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Economy

The sky’s the limit

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The skys the limit

If I have a regret over the last two years, it is not doing a better job of documenting my specific predictions about what a potential Trump Presidency would be like. I would if I could go back and do it again, but I didn’t the first time because, like so many others, it didn’t occur to me until about a week before the election that he might actually win. He did win, and here we are.

Yesterday the President made a deal with the House and Senate minority leaders, members of the party that is theoretically his opposition, while leaving the leaders of the party that he is theoretically his on the sidelines. Now I say theoretically because Mitch McConnell (R-KY) and Paul Ryan (R-WI) are hardly allies of the President, nor are they small government conservatives. Nor is the President. Nor are Nancy Pelosi (D-CA) or Chuck Schumer (D-NY). Frankly, why they all don’t just join the same party is beyond me.

The fact is though, private citizen Trump donated heavily to the campaigns of every one of those lifelong politicians. This should have been a warning sign to his supporters, but for reasons passing understanding it was not, even when it was pointed out to them. Trump was a long time Democrat, became and independent, then a Republican, then a Democrat again, now a Republican again. He has no firm principles he believes in.

I’m not here to bash Trump. This is simply who he is. And if I had done the aforementioned documentation he’d be following my predictions as if it were scripted.

So, it is no surprise to me that the issue that he has chosen to cross over and work directly with Democrats while ignoring Republicans is debt. After all, Trump is the self-proclaimed “king of debt.” The problem is that description comes from his business “savvy” where he has become wealthy in the world of micro-economics by borrowing and then sometimes defaulting on debt, leaving his investors holding the bag while he walks away with profit. This is all legal of course, but legal and moral aren’t the same thing.

Further, while this might work in the world of micro-economics, he is now dealing with macro-economics and on a global scale. It’s not certain that Trump understands that he can just have the US file for bankruptcy protection and walk away without paying our debts.

First of all, much of that money is owed to ourselves. We are the world’s reserve currency, which is the only reason we’ve been able to amass this much debt over this period of time. When China and Russia trade, they don’t trade Yuans for Rubles, they trade Yuans into US dollars and THEN into Rubles.

Or at least, they used to. That system is rapidly going away as major economic powers like Russia, China, Australia, Japan, Saudi Arabia and others are starting to conduct business without the dollar. When the dollar stops being the world’s reserve currency, we will suddenly have to start living within our means overnight, and debt will not be able to be taken anymore.

We’re already paying billions on just the interest on our loans. We’re taking loans out to pay our loans. We’re told every time the debt ceiling come up that we must “raise it to pay our bills.” This. Is. Insane. STOP SPENDING.

I’m not saying don’t raise it at this time, but it MUST be coupled with massive spending cuts.

I’ve written about tax reform and how it relates to federalism before. Most of what the Federal government does, it doesn’t have the Constitutional authority to do, but it keeps granting itself that authority in spite of the Constitution. With this usurped authority has come massive unnecessary spending that has put us in onerous debt that we must deal with NOW.

Can you imagine what would happen if we don’t do this correctly? What would happen if massive austerity measures had to be taken overnight? Look at Greece. That. Times a thousand. Some people scoff at that idea. Well, we live in a country where people literally riot over a thug who attacks a police officer getting shot. Imagine what will happen when their EBT cards suddenly stop working. Yeah. Scary.

Plenty of people reading this right now probably think I’m crazy. That’s normal. What you’re feeling right now is called the Normalcy Bias. It’s the belief that because something hasn’t happened to you before that it won’t. Well, your house has never burned down before (probably) but you still have fire insurance right? Why? Because you know it does happen. Well, financial meltdowns have happened before in other countries, and it CAN happen here. It WILL happen here is the debt is not brought to heel.

One of the reasons I didn’t see a difference between Hillary Clinton and Donald Trump is neither of them were the least bit interested in dealing with our massive debt, and frankly it was my number one domestic priority. Even if one of them had promised to deal with the debt I wouldn’t have believed them. Neither would have dealt with the root cause of the debt. Clinton has a long history of working to increase the burdensome social programs and regulations that overburden the taxpayers and lead to debt, and Trump never understood it.

The national debt, and the even greater unfunded liabilities that some experts estimate to be nearly $100 Trillion, not just the $20 Trillion in debt must be our national domestic priority, and the ONLY way to counter it is massive spending cuts. Despite the rhetoric of the leftists in both parties, the rich pay their fair share, and if they don’t, it’s the fault of the government for not enacting REAL tax reform as I’ve written about previously. We cannot tax our way out of this. We have to stop spending.

Trump’s “betrayal” of the GOP leadership (I see it as just returning to his roots) is really just dealing with debt in the only way he knows how: take out more debt. These are dangerous times for our country, but the looming debt bubble may be the most dangerous issue of all, and if it isn’t tackled quickly and smartly, we may not survive. Unfortunately, few in the two party system in Washington are inclined or capable of doing what must be done.

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Economy

PragerU: Is Denmark socialist?

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Is Denmark socialist

Not too long ago, many socialist, including presidential candidate Bernie Sanders, thought the model of the future for America was Venezuela. They saw the prosperity that the oil-rich nation was enjoying in its early days of socialism and said, “That’s us. That’s where America needs to be.”

Fast forward to today and suddenly every socialist is disavowing Venezuela altogether, claiming that the model of America was never really the model they thought it was and it’s not even real socialism. Why? Because it failed. Therefore, by the socialists’ reckoning, that must mean they didn’t do it right.

Now, Denmark is suddenly the model for America’s future. But there’s a problem. Denmark is a free-market nation that has been peeling away at its socialist foundation for decades. While they enjoy some of the most robust social programs in the world, they’re doing so at such a high price that the people are left with very little other than the essentials. Yes, they have free healthcare, but more citizens are turning to private insurance to bypass the poor treatment and long wait times associated with single-payer healthcare. Yes, they have free schooling, but grade-level students are being shifted to private schools at nearly a 20% pace while the “free” college system is being taken advantage of by those who are clever enough to realize they’re better off staying in college indefinitely than graduating and being thrown into the world of working to pay for the system.

This video by PragerU’s Otto Brons-Petersen breaks down the reality of the socialist utopia leftists often point to as their beacon of hope for a failed economic and political philosophy.

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Economy

Note to Nashville: Privatization is good, except when it’s idiotic

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Note to Nashville Privatization is good except when its idiotic

This will be the first and hopefully the last time I speak out against a government plan to privatize anything. But as much as I like a blanket approach to taking control away from government in the vast majority of situations, the plan to privatize public parking in Nashville is so loaded with problems, it shouldn’t move forward.

I first heard the details of the plan when I read about the rare occurrence of a Democratic mayor wanting to privatize an element of city government. Generally, Democrats push for more control over their territories, not less, which is why I was hoping to find an instance where the realities of limited-government federalism and capitalistic privatization was seeping into the psyche of a Democratic leader. What I found was appalling: a desperate mayor, David Briley, throwing anything he could against the fiscal walls in hopes of making it stick. His city faces a woeful budget shortfall, something that should not be happening in a city as vibrant and growing as Nashville.

But, they need money immediately to make up the shortfall before the end of the fiscal year and this seems to be their last resort following an atrocious set of attempts to sell off public land to make up the cash difference. The attempt was so botched, the city council passed a resolution preventing such an attempt from being used in the future to cover operating expenses. But now, they’re ready to push the parking privatization scheme through with a rubber stamp and hopes nobody will look closely at the details.

The latter is unlikely, as many are already speaking out. Mayoral candidate Carol M. Swain urged the city to halt the plans, clearly pointing out it’s a very bad deal:

Nashville must oppose Mayor David Briley’s public parking privatization plan

We the People of Davidson County and surrounding areas will be adversely impacted if Mayor Briley, who is up for re-election, can push through this deal that would entail a 30-year commitment.

No agreement of this magnitude should be for more than any one term of the mayor’s office.

Once they have the contract, there is nothing to prevent the bid-winning private company from also raising rates until they match rates common to larger cities such as Chicago and New York City.

As Swain noted, this is a 30-year deal that essentially turns a public revenue source into a for-profit scheme that will sacrifice the people’s control for decades in exchange for saving a single year’s budget. The loss of future revenues and control aren’t the only things at stake, though. The deal will include increases across the board for citizens of Nashville, including:

  • A rise in the number of parking spots designated as paid that will essentially double them over four years
  • Increased cost per hour by 25 cents
  • More than doubling fines from $11 to $25
  • Decreasing free parking times by four hours per weekday
  • Removing free parking on weekends
  • Removing free parking for green vehicles

The mayor is pushing the deal as a way to innovate and catch up with the rest of the nation, citing technological improvements. But any such improvements could be made by the city, as could the changes to the times, costs, and fines, so his points are moot. The reality is this: They need cash now and they don’t have any other schemes that can work this quickly.

There’s a solution to all this: cut budgets. Fiscal responsibility should not be obfuscated by get-cash-quick schemes that will harm Nashville’s citizens. Make cuts. Increase revenues long term. Make Nashville as business-friendly as possible. These are the ways that work in America. Corrupt land deals and desperate privatization schemes always hurt in the long run. This time, they’re hurting Nashville in the short term as well.

Nashville’s parking plan is the equivalent of taking an important part of many citizens’ daily lives and pawning it off to pay the city’s bills. They’re giving up 30 years of control to save a single year’s budget.

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Economy

The 1751 machine that made everything

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The 1751 machine that made everything

A short video on how technological innovation born of economic liberty has changed the world.

History is more than dates, places and battles. In many instances it’s technological advances that change the world for the betterment of all mankind. In this case it’s the story of French inventor Jacques de Vaucanson and his creation in France of the first all metal slide rest lathe, the forerunner to all modern machine tools in 1751.

Lathes had been around for centuries, but lacked the precision with hand held cutting tools. The slide rest of the Vaucanson metal lathe that provided the control to produce metal part of exacting dimensions. The lathe is said to be able to produce every other machine and machine tool. This advancement changed everything.

The producer of the video references a profound chart of World Population GCP and per Capita GCP 1 –2008 AD from data of the late Angus Maddison, similar to this produced by the  Visual Capitalist, we credit them for the chart and commentary:
Image Credit: Visual Capitalist

 

For thousands of years, economic progress was largely linear and linked to population growth. Without machines or technological innovations, one person could only produce so much with their time and resources.

More recently, innovations in technology and energy allowed the “hockey stick” effect to come into play.

The video was produced by Machine Thinking last year.

While some may quibble about which particular machine produced this miracle The larger point is that the machines of the industrial age profoundly changed what people could produce.

As the video noted the average person in 1600 was no better off economically than someone thousands of years earlier. This is what is called the Malthusian trap and for seven thousand years, it was inescapable no matter what we did.

Machine tools such as this changed all of that, one person could produce what had taken many. This surplus could outpace births, allowing the economy to grow at an incredible pace as seen in the chart. All from the genius of the mind undergirded by the Economic liberty of the free-enterprise system. This is why this is vastly superior to the societal slavery of socialism.

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Get this story in front of tens of thousands of patriots who need to see it. For every $30 you donate here, this story will be broadcast to an addition 7000 Americans or more. If you’d prefer to use PayPal, please email me at jdrucker@reagan.com and let me know which post you want boosted after you donate through PayPal.

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