U.S. dependence on foreign creditors: A long-term problem

This article from The Wall Street Journal discusses world governments' responsibility to slowly wean their economies from the exorbitant stimuli that have been inserted by unwitting policymakers. From the article:

He said the U.S. must work together with its international partners to enact changes to the system, and that the U.S. must be seen to be leading the way.
"We have to be able to set the international agenda on reforms ... because we can't have a system without a level playing field," Mr. Geithner said.

This implies that the benevolent, egalitarian politicians in Washington are the only group on the face of the earth who are fully trustworthy or intelligent enough to lay the foundation for reforms to the global financial system. Add this to the countless numbers of foregone conclusions that predate it.

But, I have a question: Why is there a global financial system and why is the U.S. its overseer? Our central bank and our treasury forced the hand on the collapse so that gives us the power now to lead the charge on all reforms to the system? I'm failing to see how this is a logical, let alone intelligent, solution. In fact, why is America involved at all in global-anything? This just makes me wonder: How many dollars in foreign aid has the U.S. sent abroad since October 2008? China is bankrolling our good deeds to the world and anything they can't cover the American taxpayer is doling out, without their knowledge in virtually every case, I might add.

Back to the main topic here... Seriously, the U.S. is on its last leg at this point as far as credibility goes. How can anyone trust Geithner when he says that we're committed to a strong dollar while it drops to 15-month lows literally as he's addressing audiences in Asia? China is calling for us to take action on the dollar and India just purchased half of the IMF's gold reserves in anticipation of currency devaluations, notably the US dollar.

Here is the list of major creditors of the US.

The fact is that if foreign nations do not buy our bonds the U.S. government would collapse just like Iceland's and they would get nothing for the papers they're holding in their hands. Do you notice that while China hovers around $800B in debt holdings they continue to buy gold mines in South America, build stadiums in Africa in exchange for oil drilling rights, and in general investing in raw materials in their own nation as well as overseas? Obviously they're catching on to the game. So, while their right hand is moving U.S. treasuries, their left hand is grasping for security anywhere it can be found. An $800B hit to the pocketbook will hurt a lot less if you've got huge gold and silver reserves, state-owned oil drilling operations and a more advanced solar power initiative than the U.S. China sees the writing on the wall.

We're only getting half the story from our government and traditional media doesn't follow it like I think they should or could, either. Interesting that we say China censored Obama's speech on censorship, but we don't consider non-coverage of all of the back-door deals and secret meetings of our own elected officials as censorship.

There is absolutely no doubt that foreign debt-holders will be around for a long time. Or, at least until their left hands can gather up enough security to allow their right hands to abandon our treasuries.

Interventionism and the Jobless Rate

The jobless rate has shot up to 10.2% according to a story in USA Today. Now, in the video that covers this story on USA Today's website, AP reporter Mark Hambrick says that if you factor in those people who have settled for part time work or have given up altogether, the rate is 17.5%. So, what is the real jobless rate? Well, we may all agree that the real rate is those who are actually without work and are still looking, that's a fair definition. However, the fact that the other numbers aren't reported to everyone, or aren't widely known seems to be... misleading? deceptive? Here's one person's take on it.

Now the question is: "What does interventionism have to do with the jobless rate, and what does that even mean, anyway?" Slow down, there. One at a time.

First, interventionism is defined by Wikipedia, here. Basically, it's when a government feels an undying need to interfere in an economy. For details on that, just google the word "federal" and add any of the following names of these Fortune 500 companies: AIG, GM, Citigroup, Bank of America, etc. For more interesting information on the history of government bailouts, click here.

Now for how this effects the jobless rate. I'll start with a question: Have you ever heard of the Great Depression of 1920? No? You're thinking of the Great Depression of the 30's, right? There was a Great Depression in 1920-21, but it ended after about 18 months. How did we recover so quickly? I'm glad you asked! Well, listen carefully... The government did nothing. That's right, nothing. Well, that's not entirely true. They cut spending. What?! The government cut spending? That's absolutely absurd, you say? Well, that's what they did. Other than that, they did nothing. No propping up banks, no bailing out large corporations, no TARP, no TALF, no New Deal, nada. Nothing. Does that just defy all logic? Well, then doesn't that make you wonder for a moment, just for a split-second, "Could the Great Depression of the 30's have been much less painful for everyone had the government cut spending and kept out of business altogether?" Now that we've opened that possibility, read this article by Tom Woods (mentioned earlier in the IVLG blog). Then, track down this book by Amity Shlaes, entitled "The Forgotten Man." Both are well worth your time and will help you to get a clearer picture of what is really happening to your country right now.

The Real Cost of Gov't Intervention

Recent figures on the true cost of the Cash for Clunkers program and the First-time Home Buyers Tax Credit program show they are costing the government a lot of money... Let me rephrase that: YOU, the American taxpayer, are getting pick-pocketed by the U.S. government, and they can't even do that efficiently.

To elaborate, the brilliant Cash-for-Clunkers program was intended to boost car sales and to get gas guzzlers off the road, which would be replaced by shiny new fuel-efficient vehicles. For every clunker you bring in, you get $4500 toward the price of a newer, more efficient car. In order to administrate this program, the government has to pay people. They can't work for free, right? So, for every car that was purchased under this program, the cost to the government (i.e. you and me), was $24,000. What a bargain, huh? So, 690,000 cars @ $24,000/ea = $16.56 billion. Every man, woman and child in the U.S. just committed $50.95 each to this magnificent success of a program, give or take a dime. Keep in mind, too, this isn't really the case, though, because no children actually pay taxes and not every man or woman pays taxes either. So, for the taxpaying American, that number goes up.

Now, let's discuss the First-time Home Buyers Tax Credit program. This piece of work promised that the government, (read: you), would essentially pay $8,000 to anyone who chooses to buy a home for the first time, including four-year-old children. So far, this program is costing the government $10.8 billion in lost taxes. The trickle-down comes to $33.23 for every man, woman, and child in America. I say "So far" because it's not over. This program has been so great that it's being expanded! I should note again that the cost per taxpayer is different than the cost per person within the borders of the United States.

What does this imply for the national deficit or the budget deficit? Well, that's a whole different story that will need to be addressed later. I will give you a preview: it's not good news.

The growth of gov't is staggering and the proposed growth of gov't is sickening. Autos, insurance, banks, and now health care.

Doug Hoffman in CT

Hopefully Rep. Doug Hoffman, soon: AP Video on YouTube

Tom Woods

For our first post of substance, we'd like to feature Tom Woods (http://www.thomasewoods.com/). Dr. Woods is an author, educator, and a defender of liberty. We encourage you to browse his website for the many resources that are available there free of charge. In addition, he has written some insightful books that are worth the purchase price (Amazon book list: http://tinyurl.com/yfdp7u9). Tom has libertarian ideas about government and he advocates Austrian economic theory, which we'll discuss further in a later post. For now, take a look at his work and do some reading. A good place to start is with his bestseller, Meltdown.

Good to go...

We're good to go now with the design. We'll keep it nice and simple for now and see how that serves us. In the meantime, take a look at the twitter feed and the videos courtesy of YouTube. Happy Monday to all.

So, the blog is functional, it just needs some aesthetic improvements which will be worked out in the next day or two. We hope to be able to provide you with insightful, liberty-focused content that should be educational and interesting to you.