The Feds big gamble on a mini period of hyperinflation. And explaining Obama's Reagan fetish.

What if I said, the Fed and the governments main economic goal was not to avoid hyperinflation but to induce it and control it? We all know threw history that hyperinflation has been the death knoll of countries, but what if in our case, it's a weapon in our arsenal?

The second half of the statement is a theory I have on the US displeasure with China and their economic practices, so let me give you my theory with the first half.

Let me start by giving the definitions of deflation and inflation.

Deflation- In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the annual inflation rate falls below 0% (a negative inflation rate).

Inflation-In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services.

Now, you might think that deflation is good, because stuff gets cheaper and cheaper and you can buy more. Of course this is not true, because what happens is when people know they can purchase something tomorrow at $1.00 that costs $1.10 today, they wait until tomorrow. And the problem is that cycle usually never ends and eventually businesses cant charge enough to even "break even". Inflation of course erodes your buying power because of course you cant buy as much stuff.

Now to you (the consumer), deflation is better then inflation. On the same note, to the Fed and the Government, deflation is the worse then that can happen.

Want proof? How about this from federalreserve.gov. From 2002...
(http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm)

"Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money18"

Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.

"18. A tax cut financed by money creation is the equivalent of a bond-financed tax cut plus an open-market operation in bonds by the Fed, and so arguably no explicit coordination is needed. However, a pledge by the Fed to keep the Treasury's borrowing costs low, as would be the case under my preferred alternative of fixing portions of the Treasury yield curve, might increase the willingness of the fiscal authorities to cut taxes."

Lets just take a few things out these statements and see if it rings so true..

Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets
Would this refer to the fact that households are cutting their budgets and buying a lot of precious metals? (I'm not going to provide links there is 100 examples out there).

If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.
Would this refer to "stimulus" since its newly created money and Bush's famous "We have to sacrifice free market principles to save the free market"

Or what about this gem from Bernake...

"As I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."

Oh the printing press example he's referring to?

Oh and heres the full text of 18 and 19 footnotes. These should connect a few dots for you.

Some have argued (on theoretical rather than empirical grounds) that a money-financed tax cut might not stimulate people to spend more because the public might fear that future tax increases will just "take back" the money they have received. Eggertson (2002) provides a theoretical analysis showing that, [1]if government bonds are not indexed to inflation and certain other conditions apply, a money-financed tax cut will in fact raise spending and inflation. In brief, [2]the reason is that people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation. Hence they will believe the government's promise not to "take back" in future taxes the money distributed by means of the tax cut.

19. Some recent academic literature has warned of the possibility of an "uncontrolled deflationary spiral," in which deflation feeds on itself and becomes inevitably more severe. To the best of my knowledge, none of these analyses consider feasible policies of the type that I have described today. [3]I have argued here that these policies would eliminate the possibility of uncontrollable deflation.

1)These are calls T.I.P.S http://en.wikipedia.org/wiki/United_States_Treasury_security#TIPS
2) Helps explain to rush to gold doesn't it?
3) Explains the real reason for stimulus.

So whats my point? The point is Fed would love to have inflation, even hyperinflation. They've also admitted that inflation's point is to pay back government debt. And that cutting taxes would also spur the recovery effort. And Bernake said the printing press example would fight deflation. But why do I say hyperinflation is coming? Because ALL of the examples are there, the examples are given by Bernake!

1) Tax cuts - "broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase"
Could this be the Bush tax cuts renewed along with the increase of interest rates gas/food prices?

2)Peoples investment in T.I.P.S and interest in tax cuts- "if government bonds are not indexed to inflation and certain other conditions apply, a money-financed tax cut will in fact raise spending and inflation."

Okay check list time...

Tax cuts - Bush era cuts renewed (check)
TIPS purchase up - (check)
Stimulus affecting other countries - (check)

So whats the key for it all? This statement:
"For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral."
Simply put, quantitative easing 2
(http://money.cnn.com/2010/11/03/news/economy/fed_decision/index.htm)

And how do I know it's coming...and soon?
http://www.cnbc.com/id/41309932 3.2% GDP growth
http://www.star-telegram.com/2010/09/18/2477105/rail-traffic-shows-signs-of-economic.html Rail traffic up.
http://www.nytimes.com/2010/11/24/business/economy/24econ.html Record Corporate Profits
http://www.huffingtonpost.com/2011/01/26/dow-hits-12000-for-first-_n_814249.html Dow hits 12,000 (okay so i lean right i'll but up a HuffintonPo link to shut up critics)


Oh and what does Bernake get when economy has recovered? Easy inflation, and does he? http://www.vancouversun.com/business/Bernanke+sees+signs+economic+recovery/4075427/story.html

Now hyper inflation kills countries just like spiraling deflation. The key here a limited period of hyper inflation. Once inflation hits the question then becomes how long can it be sustained. They are COUNTING on American's being the great innavaters again. The great archetics and scientists, they are counting on American people to lead the world again. We have to make the goods and services that the world will buy that will stop out of control hyper inflation. Now, does that explain the "civility" push and Obama's new Reagan fetish?

Go ahead pick a link:
http://www.time.com/time/covers/asia/0,16641,20110207,00.html
http://www.time.com/time/politics/article/0,8599,2044579,00.html
http://www.mrc.org/biasalert/2011/20110126125238.aspx
http://www.businessinsider.com/for-obamas-state-of-the-union-the-benchmark-is-reagan-not-clinton-2011-1
http://thecaucus.blogs.nytimes.com/2011/01/12/obama-urges-civility-in-public-discourse/
http://www.usatoday.com/news/washington/2011-01-14-obama14_ST_N.htm


And just because this is in there I'll add this quote "The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. "

This one link alone, has been our last three years of fiscal policy word for word, including our future, nearly word for word, hind sight is 20/20.
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm">http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm

Two biggest proofs that idiocy is in the highest forms of power.

I wish I was making this up....

Recession was deeper than gov't previously thought
http://finance.yahoo.com/news/Recession-was-deeper-than-apf-3247751846.html?x=0&.v=3

The Government surprised by the amount of people who came for free money.
http://www.allcarselectric.com/blog/1022744_cars-cash-for-clunkers-suspended-funds-depleted-in-just-days

And us with common sense were not surprised.

You have been warned about Kagan

Well don't say you weren't told so.

Delaware's standing in the light of Lincoln.

Four score and seven years ago our fathers brought forth, upon this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived, and so dedicated, can long endure.

Seven scores and six years ago, a great President addressed this nation at a time when the very fabric of unity was tearing without pause. Under direction of Lincoln the very existence of our union was saved, and the Constitution was reforged.

I take a look today, and I ask myself are we not in a civil war? It's hard to argue that we are not a nation torn against itself. We have entire segments of populations who are not American, but hyphen-American. We have jobs being fought and torn away from people just because the source of energy. We have people being called a racist who don't even remotely shed any commonality with real racists. We are tearing each other apart financially, emotionally, racially, and we are even beginning to tear each other apart spiritually. Well someone has to be the bigger man, so let me begin.

Today we are represented by an internal cold war or a soft civil war. You call it what you want, the green movement or the environmentalist. Whatever the case might be you can say safely that movement does not take prisoners. You've never heard nor will you see in your life time the advocates for green energy not say that they don't want to replace the entire energy industry. Ask yourself this, what Country has created more jobs by going green?

In Delaware we have three counties, Kent, Sussex, and New Castle. If you don't know much about Delaware well you can say you'll find it very hard to better employment below New Castle county. This is were the problem is, Dover (which is in Kent) is about to get a new Solar Plant, 1500 more jobs. Without hesitation I know most everybody will rush to get those jobs because of the struggling economy but, has the consequence of what will happen in Delaware City and Greenwood ever crossed anybodies mind before they vote? See here in Delaware we'll be faced with three choices of representation in the Senate. Chris Coon's, Mike Castle, Christine O'Donnell, and I fear that all three will be on the ballot in November.

What you might know is that all three candidates care about the future of our children. And all three candidates care that we have an healthy and growing environment. That's unfortunately where it ends. See two of the candidates really do believe they know what's best for us. Two of the candidates will take us kicking and screaming down the environmental path without regard to the families, or their lost jobs, or their lost income.

We have soldiers overseas. Black, White, Hispanic, Somalian, does it matter? They are American! Every member of the Armed Forces knows the risk they inherit and they do so proudly. I want every mother to see their children again without them coming threw the morgues in Dover. I've had about enough of our men and women being used, either bring them home or unleash heavens fury which in the United States military. And you know what, I got huge issue with Castle. You voted against the troop surge and then you turned around and voted for no time lines. Sir, your very votes say to me that you were okay with the purgatory in hell that our women and men in uniform were put threw. Your very ancestor went to France to get reinforcements for the Colonies to fight a war. Ben Franklin disowned his own son, I have a hard time believing he'd even acknowledge your existence.

As you stand around posing with giant poster checks of the tax payers money going right back to the State. I don't think Ben Franklin's presses would have printed that.

As an American in 2001 I pledged to put my fellow American first, regardless of age, sex, race, or heritage. As an American in 2009, I pledge to put my Country, my honor first. Well as a American in 2010, I pledge to stop the politics of division, pointing fingers. If I've learned anything from Lincoln, it's our Union and Constitution comes first. If I've learned anything about history, it repeats itself.

There was an individual who two times failed to achieve becoming a US Senator before destiny called them to preserve the Constitution and the Union. That individual was placing in a time of great turmoil in this country and turned to three things, God, the Constitution, and our Founding Fathers. Well here in Delaware we again have an individual who has failed twice to achieve becoming a US Senator. Again, we have an individual who believes the only thing that can see our Country threw this time is God, the Constitution and our Founding Fathers. If I want to have a better future for my children, then I must learn from the past. And I know what saved this country before.

9/11, 9/12, and now 9/14 which is the Delaware primary. I made myself to many promises to stay seated this time. November 19, 1863 politics was brushed aside and the Union came first. Well, November 2, 2010 I get a chance to vote for the Republic, to vote for the people, to again in the spirit of Lincoln address the biggest need in our Country, the lack of Union. I'm going to vote for the one person who's policies say that everybody can win. That our men and women will come home safe. That we stand tall and stand proud as imperfect as we are.

Make no mistake Delaware, you are important. You were the first State to ratify the Constitution and you can be the first to re-ratify. November 2nd, I'm voting. Not for myself or a party, but for the Union, and for the people, because only one candidate will give you choice! Will you join me?

https://registertovote.elections.delaware.gov/voterreg/controller?TransName=VOTERREG_DATAGATHER

A message to the Republic, we have hope!

I totally missed this, i can't believe I missed this in my own state! The Republic has a chance against a lame duck administration. I can't even believe this slip threw my fingers!

From the article at hotair.com (http://hotair.com/archives/2010/07/24/right-online-interview-christine-odonnell)

"Delaware now has to fill the rest of Biden’s term (after an interim appointment expires), and that gives this race a twist. The winner of the general election will not take office in 2011, but immediately after Election Day. That means if a Republican can beat Democratic nominee Chris Coons, they have the ability to block any lame-duck session shenanigans by Harry Reid"

That's right, that's completely right. Now you might be thinking there is 42 Republican Senators in the Senate, but take a look at the financial regulation bill that just passed, with 3 Republican Senators support, Scott Brown of Massachusetts and Susan Collins and Olympia Snowe of Maine voting yes. If you think they would vote No for the other legislation of the Obama administration, then you need to go lay down and go back to sleep.

So lets do the math, 42 Republican Senators, and 3 we know that will side with the Obama administration. So 42-3 = 39. But, what happens if you get one, just one, more Senator in there that cares about the Constitution more then politics. Just one more person in there that's willing to put the people first. Then you have the magic filibuster number of 40.

Make no mistake, this is a monumental task, not for the faint of heart or for the weak of stomachs. The Senate race in Delaware more then any other race is for all the marbles. You have Joe Biden, who will bring name recognition, career politician status, stimulus funds for campaigning, Vice-Presidential stature to the race. You have Mike Castle who will unleash hordes of money from bankruptcy lawyers, bail-out recipients, and even possibly Soros backed money into this State. You have all this against just one candidate who stands with a wonderful 14 page document.

All though the obstacles are immense, a victory in Delaware would ignite hope, real true hope, from sea to shining sea that would strike at the very heart of a regime. Delawareans now more then ever can stand out and be more then the State of Dela-"where"?. If Delaware stands up, stands up, and does not back down! You will not only put a real freedom loving candidate in office, you will strike a blow directly to the heart of Progessivism and Liberalism by putting a Conservative in the former seat of the Vice-President and effectively eliminating a run-away suicidal lame duck congress.


Delaware: Stand up! Get involved! We said we never forget 9/11, let's never forget 9/12. Get involved, get active, register to vote! Every generation has a calling, everybody has a time and place they are needed. Maybe it's our time for stand for the Constitution again!

Delaware, we were the first State to ratify the Constitution. The year is 2010, 234 years after the founding of our country and the treat of the individual is as great as it has ever been and we are again presented the opportunity to ratify the Constitution. September 11th 2001, we promised ourselves we'd never forget, September 12, 2009 we showed up in Washington and we made another promise, that if they did not hear us we would be back again. Well September 14, 2010, is the chance, is the real chance for the people to stand up and say "can you hear us now".

Never forget.

https://registertovote.elections.delaware.gov/voterreg/controller?TransName=VOTERREG_DATAGATHER

Stand up!

Had enough? Want a choice? Better yet want a voice?

https://registertovote.elections.delaware.gov/voterreg/controller?TransName=VOTERREG_DATAGATHER

Frontal Assault on the Republic and you need to know about it.

Good morning and hello, there is much work to be done.

I started this blog because I was tired of the pointing of fingers and tired of issues just not getting fixed. Here is a direct assault of the Republic and you need to understand why.

The old saying is Republican's are party of the rich, so inherently if they are the party of the rich, then that means they have to keep people rich. So if Republicans are the party of the rich, doesn't that make Democrats the party of the poor? And if Republicans need to keep people rich for votes, doesn't that mean Democrats have to keep people poor for votes? Now, that statement isn't an attack against either party, but you need to understand that both must placate to either side.

So what is the frontal assault on the Republic? The removal of the electoral college for Presidential elections. For the time being until our Country is stable again, we need to stop worrying about changing what we got, and fixing what we got. The main argument for the electoral college is it's out dated and doesn't apply to today. Hmm, well let's ask ourselves where we hear that argument.. ahh! Progressivism...
http://www.boston.com/news/local/breaking_news/2010/07/mass_may_join_e.html
According to the article:
Supporters are waging a state-by-state campaign to try to get such bills enacted. Once states possessing a majority of the electoral votes (or 270 of 538) have enacted the laws, the candidate winning the most votes nationally would be assured a majority of the Electoral College votes, no matter how the other states vote and how their electoral votes are distributed.

Well ask the questions with all the State's involved how many electoral votes do they have already, the answer is:
Illinois, New Jersey, Hawaii, Maryland, and Washington:61
Lets add Mass:12

Total:73
Total needed to win:270
Percentage obtained by popular vote:26%

So realistically speaking 26% of a Presidential election has been decided by a popular vote. In recent news some other things have become increasingly popular: unemployment, benefits, socialism, big corporate capitalism cronyism, lower education standards.

Doesn't really sound like America to me, oh and for the liberals who think that Citizens United will just allow big corporations to buy elections. How about when they dump millions of dollars into a specific state that's population would dwarf a smaller state.

For conservatives, you think that medicare and social security buys votes. Wait until the Government dictates health insurance and keeps increasing unemployment lengths...

Of course that is a hard thing to swallow. Why wouldn't it be? I mean of course, why should an old system be used for today's standards? it was put in place because delegates has to ride horses to Washington. And of course we want the people to be represented. And this is an issue that both sides of the isle have said they come out for.

Okay, so now we have to think about it, not with closed eyes but true critical thought. When there is an issue that is so close to passing there has been one method that this administration resorts to. They will say it's Bipartisan and Republicans have said they supported it to.

Now couple that with the fact that this administration has a horrible habit on fixing the problem before they know exactly what caused it. Like the US Financial Crisis Inquiry Commission is still doing investigations and hearings but some how there was a Banking over haul bill passed before we know the entire problems. Or how about passing the US Patriot Act on October 24, 2001, before the 9/11 commission report was released on July 22, 2004. Yet we don't even think back and realize that commission wasn't even formed until November 26, 2002. The point is, we have a really bad habit on fixing things before we know what is exactly broke. Although, we know in the case of the removal of the electoral college what is broke, again there is a huge rush to fix our voting system before we fix what's really broke.

Now consider the fact that rampant voter fraud:

Dead people voting:
http://www.texaswatchdog.org/2008/10/dead-voters-still-registered-in-harris-county/
http://ballotpedia.org/wiki/index.php/Dead_people_voting

illegals voting:
http://blog.heritage.org/2008/07/11/morning-bell-should-us-citizens-be-allowed-to-pick-our-next-president/

Felons voting:
http://www.foxnews.com/politics/2010/07/12/felons-voting-illegally-franken-minnesota-study-finds/
http://ballotpedia.org/wiki/index.php/Felon_vote_fraud

Voter Machine Failure:
http://www.huffingtonpost.com/2008/11/04/electronic-voting-machine_n_141119.html
http://www.myfoxny.com/dpp/news/local_news/new_york_state/Voting-Machine-Design-Flaw-20100628-apx

Oh that doesn't even cover the legal voter fraud:
http://www.msnbc.msn.com/id/37705285/ns/politics-more_politics/

Now just stop and think about it. If there is massive voting problems, and the electoral college is removed, what happens? What happens if we remove the system in place for a new system that will only exaggerate the problem. Better yet, if you had a problem with your gas engine, so you wanted to switched to a hybrid diesel engine. What happens if you forget to change the gas in the gas tank?

Oh yeah and look http://www.nationalpopularvote.com///www.nationalpopularvote.com/ it's Red and Blue! Why do i got a suspicion that it's the usual suspects....