Naive and Blind

I read with interest Jeff Harding's column on monetary policy (“Bernanke Will Do QE3,” Montecito Capitalist MJ # 17/22). I found the analysis a bit naive.

I don't for a second believe the Federal Reserve or Ben Bernanke have resorted to quantitative easing as an effort to increase demand in our sputtering economy. Quantitative easing has been an effort to forestall the inevitable – the public mea culpa exposing that Fed policy has rendered our country insolvent. This has gone on in a big way since Jimmy Carter.

The Fed does not act on its own.

Both Alan Greenspan and Paul Volcker were charter members of the Trilateral Commission, offspring to the Council on Foreign Relations, sibling to the international Bilderberg Group, a hush-hush organization of financiers, and former and future politicians.

Each president (since, but not including, JFK) has been trotted before the Bilderberg Group prior to his election to high office. The most recent Bilderberg conference was held two years ago in Chantilly, Virginia. Participants included Hillary Clinton, John McCain, Barack Obama, and Joe Biden. Obama asked Jim Johnson to vet V.P. candidates. Jim Johnson – architect of Fannie Mae through whose intercession millions of unqualified borrowers found themselves saddled with predatory loans that all involved knew would never be repaid. These loans did, however, generate luxurious bonuses based solely on earnings. Jim Johnson was CEO of Fannie Mae (making over $100 million in a government partnership) between 1992-1999. His successor, Franklin Raines, made $48 million from 2002-2007. Mr. Johnson then joined the board of Goldman Sachs and headed the Kennedy Performing Arts Center. Senator Kennedy was a big fan of Fannie Mae's campaign contributions. As was Bill Clinton (D), Barney Frank (D-Ma), Christopher Dodd (D-Ct), Kit Bond (R-Mi), Robert Bennett (R-Ut), Maxine Waters (D-Ca) and Robert Zoellick. Zoellick served in both Bush cabinets and is currently President of the World Bank.

Mssrs. Johnson and Raines co-opted both Republicans and Democrats to relax lending standards into non-existence. No-money-down loans comprised 50% of the mortgages underwritten from 2005-2007. All these loans had pre-payment penalties and all had floating rates that went in one direction.

All the while, the Federal Reserve and Alan Greenspan were apprised daily of the certain dire consequences which would result from these loans, both here and at our overseas trading partners.

It's important to remember that Zbigniew Bzrezinski was David Rockefeller's assistant and at Rockefeller's behest founded the Trilateral Commission. Zbigniew served in the Carter cabinet. Don Regan, CEO of Merrill Lynch, was Ronald Reagan's Chief of Staff. Zoellick was in the George H.W. Bush cabinet. Robert Rubin, former CEO of Goldman Sachs, was Clinton's Secretary of the Treasury. He did such a good job, George W. Bush picked another alumnus, Henry Paulson, also former CEO of Goldman Sachs. Obama, following in the family tradition, picked Tim Geithner, former head of the NY Fed (who presided over the failure of the NY investment banks), who was also the protégé of Robert Rubin.

To think the Fed and by extension Bernanke are doing anything with any motive other than that of treading water.... frankly is silly.

I suggest reading “Reckless Endangerment,” the new book by New York Times Business editor Gretchen Morgenson. It will not only open your eyes, it will make you blind.

And who are the beneficiaries of QE 1, 2 (and 3, if there is one)?

Multinational corporations! On the last day of QE 2, they were seen lining up at the Fed's teller windows as their empty suitcases were filled up with cash. A democracy indeed.

Carole Lieff


(Editor’s note: No doubt Jeff will have a response to this in an upcoming issue – T.B.)

Debt Crisis? Pshaw!

Current Federal revenues are ten times debt interest obligations. There is no reason to default, but every reason to cut spending. Where? Corporation for Public Broadcasting, $445 million. Save America 's Treasures Program, $25 million. International Fund for Ireland, $17 million. Legal Services Corporation, $420 million. National Endowment for the Arts, $167.5 million. National Endowment for the Humanities, $167.5 million. Hope VI Program, $250 million. Amtrak, $1.565 billion. Sixty-eight duplicative education programs, $1.3 billion.

Trade Development Agency, $55 million. Woodrow Wilson Center, $20 million. Congressional overprinting, $47 million. John C. Stennis Center, $430,000. Community Development Fund, $4.5 billion. Heritage Area Grants and Statutory Aid, $24 million. Half of Federal Travel, $7.5 billion. 20% of Federal Vehicle Budget, $600 million. “Essential Air Service,” which is not, $150 million. Technology Innovation Program, $70 million. Manufacturing Extension Partnership Program, $125 million. Department of Energy Weatherization grants, $530 million. Beach Replenishment, $95 million. New Starts Transit, $2 billion.

Exchange Programs for Alaskan, Hawaiian and Massachusetts Natives, $9 million. Intercity and High Speed Rail Grants, $2.5 billion. Title X Family Planning, $318 million. Appalachian Regional Commission, $76 million. Economic Development Administration, $293 million. National Community Services Act, $1.15 billion. Applied Research at Department of Energy, $1.27 billion. Freedom CAR and Fuel Partnership, $200 million. Energy Star Program, $52 million. Economic Assistance to Egypt, $250 million annually. U.S. Agency for International Development, $1.39 billion. General Assistance to District of Columbia, $210 million. Washington Metropolitan Area Transit Authority, $150 million. Presidential Campaign Fund, $77.5 million.

Federal office space acquisition, $864 million. Prohibition on competitive sourcing of government services, billions. Repeal Davis-Bacon Act, more than $1 billion. IRS Bounty Use, $1.8 billion. Collect $1 billion in unpaid taxes by federal employees. Prohibit taxpayer funded union activities by federal employees, $12 million. Sell excess federal properties, $15 billion. Mohair Subsidies, $1 million. UN Intergovernmental Panel on Climate Change, $12.5 million. Market Access Program, $200 million. Organization for Economic Co-operation and Development (OECD), $93 million. National Organic Certification Cost-Share Program, $56.2 million. Obamacare Administration, $1.2 billion. Ready to Learn TV Program, $27 million. The HUD Ph.D. Program and the Deficit Reduction Check-Off Act, millions to be determined.

Total: $250 billion per year. Now shall we talk about entitlements? Or, what would you cut?

Adrian Vance


(Editor’s note: Good start, Mr. Vance. How about we cut all the idiotic ads put together by Health & Human Services and the Ad Council. No doubt there’s another couple of hundred million dollars in savings there too. Can’t wait to get this budget-cutting train rolling down the tracks! – T.B.)

Capitalism Defined

“It ain't so much the things you don't know that get you in trouble. It's the things you know that just ain't so.” – Artimus Ward, 1834-1867.

Typically, we have allowed the liberal intelligencia and mainstream media to define the argument. Under their definition, free people are bound to lose. The two types of philosophies they present are, "Greedy Capitalism" (bad), and "Socialist Government Control" (good).

Using a simple definition of "Capital" (means of production), (tools), all societies are "Capitalist," as they all make use of capital. They all must produce or perish, so all make use of capital tools.

The difference between the two types of capitalism is, "Free Market, Competitive Capitalism" (where the capital is available to all who produce), or "Monopolistic Capitalism" (where the capital is held in just a few hands).

The best example of "Competitive Capitalism" would be "Wal-Mart," which gains market share by simply better serving its customers. Free competition in any market always produces the highest quality at the lowest price. Market share is lost when any competitor gives more for less. Everyone benefits!

A good example of "Monopolistic Capitalism" would be the small group of international oil companies. They control world oil supplies through deals with foreign governments, who allow no free competition in oil production. Since they could not openly monopolize American oil production, they have used governmental regulation and unrealistic environmental laws to just shut down any free competition. They are not "Competitive Capitalists," they are "Monopolists." How about $10-a-gallon gas? Why not?

The obvious result of removing competition from any market is lower quality and higher price. The only way to lower our gas prices is to open U.S. oil production to free competition. Obama has stopped U.S. oil drilling by executive order. The Supreme Court has said “that is unconstitutional.” He’s doing it anyway.

The most misunderstood reality of our present world is you cannot have a monopoly in a free market. If you want a monopoly, it is necessary to have government restrict the market for you. The more that government interferes with the natural supply and demand of a free market, the more inequity it creates. This eternal reality is the basis upon which our founding fathers, in their wisdom, prohibited our federal government from having any power to interfere with free market competition. They have not repealed the Tenth Amendment – "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people” – they are just ignoring it. Instead of fulfilling its primary role of protecting justice and fairness in the free market, government has begun to give monopolistic powers to friends and campaign donors. America, the most productive nation in history, is no longer most concerned with production but with regulation.

Politicians claim that this is for the benefit of "The Common Man." They lie. They are all wealthy and “The Common Man” is being robbed. Politicians really are smarter than us, because we are allowing it and keep re-electing them.

Chuck Stersic

Santa Barbara

A Glass of Wine and Thee

To my friends who enjoy a glass of wine, and those who don’t and are always seen with a bottle of water in their hands. As Ben Franklin said: In wine there is wisdom; in beer there is freedom; in water there is bacteria.

In a number of carefully controlled trials, scientists have demonstrated that if we drink one liter of water each day, at the end of the year we would have absorbed more than a kilo of Escherichia coli, (E. coli), bacteria found in feces. In other words, we are consuming a kilo of poop.

However, we do not run that risk when drinking wine and/or beer (or tequila, rum, whiskey, or other liquor). Because alcohol has to go through a purification process of boiling, filtering, and/or fermenting.

Remember: water = poop; wine = health. Therefore, it’s better to drink wine and talk stupid than to drink water and be full of crap.

There is no need to thank me for this valuable information. I’m doing it as a public service.

Wine Lover

Santa Barbara