Madness Coming To Gold Market: “There Are Thirty to Fifty Owners For Each Ounce of Gold That’s Out There”

Posted on April 6th, 2015

Gold Trap

By Max Slavo

Though the price of gold has seen a significant drop over the last two years from it’s all time highs of about $1900 per ounce, many experts and analysts believe that western central banks and their colleagues at major financial institutions have been manipulating the price. The rampant manipulation is believed to stem, in part, from the formerly Rothschild owned London Gold Fix, an organization made up of five large banks that make a daily determination of what the price of gold should be.

It is this unilateral control by western banks that recently prompted the Chinese to create their own Shanghai Gold Exchange. What separates the two is that the Chinese will be using their currency, the Yuan, as the reserve rather than the U.S. Dollar. Moreover, unlike their European counterparts, the Chinese will be trading in actual physical dollars. Read More..

If Anyone Doubts That We Are In a Stock Market Bubble, Show Them This Article

Posted on April 3rd, 2015

Bubble In Hands Public Domain By Michael Snyder

The higher financial markets rise, the harder they fall.  By any objective measurement, the stock market is currently well into bubble territory.  Anyone should be able to see this – all you have to do is look at the charts.  Sadly, most of us never seem to learn from history.  Most of us want to believe that somehow “things are different this time”.  Well, about the only thing that is different this time is that our economy is in far worse shape than it was just prior to the last major financial crisis.  That means that we are more vulnerable and will almost certainly endure even more damage this time around.  It would be one thing if stocks were soaring because the U.S. economy as a whole was doing extremely well.  But we all know that isn’t true. Read More..

ABCs of the Coming Credit Crunch?

Posted on April 1st, 2015

ABC’s, credit crunchBy The Daily Bell

The world’s next credit crunch could make 2008 look like a hiccup. Is this why central bankers are so scared of raising interest rates? – Telegraph

Dominant Social Theme: Markets go up and down. Not to worry.

Free-Market Analysis: This is a good analysis of what could go wrong with world markets (especially Western and US ones) and why … It touches on a number of memes: Sort through them to better understand what’s taking place, or what could take place – and could not.

Maybe it’s too quiet. Last week, Ray Dalio, the founder of the $165bn (£110bn) hedge fund Bridgewater Associates, wrote a widely-circulated note warning his clients that the US Federal Reserve risked setting off a 1937-style crash when it starts raising interest rates again. Read More..

Feds Urge Banks to Consider Calling Cops on Customers Who Withdraw $5,000 or More

Posted on March 24th, 2015

US Department of Justice

EDITOR’S COMMENT: Here is further proof of the ever-encroaching police state here in America, as everyone is now considered a threat or a terrorist. Except those, of course, who are exempt because of political correctness. As Max Slavo has said,It’s a sad state of affairs when law-abiding American citizens now have to worry about how to hide their money where the bankers and police can’t find it.”

By Simon Black

Imagine going to the bank to withdraw some cash.

Having some cash on hand is always a prudent strategy, and especially today when more and more bank deposits are creeping into negative territory, meaning that you have to pay the banks for the privilege that they gamble with your money.

You tell the teller that you’d like to withdraw $5,000 from your account. She hesitates nervously and wants to know why.

You try to politely let her know that that’s none of the bank’s business as it’s your money.

The teller disappears for a few minutes, leaving you waiting.

When she returns she tells you that you can collect your money in a few days as they don’t have it on hand at the moment.

Slightly irritated because of the inconvenience, you head home.

But as you pull into your driveway later there’s an unexpected surprise waiting for you: two police officers would like to have a word with you about your intended withdrawal earlier

If this sounds far-fetched, think again. Because it could very well become a reality in the Land of the Free if the Justice Department gets its way.

Earlier this week, a senior official from the Justice Department spoke to a group of bankers about the need for them to rat out their customers to the police.

What a lot of people don’t realize is that banks are already unpaid government spies.

Federal regulations in the Land of the Free REQUIRE banks to file ‘suspicious activity reports’ or SARs on their customers. And it’s not optional.

Banks have minimum quotas of SARs they need to fill out and submit to the federal government.

If they don’t file enough SARs, they can be fined. They can lose their banking charter. And yes, bank executives and directors can even be imprisoned for noncompliance.

This is the nature of the financial system in the Land of the Free.

And chances are, your banker has filled one out on you—they submitted 1.6 MILLION SARs in 2013 alone.

But now the Justice Department is saying that SARs aren’t enough.

Now, whenever banks suspect something ‘suspicious’ is going on, they want them to pick up the phone and call the cops:

“[W]e encourage those institutions to consider whether to take more action: specifically, to alert law enforcement authorities about the problem, who may be able to seize the funds, initiate an investigation, or take other proactive steps.

So what exactly constitutes ‘suspicious activity’? Basically anything.

According to the handbook for the Federal Financial Institution Examination Council, banks are required to file a SAR with respect to:

“Transactions conducted or attempted by, at, or through the bank (or an affiliate) and aggregating $5,000 or more…”

It’s utterly obscene. According to the Justice Department, going to the bank and withdrawing $5,000 should potentially prompt a banker to rat you out to the police.

There’s something else about this that I want to point out, though: this may be a very early form of capital controls in the Land of the Free.

This is the subject of today’s Podcast. You can listen to Podcast in here.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

If you liked this post, please click the box below. You can watch a compelling video you’ll find very interesting.

Will you be prepared when everything we take for granted changes overnight?

Just think about this for a couple of minutes. What if the U.S. Dollar wasn’t the world’s reserve currency? Ponder that… what if…

Empires Rise, they peak, they decline, they collapse, this is the cycle of history.

This historical pattern has formed and is already underway in many parts of the world, including the United States.

Don’t be one of the millions of people who gets their savings, retirement, and investments wiped out.    (my emphasis)

Click here to watch the video.

By Simon Black for Sovereign Man

By permission Simon Black

www.sovereignman.com

http://www.sovereignman.com/trends/justice-department-rolls-out-an-early-form-of-capital-controls-in-america-16640/

Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

New Report: Over Next Decade, Budget Deficits Will Hit Trillion Dollar Mark

Posted on March 23rd, 2015

Deficit Spending by RJ Matson, The St. Louis Post Dispatch

By Romina Boccia and Michael Sargent

You’ve probably heard the claim that deficits have been cut in half and are at the smallest level since 2009, implying that the nation has corrected its fiscal course.

But that’s not nearly whole story. The Congressional Budget Office’s latest “Updated Budget Projections: 2015 to 2025,” which details spending, revenues and deficits, shows that while those deficits are projected to remain flat through 2018, they are projected to rise steeply afterwards. The 2015 deficit is projected at $486 billion, or 2.7 percent of gross domestic product—hardly a cause for celebration.

And the long-term picture is even worse. The report shows that spending is on the rise, propelling deficits to return to the trillion-dollar mark by the end of the decade in 2025. Spending meanwhile will nominally grow from $3.5 trillion last year to exceed $6 trillion by 2025. In terms of a percentage of the economy, spending will rise to 22.1 percent of GDP from its 2014 level of 20.3 percent of GDP.

While many opponents of fiscal restraint would have you believe that the country’s spending and deficit problem are at ease, deficits shrunk only as discretionary spending temporarily leveled off (largely as a result of statutory budget caps) and tax revenues surged due to a litany of tax increases and a stronger economy. The CBO report shows that excessive spending and high deficits are lurking just beyond the veneer of temporary progress.

Spending will nominally grow from $3.5 trillion last year to exceed $6 trillion by 2025.

Rather than tout short-lived improvement and ignore long-term fiscal dangers, lawmakers should put the nation’s budget on a path to balance. Congress can take three steps to promote fiscal solvency by reducing spending and debt:

  • Reform the major three entitlements: Spending on Medicare, Medicaid and Social Security are set to explode as the nation’s population ages and Obamacare is phased in. Together with net interest, entitlements are projected to account for 85 percent of spending growth. Entitlement reform should focus on providing benefits to those who truly rely need them in a cost-effective way.
  • Eliminate wasteful and improper spending: Congress should establish a mechanism such as an independent waste commission that can effectively identify and root out wasteful and duplicative spending, as well as end programs that fall outside the purview of the federal government.
  • Control spending with firm caps: Even though Congress weakened the discretionary spending caps enacted in 2011, the Budget Control Act caps still helped return discretionary spending to pre-recession levels. While considering legislation when the debt limit returns this month—a sign that reforms are needed — Congress should implement spending caps that will curb long-term spending growth as a requisite for any increases to the debt limit.

The CBO’s outlook makes it clear that the nation still faces a grave threat from its spending and debt problem. Congress should take these steps to curb government spending in the future and save the next generations from being mired in excessive debt.   (my emphasis)

By Romina Boccia and Michael Sargent for The Daily Signal

By permission The Daily Signal

http://dailysignal.com

http://dailysignal.com/2015/03/09/new-report-next-decade-budget-deficits-will-hit-trillion-dollar-mark/

Romina Boccia focuses on federal spending and the national debt as the Grover M. Hermann fellow in federal budgetary affairs in the Roe Institute for Economic Policy Studies at The Heritage Foundation.

Michael Sargent is a research assistant at Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Imam Who Called for Death for Ayaan Hirsi Ali Hired by Feds to Teach Islam to Prisoners

Posted on March 16th, 2015

WAIMH Red ArrowEDITOR’S COMMENT: Why are your tax dollars being used to hire an Imam to teach Islam to federal prison inmates, particularly since some studies show that our prisons might be where certain Muslims’ radical beliefs get started. Political correctness gone wild again?

By Thomas Lifson

Your tax dollars at work, teaching Islam to federal prison inmates.

Chuck Ross of The Daily Caller reports:

According to federal spending records, Fouad ElBayly, the imam at Islamic Center of Johnstown in Pennsylvania, was contracted by the DOJ’s Bureau of Prisons beginning last year to teach the classes to Muslim inmates at Cumberland Federal Correctional Institution in Cumberland, Md.

The records show that ElBayly has two contracts worth $12,900 to teach the classes and to provide the inmates “leadership and guidance.” One of the contracts is dated Feb. 20, 2014, and the other is dated Dec. 8, 2014.

It was April 2007 when ElBayly, the imam at the Islamic Center of Johnston, protested Ali’s scheduled appearance at the University of Pittsburgh-Johnstown.

Ms. Ali is well known to regular readers of American Thinker as a fearless critic of Islam’s treatment of women. Born in Somalia and subjected to brutal surgical disfigurement, she left that nation and the faith of her birth (that apostasy alone is enough for the death penalty under Sharia law) and has criticized the subjugation of women, which what apparently triggered Imam ElBayly’s call:

“If you come into the faith, you must abide by the laws, and when you decide to defame it deliberately, the sentence is death,” the imam told a local newspaper ahead of her university visit.

Somehow, ElBayly passed the screening requirements of the Federal Bureau of Prisons and went on the taxpayers’ payroll.

Perhaps the highest hurdle for ElBayly to clear would be the program’s requirement to affirm, I do not endorse nor will I practice or use language in the institution that will support violence, terrorism, discrimination against other inmates.”

The Daily Caller sought to interview ElBayly, but he didn’t not respond to an email request. A phone number listed for ElBayly was directed to a fax machine.

The DC also wanted to find out more about how the DOJ’s Bureau of Prisons chooses who can teach religious classes to inmates, but the agency did not respond. The Cumberland facility also did not respond to specific questions about ElBayly’s classes.

Given the scripturally-sanctioned violence against non-believers practiced by a nontrivial proportion of Muslims, it is highly questionable that federal funds ought to be expended in instruction of Islam. Of course, such a position would fly in the face of the official ideology that all religions are the same, and that Islam is a “great religion.” While it is true that most Muslims practice their faith in peace, it is also true that the United States is under threat by people who use a historically prominent interpretation of the explicit wording of the Koran and hadith calling for subjugation of non-believers and imposition of a global caliphate. In Jutice Jackson’s words, “The Constitution is not a suicide pact.”   (my emphasis)

By Thomas Lifson for American Thinker

By permission American Thinker

www.americanthinker.com

http://www.americanthinker.com/blog/2015/03/imam_who_called_for_death_for_ayaan_hirsi_ali_hired_by_feds_to_teach_islam_to_prisoners.html#ixzz3TZtQaDhm

Hat tip: Clarice Feldman

Disaster Ahead for the Humpty Dumpty Economy

Posted on March 12th, 2015

Titanic Sinking

By Monte Pelerin

Anyone with an ounce of intelligence should be able to see the disaster ahead for this country. It should be noted that the US is not alone. Other developed countries are heading for the same tragedy. Governments everywhere are little more than Mafia, draining their productive citizens dry.

Economics has not failed but it might as well have. It was co-opted by the Mafia Class and turned into Statist policies to exploit the productive. A pact between the financial classes and government created a myth about Central Banking that made the entire scheme possible.

To understand the full implications of the criminal takeover of government, the words of Thad Beversdorf are enlightening:

But we are failing to deliver on our obligations as Americans, that is undeniable.  We are allowing the political class to plunder our wealth, negate our freedoms and desecrate our Constitution.  Sadly we have become the immoral populace our founding fathers warned all future generations not to become.  As the ‘Founding Father of Scholarship and Education’, Noah Webster, put it in 1832,

“if the citizens neglect their duty and place unprincipled men in office, the government will soon be corrupted; laws will be made, not for the public good, so much as for selfish or local purposes; corrupt or incompetent men will be appointed to execute; the public revenues will be squandered on unworthy men; and the rights of the citizens will be violated or disregarded. If a republican government fails to secure public prosperity and happiness, it must be because the citizens neglect the Divine commands and elect bad men to make and administer the laws”

The duty and obligation is ours and so too then are the failures and successes of our society.  Unfortunately ours will be the first generation to have failed at being American.  Yet regrettably more unfortunate is that it will be the innocent generations yet to come that will bear the full costs of our failures.  We are 15 years in to what is absolute denial regarding the competence of our nation’s policymakers.  Their failures in taking us to a false war in Iraq, in making a mockery of our rights as Americans and in destroying our economic opportunities are our failures.  Yet here we sit, silent and indifferent to our own demise; so completely antithetical to the character of a true American.

Mr. Beversdorf article goes into detail to generously support his conclusion.

Humpty Dumpty Economics

Humpty Dumpty

Mother Goose authored a nursery rhyme about Humpty Dumpty:

Humpty Dumpty sat on a wall,

Humpty Dumpty had a great fall;

All the king’s horses and all the king’s men

Couldn’t put Humpty together again.

Statist economists may have forgotten this nursery rhyme but their harmful economic policies, begun almost a century ago but accelerated recently, have pushed Mr. Dumpty (the economy) off the wall. Hubris or academic goupthink coupled with government largess prevents them from seeing that Humpty is irreparable. The media don’t have the requisite ounce of intelligence nor the willingness to report the truth if it were explained to them. They are truly “all the king’s horses and all the king’s men” trying to put Humpty together again or at least hide the incident with Humpty and the wall.

After six years of proclaimed “recovery” accompanied by rigged statistics and Pravda-like reporting, it is apparent that there has been no recovery. The average man knows that things are bad and not getting better. However our governing intellectuals and their pawns in the media continue the propaganda about a recovery. There is none, nor can there be one with current policies.

The stock market has done well over this period. But that is a result of the Federal Reserve flooding the system with liquidity, most of which has inflated financial asset prices. This chart, from Zerohedge, shows the divergence between stock prices and GDP growth:

Stock Econ Divergence

Among the several charts in Beversdorf’s article are some that support the ridiculous over-valuation of the stock market. Here is one:

Stock Market Valuation

These markets are not based on your father or grandfather’s valuations. Financial markets can be looked at as akin to a Ponzi scheme. So long as liquidity continues to be added, they may continue to climb. Participating in this game where value is dependent on government schemes rather than underlying economic value is akin to playing Russian roulette. Unfortunately, financial repression (the holding down of interest rates) has forced many people into the stock market who should not be taking these risks.

Damage and distortion is not restricted to financial assets. Mis-pricing of interest rates and other price signals ensures improper capital allocation. When the tide recedes, these improper decisions will become apparent with abandoned projects, closed plants and bankruptcies.

Humpty Dumpty economics is flooding the system with liquidity and encouraging additional debt. This approach cannot avoid the tragedy it has already created, but it may be enable to defer the economic reckoning a bit longer. The pain of correction is avoided in the same fashion as more heroin works for the addict. Additional harm is inflicted to avoid the necessary correction. At some point death results.

Ultimately, there will be another Great Depression. The levels of debt are not sustainable nor serviceable. That pertains to both public and a lot of private debt. Debt will decrease, but it will decrease via massive defaults.

Whether we get the high inflation that the government is targeting (to have a surreptitious default on debt) is moot. The Mafia is truly desperate at this point. They have little control over the path to the Greatest Depression. There is a chance that their policies get out of control on the inflation front, producing a hyperinflation. Regardless, there is no chance of current policies returning the economy to normal. Regardless of the path, there is massive disaster ahead. Debt defaults and the Greatest Depression seem inevitable. Only the timing is difficult to predict.   (my emphasis)

By Monte Pelerin for Economic Noise

By permission Monte Pelerin

www.economicnoise.com

http://www.economicnoise.com/2015/03/01/disaster-ahead-for-the-humpty-dumpty-economy/

New Choice for World Currency: “Chinese Yuan Will Supersede Dollar as Top Reserve Currency”

Posted on March 10th, 2015

Billboard, New World Currency, Chinese Yuan

EDITOR’S COMMENT: As SHTF has reported, China has been furiously buying up gold and stockpiling it for many years. While the U.S. continues to pursue a foolish economic path hinged on geopolitical dominance and interference through war, China has been positioning itself to hold all the face cards.

China has openly declared that it will dominate the next era of the global market, and present a viable world currency that will compete, or perhaps, replace the U.S. petrodollar, whose power has been challenged even by recently falling oil prices.

As this continues to play out in slow motion, one has to wonder, what are Americans preparing for? And why are we not preparing better for our position in the future?

By Max Slavo

The following article has been graciously contributed by Michael Snyder via his Economic Collapse blog.

China Has Announced Plans For A ‘World Currency’

By Michael Snyder

The Chinese do not plan to live in a world dominated by the U.S. dollar for much longer.  Chinese leaders have been calling for the U.S. dollar to be replaced as the primary global reserve currency for a long time, but up until now they have never been very specific about what they would put in place of it.  Many have assumed that the Chinese simply wanted some new international currency to be created.  But what if that is not what the Chinese had in mind?  What if they have always wanted their own currency to become the single most dominant currency on the entire planet?  What you are about to see is rather startling, but it shouldn’t be a surprise.  When it comes to economics and finance, the Chinese have always been playing chess while the western world has been playing checkers.  Sadly, we have gotten to the point where checkmate is on the horizon.

On Wednesday, I came across an excellent article by Simon Black.  What he had to say in that article just about floored me…

When I arrived to Bangkok the other day, coming down the motorway from the airport I saw a huge billboard—and it floored me.

The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency”

Given that the Bank of China is more than 70% owned by the government of the People’s Republic of China, I find this very significant.

It means that China is literally advertising its currency overseas, and it’s making sure that everyone landing at one of the world’s busiest airports sees it. They know that the future belongs to them and they’re flaunting it.

This is the photograph of that billboard that he posted with his article…

Chinese World Currency 2

Everyone knows that China is rising.

And most everyone has assumed that Chinese currency would soon play a larger role in international trade.

But things have moved so rapidly in recent years that now a very large chunk of the financial world actually expects the renminbi to replace the dollar as the primary reserve currency of the planet someday.  The following comes from CNBC

The tightly controlled Chinese yuan will eventually supersede the dollar as the top international reserve currency, according to a new poll of institutional investors.

The survey of 200 institutional investors – 100 headquartered in mainland China and 100 outside of it – published by State Street and the Economist Intelligence Unit on Thursday found 53 percent of investors think the renminbi will surpass the U.S. dollar as the world’s major reserve currency.

Optimism was higher within China, where 62 percent said they saw a redback world on the horizon, compared with 43 percent outside China.

And without a doubt we are starting to see the beginnings of a significant shift.

Just consider this excerpt from a recent Reuters report

China’s yuan broke into the top five as a world payment currency in November, overtaking the Canadian dollar and the Australian dollar, global transaction services organization SWIFT said on Wednesday.

The U.S. dollar won’t be replaced overnight, but things are changing.

Of course the truth is that the Chinese have been preparing for this for a very long time.  The Chinese refuse to tell the rest of the world exactly how much gold they have, but everyone knows that they have been accumulating enormous amounts of it.  And even if they don’t explicitly back the renminbi with gold, the massive gold reserves that China is accumulating will still give the rest of the planet a great deal of confidence in Chinese currency.

But don’t just take my word for it.  Consider what Alan Greenspan has had to say on the matter…

Alan Greenspan, who served at the helm of the Federal Reserve for nearly two decades, recently penned an op-ed for the Council on Foreign Relations discussing gold and its possible role in China, the world’s second-largest economy. He notes that if China converted only a “relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system.”

Meanwhile, the Chinese have also been accumulating a tremendous amount of U.S. debt.  At this point, the Chinese own approximately 1.3 trillion dollars worth of our debt, and that gives them a lot of power over our currency and over our financial system.

Someday if the Chinese wanted to undermine confidence in the U.S. dollar and in the U.S. financial system, they have a lot of ammunition at their disposal.

And it isn’t just all of that debt that gives China leverage.  In recent years, the Chinese have been buying up real estate, businesses and energy assets all over the United States at a staggering pace.  For a small taste of what has been taking place, check out the YouTube video posted below…

For much, much more on this trend, please see the following articles…

-“The Chinese Are Acquiring Large Chunks Of Land In Communities All Over America

-“Meet Your New Boss: Buying Large Employers Will Enable China To Dominate 1000s Of U.S. Communities

-“Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America

-“The Chinese Want To Spend Billions Constructing A 600 Acre ‘China City’ In New York State

-“45 Signs That China Is Colonizing America

-“Will Detroit Be The First Major Chinese City In The United States?

On a purchasing power basis, the size of the Chinese economy has already surpassed the size of the U.S. economy.

And there are lots of signs of trouble ahead for the U.S. economy at this point.  I like how Brandon Smith put it in one recent article…

We are only two months into 2015, and it has already proven to be the most volatile year for the economic environment since 2008-2009. We have seen oil markets collapsing by about 50 percent in the span of a few months (just as the Federal Reserve announced the end of QE3, indicating fiat money was used to hide falling demand), the Baltic Dry Index losing 30 percent since the beginning of the year, the Swiss currency surprise, the Greeks threatening EU exit (and now Greek citizens threatening violent protests with the new four-month can-kicking deal), and the effects of the nine-month-long West Coast port strike not yet quantified. This is not just a fleeting expression of a negative first quarter; it is a sign of things to come.

In addition, things continue to look quite bleak for Europe.  Once upon a time, many expected the euro to overtake the U.S. dollar as the primary global reserve currency, but that didn’t happen.  And in recent months the euro has been absolutely crashing.  On Wednesday, it hit the lowest point that we have seen against the dollar in more than a decade

The euro last stood at $1.1072, off 0.90 percent for the day and below a key support level, Sutton said. It fell to as little as $1.1066, which was the lowest level for the euro against the dollar since September 2003, according to Thomson Reuters data.

The euro also declined to one-month lows against the Japanese yen, which was flat against the dollar at 119.72 yen to the dollar.

As the U.S. and Europe continue to struggle, China is going to want a significantly larger role on the global stage.   (my emphasis)

By Max Slavo for SHTF Plan

By permission Max Slavo

www.shtfplan.com

http://www.shtfplan.com/commodities/new-choice-for-world-currency-chinese-yuan-will-supersede-dollar-as-top-reserve-currency_03042015

AND

By Michael Snyder for Economic Collapse

By permission Economic Collapse Blog

http://theeconomiccollapseblog.com

http://theeconomiccollapseblog.com/archives/china-announced-plans-world-currency

Preparing for the Next Debt Fight

Posted on March 9th, 2015

Kicking the can debt by Rick McKee, The Augusta Chronicle from www.caglecartoons.com # 138859

By Doug Bandow

While the Obama administration lectures Europe about the latter’s fiscal policies, Washington continues to run deficits. The problem is bipartisan. When George W. Bush took office the national debt was $5.8 trillion. When Barack Obama took over it was $11.9 trillion. Now it is $18.2 trillion.

And these numbers will look like the “good ol’ days” when the entitlement tsunami hits in coming years. Interest alone ran $431 billion last year. As interest rates rise to more normal levels, debt payments will be one of the big spending boulders, alongside Social Security, Medicare, Medicaid, and military. Worse, economist Laurence Kotlikoff figures total unfunded liabilities today run about $200 trillion. But who’s counting? Certainly not the president!

It long has been obvious that the American political system is biased toward spending. (Actually, looting would be the more accurate term, but such honesty is frowned upon in Washington.) Public choice economics explains how government agencies have interests and why spending lobbies so often prevail over the public. Congress demonstrates a “culture of spending” in which members tend to back higher expenditures the longer they serve. Washington culture richly rewards legislators for “growing” in office and joining the bipartisan Big Government coalition. In particular, the famed “revolving door” provides lavish financial rewards for those who ally with well-heeled special interest groups.

Some analysts still hope that electing the “right people” will fix the system. But that is unlikely. Spending has continued ever upward under Republicans and Democrats, conservatives and liberals, saints and scoundrels. Without creating some institutional barriers to political plunder the system will continue to produce the same overall results, despite slight differences in exactly how much is spent on whom and when.

Over the years advocates of fiscal responsibility have offered various proposals to contain Uncle Sam’s voracious fiscal appetite. Many systems were complicated and subject to manipulation, being based on estimates of GDP, for instance. In contrast, the late William Niskanen proposed a measure that was simple and impossible to game. Niskanen, a UCLA economist, served as Ford Motor Company’s chief economist until the firm decided to lobby for protectionism. He was acting Chairman of the Council of Economic Advisers under President Ronald Reagan and left that position to become Chairman of the Cato Institute. He was principled, blunt-spoken, dedicated to liberty, and a friend.

Two decades ago Niskanen proposed a simple 125-word amendment requiring a three-fifths vote to increase the debt limit or raise taxes and federal compensation to states and localities for any mandates. These provisions would be suspended in the event of a declaration of war. Nothing has changed in the interim to render Niskanen’s proposal obsolete or impractical,” noted Lawrence Hunter of the Social Security Institute in a new study for the Carleson Center for Welfare Reform.

The measure would put taxing and borrowing on a level playing field, eliminating the current bias for piling up debt and more debt. Moreover, the three-fifths requirement would make it easier for legislators to reconsider outlays than to collect more money to waste. This would create a useful corrective for the pervasive pro-spending bias built into the system today. As Hunter explained, “Niskanen has constructed two jaws of a fiscal vice on spending (one on debt, one on taxes), with the default position set at ‘closed’—i.e., no room for deficits.”

However, Niskanen was writing in far more innocent times. When he left the Reagan administration three decades ago the national debt was $2.7 trillion. One then might imagine electing a few more Republicans could solve the fiscal problem. After all, under President Bill Clinton the GOP Congress slowed growth in the national debt to a relative crawl. Alas, the six years of President George W. Bush and a GOP Congress demonstrated that Republicans could be even more fiscally irresponsible than Democrats. The Senate filibuster, with a three-fifths rule, was only a limited impediment to the growth of government, and it could be ended by a simple rules change, as has been done for many judicial nominations.

Thus, the required super-majority should be two-thirds. Wrote Hunter, experience makes clear that the three-fifths requirement is “not sufficiently stringent to overcome the enormous bias in the legislative process compelling Members of Congress to spend more money, borrow more money and raise more tax revenues to pay for it.” Consequently the ramparts of fiscal responsibility should be raised even higher and made even stronger.

Moreover, Hunter noted that Congress has subverted the debt limit by effectively setting a floating number “suspended” to accommodate whatever amount Congress ends up spending. As a result, “in order to enforce the hard statutory debt limit that was in place before the suspension period took effect, Congress would actually have to extinguish almost a trillion dollars of outstanding debt to be in compliance with its own law—unimaginable.”

Thus, he proposed that the Niskanen Amendment be updated to explicitly restrict any suspension to no more than 30 days per Congress, and require the same super-majority vote to suspend the limit. If the constitutional change was enacted Congress could set a realistic but hard debt ceiling for use about a year after the provision took effect. Then the “fiscal vice” would be in place and could work its magic.

Hunter proposes one final legislative piece to complete the fiscal puzzle. Congress should prioritize spending in the event that borrowing hits the debt ceiling. Hunter proposed setting repayment of the national debt, both principal and interest, as the top priority. That would eliminate any possibility of default. Then Washington should repay Social Security recipients. The reason is politics rather than principle, since doing so would eliminate the transfer payment version of the “Washington Monument Syndrome,” by which any push for serious budget cuts is met with proposed reductions in the most sensitive and popular government programs. Today big spending politicians respond to opposition to higher borrowing, despite the availability of abundant tax revenues, by threatening retirees’ livelihoods. Instead, Uncle Sam should first cut off clamorous interest groups which fill the nation’s capital.

Congress must again address the debt limit by the Ides of March. Despite the fact that Republicans have taken control, the congressional leaders can be expected to play the same tricks as in the past. They will allow outlays to move ever upward without hindrance while giving “the impression they are not ‘caving’ on raising the debt ceiling,” warned Hunter.

Advocates of fiscal responsibility should use the debt battle to push the Niskanen Amendment. Everyone but the most committed redistributionist admits Uncle Sam has a spending problem. Niskanen’s proposal is easy to understand and enforce. It complements other budget amendments, whether balanced budget or spending limitation. Simply proposing the measure would enable the Republican majority to highlight Washington’s pervasive bias toward special interests and against common taxpayers.

Equally important, any increase should include language prioritizing payments with existing funds. The Republican House previously approved a similar measure, the Full Faith and Credit Act of 2011, which was rejected by the Democratic Senate. There’s no excuse for Congress not to decide what bills to pay first in the event of a shortfall. Congressional spendthrifts should not be able to hold everyone hostage for political purposes. Indeed, any definition of good government requires setting priorities. Let President Barack Obama threaten to veto a debt measure because it includes language requiring him to pay the most important claims first.

As the American people previously discovered, electing a GOP Congress is no panacea for Washington’s fiscal woes. However, Republican legislators typically behave far better when in opposition—compare the dramatically different experiences of the Republican Congresses under Bill Clinton and George W. Bush. Thankfully, Republicans have a similar partisan incentive to oppose President Obama’s more grandiose fiscal dreams.

While it would be hard to reject a debt limit increase for spending already approved, congressional Republicans should begin preparing for the next debt fight. That means introducing the Niskanen Amendment and approving legislation setting payment priorities. The only hope for reducing the growth in federal debt is to create institutional barriers to its growth. Otherwise the red ink likely will rise until Uncle Sam is both insolvent and bankrupt.     (my emphasis)

By Doug Bandow for The American Spectator

By permission The American Spectator

http://spectator.org

http://spectator.org/articles/61949/preparing-next-debt-fight

Mr. Bandow is a member of the Carleson Center’s Policy Board.

Net Neutrality Is About Regulating Speech

Posted on March 4th, 2015

I’m From the Government net neutrality from Legal Insurrection

By Mark Hyman

Just the latest step in Obama’s effort to ruin what works.

Thursday’s historic vote by the Federal Communications Commission to reclassify broadband was not the first but merely the latest step toward regulating speech. The FCC voted to no longer classify broadband as a Title I entity (of the Communications Act) but instead as a Title II entity, like common carriers such as telephone service. The commission’s three Democrats approved the change over the dissent of the agency’s two Republican commissioners.

Anyone who believes this vote was about preserving a free and open Internet as so-called “net neutrality” supporters have claimed has not been paying close attention. One only has to revisit statements and actions undertaken by Administration officials in the last several years to understand the end-game.

President Barack Obama’s first-term chairman of the FCC was former Harvard Law School classmate, Julius Genachowski. Genachowski directed a multi-pronged effort aimed at increasing government control of news, information, and entertainment.

The FCC’s ill-conceived National Broadband Plan, was the first round in moving electronic media (the dominant form of information distribution) from other platforms (e.g. broadcast) to broadband.

The goal, claimed Genachowski, was to make the spectrum occupied by television broadcasters available to other wireless platforms such as cellular telephones. That was merely the excuse. By virtue of the broadband reclassification vote, the regulatory light touch of the Internet, which allowed it flourish in the past couple of decades, was abandoned in favor of the heavy-hand of government regulation.

Perhaps to mollify critics, the agency’s Democratic commissioners insist they will exclude Internet service providers from some of the other Title II regulatory burdens placed on telephony.

Does anyone truly believe DC politicians will resist the urge to extract billions of dollars in payments from Internet service providers as they currently do with telephony in order feed the Universal Service Fund? The USF was a reelection windfall for Obama. It was used as a slush fund to hand-out the notoriously nicknamed “Obama phones” to low-income voters. About 2.2 billion dollars in Obama phones were given away in 2012.

There were other FCC actions that signaled the Democratic majority’s desire to regulate content.

The “Future of the Media” inquiry fell well-outside the agency’s statutory charter. The 468-page report addressed topics in which the agency did not have the expertise to properly evaluate the information it collected including company business models, corporate debt levels, newsroom staffing policies, and print industry operations.

The report contained what could be one of Washington, D.C.’s greatest juxtapositions. The executive summary’s opening statement was “In most ways today’s media landscape is more vibrant than ever, offering faster and cheaper distribution networks, fewer barriers to entry, and more ways to consume information. Choice abounds.” Apparently, this leads to the conclusion that this better-faster-cheaper-more-abundant media needs government regulation.

Another regulatory agency, the Federal Trade Commission, also unqualified and without statutory authority, launched its own effort to improve journalism. The FTC’s “Reinvention of Journalism” discussed several proposals to “reinvent” journalism, including some that would drastically alter the media landscape and severely impede a free press.

The staff discussion draft suggests a news “licensing arrangement be adopted, perhaps with the government’s help and support.” That suggestion of licensing news organizations should send shivers down the spine of any First Amendment supporter.

Another proposal was “[a] national Fund for Local News …[to] be created with money the Federal Communications Commission now collects from or could impose on telecom users, television and radio broadcast licensees, or Internet service providers [emphasis added].” Does anyone still think the FCC wouldn’t demand broadband providers pay into the onerous Universal Service Fund in order to fund government-approved new entities?

I could continue ad infinitum with the FTC report but you get the idea.

Meanwhile, allies of the Obama White House and influential advocates of regulated content, such as Free Press, have been completely transparent in their wishes. They call for the government to spend as much as $30 billion annually to fund approved news operations.

Lawrence Strickling, the Assistant Secretary of Commerce for Communications and Information, is the principal advisor to the president on telecommunications and information policy. As assistant secretary, he proposed the government regulate Internet content. “[W]e rely on the Internet for essential social purposes: health, energy, efficiency and education.” He added, “There [should] be rules or laws created to protect our interests.”

In 2009, Cass Sunstein was appointed to head the White House Office of Information and Regulatory Affairs. Fourteen years earlier his book Democracy and the Problem of Free Speech revealed his hostility toward the First Amendment. Like Free Press and the FTC, he argued (in a subsequent book) in favor of government “subsidised (sic) programming,” and that “the government might impose ‘must carry’ rules on the most popular Websites, designed to ensure more exposure to substantive questions,” and the government implement a “Fairness Doctrine” for the Internet requiring some websites to offer opposing viewpoints.

One can easily imagine which websites would receive universal carriage and which would be mandated to carry opposing views.   (my emphasis)

By Mark Hyman for The American Spectator

By permission The American Spectator

http://spectator.org

http://spectator.org/articles/61897/net-neutrality-about-regulating-speech

Mark Hyman hosts “Behind the Headlines,” a commentary program for Sinclair Broadcast Group.

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