reasons they put forward was the $150 million project called the Whispering Willow-East wind farm in Franklin county. This was big news in Newton, where I was living at the time, as Newton is both the location of some wind turbine manufacturers, and within the area that would be affected by the rate increase.

This serves as perhaps a perfect litmus test for how people think about economics. If you are a progressive or a neo-Keynesian, then your reaction is likely to be that this is entirely appropriate; these wind farms are being built for our benefit, so of course we must pay. If you are an environmentalist or a socialist, then, of course electricity should cost more in your mind. As you are increasing your standard of living, at the unfair expense of the environment or the proletariat, it would be akin to questioning whether people should be locked up for committing assault, wouldn’t it?

If you believe in Austrian economics, or just in free-market pricing in general, then this situation would seem a bit odd. The supply of electricity is presumably increasing because of new wind farms. Increases in supply tend to reduce pressure on prices, not cause them to increase. Yet here, the new wind projects are being cited as a reason to increase the rates per kilowatt hour to the end users. They have built a wind farm, and now demand to pay for it by charging more for electricity still produced mainly by coal which could have been provided for the old price if they hadn‘t bothered to build the wind farm.

That is how capital investment works; if you couldn’t make money by building houses in the current market, but you build a bunch of houses anyway, it doesn’t cause the price of houses to go up. Wind energy doesn’t seem to follow the script of wealth creation.

The rule of thumb seems to be that a wind turbine costs about $1 million per nameplate megawatt of capacity, so if a turbine has 3 megawatts of stated capacity then it would cost about $3 million. Then you have to factor in what the industry refers to as the “capacity factor,” which is the percentage of the nameplate capacity that the turbine actually produces, and in Iowa the capacity factor is said to be about thirty percent. In plain terms, that means that if you want one megawatt of electricity, you need a three-megawatt wind turbine. However, it isn’t as simple as that. Although Iowa might be the “Saudi Arabia of Wind” – proclaimed as such by people who have likely never been to Saudi Arabia, nor had difficulty paying their electric bills – our winds are not constant.

When the wind doesn’t blow, the turbines don’t turn. The same is true for when the wind is too strong – wind turbines are equipped with a braking mechanism to stop them during high winds. If that brake fails, the turbine blades can rattle the entire tower to pieces, if the generator doesn’t catch on fire first – which you should look up on the internet because it is an interesting sight.

As a result of all the shortcomings of wind turbines, wind power costs about $90 per megawatt hour, compared to about $60 per megawatt hour for coal and even less than that for natural gas-generated electricity, yet we are told we need to fill our skylines with expensive wind turbines which spend most of their lives perfectly still and producing nothing – and then charge us for the cost of the electricity these intensely ugly things don’t produce. The Iowa Wind Energy Association has a goal to increase Iowa’s wind capacity from 4,500 megawatts to 20,000 megawatts by 2030 – so we can enjoy 6,000 megawatts of electricity doled out in intermittent intervals.

Germany announced its intent to decommission all of its nuclear power stations after the Fukushima incident, and the German government has been very supportive of wind energy, but not a single coal plant has been shut down. In fact, Germany is replacing its nuclear capacity with new coal power plants – as many as 26 new coal power plants are planned. The wind, like the sea, is a fickle lover as it would seem.

According to wind energy supporters, expanding wind energy creates jobs, and therefore none of the shortcomings in the technology or the economics are considered to matter. This attitude seems to be the source of the consensus among political leaders – or at least the appearance of consensus – as politicians go along with the wind energy movement lest they be accused of being “against jobs.” There are even pictures of wind turbines on Iowa’s new driver’s license design.

The wind energy addiction will end up being much the same as the other fads. State and federal tax credits, grants, and green energy targets are directing capital towards these wind energy projects. The jobs created in the short term are visible to politicians seeking reelection, but the damage is diffused across the entire economy and the effects won’t be felt until later. They can see the turbine blades going down the interstate, but not the higher utility bills of their constituents – including employers – nor the layoffs when the negative financial effects become impossible to ignore. Americans are too broke to pay for expensive wind-generated electricity, governments are too broke to continue subsidizing these projects, and the economy is too broke to carry an industrial sector which generates no profits, no useable increases in electricity, and no discernable tax revenue.

Wind turbines don’t increase the standard of living; in fact they seem to make energy more expensive. They only work intermittently, wear out rather quickly without expensive maintenance, and are heavily dependent on government credits and grants for their manufacture and installation. They have also been known to kill eagles, which is reason enough to hate anything.

The future might be filled with wind turbines, but that won’t be a positive thing. They are too expensive and too underproductive to provide electricity in quantities and at prices that are necessary to make them profitable. Elected officials at all levels need to move past the rhetoric of the wind energy craze and do their own research into this matter.

Unless they do so, they have no business voting to appropriate public funds to support the construction of more public relations kitsch at $1 million per nameplate megawatt. Even now attention is turning towards natural gas as the real driver of future energy production while a combination of better exploration techniques and hydraulic fracturing makes natural gas properly cheap.

Alliant itself is looking at building a new natural gas power plant – in Iowa.

So it is that my observations continue. One cannot help but observe, for example, the contradictions involved with the “private” funeral of Whitney Houston today. You know… the one that every network on the planet apparently has cameras into. That contradiction aside, there are a number of others that require addressing.

There is no doubt in my mind that the woman was among the more talented among us. An angelic voice with looks to match, and for all accounts a personality that one could envy. But what is the message that’s being sent by all this praise being lavished up on her, postmortem?

When the news of her death came in the other day, I was loosely watching a “Golden Girls” re-run and having a chuckle over Betty White’s antics on that show. Thinking perhaps a little too abstractly for some, my first reaction was that the reason Betty White is still alive at age 90 (v being dead at 48) is that she didn’t get tangled up with the likes of Bobby Brown.

It is bizarre indeed, that Brown continues his so called “reunion” tour. I suppose his promoters figure that with Houston gone, and therefore generating sympathy, Brown will gather larger crowds. The sad part is, they’re probably right. Indeed, the show’s highlight according to reports is the tributes he manages to generate for Houston. Still, I can’t help but feel that Brown was probably the largest part of her death. You see, I consider that Whitney Houston died that first line she went through. Brown was certainly a part of that. A major part, in fact. That was a point of contention in their divorce, if you will recall.

Supposedly she was on her way back. At least, that’s what the publicists were saying. Behind the scenes however she’d been bingeing on booze coke, crack, and pills, for the last several months. They called it a relapse. I regard that there’s some things that can’t be cured.

The rest of it was just waiting around for the “thud”. Harsh, I suppose you call that, but the truth often is… and is harder for having ignored the problem for years. And there is is…we’ve seen this syndrome all too often before. And done nothing.

Let’s examine this in light of a few points of recent history, because it seems illogical to me that we can ignore the well-esatablished pattern here.

Michael Jackson; Amy Winehouse. Janis Joplin. Morrison. Hendrix. These top the list, but there are others.

Jazz greats Chet Baker. and Sonny Clark. John Belushi. Mike Bloomfield. Tim Buckley. Richard Burton. Paul Butterfield. John Entwistle. Brian Epstein… the guy who managed the Beatles. Howie Epstein of the Heartbreakers. Comedian Chris Farley . Actress and Singer Judy Garland. Bobby Hatfield of The Righteous Brothers. Tim Hardin. Rolling Stone Brian Jones. Gerald Levert. AWB drummer Robbie McIntosh. Keith Moon. Gram Parsons.

This list  is by no means all inclusive… (being in fact a partial list of what I could remember off the top of my head)  ..but I think the point well established. This is a syndrome we’ve been seeing for years and years. And done nothing.

Which is not so say.. and I’m by no means suggesting… that the star themselves are guiltless.  But our reaction reinforces their excesses. I wrote of Micheal Jackson some months ago, that can see by his whack-job behavior, that Jackson was well beyond reason for a lot of years, but that point alone does not absolve him of his irresponsibility toward his health and the consequences of it. That irresponsibility was essentially reinforced by his star power. Let’s be honest enough to say that after the string of hits in the 80’s and early 90’s, the guy could spend an entire CD making artificial fart noises and nothing else, and his fans would be buying the things, talking about how talented he was, and that he was breaking new artistic ground, rather than simply breaking wind… and that brings me to the second point; Jackson is being held as innocent by his fans, since he was the star and could do no wrong.

I wonder what kind of a message it is that we’re sending as a society when we continue to keep accolades on people whose excesses we know will kill them. Whose excesses are unquestionably hurting people around them, indirectly in the loss imposed on the people around them by their deaths, or more directly, such as Jackson with his hugely public penchant for small boys.. Whose behavior of excess, is being reinforced by our adulation.

I reject out of hand the argument that the legalization of drugs is called for by these events. Sorry, no sale. In response to that argument I point to Amy Winehouse, whose drug of choice is still legally available just about anywhere.  Michael Jackson’s addiction was to prescription painkillers, which doctors prescribe all the time.  The issue is not one of legality, and frankly is in the same class as any argument which focuses on law and government as a solution do anything.  The fact is, government is almost never the solution to a given problem.  It does, of course, ’cause many problems of its own.  But the syndrome we’re describing here, is not among them I don’t believe.

The issue here seems more of a societal issue.  We hold these people to be above and apart because of their talent, and so dedicated are we to that proposition that we tend to ignore these destructive excesses.  eventually, the message becomes twisted to the point where to be held above and talented, one must have these excesses.  that it is standard equipment for such people.  That it aids creativity.    Or, whatever other excuse you want to name.

I offer no immediate solution here.  Frankly, I wonder if there is one, because what we’re fighting here is the true believer.

We’ve seen it often enough in the political world.  Consider the adulation rendered to, say a Barack Obama. Here we have someone who is by any measure, a failure as a president. A man whose actions have hobbled, and possibly destroyed this country.  and yet, the star power he commands apparently blinds some to the consequences. He is still idolized for a number of excuses, which have nothing to do with his performance.

I suppose that as the world becomes more immoral, or perhaps more amoral, our list of true heroes becomes exceedingly short, therefore giving rise to this kind of thing.  In short, the people some idolize, aren’t being held in the same moral demands that they were say, 50 or 60 years ago.  It has become a self feeding circle, both cause and symptom.

If you’ve read any of my pieces from the last four years, you understand that I’ve always been concerned about President Obama’s motives.  He has spent very little time governing since taking office, and a lot of time campaigning for re-election.  His handling of our economy can only be described as bumbling, incompetent.  I used to think it was on purpose; that his rhetoric was designed to appeal to his populist base, and to a certain extent it is.  But I’ve slowly come to realize that the President is clueless.

My evidence for this realization is the budget that the White House submitted to Congress yesterday.   When I do my budget at home, I look at revenues and expenses, and if my expenses exceed my revenues, I either cut my expenses or seek to grow my revenues, or a combination of both.

But not this Administration.  For the third year in a row, they submitted a budget to Congress that cuts virtually nothing, raises revenues on the wealthy, and the discrepancy is so huge ($1 trillion, with a “t”) that it cannot be reconciled.  And this is the third year in a row!  The President is already blaming the Republicans in the House, and “the failed policies that got us into this mess”.  It’s as if he has no say in the matter.  He’s not responsible.  He’s irresponsible.

The Administration cannot possibly be looking at the situation in Europe and learning from it.  So, here it is, plain and simple:  We have insufficient revenues to meet our obligations.  The only reasonable way to grow revenues is to increase the receipts coming to the Treasury.  The most effective, longest-lasting way to do this is to create more tax payers and grow the economy as fast as possible.  Our obligations still must be brought under control and reformed.  We call it entitlement reform.  We cannot afford Obamacare.  We cannot afford our Medicare obligations as they currently exist.  We need responsible politicians; someone who will look at the situation and see it for what it is and be an adult and make the hard decisions.  Help!

Which brings us full circle to the Shakedown.  Five banks cannot make loans if they have a $25 billion nut to crack because of an individual President’s vendetta.  That money has to come from somewhere, and usually means fewer loans and fewer employees, which only exacerbates the budget deficit.  When banks lend, that money gets circulated through the economy and creates jobs, tax revenues and, yes, wealth.  And to my knowledge, being wealthy is not a sin, although greed is.

Let’s hope that the Republican nominee, whoever he is, will man up and take responsibility for our fiscal situation and be serious.  Because the incumbent can no longer be taken seriously.

My heart breaks every time I think of each life that is shattered indiscriminately as it is snuffed out by a doctor who violates his Hippocratic Oath by harming an innocent life, and a mother who is convinced that she has no way to handle the challenges of pregnancy.  The worst of it is a society that esteems the notion as noble that offers women the “freedom” to destroy their own children.

Unfortunately, our concept of Liberty has become animalistic.  We no longer believe that our once great nation is intended to be a bastion for building, growing, encouraging, supporting a society that wants to work together to make the best of life.  It has come to mean simply that each individual can do absolutely anything they want to do, regardless of the impact to themselves OR society.  Frankly, I have occasionally been heard to speak in Libertarian tones on issues such as Medical Marijuana.  I don’t retract the opinions, but I fear that the general mindset of the Libertarian may be no better than the Liberal in this regard: they seem to have no real concern about the accumulated impact of “doing as you please regardless of the consequences”.  As long as every American is free to be as much of a drain on society as they want to be, this country will continue to crumble.  Please don’t misunderstand or lose sight of my desire to help those in need.  I simply cannot tolerate the idea that we are truly focused on how to help those in want.

Our society now lifts up the meeting of the individual’s physical desires, through whatever means is necessary, as the ultimate responsibility of society.  Essentially our traditional mores are confounded, and our resources are being directed toward the pleasures of the individual.  We go so far as to provide the tools needed to conceal our failings either before or after the fact.

That’s just a bit of how deplorable I find our current social state.  But even in the midst of all of this angst and frustration about our society’s self-destruction, I find those who I expect to help hold our society up to be falling themselves.

This past week our President announced that all employers, including religious organizations, would be required to provide as part of their health-care benefits, covered access to birth-control.  Understandably, the Catholic Bishops are up in arms about this.  The Catholic Church does not permit the use of birth-control for the simple reason that it has always been taught that the purpose of intercourse is to procreate, and to treat it otherwise is in opposition to God’s plan (I am not opposed to birth-control for married adults, but the Catholic Church should not be forced to pay for birth-control).

I interject this event at this point not because on the face of it I see a direct tie between birth-control and abortion, but because some who spoke out in support of the Catholic Bishops took the trouble to associate it with paying for abortions.  That association is justified, as some techniques that are referred to as “birth-control” are truly causing the abortion of a conceived human.

On Friday, the President announced that religious organizations who are opposed to birth-control would not be required to provide this to their employees.  However, their insurance companies would still be required to provide the birth-control at no charge.

I could focus my efforts on how stupid it is to believe that this is actually a compromise, but thankfully the Catholic Bishops have spared me from having to point out the obvious.  But I’ll say this much: this compromise solves this issue about as much as saying that paying Planned Parenthood to perform breast screenings has nothing to do with supporting abortion.  If I have to explain either of those, I will be wasting my breath because you’ve already been sucked into the lies of our media the Liberal elites.

What bothers me about all this (and the reason for the headline) is that we’re getting riled up about government forcing folks to pay for things that they don’t like, whether it’s birth-control or abortion, as if we live in a post-progressive society that has taken legalized abortion and social deterioration for granted.  Instead of actually fighting for the rights of the unborn or a culture that upholds purity, integrity and self-control, we’re busy pecking at the insults of government forcing some of us to actually pay to continue supporting the corruption of our society.  Don’t get me wrong; if we really want to see ourselves living in a universe where we allow everyone to live as they so desire, then this is what we are left with and I would (and still do) support Catholic organizations that do not want to be paying for birth-control.  However, too many are arguing that “You can let others pay for (and by inference, conduct) birth-control or abortions, just don’t force me to pay for it”, and this is the problem: we seem to have given in.

But I refuse to allow our corrupted society to set the baseline for my perspective.  Unfortunately, the Pro-Life movement is going nowhere, the contemporary Purity movement (chastity commitments by teenagers) seems equally paralyzed.  Too much money and effort is being spent to argue against the insults and not enough on the offense.  Making me pay for something that is an offense is only an insult… making me part of what allows the offense should be intolerable.

Standing by and hoping that our incremental steps to solve the ills of our society can themselves be goals is a formula for failure.  I hope every life-supporting politician is willing to vote for bills that make incremental progress, but these should NEVER be seen as successes, only as opportunity to save the lives that can be saved.  The only goal we should have is to eliminate all forms of optional abortion.

If we are really truly Pro-Life, we should avoid fighting for our right to be Pro-Life, and rather for rights of the unborn.  It is the unborn that need our voice… do not ever give up on them.

I encourage you to support your local or the national right-to-life organization.  Click here to visit the National Right To Life web site.

Photo © Calek – Fotolia.com

Low interest rates are supposed to spur economic growth, or at least that is what the textbook for my International Political Economy course said, so what could possibly be wrong with low interest rates?

Of course, low interest rates provide an incentive to borrow money. However, they also form a powerful incentive to avoid saving money – if you don’t get any returns on saving your money, then you are more likely to spend it and get some immediate enjoyment from it.

It is important to remember that our economy is rife with other government-backed incentives, everything from tax credits for “green” cars to FHA mortgage insurance. Low interest rates will exacerbate these incentives even further, giving powerful incentives to borrow money for houses, cars, consumer goods, and government spending.

This is the stated intention, and we are constantly told that consumer spending is the bulk of our GDP, and that it is critical that we stimulate demand – that is, fill the economy up with refreshing and energizing financial methamphetamine. The result will be exactly the opposite.

With every reason in the world to borrow and spend money, and with absolutely no reason to save or invest it, the United States will witness a continued depletion of our domestic capital pool. Capital will be shifted away from funding businesses, factories and production, and towards non-productive spending, just as it was during the housing boom. (If you have the time, find a chart of average home prices for the US from 2000 onwards and compare it to the US trade deficit for the same time period.)

Money has inherent opportunity costs. If you spend it, then you cannot save or invest it. The Federal Reserve and the Federal government together have decided that spending is what counts, and that spending borrowed money is the greatest virtue of all. As a result, the same bank that wouldn’t give you a line of credit for your small business will give you an FHA-insured home mortgage at 3.25% APR.

As the capital pool shrinks, the Fed will try to fund this new bubble with inflation, but while a government can print currency, they cannot print capital – as they increase the money supply, the prices for consumer and capital goods go up, eating up all of the new “liquidity“ from the central banks.

In short, the low interest rates will have the exact opposite effect as intended. Borrowing and consumption will likely go up as Bernanke theorizes, that much is true, but production-based economic activity will not. Retailers might hire a few more clerks, and banks might hire a few more mortgage brokers, at least for a while. Unable to borrow production capital, more businesses will fail. Able to borrow revolving credit, some consumers will spend. Already burned by the last housing bubble, Americans are unlikely to be suckered into another one, so the effects on housing prices are likely to be minimal – people will buy, but probably not at current prices.

The Fed thinks they are providing the economy with an upper, a powerful stimulant, and they are expecting a jolt of frenzied energy to follow. In reality, they have provided a powerful opiate; one which will not bring any recovery to the economy but will help mask the pain of an economy that is consuming itself.

If I am right, it will be evidenced by persisting unemployment, more business closures and an increase in the trade deficit.

But this is an election year, and much is being made about how the uber-wealthy are being taxed, whether it’s Warren Buffett, or Mr. Buffett’s secretary, or Mitt Romney or Newt Gingrich.  What we hear is that they pay a rate of something outrageous like 15% of their income in taxes, while the top marginal rate is 35%, and so some feel (Is the term “Liberal Reader” an oxymoron?) that Governor Romney is somehow not paying his fair share.  Apparently $300,000 is not enough for him.

Here’s the reality of the situation.  Much of Mr. Buffett’s and Governor Romney’s income is not what we would categorize as “ordinary” income, that is, earnings from wages and interest on savings.  Rather, it’s dividend and capital gain income, which is taxed at 15%.  Dividends, quite simply, are what’s left over after corporations have already been taxed.  Corporations provide many functions, one of which is to collect taxes (income, payroll and sales taxes) from their employees and customers.  The dollars that flow back to investors in the form of dividends have already been taxed multiple times.  To suggest that those dollars should be taxed yet again at a higher rate is akin to stealing.  If I do it, it’s wrong, but if the government does it, it’s legal, and the argument is probably borne of jealousy.  My wish is that everyone would have a healthy income derived from dividends.

No one can argue that the government isn’t in a financial fix.  Spending is out of control, but so is the size of government.  Senator Marco Rubio (R-Florida) perhaps said it best.  What the country needs is not more taxes, he said, but more tax payers.  That’s what President Obama should have been addressing in his State of the Union.

At the heart of the wild ride that this nominating process has been is a reality that Newt Gingrich referenced in his victory speech Saturday night.  The four candidates left are all from different backgrounds and each is giving voice to unique portions of the Republican ideology.  Like most Republicans this cycle, how this cast of characters interplays with my specific political stances has made for a very difficult decision in where to place my support and who to root for.  Here is how I see it.

While Gingrich and Romney look to be the two that future voters will largely decide between, Ron Paul is probably the closest to my own personal views on most of the issues, and champions what I want to see happen domestically.  In terms of who is the most likable of the four, Rick Santorum wins this for me by a large margin.  When it comes to who I see as the most electable I believe the answer to be Gingrich and Romney.

Mitt and Newt

Months ago I went on record with my opinion that Mitt Romney would ultimately fall short in his effort to win this nomination.  Though I may end up being proven right, it will mainly be for reasons un-forecasted at the time.  There are two things hurting Romney right now, one is policy based and the other is political.

The policy issue giving Conservatives pause is Romney’s relatively small solutions to what most see as huge problems.  Though he talks the talk of changing Washington, voters who inform themselves of his economic proposals find that he is not embracing dramatic changes to either our tax code or our economic system.  The political problem befalling him currently is his reaction to releasing his tax returns.  Yesterday morning on Fox News Sunday he committed to releasing only his returns from 2010 and 2011.  Whether true or not, his unwillingness to disclose more screams that he is trying to conceal something damaging.

These two issues are so devastating because one affects the in-depth policy voter and the other affects the more surface level voter.  Combined, these drawbacks are putting a huge hole in what has been his biggest positive—that he is the most electable candidate in a match-up with President Obama.  Along these lines, if on any level there indeed is damaging facts inside his tax records his “electability” advantage will be nearly wiped out.

Prior to the Iowa Caucuses I also went on record with my support for Newt Gingrich.  You can click the link to read my reasoning, and it still remains the same.  The frustrating thing about Newt is that, to this point, he has been immensely more likable when he is losing.  Each time he has enjoyed success throughout this process he has managed to come off as pompous and over-confident.

If he is able to put his head down, humbly work for every vote, and keep the focus on his vision and his 21st Century Contract With America, he has a very good chance at eventually surpassing Romney.  As the weeks pass he is beginning to erode the notion that Romney is more electable and elevate the case that he would be just as, if not better, suited to face Obama in a general election campaign.

The main arguments for this is his superior position in refuting Obama Care, his optional 15% flat tax contrasted to Romney’s tax code tinkering, and his past record of large scale government achievement.  The X-factors that will impact this race going forward will be how Romney handles the tax return issue and whether or not Newt can stay humble and focused on working hard for votes in the wake of his recent surge.

If this cycle has proved anything so far it is that predictions are foolish.  The only wise move is to keep watching everything…and to not bet on anything.

I missed Ralph Reed speaking at our caucus.  Oh well, the price you pay for volunteering!

We had a total of about 200 caucus goers, more than 25% of whom registered at the caucus (I was very happy to see the new crop of high school students getting registered for the first time!).  Everything was crazy for about 30 minutes running up to the start of the meeting, but nothing traumatic.  No big protests, no trouble makers trying to force their way into the event.

Quite a few news crews with cameras.  Including a reporter for an Italian television network.

The speeches all went pretty much as expected, and everyone was very courteous.  I heard that some other meetings around town didn’t go quite as nicely, which is really too bad.

The voting was quick and my tellers and I gathered up the ballots and counted.  With several cameras only two feet away rolling video and stills… I can’t understand why they needed what sounded like 40 or more stills for one camera of us… counting.

Anyhow, I reported the results to the caucus, and about 190 people left immediately.  Including most of the reporters.

We elected central committee members, convention delegates and such.  We only had one platform plank presented which was a solid right-to-life statement.  Also the current platform already speaks to this, the wording addressed the need to be consistent and engaged at all levels on the issue, and clearly states the meaning of life as from conception to natural death.  It passed unanimously, as it should have.

Teardown and cleanup took less than 30 minutes.  We were out of there by 9:00 PM.

~ ~ ~ ~ ~

Surprises:

1. There were no attempts to derail our caucus by the Occupy movement.
2. Nobody complained about having to fill out a registration form.
3. Nobody complained about anything as far as I could tell.
4. Michelle Bachmann only got 2 votes.  So did “No Preference”.

Not a surprise was the fact that our caucus was not typical of the state-wide numbers.  Romney was far and away the winner in our precinct with 80 votes, with Santorum at 45 and Paul at 36.  Gingrich and Perry had 22 and 12 respectively.  Oh, and Jon Huntsman had 1 vote.