The cure for many of the ills that the USA is suffereing from could be for all the States to seceed from Washington DC. Then they could form a much looser customs union along the lines of the EU.
Then we could build a wall around Washington DC and put all the Federal politicians and employees inside that wall and let them fend for themsleves in some glorious game of survivor.
Its like what we did with banks. Have good banks that are the States with much stronger states rights and no debt and a bad bank that is Washington DC with all the Federal debt and the obligation to act as the World's policeman.
The bad bank (Washington DC) could keep printing money to fund their obligations (after all - its just a matter of adding zero's to the national debt) and the States could each move to having their own currencies, which could float up and down based on the economic success of each state.
Maybe, as has been suggested by some people, the USA will break up into regional blocks with shared interests and values. But, it is obvious that the Federal Goverment has become totally disfunctional in a way that benefits no-one except for Federal politicians and Federal employees and their hangers on.
Wednesday, December 1, 2010
Republican Hatred of the Poor and Elderly
It would appear that the Republicans have a total hatred of the poor and elderly on Medicare and Medicaid. They are also totally against those elderly who have the audacity to request repayment for all the funds that they paid into the Social Security trust fund only to have it stolen right away by the Federal Government.
So why don't the Republicans urge their members to take the guns that they are so fond of owning and to go out and kill anyone who is poor or elderly, exluding of course the rich (which would include retired Government workers). In that way the Republicans can eliminate the drain on Taxes caused by supporting the poor and elderly thereby enabling them to offer more tax cuts for the wealthy.
So why don't the Republicans urge their members to take the guns that they are so fond of owning and to go out and kill anyone who is poor or elderly, exluding of course the rich (which would include retired Government workers). In that way the Republicans can eliminate the drain on Taxes caused by supporting the poor and elderly thereby enabling them to offer more tax cuts for the wealthy.
Saturday, November 27, 2010
War with China
Since the Chinese came across the Yaalow River and drove us back to the 49th parallel during the Korean War, I believe that we have technically been at war with China.
This war was put on hold by the aarmistice that halted, but not ended, the Korean war. Now that armistice has been broken by the North Koreans shelling and killing South Korean civilians.
Technically, we are probably still at war with the Chinese.
So why are we still trading with China?
The US Government claims that it is for global trade that is for the good of America. In fact, if you look at our trade imbalance, we would be much better off stopping trading with China.
The reality is that trade with China makes a small number of individuals very rich in the USA and impoverishes many of the rest because of lost jobs. These small number of individuals pay bribes (technically campaign contributions) to our politicians to continue this foolish policy from which they and the politicians make lots of money while the people of America suffer the consequences.
The politicians in Washington make the argument that we owe the Chinese so much money that we cannot do anything to annoy them. The best thing we could do is to declare the Chinese as a rogue terrorist nation along with North Korea and Iran and stop trading with them.
They would immediately dump all their dollars onto the world market, which would devalue the US dollar by about 2:1, which would make us highly competitive against the Chinese. It would be disruptive to some rich people's lives - but hey, we are at war aren't we?
Internally, this would cause massive layoffs in Chinese factories and great internal unrest in China - which is just what we want to happen. It would also cause the creation of millions of jobs in the USA to replace the goods we should no longer buy from China.
Make no mistake, the Chinese are our competitors and our enemy. If you don't understand the link between these two, read Clausewitz on warfare being an extension of economic policy.
At a recent presentation I attended, on international trade embargoes, by US Government officials, I was heartened to see that China had finally been placed on the watch list of countries suspected of forwarding technology to terrorist nations like North Korea.
Maybe we are starting to get some sense after all.
If politicians want to get re-elected they need to create jobs in the USA. The quickest way to do this is for the US Government to recognize that China is a rogue state and to stop trading with China. Then get out of the way and let American entrepreneurs create the factories and jobs to replace the goods that we need, without the unfair and crooked competition from China.
This war was put on hold by the aarmistice that halted, but not ended, the Korean war. Now that armistice has been broken by the North Koreans shelling and killing South Korean civilians.
Technically, we are probably still at war with the Chinese.
So why are we still trading with China?
The US Government claims that it is for global trade that is for the good of America. In fact, if you look at our trade imbalance, we would be much better off stopping trading with China.
The reality is that trade with China makes a small number of individuals very rich in the USA and impoverishes many of the rest because of lost jobs. These small number of individuals pay bribes (technically campaign contributions) to our politicians to continue this foolish policy from which they and the politicians make lots of money while the people of America suffer the consequences.
The politicians in Washington make the argument that we owe the Chinese so much money that we cannot do anything to annoy them. The best thing we could do is to declare the Chinese as a rogue terrorist nation along with North Korea and Iran and stop trading with them.
They would immediately dump all their dollars onto the world market, which would devalue the US dollar by about 2:1, which would make us highly competitive against the Chinese. It would be disruptive to some rich people's lives - but hey, we are at war aren't we?
Internally, this would cause massive layoffs in Chinese factories and great internal unrest in China - which is just what we want to happen. It would also cause the creation of millions of jobs in the USA to replace the goods we should no longer buy from China.
Make no mistake, the Chinese are our competitors and our enemy. If you don't understand the link between these two, read Clausewitz on warfare being an extension of economic policy.
At a recent presentation I attended, on international trade embargoes, by US Government officials, I was heartened to see that China had finally been placed on the watch list of countries suspected of forwarding technology to terrorist nations like North Korea.
Maybe we are starting to get some sense after all.
If politicians want to get re-elected they need to create jobs in the USA. The quickest way to do this is for the US Government to recognize that China is a rogue state and to stop trading with China. Then get out of the way and let American entrepreneurs create the factories and jobs to replace the goods that we need, without the unfair and crooked competition from China.
Friday, November 26, 2010
What we should do about North Korea
We can no longer afford to be the world's policeman. Globalization is only good if you are making money at it and we are losing money hand over fist. So we need to stop defending Japan, South Korea and Taiwan.
Tell them, sorry guys but you are on your own. But also tell them that we have a wonderful array of advanced weapons that they can buy to defend themselves.
Forget the huge market potential in China - the Chinese are not going to let us have any major part of it. If you are a USA company and want to establish a business in China you have to do it as a joint venture and then hand over all your technical secrets - and the get kicked out.
The Chinese are playing us for suckers and its time we stopped palying this stupid game on their terms.
The first thing to do is to rearm the Japanese - they know how to fight the Chinese successfully -there are millenia of hatrid between the Japanese and Chinese. We should take advantage of this by pulling back to Pearl Harbor in Hawaii and let the Asians fight amongst themsleves - while we sell them the arms they need to decimate each other.
We cannot defend South Korea without going to War with the Chinese and we do not have enough troops or wealth to do so.
South Korea looks a lot like Belgium in 1913 or Poland in 1939. I think that Gloabalism is going to come to a crashing halt just like it did in 1914. But we should avoid the fate of the British Empire by not attempting to defend South Korea, Taiwan or Japan. Instead we should seek to profit from such a war by pulling all our troops out of Korea, Taiwan and Japan and then sell arms to the protaginists.
If we do this right we can end up eliminating much of the manufacturing competition responsible for our trade imbalance very quickly.
We can end up with a stable cold war with China with dramatically reduced imports from China and a much improved trade balance. We could, at the same time substantially reduce our own Defense costs by pulling all our troops back to US soild and eliminating every one of the 768 garissons we maintain overseas at huge expense.
We do not need troops in Asia, Europe, the Middle East as all they do is cause us to get involved with foolish wars that are of no benefit to the USA. We need instead to dramatically cut the size of our defense establishment and size it to defend the homeland - not to act as the world's policemen.
So, what should we do with all the Admirals and Generals that we maintain in lavish pomp and circumstance? That is easy: Give each one a rifle and station them every foot along the Mexican border - there should be enough to go around - and have them stop the flow of drugs and illegal immigants into the USA and the flow of arms and money to Mexico.
Tell them, sorry guys but you are on your own. But also tell them that we have a wonderful array of advanced weapons that they can buy to defend themselves.
Forget the huge market potential in China - the Chinese are not going to let us have any major part of it. If you are a USA company and want to establish a business in China you have to do it as a joint venture and then hand over all your technical secrets - and the get kicked out.
The Chinese are playing us for suckers and its time we stopped palying this stupid game on their terms.
The first thing to do is to rearm the Japanese - they know how to fight the Chinese successfully -there are millenia of hatrid between the Japanese and Chinese. We should take advantage of this by pulling back to Pearl Harbor in Hawaii and let the Asians fight amongst themsleves - while we sell them the arms they need to decimate each other.
We cannot defend South Korea without going to War with the Chinese and we do not have enough troops or wealth to do so.
South Korea looks a lot like Belgium in 1913 or Poland in 1939. I think that Gloabalism is going to come to a crashing halt just like it did in 1914. But we should avoid the fate of the British Empire by not attempting to defend South Korea, Taiwan or Japan. Instead we should seek to profit from such a war by pulling all our troops out of Korea, Taiwan and Japan and then sell arms to the protaginists.
If we do this right we can end up eliminating much of the manufacturing competition responsible for our trade imbalance very quickly.
We can end up with a stable cold war with China with dramatically reduced imports from China and a much improved trade balance. We could, at the same time substantially reduce our own Defense costs by pulling all our troops back to US soild and eliminating every one of the 768 garissons we maintain overseas at huge expense.
We do not need troops in Asia, Europe, the Middle East as all they do is cause us to get involved with foolish wars that are of no benefit to the USA. We need instead to dramatically cut the size of our defense establishment and size it to defend the homeland - not to act as the world's policemen.
So, what should we do with all the Admirals and Generals that we maintain in lavish pomp and circumstance? That is easy: Give each one a rifle and station them every foot along the Mexican border - there should be enough to go around - and have them stop the flow of drugs and illegal immigants into the USA and the flow of arms and money to Mexico.
Cutting the Cost of Goverment
We have arrived at the crazy situation where Government workers at all levels get paid twice as much as their counterparts in private industry - as verified by the recent report by the Brookings Institute.
They used to be public servants - now they are our masters - we work to serve them.
Everyone wants a Goverment job - and who can blame them - get paid twice as much as everyone else and retire on full pay after 20 to 25 years years of service.
But, if no one is making the money, who is going to pay our Government employees.
When I was at university, I read a book that expressed a concern about what we would do with all the people who do not do constructive work as there are fewer and fewer people needed in Manufacturing, Mining and Agriculture. Now I know the answer, we call them Government employees - and they are increasing in number at an exponential rate.
So where does this lead: well in the case of Rome, it led to ruinous levels of taxation as fewer and fewer people were taxed to support an ever increasing number of Govermenet employees.
There is a theory that Rome fell to the Visigoths not because of the military prowess of their armies but simply because they offered lower tax rates to their citizens than the Roman emporers. So no one wanted to defend the Empire and so it fell.
So, the question arizes, how do we solve the problem in the USA. The answer is simple. Stop cost of living rises for Government workers. Freeze their pay in place and, as the dollar devalues (which it is doing rapidly due to the ever increasing national debt) the wages of Government workers will come in line with those of ordinary workers.
Unfortunately the Government workers unions have become so powerful that this may not be possible and could lead to a civil war between the "Federales" and the ordinary people of the USA. It has happened in other countries and empires throughout history and could happen here if the Government workers and politicians continue to take an ever increasing share of the USA's wealth.
I am reminded of Marie Antoinette's "Let them eat cake" statement when listening to the pronoucement by the leaders of the Government unions that they need ever increasing wages and benefits if they are to serve the American people "better".
So, can we solve this problem? Well again Government incompetency may come to the rescue. With the current bunch of neer-do-wells we have in Government, I expect that we will quickly have complete deadlock in Washington with the inability to pass any legislation at all. This will lead to a complete shutdown of Goverment because there will be no money appropriated and a good thing too!
I am sure that we will have rioting in the streets by all the Government workers - just like in France and Greece. But, if we don't pay them any money, maybe- just maybe - they will eventually fade away and get a real job - if there is one to be had for someone who is used to not working too hard and taking long vacations and holidays.
They used to be public servants - now they are our masters - we work to serve them.
Everyone wants a Goverment job - and who can blame them - get paid twice as much as everyone else and retire on full pay after 20 to 25 years years of service.
But, if no one is making the money, who is going to pay our Government employees.
When I was at university, I read a book that expressed a concern about what we would do with all the people who do not do constructive work as there are fewer and fewer people needed in Manufacturing, Mining and Agriculture. Now I know the answer, we call them Government employees - and they are increasing in number at an exponential rate.
So where does this lead: well in the case of Rome, it led to ruinous levels of taxation as fewer and fewer people were taxed to support an ever increasing number of Govermenet employees.
There is a theory that Rome fell to the Visigoths not because of the military prowess of their armies but simply because they offered lower tax rates to their citizens than the Roman emporers. So no one wanted to defend the Empire and so it fell.
So, the question arizes, how do we solve the problem in the USA. The answer is simple. Stop cost of living rises for Government workers. Freeze their pay in place and, as the dollar devalues (which it is doing rapidly due to the ever increasing national debt) the wages of Government workers will come in line with those of ordinary workers.
Unfortunately the Government workers unions have become so powerful that this may not be possible and could lead to a civil war between the "Federales" and the ordinary people of the USA. It has happened in other countries and empires throughout history and could happen here if the Government workers and politicians continue to take an ever increasing share of the USA's wealth.
I am reminded of Marie Antoinette's "Let them eat cake" statement when listening to the pronoucement by the leaders of the Government unions that they need ever increasing wages and benefits if they are to serve the American people "better".
So, can we solve this problem? Well again Government incompetency may come to the rescue. With the current bunch of neer-do-wells we have in Government, I expect that we will quickly have complete deadlock in Washington with the inability to pass any legislation at all. This will lead to a complete shutdown of Goverment because there will be no money appropriated and a good thing too!
I am sure that we will have rioting in the streets by all the Government workers - just like in France and Greece. But, if we don't pay them any money, maybe- just maybe - they will eventually fade away and get a real job - if there is one to be had for someone who is used to not working too hard and taking long vacations and holidays.
Why Ben Bernanke is Doing the the Right Thing with QE2
When your competitors start complaining about unfair competition you know that you are doing exactly the right thing. That what happened at the recent G20 Summit.
As the Chairman of a small manufacturing company told ne recently "Economics 101: There are only four ways of creating true wealth: Mining, Agriculture, and Manufacturing." To that I would add Intellectual Property". All the rest are ways of spending money.
My primary concern is Manufacturing and how the 60,000 or so mid-sized manuafcturing plants in the USA become world beaters again.
The answer is easy - keep devaluing the US dollar. Every time Ben Bernanke adds another zero the the money supply, the dollar depreciates and we become much more cost competitive in Manufacturing.
In real terms the dollar has declined in value by 50% over the last 5 years. It will decline again by the same amount over the next few years. Currently our manufacturers are very cost competitive versus Europe. Another 50% decline in the value of the dollar and we will beat the Chinese at their own game.
We currently only spend 15% of our manufacturing costs on labor and, if the dollar declines in value, this will continue to go down.
Manufacturing is coming back to the USA in a big way. And, if you want to see a group of believers, look at the behavior of the Venture Capitalists. They are buying up manufacturing companies in a big way because they see that they will have the ability to flip these companies at a big profit in 5 - 7 years when the dollar has halved again.
So is the decline of the value of the dollar a great prescient move by the US Government? Unfortunately no. We have a bunch of incompetents in Washington (in both parties) who will continue to add to the money supply because the only way they can get re-elected is by bringing more goodies (earmarks) back to their constituents and the only way they can do this is by adding to the debt - which automatically decreases the value of the dollar.
Some point in the not too distant future the Chinese are going to have to decouple their currency from the US dollar, otherwise they will be selling their products at less than the cost of the raw materals they consume to make them. Then we will be able to truly compete with the Chinese manufacturing plants.
But will this bring back jobs to the USA? Unfortunately no. Manufacturing is going the way of Agriculture. Half the corn in the USA was harvested last year by a team of 48 people. The number of people needed to work a manufacturing plant is steadily declining due to the use of technology but the skill level of those people is going way up.
But the good news is that those manufacturing plants will earn more and more money for the USA by turning our natural resources into manufactured goods that can be sold to the rest of the world, eventually reversing our trade imbalance; all due to the incompetence of our Goverment.
As the Chairman of a small manufacturing company told ne recently "Economics 101: There are only four ways of creating true wealth: Mining, Agriculture, and Manufacturing." To that I would add Intellectual Property". All the rest are ways of spending money.
My primary concern is Manufacturing and how the 60,000 or so mid-sized manuafcturing plants in the USA become world beaters again.
The answer is easy - keep devaluing the US dollar. Every time Ben Bernanke adds another zero the the money supply, the dollar depreciates and we become much more cost competitive in Manufacturing.
In real terms the dollar has declined in value by 50% over the last 5 years. It will decline again by the same amount over the next few years. Currently our manufacturers are very cost competitive versus Europe. Another 50% decline in the value of the dollar and we will beat the Chinese at their own game.
We currently only spend 15% of our manufacturing costs on labor and, if the dollar declines in value, this will continue to go down.
Manufacturing is coming back to the USA in a big way. And, if you want to see a group of believers, look at the behavior of the Venture Capitalists. They are buying up manufacturing companies in a big way because they see that they will have the ability to flip these companies at a big profit in 5 - 7 years when the dollar has halved again.
So is the decline of the value of the dollar a great prescient move by the US Government? Unfortunately no. We have a bunch of incompetents in Washington (in both parties) who will continue to add to the money supply because the only way they can get re-elected is by bringing more goodies (earmarks) back to their constituents and the only way they can do this is by adding to the debt - which automatically decreases the value of the dollar.
Some point in the not too distant future the Chinese are going to have to decouple their currency from the US dollar, otherwise they will be selling their products at less than the cost of the raw materals they consume to make them. Then we will be able to truly compete with the Chinese manufacturing plants.
But will this bring back jobs to the USA? Unfortunately no. Manufacturing is going the way of Agriculture. Half the corn in the USA was harvested last year by a team of 48 people. The number of people needed to work a manufacturing plant is steadily declining due to the use of technology but the skill level of those people is going way up.
But the good news is that those manufacturing plants will earn more and more money for the USA by turning our natural resources into manufactured goods that can be sold to the rest of the world, eventually reversing our trade imbalance; all due to the incompetence of our Goverment.
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