Obama's Economic Kiss of Death (Republicae)
While it may appear that the Obama Administration has embarked on a totally different course from other Administrations, the fact of the matter is that it is simply a continuation of an agenda that has been operating in this country, to one degree or another, not only for decades, but for much, much longer.
The seeds of the destructive nature of this present governments policies predate the ratification of the Constitution, but of late those seeds have began to bear fruit, a vile, degenerative fruit that places the future of this country, its people and their liberty in the utmost jeopardy. The eventual effects of this government’s policy will be chaotic in nature and affect every aspect of our lives. As stated, this course is not a new one, but one that has been gradually implemented, whether conscientiously intended or not, by a political mindset that promotes the consolidation of the powers of all government into the hands of the political class.
The ideology has morphed little since the time of Hamilton, the central theme is an all-powerful government, whether Monarchist, Mercantilist, Consolidationist or Socialist in nature. The core of this ideology is that all power rests, not in the people, but in the government. The methods to achieve such a consolidation of power have been varied, but primarily rest within the sphere of monetary economics where a political economy can be produced and expanded to the point of complete government control.
While it is not a recent development, the Obama Administration has embarked on a very definite path toward controlling, either directly or indirectly, the means of production in this country to an extent that has not been seen previously, as such, the distortions which already exist due to past government intervention in the markets will become more exaggerated and new distortions will be created. As the distortions increase so too does the chaos and as this happens those within this government, without a clear explanation of the causes or solutions to the problems it creates, will simply continue on the same chaotic path with even more vigor.
Upon this path lay eventual price and wage controls, they are inevitable. The entire system employed by this government, fueled through a total fiat currency, is built upon an ideology that not only ignores the principles of sound monetary economics, but also must ignore such principles. Of course, one of the major issues of such policies is that eventually they become not only cumulative in nature, but also self-perpetuating. The necessity of further government intervention simply becomes unavoidable.
A point is reached where the government has no alternative but to gear-up its efforts to combat the effects of its own policies, one of the indicators that the government has lost control of the actual economic when it is forced to actually seize control of businesses, the means of production within various sectors of the economy, especially the financial sector. As stated before, this is not a new path, but one that has gradually been enlarged to the point where we now find ourselves.
While there are different definitions of Socialism, the fact is that the common thread throughout all such definitions is increasing necessity of government controls and what amounts to de facto ownership over the means of production and distribution of goods and services. It is the government’s ability to gain and then exercise control over economic matters that increasingly cause markets to lack the ability to adequately calculate economic information in business decisions. This stealth form of Socialism is insidious for it gives the general appearance that government planning is necessary to maintain economic market viability when just the opposite is true.
When government policy encompasses the power to actually determine the manner in which economic functions are expressed in the markets then the entire definition of ownership eventually falls under government control since the government is able to, through legislative acts and non-legislative statutes, determine the actual use of property, as well as the disposal of such property. The economic movement of goods and services are increasingly swayed by government policy and regulation, as such there is, in a very real sense, a transfer of ownership from the private sector to the public sector or government. While it appears that there is private ownership within the economy, in actuality that ownership is only nominal since it has been effectively transferred via such legislations and statues. Essentially, a nationalization of economic functions has gradually taken place where government controls and mandates supercede the ability of control over property rights traditionally thought of as being solely owned through the determination of actual title to goods and services by individuals or companies.
Such gradualism toward a Socialistic economy has, of course, been accomplished under the name of capitalism, the government allowing for a degree of capitalistic traits to be maintained to continue the ruse. Essentially, while it appears that actual private ownership is legally maintained the fact is that due to the legislative and mandated controls, private ownership is actually only maintained as long as the legal restraints on that private property are fulfilled by those who claim such private ownership. If the legal restraints are violated, which is a rather simply matter for the government, at any level, then the government can step-in without any consideration of what should be protected private property rights.
It must also be understood that the actual definition of private property and the rights that protect such property have gradually been diluted, being now dependent upon the allowances of government legislation. It is generally accepted by the population that their property is subject to potential intervention by the government, whether that intervention is through restrictive regulation, increasingly heavy taxation, or more drastically, the potential for forfeiture to some government agency. No longer is allodial title to private property sacrosanct, but all title to property rests solely at the political and bureaucratic whims of government. Gradually, what has been a mixed economic system is being transformed into a completely Socialistic economic system, though it will never be described as such.
Through the last century and a half, this economy has gone from a free-market to a mixed economy and is now moving toward a completely quasi-Socialistic economy that is characterized by government corporatism and economic tyranny. The consequences of such a transition however, will not be as simple as the political class envision, the resulting chaos stemming from this transition has the potential of destroying the political superstructure as it now stands. Under the mixed economy that began in earnest during the 1930s the system requires intervention by government; as stated, it eventually becomes inevitable that more and more intervention is required to maintain the system.
While under a mixed economy, the means of actual production and distribution are maintained privately, but are subject to government control; this continues until the effects of such intervention creates an increasing need for more government intervention, so much so that economic distortions eventually require the government to intervene even more into economy to the point that it must take drastic measures to maintain the economy. Such measures always fail to accomplish the stated purposes, as such more measures are required to keep the system afloat. As economic chaos increases, the uncertainty of the public is used to the advantage of the government, making it politically palatable for the government to propose more intervention, leading to more chaos requiring more intervention.
As this government takes upon itself responsibilities that are normally associated with the markets, it is the government that ultimately decides how goods and services are created, used and disposed. Eventually, of course, such interventions bring about such distortions in the markets that it becomes impossible for the government to reverse the effects of such distortions.
We have already reached the point where the government must begin to institute certain controls to maintain the system it has created. Such controls will come in the form of a greater degree of manipulation of wages and prices until the manner in which the division of labor is determined in the market is corrupted and non-functional. The mere act of buying and selling is no longer governed by the markets alone, but by the legislative policies of government. As the intervention continues, at some point the right to bid pricing on a good or service or the right of ask pricing no longer applies, this happens because of the controls that the government institutes and must institute to keep a semblance of functionality within the economy. This however, only exacerbates the problems associated with continued economic distortions until shortages begin to appear within the market.
The Obama Administration has already given plenty of hints as to what is in store for our country. Recently, Mr. Obama stated that:
“We’re not, we’re not trying to push financial reform because we begrudge success that’s fairly earned. I mean, I do think at a certain point you’ve made enough money. But, you know, part of the American way is, you know, you can just keep on making it if you’re providing a good product or providing good service. We don’t want people to stop, ah, fulfilling the core responsibilities of the financial system to help grow our economy.”
J. Kenneth Galbraith said:
"There is a widespread notion that one of the most primitive of modern ideological choices is whether a government shall be Keynesian or not . . . no present or future administration really has the non-Keynesian choice."
As the future will prove, the Administration will engage in a soft form of wage and price controls, but even in the soft state, such controls will ultimately be devastating in terms of economic functions. Such destructive attributes associated with wage and price controls eliminate the rights of ownership in the private economy. It is a de facto form of Socialism that has all the characteristics of a Socialistic economy in everything but name, all that remains of free market capitalism is an empty shell.
Such controls deprive those in business from the use of their capital freely, the uses ultimately being determined by the various measures implemented by government. The government interferes with the natural economic market functions, interjecting conditions and restrictions on business to the point that businesses can no longer use their capital in the most profitable manner possible. The limitations on profit filters through the economy, diverting resources and redistributing those resources in ways that cause economic distortions.
Now it must be understood that such controls have been in place for decades, but with the election of Barack Obama, the goal of transforming the United States into a Socialistic society is closer than ever. It is clear, not only by the actions and the words of Obama, that the intentions of the Administration are far from what could remotely be considered Constitutional, or even American for that matter, but it is also clear that Obama is following a well-beaten path of Socialistic ideology that has plagued this country since the period of Lincoln.
The entire impetus from the period of Lincoln to Obama has been, with little interruption, a path of the consolidation of a nationalized government with the power to control every aspect of the lives of individuals. In order to do this it was necessary for the free-market to be completely destroyed and a system of centralized planning be implemented. The first barrier that had to be removed was sound money, after that it was necessary to implement a form of economic theory that would not only allow the government to gain control over the economy, but would make it necessary for it to gain control through the gradual destruction of monetary and economic functions that operate according to free-market principles.
Keynesian economic theory was, without a doubt, one of the single most important tools in the Marxist agenda for this country. As Joan Robinson, a Keynesian economist stated: “ the differences between Marx and Keynes are only verbal”. The agenda is to control, not necessarily to own all productive and distribution avenues within this country and to do that it is of primary importance that the government bring about a certain degree of disruption in the economy. Such a disruption, whether intentional or not, would make it necessary for more and more government intervention into economy and social matters.
As a former Keynesian Economist, Dr. L.A. Hahn stated: For it [the Keynesian view] presupposes an economy whose members do not see through the changes brought about by monetary or fiscal manipulation or as some might say, the swindle. Above all, it presupposes that people are blinded by the idea that the value of money is stable by the "money illusion."
It is indeed an illusion, there is nothing real about the Keynesian economic foundation upon which this economy now rests, nor is there any reality within the fiat monetary system that keeps the government expanding. The key to ability of this government to expand its power, abusing the delegated and enumerated powers along the way, is the fiat monetary system employed by government to bypass all Constitutional limitations.
As the government continues to expand its influence over the lives of the individual, as it seeks to redistribute the wealth of the people into what it considers a more equitable distribution, it produces, in reality, a stratified society where the ruling classes are never included in the egalitarian plan. A government aristocracy develops that sets itself above its own mandates for Socialistic equalities; those that are privileged exclude their own participation in meeting the required mandates of government legislation.
Unfortunately, for the government, central planning can take unexpected paths; usually it forms chaotic paths due to the effects of intervention in the market. While it most certainly appears that there are those within this government to have full faith in the ability of government to actually control economic mechanics, the reality is that it is simply impossible. All efforts in that direction only increase the distortion already created by previous government intervention and interference into the market. Those within government, the politicians and bureaucrats will always seek to expand production within the economy however; the massive inefficiencies brought about by the governments own intervention in the markets inhibits such production. The incentives of production are destroyed, not only are the incentives to produce destroyed, but the incentive to act productively is destroyed by the unending cycle of government intervention necessary to keep the system hobbling. The really amazing fact is that even in the face of such overwhelming evidence of the failure of Socialistic economic policies, most politicians who adhere to such ideology are completely unwilling or unable to abandon the ideology.
As with all Socialistic or quasi-Socialistic political economic systems, the resources and funds required to maintain such a system become enormous, even crippling to the markets. Instead of providing economic stability, the results are chaotic disruptions as the government intervention apparatus continues to intervene to correct the problems resulting from the previous manipulations by the government in the economic processes. It is a cycle of destruction, feeding upon itself as the government continues to gain more and more control over economic matters. Eventually, the entire system becomes unmanageable and the controls unenforceable. Under such system there can never be any real planning, such planning must eventually reach the stage of reactionary responses to the consequences of the governments own policies and legislative mandates. Real control becomes illusionary.
As the government assumes more and more responsibility for the economic well being of the citizens, the less well being there is to go around. Everyday life becomes almost unbearable as people attempt to skirt the system that has entrapped them. Resentment and open hostility will manifest, causing the government, in the interest of its own survival, to brutalize the people. Individual freedoms are sacrificed for The State Collective, propaganda is geared toward any hint of discontent and those who intend to rule do so with the cruelest intent.
As failures mount, the government is quick to place blame, that is, to place blame on anyone and everyone other than itself and its policies. The government must turn to external threats in hopes to rally the people behind it and no longer depends on reality of potential threats, when it is enough to fabricate those events to garner support. Of course, corruption is always present, but now and then it becomes necessary to expose internal corruption to maintain a degree of legitimacy in the eyes of the people.
As the Socialistic economic and social system crumbles under its own weight, the government must resort to overt force to maintain its control over the people; there is no other alternative but state-terror as a sanctioned method of maintaining its power.
The Obama Administration has set its course, a course that is resulting in one of the most massive periods of deficit spending in the history of our country; the only real method for financing that spending is a policy of inflation since there is no possible way for this government to tax its way to solvency. Using the government’s favorite instrument, fiat currency, it has been able to spend with wild abandon without the worry of massive taxation at this point to keep the system working. Factually, there is absolutely nothing this government can do, or will do, to get itself and this country out of this situation it now faces.
The actions of this government have been, and are, distorting, actually destroying the uniform rate of profit that the markets normally establishes and governs. As such, this distortion can be seen in the manner in which businesses make business decisions and even how they account for profit. The entire system of fiat currency and the economy on which that system must be based creates some of the most destructive economic factors that eventually cannot be hidden in the real world. The rate of influx within the withdrawal and injection of capital is contorted through the inflationary depreciation of the fiat monetary regime. As such, the actual profit and therefore, capital available to business and even individuals is a façade and cannot provide an accurate portrayal of economic reality. This distortion can easily be seen by comparing profits without the effects of inflation with the effects of inflation on the rate of profit. Eventually, this begins to corrode the basis of production, even the motives behind production. Indeed, since the rate of profit becomes distorted, over time, the measure of total production also is distorted, as well as the ability of business to correctly anticipate actual consumer demand.
It should be evident that along with the distortions created by the monetary system and the manipulation of that system, there has, by necessity, been a drastic increase in what can only be considered an almost completely subsidized economy, generated by the power of government to redistribute wealth from what remains of the productive sector of the economy to the non-productive sector, as well as those businesses which are politically connected. Subsidies are nothing more than a form of price control, along with such price controls; wages are equally manipulated through various means, from taxation to fiat inflationary depreciation. Under such a system, there can never be real expectations of stable future pricing or wages sufficient to keep pace with unstable fiat pricing. Since the economy adjusts itself to the quantity of money available, the fiat monetary system, being manipulated by external forces, i.e. the government, the adjustments themselves are a product of quantity distortions in the supply of fiat money.
A problem arises when this distortion affects the value judgments of businesses and individual consumers, which, in turn, affects the demand within the economy, usually causing a misallocation of resources and labor. There is a very good reason why a fiat economy must depend upon a great deal of fiat credit creation, the system by itself, cannot maintain economic progress over a long period of time and will falter without such fiat credit creation. Such a condition, of course, creates a number of dangers, the least of which is the level of accumulated debt that must be held to maintain the fiat economic system.
Additionally, since the normal and healthy forces within a free-market economy are manipulated, and thus distorted, by government intervention, the actual supply of resources are diverted to elements within the economy which, may or may not be the most important employment of those resources as they would be under a free market economy. Government regulation tends to create these diversions of resources, rerouting resources to less efficient production that would be normal under a free market. Normally, in a free market, the market will naturally form a variable range where supply and demand expand and contract naturally, the same cannot be said of the government’s manipulated economy. A free market will determine all prices by costs of production; this is done with respect to the individual’s economic value judgments as a balance is achieved in the market based on the various forces at play within the economy. In the Socialistic economy, eventually no such value judgments are possible, supply and demand become skewed according to government policies affecting those forces.
What was once only a transitional form of Socialism has now been implemented forcefully by the Obama Administration. This form of Socialism cannot be considered traditional Socialism, but is a conglomeration of Socialistic principles mixed, by necessity, with free-market principles, but the transition to a total Socialistic system is much closer under the Obama Administration than at any other time in our history. The problem that the Obama Administration seems to be completely oblivious of is the fact that under such a system there can be no real economic progress, the economy falls into deeper levels of disarray, requiring more and more government intervention just to create a degree of balance within the economy.
While the former Soviet Union suffered a rather rapid decay due to various factors, the least of which were an unsustainable Socialistic economic system, the United States will suffer form a slightly different type of economic and social decay. Obama’s Kiss of Death will include a combination of factors that were not prevalent in the former Soviet Union, but there will be comparisons to be sure. The fact that the United States has been so dependent upon an open fiat monetary system, fractional reserve banking system and fiat credit creation that there will be a much more intense form of decay, causing an intense collapse on many fronts, including societal.
There will be a convergence of events taking place through the fiat economies around the world, the events of the United States will prove to be a fatal blow, not only domestically, but on the foreign economic fronts. As the economic situation grows worse, so too will the attempts of the government to maintain control and power. These attempts will naturally include tactics that will not be mistaken as anything but tyrannical, despotic and cruel. The government will take upon itself life and death decisions that will impact every aspect of the lives of the People of this country.
As an high rate of fiat inflation turns extreme, more extreme price controls will ensue, making matters worse, leading to massive shortages and setting off a cycle of uncontrollable events that will seem, in many respects, contradictory in traditional economic terms since there is no real historical comparison available. A hyper-inflationary depression will produce events that mimic both deflation and inflation, but are not, in the strictest sense either. The displacement of employees will be massive as layoffs increase at an alarming rate. Many of the most respected companies will be wiped away with a rapidity that will literally be shocking and economically earth shaking.
Property rights will be the first to suffer then will come the abolishment of all individual rights. There will be a rapid rise in black market activities and the government will seek to impose draconian measures to prevent such activities, without much effect. The forcible expropriation of the means of all production, the implementation of heavy-handed controls of both prices and wages will inevitably create even more chaos. We will see starvation on an ever-increasing scale, along with acts of desperation by the public as mass confusion and distrust spread. Widespread violence will bring about even more acts of abuse and even atrocities which will be viewed as necessary and perhaps even proper [by the political elite] given the increasingly uncontrollable situation.
The Panic of 2008, which is the preview of events to come, will appear to be good times as the economic system deteriorates in the most surprising ways imaginable. Economic and therefore, social dislocation will be nightmarish in the extreme, social unrest will gravitate toward complete chaos and all faith in government will be erased.
The real danger, particularly for this government, is the social unrest that will result from such distortions. There will either be a complete breakdown of the economic functions in this country or there will be a continuation of a gradual disintegration, which will allow the government to implement a complete Socialistic economy, thus a society, without the need for forceful restraint. In other words, if there is a very gradual decline in the economy well-being of this country then the people will be much more receptive of such government controls and intervention. If however, there is a rapid disintegration, which at this point can be expected, then the likelihood of a drastic backlash against government intervention is possible. The traditional views upon which this country was founded have a chance of resurfacing during such a period of disintegration.
That being said, there is still hope and it is not the kind of hope promoted and promised by this illegitimate Administration. It is a hope of Restoration, a hope that the People of this country have reached the point where they are no longer asleep and have started to question the actions and motives of their government. Perhaps the greatest force to confront this heavily centralized government is the 10th Amendment Movement and the empowerment of the Several States to interpose themselves, effectively nullifying federal government actions and laws in favor for a much more Constitutional stance. The concerted efforts of a growing number of States, with a growing awareness and support of the Citizens of those States, will be persuasive, as the movement grows, so to will be the pressure on the federal government to reconsider its stances and actions.
A plea to the common sense of the American People, or at least that which remains, will go far in crippling the goals of this Administration. There will come a time, and we have almost reached that point, when the American People will finally have had enough of the folly instituted by this government. We are fortunate in that the People of this country are not accustom to nor inclined to trust nearly as much as other countries where the tradition of being subjected to a paternal government was generally accepted as normal. There are rumblings in the land, and many of those rumblings are coming from the some of the more surprising places and people.