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Saturday, October 13, 2012

The Deficit, The GDP and Other Media Lies

        The media loves to spin things to make it look like they have a complete understanding of all that is going on in the world around them.  They really do not have a clue.  They are victims like the rest of us.  When crisis happens they feel obligated to spout some form of understanding of what is going on.  The recent attack on our embassy in Libya is a perfect example.  They took what they heard the government say and ran with it.  They published it loud and wide.  Only a few weeks later the facts came out.  Now they want to point fingers and scream with indignity that they were lied to.  Well their job is to check the facts and put them out and not create their own facts.  Here is an example of what I am talking about.

        All through this election cycle the media has been screaming.   "No President has ever been re-elected when the unemployment rate has been over 8%.   Well the facts do not back that statement up.  The unemployment rate in 32 when FDR was elected was 23.6%,  by 1936 he had managed to trim it 19.9% and by 1940 the rate was down to a respectable 14.6%.. What those numbers fail to show is that in 1937 FDR thought the economy was getting better and they increased taxes.  Growth stopped dead in its tracks.   They back tracked and the numbers were coming down as we approached World War II.  The war is the only thing that created a stimulus.     The rate did go down to 1.2% by the 1944 election.

       Today we are facing mandatory tax increases in January of 2013.  If Congress fails to act, and the taxes are allowed to go up it will end any forward motion the economy is having.  The recent public debates have shown that neither party has a clear answer to the problems.  Candidate Ryan showed clearly that he is still for wasting money on war.  He said he did not approve of pulling out troops.  He did not say how he would pay for that continued commitment to Afghanistan.  The failure to appropriate funds to pay for the war is half of why our national debt is skyrocketing.  My personal opinion is I am far more willing to spend money to help my fellow Americans.  Spending money to help people who still have a stone age mentality is a waste of time.  You can put a suit on a gorilla and it may look nice, but that does not mean it is any smarter.

      Neither party has a definite plan to create jobs.  All through the roaring twenties the property markets were losing ground.  The industrial growth more than compensated for the losses experienced by farmers. In 1928 unemployment was 4.2% and things seemed rosy.  The problem was that people were starting to feel the effects of the losses in the real estate markets and cutting back on investing.  As soon as the little guys quit buying things the markets started to dry up.  Suddenly the demand for steel to make cars and planes was going down.  It started a movement that turned into a tidal wave.  It is the little people that drive the markets with their expenditures, not the wealthy.  The wealthy add to the problem by hoarding their money instead of reinvesting it.

       While I personally do not like FDR he did understand the situation pretty well.  He made the comment,
"We have nothing to fear, but fear itself."  He understood that if people felt threatened they tended to hold on to what they had and ride out the storm.  They did not want to lose what they had.  The problem with that mindset was that as they held on to their money it created a snowball that just kept growing.  America is at the same point again.  Americans are showing signs that they believe that things are getting better.  The snowball is half ways down the slope and whether it continues to the bottom or melts where it is at depends basically on perceptions.

      The media has also been saying this is the worse recession since the Great Depression.  Based on that fact higher unemployment numbers should be expected.  The present administration does not have some magic bullet to fix the problem.  The media is screaming that the GDP is the greatest sign we have of a problem.  Well they do not get it at all.  The national debt at the start of Great Depression was only 38% of  GDP, and the economy collapsed.   Yet in 1945 at the end of World War II the national debt was 122% of the GDP and it did not stop the economy.   In fact the economy took off and boomed for years.  The difference was jobs.

      I hear the candidates all talking about the need for jobs, but they are not talking about how or what kind of jobs they will create.  They talk about creating an environment for growth, but they do not say how they will create that growth.  They do not say what kind of jobs they will encourage.  If the mandatory tax hikes are allowed to happen millions of jobs will be lost.   If the Republicans win and they make all the cuts they are proposing millions of jobs will be lost.  Neither of these situations will stop pushing the snowball down the hill.   Cutting business taxes and doing away with loopholes will help the situation.  Creating jobs fixing infrastructure may spend money, but it does create jobs, that may help create more jobs.  This in turn creates more tax revenue which gives the government more money to pay its bills and reduce its debt.

      Reducing the debt is one thing that has to be a priority.  After World War II the government paid down the debt.  We need to focus in that direction again.  Building infrastructure to support the war machine and rebuild the World after World War II is what drove our economy.  The problem was we were so busy helping the World we failed to take care of our own problems.   As we modernize an rebuild America it will create a new wave of jobs and prosperity.  While I agree with candidate Romney that the Government is not the one that creates jobs.  It is the one that creates the demands for improvements that drives the need for jobs.  We need to build the infrastructure that will help us compete in the 21st Century.  It is also not the governments job to support industries such as solar and wind energy.  The government however can help create markets  by reducing the political obstacles to growth.  Tariffs not thought out can cost as many jobs as they create.  We need to keep our eye on what really levels the playing field.

      What would help is if the media would read Article 1, Section 8 of the Constitution and ask Congress why they are not doing their job.  Why have they failed to do the duties assigned to them in the Constitution. What are they going to do about their duty to manage the governments spending?  What are they going to do about the military that they no longer seem to be in charge of?  Finally when are they going to define what providing for the Welfare of America covers?  They need to wake up and do their job.  I think Welfare can be defined pretty clearly by what the average person provides for their own family.  Shelter, Food, Clothing, Healthcare, Education  and Security which are all the things they need to grow.  Just as our nation needs the same things to grow.  Wasting funds as they are in Afghanistan is shortchanging Americans that could put the funds to much better use.

      We still need to defend America but how we do it could change.  We could and can use the drones, cruise missiles and sniper units that are supplied with intelligence from an Army of undercover spies that makes each engagement with enemies of our country a terminal event.  We need to use a surgical strategy and the not the sledgehammer approach we used kill a few cockroaches. We need to cut off all aid to countries that support our enemies, like Pakistan and Saudi Arabia.  Put all those nations on a target list and let it be known if they support terrorist they will receive appropriate retaliation for any attacks originating from their countries.  A bomb on the home neighborhood of all the 9/11 terrorist might have been cruel, but it would have be just payback.  Those people would not be less innocent than were the Americans killed by their friends and neighbors.  They would understand their is a price to be paid for supporting terrorism.  That may sound barbaric, but it would be speaking to them in a language they may understand.

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