Traveling Road Show

The purest form of democratic governing is practiced in a Town Meeting. In use for over 300 years and still today, it has proven to be a valuable means for many Massachusetts taxpayers to voice their opinions and directly effect change in their communities. Here in this ancient American assembly, you can make your voice heard as you and your neighbors decide the course of the government closest to you. Massachusetts Citizen's Guide to Town Meetings

During the August recess, members of Congress have been meeting with constituents. President Obama (D) pretends the meetings are town meetings:

"I know there's been a lot of attention paid to some of the town hall meetings that are going on around the country, especially when tempers flare."

Or did the President slip by conflating 'town meeting' and 'city hall'? 'Town meeting' as in a form of government where people meet locally to voice their opinions and vote directly on what the local government will be doing vs. 'city hall' as in "You can't fight city hall"?

Americans across the country have been vocally expressing their opposition to government healthcare (Youtube example). For daring to disagree, or for having the "audacity of hope" that they could actually get a Senator or Congressman to listen, Senate Majority Leader Harry Reid (D) "accused the protesters of trying to 'sabotage' the democratic process."

Nancy Pelosi (D) doesn't like listening to taxpayers disagree about government healthcare either. She thinks it is "un-American." In an OpEd piece, "'Un-American' attacks can't derail health care debate," written with House majority leader Steny Hoyer (D), they write:

"However, it is now evident that an ugly campaign is underway not merely to misrepresent the health insurance reform legislation, but to disrupt public meetings and prevent members of Congress and constituents from conducting a civil dialogue."

Pelosi and Hoyer explain that they will allow taxpayers to speak, but that the members of Congress are there to elucidate, not contemplate. Their minds are made up:

"This month, despite the disruptions, members of Congress will listen to their constituents back home and explain reform legislation. We are confident that our principles of affordable, quality health care will stand up to any and all critics."

So Americans who not only oppose a government plan, but who actually dare to speak their disagreement, are to be contemptuously thought of as saboteurs, disrupters, and un-American, according to Reid and Pelosi.

On August 14, 2009, an ABC News article goes even farther as it tried to preempt the debate, changing it to a battle of racists and hate groups opposing the forces of good:

"Experts who track hate groups across the U.S. are growing increasingly concerned over violent rhetoric targeted at President Obama, especially as the debate over health care intensifies and a pattern of threats emerges."

Perhaps if the traveling road shows were real town meetings where citizens actually had a say in the matter, things might be less antagonistic. Henry David Thoreau, speaking at an Anti-Slavery Celebration in Framingham, Massachusetts, on July 4, 1854 saw the value to be had in town meetings where local people governed themselves:

"When, in some obscure country town, the farmers come together to a special town-meeting, to express their opinion on some subject which is vexing the land, that, I think, is the true Congress, and the most respectable one that is ever assembled in the United States."

Instead today, citizens must swallow what they're fed or be criticized for having an independent opinion and daring to question their masters.

Similar frustration over powerlessness in America's past resulted in revolts in the 1770s and again a decade later in the 1780s. Both led to "real change" in government.

Tar and feathers anyone?

Sedan Chairs and Litter Bearers

The lectica, a kind of portable bed, originated in the East. Initially the Romans viewed it as a symbol of decadence, but it became an increasingly popular mode of transportation for the well-to-do in the late Republic. In the imperial period, elaborately decorated litters were fashionable...In the country and for long journeys, wealthy aristocrats of both sexes preferred this mode of travel to wheeled carriages, which offered no protection from the discomforts of uneven roads. From the Internet

Taxpayer-funded congressional travel is up 1000% since 1995. It might not sound like good news during our sinking economic times, but it's for our benefit...just ask Congress. According to a July 2, 2009 WSJ article:

"Lawmakers say that the trips are a good use of government funds because they allow members of Congress and their staff members to learn more about the world, inspect U.S. assets abroad and forge better working relationships with each other."

Remember back in November 2008, during the automaker bailout hearings? Members of Congress criticized the "Big Three" CEOs for owning corporate jets while receiving taxpayer money. The anti-corporate jet backlash didn't help manufacturing in the US as corporate jet manufacturers lost business and eliminated many manufacturing jobs.

Meanwhile, President Obama flies around in a $325 million aircraft, Michelle takes a European vacation, Nancy Pelosi doesn't want a refueling stop when she commutes to home from Washington, D.C., and congressional delegations travel the world--all on the taxpayer dime. Why is it ok for government officials to have fancy rides at taxpayer expense, when it wasn't for corporate CEOs?

Recently 10 members of Congress, some accompanied by spouses, took an 11 day trip to New Zealand, Australia, and Antarctica over New Year's to investigate first hand the effects of climate change. The trip cost taxpayers over $500K. An August 8, 2009 WSJ article describes the junket:

"'The trip we made was more valuable than 100 hearings,' said Rep. Baird, its leader. 'Are there members of Congress who take trips somewhat recreationally? Perhaps. Is this what this trip was about? Absolutely not.'

"The knowledge gained is 'profoundly important to how I do this job,' added Mr. Baird, who at the time headed the House Science Committee's subcommittee on research and science education."

On the last day of their trip, the group investigated the effects of climate change first hand in Hawaii.

Why Walk When You Can Ride in Style?

William Smith's 1875 A Dictionary of Greek and Roman Antiquities describes the litter ridden in by wealthy Romans as they traveled in style:

[The ancient Roman lectica] "had a roof consisting of a large piece of skin or leather expanded over it and supported by four posts, and the sides also were covered with curtains...The whole lectica was of an oblong form, and the person carried in it lay on a bed, and the head was supported by a pillow, so that he might read and write in it with ease...The frame-work, as well as the other appurtenances, were, with wealthy persons, probably of the most costly description. The lectica, when standing, rested on four feet, generally made of wood. Persons were carried in a lectica by slaves (lecticarii) by means of poles (asseres) attached to it, but not fixed, so that they might easily be taken off when necessary."

Apparently many in Congress are fans of a similar mode of transport for themselves. Our "leading government officials" apparently aren't satisfied with publicly-subsidized air travel on commercial aircraft where they might have to rub shoulders with the hoi polloi.

The House voted on July 30, 2009 to double from four to eight the number of business-class passenger jets to buy to ferry senior government and military officials around the globe in a defense appropriations bill, HR3326. The bill includes money to purchase three Gulfstream G550s at a cost of roughly $65 million each. An August 7, 2009 WSJ article explained:

"The purchases will help accommodate a growing travel demand by congressional officials" using taxpayer money. (Italicized clarification added.)

A Gulfstream website description of the G550 would appeal to litter-riding Romans:

The G550 "is a brawny aircraft with an international reach. Powered by enhanced Rolls-Royce BR710 turbofan engines, the G550 has a range of 6,750 nm at Mach 0.80 and a high-speed cruise capability of Mach 0.87. With its long legs, the G550 easily links Washington, D.C., with Dubai, London with Singapore and Tokyo with Paris."

"The cabin aboard the G550 combines productivity with exceptional comfort. It features up to four distinct living areas, three temperature zones, a choice of 12 floor plan configurations with seating for up to 18 passengers. Maintaining contact with the home office is easy thanks to a host of standard communication features: a fax machine, a printer, a wireless local area network and satellite communications. As an option, consider Gulfstream's Broad Band Multi Link, which combines fast Internet-connection speeds with low operating costs."

Who Bears the Litter?

In ancient Rome, wealthy Romans kept certain slaves solely as their lecticarii (litter-bearers), and generally selected the tallest, strongest, and most handsome men, always well dressed. Ancient Rome didn't have the advantages of our technology which allows our leaders to travel the globe in air-conditioned comfort isolated from everyday people. Rome's best needed sweaty human beings to carry them in their travels, so they made sure their beasts of burden were at least physically attractive.

"The lectica was generally preceded by a slave called anteambulo, whose office was to make room for it." In America today, they are called the police or the secret service.

"The number of lecticarii employed in carrying one lectica varied according to its size, and the display of wealth which a person might wish to make. The ordinary number was probably two, but it varied from two to eight, and the lectica is called hexaphoron or octophoron, accordingly as it was carried by six or eight persons."

Today taxpayers bear the burden of transporting their government leaders. But just as ancient Romans feared a slave revolt, the American public must be appeased for a similar reason. An August 10, 2009 WSJ article describes building opposition in the Senate to a plan to spend $550 million in taxpayer money as the public became aware of the planned bizjet purchases. Chairman of the Defense Appropriations subcommittee, Rep. John Murtha (D) offered to eliminate the additional planes from the bill. The Gulfstream 550s might not be purchased yet after all. Meanwhile there's no discussion in the media of the over $600 billion in other spending in the bill.

An August 10, 2009 WSJ article relates the mixed feelings legislators have about being caught spending money like ancient Roman aristocrats:

"While some legislators take issue with the pricey new aircraft that would ferry officials around, they still see merit in the trips themselves. Politicians from both sides of the aisle have publicly defended their far-flung forays, which they say strengthens relations with foreign leaders, gives them a first-hand look at how U.S. funds are being spent overseas and allows them to speak directly with battlefield commanders and troops."

Congressional hypocrites, including Sen John McCain (R) and Republican leader John Boehner, made obligatory statements opposing the funding for the jets. According to the August 10, 2009 WSJ article, the day after the House began its summer holiday, Mr. Boehner and five other lawmakers departed for a two-week trip around the globe, while McCain is scheduled for a weeklong trip:

"The goal of the trip, which will include stops in Germany, Ukraine, Kazakhstan, Mongolia and China, was to discuss issues surrounding the global economic crisis and national security with government and private-sector officials in those countries. At least some of the lawmakers took their spouses, which they are allowed to do under House rules for 'protocol' purposes.

"After visiting Asia, the delegation is scheduled to fly to Vancouver before returning to Washington in mid-August, according to the travel document and the aide.

"This month, Mr. McCain is scheduled to leave with a group of senators for a weeklong trip to Libya, Kuwait, Iraq, Yemen, Afghanistan and Iceland. A spokeswoman for Sen. McCain didn't respond to calls or emails for comment about the trip.

"Sen. Patrick Leahy (D., Vt.), Sen. Judd Gregg (R., N.H.) and other senators and their spouses are planning to travel to the U.K. for the week before the Senate reconvenes after Labor Day. The purpose of the trip, according to a spokeswoman for Sen. Gregg, is an annual meeting with members of the British Parliament."

Isn't the weight of the litter already too heavy? Isn't it time Americans throw this litter in the trash?

Pulling a Rabbit out of a Hat (Part 2)

The Federal Reserve affects the economic and financial decisions of virtually everyone--from a family buying a house, to a business expanding its operations, to a consumer choosing a sound financial institution. In the global economy, the Federal Reserve's actions have significant economic and financial effects around the world. Federal Reserve Bank of San Francisco

"If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible -- but there it is." Robert Hempstead, Credit Manager of Federal Reserve Bank of Atlanta in the foreword to 100% Money by Irving Fisher

Government is always about power and money. Since the Philadelphia convention of 1787 which wrote the US Constitution, the nature of American money and how it's created have been the chief concern of the powers that control our government and us.[1]

After the adoption of the Constitution, Alexander Hamilton pushed the idea of a central bank as a way to weaken the states and tie them to a strong central government, earning his place on a $10 FRN. The first central bank lasted 21 years, after rewarding speculators in Revolutionary War debt. Andrew Jackson (D) killed the poorly managed second central bank because he hated paper money not 100% backed by gold or silver. It wasn't until December 23, 1913 that the powerful money interests of the world succeeded in giving Americans a central bank again with the Federal Reserve Act of 1913, telling Americans it was necessary to avoid business cycles and preserve the value of the dollar.

The Federal Reserve system and the federal government have controlled our money system ever since. With what results? The dollar has become a fiat currency, no longer redeemable in gold, America is now sinking in the midst of a second depression, and the purchasing power of the dollar is 1/20th of what it was in 1913. The Fed has not delivered on the promises of its 1913 proponents, but those promises were lies, also known as doublethink. The Fed is a tool for the powerful to control the productive in America and nothing more.

Austrian economist Murray Rothbard explains the two main roles of the Federal Reserve system:

1. To help finance the government's deficit;
2. To cartelize the private commercial banks in the country.

The Fed finances the government deficit, allowing it to overspend its revenues every year and giving it access to every aspect of our lives.

A cartel of private commercial banks in the market allows the banks to unite and control the expansion of money (i.e. counterfeiting). But cartels are difficult to sustain unless the government enforces the cartel. In fractional-reserve banking, the Central Bank assists cartelization by removing or alleviating the two basic free-market limits on banks' inflationary expansion of credit: public "loss of confidence in banks leading to bank runs; and the loss of reserves should any one bank expand its own credit."[2]

In the current economic crisis, big banks get wealthier, buying up millions of dollars of good assets from failed banks, while the FDIC and Congress pick up the tab for the bad assets. They'll pay with money created by the Fed from nothing. Even in good economic times, Fed-created money enriches those who create the new money and those who get that money first. Everyone else suffers. Rothbard explains how counterfeiting hurts everyone but the counterfeiter because the counterfeiter gets the new money first:

"Counterfeiting, in short, involves a twofold process: (1) increasing the total supply of money, thereby driving up the prices of goods and services and driving down the purchasing power of the money-unit; and (2) changing the distribution of income and wealth, by putting disproportionately more money into the hands of the counterfeiters." [3]

Counterfeiting is robbery. The effects of creating money from nothing are identical whether done by an enterprising counterfeiter, a fractional reserve banker, or the Treasury and the Fed.[4] When it's done well, the audience doesn't even know it has been robbed, sitting and clapping for the magically appearing rabbit.

How Do They Do It?

The Bureau of Engraving and Printing, a branch of the US Treasury, creates paper FRNs for the Federal Reserve Bank to support public withdrawals of currency. But emitting paper currency isn't the most effective way for the Fed to create money out of thin air. The Fed has largely replaced paper currency with computer entries at Reserve banks.

Rothbard explains the money creation process:

"Suppose that the Fed decides it wishes to expand the nation's total money supply by $10 billion. If the money multiplier is 10, then the Fed will choose to purchase $1 billion of assets, generally U.S. government securities, on the open market."[5]

In a fractional reserve banking system, the money multiplier tells commercial banks how much money bank magicians can create out of thin air. The product of the money multiplier times the total reserve deposits a commercial bank has in its own vault and as computer entries in a reserve account at a Federal Reserve bank tells a commercial banker by how much the commercial bank can expand its reserve account.

"...In the first step, the Fed directs its Open Market Agent in New York City to purchase $1 billion of U.S. government bonds. To purchase those securities, the Fed writes out a check for $1 billion on itself, the Federal Reserve Bank of New York. It then transfers that check to a government bond dealer, say Goldman Sachs, in exchange for $1 billion of U.S. government bonds. Goldman Sachs goes to its commercial bank—say Chase Manhattan—deposits the check on the Fed, and in exchange increases its demand deposits at the Chase by $1 billion."[6]

Did you see the money get created? The Fed writes a check "on itself" or simply credits the commercial bank's account at a Federal Reserve bank. When you write a check, you need money in your account to back the check; the Fed just creates the money in its account to back the check it writes "on itself." Everyday people go to jail for counterfeiting if they create their own money, and for check fraud if they pass bad checks. Since the Fed is our money god, and gods can create something from nothing, the Fed can write a check on itself because it alone can create money in the US.

Also notice the importance of a Goldman Sachs to the process of creation, showing why it was so important to former Treasury secretary and former CEO of Goldman Sachs, Hank Paulson recently, that taxpayers bail out Goldman Sachs.

If you weren't watching closely enough, Rothbard gives a slow motion instant replay:

"Where did the Fed get the money to pay for the bonds? It created the money out of thin air, by simply writing out a
check on itself. Neat trick if you can get away with it!

"Chase Manhattan, delighted to get a check on the Fed, rushes down to the Fed's New York branch and deposits it
in its account, increasing its reserves by $1 billion...

"The nation's total money supply at any one time is the total standard money (Federal Reserve Notes) plus deposits
in the hands of the public. Note that the immediate result of the Fed's purchase of a $1 billion government bond in the
open market is to increase the nation's total money supply by $1 billion. But this is only the first, immediate step. Because we live under a system of fractional-reserve banking, other consequences quickly ensue. There are now $1 billion more in reserves in the banking system, and as a result, the banking system expands its money and credit, the expansion beginning with Chase and quickly spreading out to other banks in the financial system. In a brief period of time, about a couple of weeks, the entire banking system will have expanded credit and the money supply another $9 billion, up to an increased money stock of $10 billion. Hence, the leveraged, or 'multiple,' effect of changes in bank reserves, and of the Fed's purchases or sales of assets which determine those reserves."[7]

Commercial banks create money when people assume debt. We have a debt-based money supply. Do you have a mortgage on your home? When the bank loaned you the money to buy your home, it maintained 10% of the loan value in a reserve account and created the money it loaned to you out of nothing. Our fractional reserve banking system lets the bank create money to loan to home buyers as a bookkeeping entry. When it makes the loan, the bank increases the money supply by paying the home builder with newly-created electronic FRNs.

One reason tax incentives exist for people to assume the debt in a mortgage is that's how money is created in our economy. A lot of magicians are involved in the process, each pocketing some of the money for waving their hands and moving some paper around. Many magicians benefit when productive people go into debt.

Why do you have to pay interest on the entire loan to the bank and also pay the entire loan off when the bank kept only 10% of the loan value in a reserve account?

Are you having a tough time making payments to the bank on your mortgage? Why does the bank own your home if you default when the bank didn't really put its own money into the loan?

Why Do They Do It?

Because we let them. And they'll continue until enough Americans realize that just as magicians don't pull rabbits out of thin air, the Fed can't create value out of nothing.

“None are more hopelessly enslaved than those who falsely believe they are free.” Goethe

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[1] Holton, Woody, Unruly Americans and the Origins of the Constitution, 2007, p. 186.

[2] Rothbard, The Case Against the Fed, 1994, p. 58. (pdf)

[3] Ibid. p. 22.

[4] Ibid. pp. 24, 28-29, 59, 62, 119.

[5] Ibid. pp. 139-140.

[6] Ibid. pp. 140-141.

[7] Ibid. p. 141.

US Money Timeline

1637 Wampum (seashell) legal tender in Massachusetts More details from the New York Fed: (pdf).

1661 Wampum no longer legal tender in New England, still used elsewhere in America

1690 Massachusetts Bay Colony issues paper money

1760 Wampum factory in New Jersey

1775-1791 Continental Congress prints paper money to finance American Revolution

1791 First Bank of US in Philadelphia given 21 year charter. New York Fed gives more details on the history of the US central banks.

1792 US Coinage Act

1794 US Mint in Philadelphia starts operation

1811 First Bank of US charter is not renewed

1816 2nd US Bank founded

1832 President Jackson vetoes early renewal of 2nd Bank of US charter

1833 Jackson moves US deposits from 2nd Bank of US to state banks

1836 2nd US Bank charter expires

1861 Under Lincoln, US suspends convertibility of notes into gold and silver

1862 US Legal Tender Act: US Notes first printed

1863 National Banking Act provides for nationally chartered banks with circulating notes backed by Treasury securities

1878 Silver Certificates authorized by Congress

1908 Aldrich-Vreeland Act establishes National Monetary Commission to lobby for central bank

1913 Federal Reserve Act. The Boston Fed supplies more details (pdf).

1914-1918 World War I

1926-1931 Gold Exchange Standard

1931 Britain no longer redeems pound with Gold

1933 Glass-Steagall Act separates commercial and investment banking, requires Treasuries as security for Federal Reserve Notes; creates FDIC

1933 April - Under FDR, US demonetizes gold, US citizens cannot own gold, given $20/oz at bank

1934 US Gold Reserve Act: gold set at $35/oz for bank dealings

1935 Banking Act creates Federal Open Market Committee (FOMC), removes Treasury secretary from Fed governing board

1944 Bretton Woods agreement

1964 Silver certificates no longer redeemable in silver

1967 Silver certificates redeemable in bullion for one more year

1971 Under Nixon, US stops redemption of foreign-held $ in gold.

US notes no longer issued--only Federal Reserve Notes printed

1974 Ford repealed prohibition on public ownership of gold or engaging in gold transactions. Today, no country bans private ownership of gold.

Pulling a Rabbit Out of a Hat (Part I)

The Federal Reserve System is accountable to no one; it has no budget; it is subject to no audit; and no Congressional committee knows of, or can truly supervise, its operations. The Federal Reserve, virtually in total control of the nation's vital monetary system, is accountable to nobody—and this strange situation, if acknowledged at all, is invariably trumpeted as a virtue. Murray Rothbard, The Case Against the Fed (pdf), 1994, p. 3.

Relying on misdirection, a magician pulls a rabbit out of a hat--seemingly creating a rabbit out of nothing. Done well it will impress small children. But that's nothing compared to the prestidigitatorial skills of Federal Reserve bankers and the federal government as they counterfeit trillions of dollars in plain sight of Americans. Our fiat money dollars are created as if by magic. US paper money is denominated in dollars, but they're Federal Reserve Notes (FRNs) with no intrinsic value; the Fed will even tell you so.[1] Yet to date, not one banker or government official has ever been tarred and feathered for greater transgressions than those that colonial Americans believed warranted overthrow of a government.

The Bureau of Engraving and Printing prints every FRN with a portrait of a government official just as Roman emperors minted coins bearing the image of Caesar to remind servants of their master. Using misdirection, our money magicians make sure that the most common bills bear a portrait of Franklin, Washington, Jefferson, or Hamilton, men we are all taught to revere as bastions of freedom. (How much would you trust the integrity of your FRN if it had the head of Bill Clinton or Richard Nixon on it?) That one of the main reasons these founding fathers supported the Constitution was to remove power from the states for emitting worthless fiat paper money, is classic doublethink. Today's Federal Reserve exists mainly to create money out of nothing to credit the accounts of the powerful.

The word 'doublethink' is an exemplary example of its own meaning as doublethink sounds like twice as much thinking, but is in actuality the gateway to no thinking at all. Our federal government and our money system is rife with doublethink and depends on the vast majority of Americans not thinking about what's hidden up the magicians' sleeves. The magicians want to make sure that most people just clap when the rabbit appears and sip some more of their drinks. Meanwhile, the fiat money the Fed creates robs productive people by devaluing their savings.

Ron Paul (R), a true advocate of change, wants to educate Americans by getting them to think about liberty. On February 26, 2009, he introduced HR 1207: The Federal Reserve Transparency Act of 2009, a bill to audit the Federal Reserve Bank. Paul believes "the Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen."

There are now 282 co-sponsors for the bill and the Federal Reserve chairman Bernanke is now on a publicity tour because he and those who benefit from its policies are terrified that if the bill passes, the public will know which banks are solvent and which are not. According to Gary North:

"If Congress compels a full audit – a real audit, not a FED-controlled audit – individual members of Congress will discover that the American financial system is a house of cards. A few of them will release the results of the audit to the public."

But North also explains how the co-sponsors will avoid backing the bill:

"Barney Frank understands the threat. He has bottled the bill up in committee. This way, members who support the bill can tell the folks back home that it's not their fault. If they are asked about this, they can say, one by one, 'I am really sorry. I did my best, but the bill is bottled up in committee. There is nothing I can do.'

"Of course there is something they can do. They can vote to bring the bill to the floor for a vote. There, they will be exposed to the folks back home. Did they vote 'yes' to audit the FED? By co-sponsoring the bill, they can tell the folks back home, 'I'm with you on this.' By letting Frank bottle it up in committee, they can plead powerlessness. Nice."

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[1] "Modern Money Mechanics," A publication of the Federal Reserve Bank of Chicago (pdf) From page 2:

"In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value.
What, then, makes these instruments - checks, paper money, and coins - acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so."

Rest Assured

The nine most terrifying words in the English language are, "I'm from the government and I'm here to help." Ronald Reagan (R)

In his July 18, 2009 weekly address to the nation to support a House bill to create national health insurance and increase government regulation of private health insurance, President Obama (D) vowed:

“I want to be very clear, I will not sign on to any health plan that adds to our deficits over the next decade. And by helping improve quality and efficiency, the reforms we make will help bring our deficits under control in the long term.”

A Congressional Budget Office letter (pdf) to Congress estimated that HR3200 would increase the deficit in the next 10 years by another $239 billion. The President disagreed:

“The same folks who controlled the White House and Congress for the past eight years as we ran up record deficits will argue — believe it or not — that health reform will lead to record deficits. That’s simply not true.”

What President Obama didn't add is that since his administration ushered in a "new era of responsibility" (pdf) on February 26, 2009 with his 2010 budget proposals, it has already set a record for budget deficits projected to reach $2 trillion this year, even without his health care "reform."

Isn't this reminiscent of former President Clinton (D) caught in a lie and then rationalizing by asking what the meaning of the word 'is' is? Or President Bush (R) and his WMD (Youtube) lies?

President Obama explained that his proposals wouldn't cost more, but instead would cut “hundreds of billions of dollars” in unnecessary spending and change incentives so health providers “will give patients the best care, not just the most expensive care.” This is the same approach the President used in February, talking about a $2 trillion deficit reduction, while announcing a $3.55 trillion budget for 2010 and increasing 2009 spending to $3.94 trillion.

Rest assured, things might not look so good with a $2 trillion deficit this year, but the president has promised a "new era of responsibility" and he's here to help. Everyday Americans should be terrified.

Tea Parties

Many angry Americans spent the 4th of July at tea parties protesting massive increases in federal spending and taxes in the US. These Americans want change in America: change from a government that steals their earnings by taxation and devaluation of their money; change from a government that relieves investment bankers of $2 trillion in debt liabilities while everyday people lose their jobs and their homes; change from a government where US senators travel to Paris and stay in hotels at taxpayer expense with room rates starting at $460 a night, while everyday American taxpayers fall deeper into debt.

Tax protestors don't get a lot of media coverage. Their cause might seem hopeless considering most Americans wave a government flag to celebrate the July 4th holiday that commemorates secession from England after Americans closed down an oppressive government. One can hardly blame the flag wavers since four score and five years after the Declaration of Independence was written, the federal government provoked a bloody war to preserve the union. We've been conditioned ever since to believe that secession is a bad word.

The original December 16, 1773 Boston Tea Party, for which this year's July 4th tax protests were named, occurred when Americans took direct action to protest a tiny tax on tea of 3 pence per pound weight of tea: equivalent to less than 25 cents today for tea in the store.[1] The Boston Tea Party culminated a resistance movement throughout the colonies against the May 1773 Tea Act passed by the British Parliament. In Boston, Massachusetts Colony's Royal Governor, Thomas Hutchinson, refused to allow the tea to be returned to Britain. He didn't imagine that the protestors would destroy the tea rather than submit to the authority of the crown. Could any US government official today imagine Americans taking such direct action?

Mercy Otis Warren, who wrote a history of the American revolution that she had lived through, described the Boston Tea Party protesters calmly walking to the wharves in Boston as "innumerable spectators" watched the quiet parade. Most watching knew what they were about to do and supported them. The group boarded the ships and destroyed the tea, throwing it into Boston Harbor.[2] They did this because their government wasn't listening to them. Are the tea parties of today a first step to direct action by everyday Americans of the 21st century?

Warren described the polarized attitudes of her contemporaries towards the brewing dispute (pun intended) between citizens and their central government:

"Others, the true disciples of passive obedience, had real scruples of conscience with regard to any resistance to the powers that be; these, whether actuated by affection or fear, by principle or interest, formed a close combination with the colonial governors, custom-house officers, and all in subordinate departments, who hung on the court for subsistence. By the tenor of the writings of some of these, and the insolent behaviour of others, they became equally obnoxious in the eyes of the people, with the officers of the crown, and the danglers for place; who, disappointed of their prey by the repeal of the stamp-act, and restless for some new project that might enable them to rise into importance, on the spoils of America, were continually whispering malicious insinuations into the ears of the financiers and ministers of colonial departments."[3]

The "true disciples of passive obedience" of Warren's time are the same politicians, well-connected lobbyists, and government contractors of today who live off federal largesse at the expense of the American people. These "true disciples of passive obedience" can't imagine life without Uncle Sam--they have too much invested in the system. The continued existence of the federal government is vital to their way of life.

Warren also wrote of the initial reluctance of everyday people to oppose the powers that oppress them, and how gradually colonial Americans decided to oppose their rulers:

"...there is a certain supineness which generally overspreads the multitude, and disposes mankind to submit quietly to any form of government, rather than to be at the expense and hazard of resistance. They become attached to ancient modes by habits of obedience, though the reins of authority are sometimes held by the most rigorous hand. Thus we have seen in all ages the many become the slaves of the few; preferring the wretched tranquillity of inglorious ease, they patiently yield to despotic masters, until awakened by multiplied wrongs to the feelings of human nature; which when once aroused to a consciousness of the native freedom and equal rights of man, ever revolts at the idea of servitude."[4]

The British government tightened "the reins of authority" on Americans and responded to the Boston Tea Party with five even harsher measures the next year. For example, The Massachusetts Government Act of 1774:

• replaced the elected assembly with a council of clerks appointed by the Governor
• empowered the Governor to appoint/dismiss all law officers
• forbade Town Meetings without royal assent
• ended election of juries by the freeholders.

Colonists labeled the new British laws "The Intolerable Acts." And revolting "at the idea of servitude," everyday colonial Americans didn't tolerate them. So many protesters in Worcester, Massachusetts armed themselves that there were gunpowder shortages.[5] By September 1774, Worcester protesters had boarded up the courthouse and forced crown-approved officials to resign. Everyday Americans ended British authority in Worcester, Massachusetts.[6] No weapons were fired in the process; they didn't need George Washington to lead them in battle to do it.

By October 1774, protestors had seized all authority outside of Boston:

"In the late summer and early fall of 1774, patriots did not simply protest government, they overthrew it."[7]

On October 4, 1774, everyday people in Worcester declared their independence from Britain.[8] This came a full 21 months before the Declaration of Independence of July 4, 1776.

Today the federal government conditions us to believe its existence is crucial to our well-being. It insinuates itself into all aspects of our lives: regulating schools, healthcare, public transportation, the environment, welfare, retirement, and the money supply. And it taxes us to support its incursions. The talking head news media do their best to make sure everyday Americans are all sufficiently awed and cowed by the people "behind the Washington beltway" who thrive on the backs of those in the private sector. Most Americans today still "patiently yield to despotic masters" wondering:

• How would we ever survive without the federal government?
• How would we be free if federal soldiers hadn't died for our freedom to submit to federal authority?
• How can we guarantee a just society for all if the IRS, our present day "custom-house officers," didn't regularly tip us upside down and shake out money to give to modern day "danglers for place"?

Everyday colonial Americans initially submitted "quietly to any form of government," as Warren wrote. When they disagreed with their government, they tried to fix things through their local officials. Once everyday colonial Americans believed there was a systematic plan to enslave them, they wouldn't allow it. They took direct action: they armed themselves, they refused to pay the tea tax, and they refused to be subject to a government they no longer recognized.

British General Gage and former British Governor of Massachusetts called revolutionary war Americans, particularly Bostonians, "bullies" because they wouldn't tolerate being pushed around and stood up after their "habits of obedience" had failed. Everyday people do have the power to stop abuse by their government.

How much longer will everyday Americans of the 21st century tolerate being pushed around by their government before they take direct action?

Are the July 4th, 2009 tea parties a first step?

_____________________________________

[1] Mercy Otis Warren, History of the Rise, Progress, and Termination of the American Revolution 2 vols 1805. p. 57 of online pdf version.

Warren states 3 pence per pound was a "small duty." For an estimate of 3 pence in 1774, compare the price of a commodity still in use today: a bushel of wheat. 12 pence made a shilling. A bushel of wheat has ranged in price from $7 to $20 since 2007. From a 1984 paper (pdf), "Money and Inflation in Colonial Massachusetts," by Bruce D. Smith, an Economist in the Research Department of Federal Reserve Bank of Minneapolis, a bushel of wheat in 1770 cost 5.39s Massachusetts (shillings) with an exchange rate of 1.26 to 1 in favor of British shillings. 5.39s/1.26 = 4.27s British. So 4.27s British in 1770 purchased what $15 does today, if we assume a price of $15 for a bushel of wheat.

So 4.27s x (12d per s) = 51d bought what $15 does today.

$15/51d = 29 cents/d

The tea tax was 3d (pence) per pound of tea, so it was about the equivalent of slightly less than $1 per pound of tea ($0.87) or 5.5 cents/ounce.

[2] Warren, p. 61 of online pdf version.

[3] Warren, p.24. of online pdf version.

[4] Ibid.

[5] Ray Raphael, Founders, N.Y., 2009, p.139.

[6] Raphael, p. 143-4.

[7] Raphael, p.150.

[8] Kenneth J. Moynihan, A History of Worcester 1674-1848, 2007, p.80.

How it Starts

"We are excited. I can't tell you how excited we are about the president's commitment to lead us to the future." IBM CEO Sam Palmisano

R types will tell you President Obama (D) is rapidly moving America to fascism as he makes GM into Government Motors. They're correct, but they usually neglect to acknowledge that their candidates move America down the same road. Rs warning of D-invoked fascism is a case of the pot calling the kettle black. Lest they forget, the TARP bailout enacted less than a year ago was championed by the Bush (R) administration and supported by Rs and Ds alike. Bush administration Treasury secretary Paulsen forced out AIG CEO Robert Willumstad just as President Obama has now forced GM CEO Wagoner to resign. But because car manufacturers produce something more tangible than insurance, the government takeover of GM is a more blatant example of a state-controlled enterprise.

So how do government and corporations get tangled up in the first place? Usually in times of "crisis" under the guise of solving some pressing problem, and always for the "common good"--whatever that is.

A recent example occurred in response to the imploding economy, when on January 28, 2009, Honeywell CEO Dave Cote and IBM CEO Samuel Palmisano fawned over the new President as they shilled for his eventual $787 billion (CBO estimate pdf) stimulus package.

Palmisano started the performance, blathering about the honor of being led by the President in creating jobs with taxpayer money:

"We are excited. I can't tell you how excited we are about the president's commitment to lead us to the future.

"And the support for health I.T., the support in the area of smart grids, the support in the area of education and broadband, all those things are essential. They're essential in the short term, because in the research we've done, working with the transition teams, we know that $30 billion could create a million jobs in the next 12 months. But it's also every bit as important, because we touch so many factors in the ecosystem that'll create jobs for decades to come.

"So we're honored to be here. I'm honored to be speaking on behalf of the business community. And I would just say that it's an imperative that business and government come together, we help the president get the package through, and we get to work. And we have a lot of work ahead of us."

Palmisano's words belied recent IBM layoffs which didn't create new jobs, but eliminated thousands of IBM jobs in North America. According to a January 30, 2009 Times-Herald article:

"In 2007, 121,000 of IBM’s 387,000 workers were in the U.S., down slightly from 2006. Meanwhile, staffing in India jumped from 9,000 workers in 2003 to 74,000 workers in 2007.

"But for $30 billion, Palmisano promises a million jobs will come to America."

Apparently Palmisano prefers that US taxpayers subsidize job creation in America.

Next at the podium, Dave Cote, Honeywell CEO and a member of board of directors of JPMorgan Chase introduced the President (video) and warned "the situation is dire":

"We very much appreciate an aggressive approach here, and think it makes a lot of sense. Getting money out fast to people who will spend it, and getting the velocity of the spend. And then the reinvestment, investment in the future of the country, whether it's infrastructure, energy efficiency, math and science, which is particularly important to us. All these things need to happen."

In his introduction, Cote started a theme he has since repeated at the London School of Economics and Political Science this June about climate change, where he spoke about the desirability of government mandates for energy saving products, products which, coincidentally, Honeywell happens to manufacture.

"You look at energy efficiency, there are great strides that we can make in this country in energy efficiency. There are a number of solutions out there that are possible. And we just need to encourage people to do it. It improves our energy security. It just -- just makes sense."

Cote nearly outdid Palmisano's hypocrisy about creating technology jobs in America saying:

"We have to make math and science cool again in the U.S. It has to become cool. We need this-- we have a desperate need for engineers. That's all math- and science-based. We need to make that cool again, it's one of the best investments we can make."

Cote was alluding to the tired refrain that Honeywell and other technology companies are forced to hire foreign workers because there just aren't enough qualified Americans to hire. Cote has since bragged about spending $50 million to open a second research and development center in Bangalore, India and about the growth of Honeywell employment in India from 1,000 employees in 2002 to 10,000 today--the opposite direction of Honeywell jobs in the US. Honeywell and Cote's attempts to make engineering "cool again" in the US entailed systematically cutting jobs in the US and moving them overseas:

• September 2001: Before Cote is CEO, Honeywell announces 7600 layoffs, the majority in aerospace.
• October 2002: Cote announces 5000 layoffs across all divisions in a conference call .
• July 2005: Honeywell announces 2000 US layoffs in its aerospace division, first denying it was part of an outsourcing strategy, and then acknowledging plans for an increase in foreign hiring by 5000 workers.
• February 2008: Honeywell announces 420 jobs to be eliminated in aerospace manufacturing moving the jobs to Indonesia and Malaysia.
• November 2008: Honeywell aerospace announces 700 manufacturing jobs to be moved to Mexico and the Czech Republic.

By "cool again," at least for American engineers, Cote must mean a pink slip and an updated resume.

Like Palmisano and IBM, Cote wants US taxpayers to subsidize Honeywell engineering jobs in the US while Honeywell uses its own money to create jobs elsewhere in the world. Despite what Cote says about making "engineering cool again," he's really looking for government assistance in the form of more government contracts and laws mandating Honeywell products.

While economists debate the merits of outsourcing in general, to find the answer to whether it's good or bad for a particular company just let that individual company succeed or fail without government intervention. Unfortunately, corporate leaders, as exemplified by Palmisano and Cote, under the guise of helping in a crisis, really just smell cash handouts for themselves and their corporations. They gladly let taxpayers bear the financial burden while they reap the financial rewards, all while pretending government intervention in the market is for the "common good." As a member of the JPMorgan Chase board of directors, Cote has already seen the benefits of a public-private partnership between business and government as part of the TARP bailout.

The next time you hear that the government is forming a partnership with an industry for the common good or you read that an executive at a failed institution is now a high-ranking government appointee. . . that's how it starts.