Blog - The Real Problem With Funding the Government

The Republicans have made this a not-too-friendly-democrat Christmas tree bill. Many Democrats will NOT support this bill because of the following:

Blocking the EPA from regulating green house gases.
As well as blocking the opening internet campaign.

Those clauses will have little to no Democratic support, which will hinder passing this budget bill.

Though it may seem like a minor issue, insinuating that Congress may regulate the internet just because it is not mentioned in the Constitution basically flies in the face of defining characteristic of our particular flavor of federalism. I’m not saying this is exactly what you were getting at, but one of your statements was close enough that I thought I’d chime in.

I should have listed the FDIC, and the federal pension guarantee corporation as well.

When I talk about bailouts I include the $23 trillion dollars spent by the Fed in 2007, TARP, Use of fannie and freddi to hide market failures(rule changes in this organizations by the Bush administration in 2007 forced them to buy a lot of junk mortgage bonds).

The depth of the crisis is completely misunderstood, It would have dragged out much much longer, Remember the last great depression wasn’t pulled out until the government engaged in the largest spending spree ever engaged in ever(World War 2). Right along with the highest tax rates ever( 96% on highest bracket ).

I doesn’t just refer to tax rates, it refers to the idea of making money “cheap”, using outsourcing to reduce costs(aka undermine the wages of people who buy things), undermining regulation especially in the area’s of banking and money.

The overall idea that supply of anything creates its own demand, that is “Voodoo” economics.

It is not a misunderstanding, it is seeing the fractional reserve system for what it is. Creating money out of thin air and thereby decreasing the real value of the existing money in the system.

Fractional reserve banking is predicated thoroughly on the bank being allowed to extend more credit than it has cash on hand – that is creating money out of thin air.

A real money system, not based on fiat currency, is the only way to eliminate the death spiral that our current system is in. As for Reagan’s use of the Laffer curve (what you choose to call Voodoo) was at least an honest attempt to spur the economy into creating jobs. The last two administrations (W and O) have done everything in their power to stifle the economy while pretending that they are doing otherwise – that is voodoo….

And I don’t want to make it sound like I support Keynesian theory, It has been used to justify some pretty major stupidity.

But its models for how capital move around an economy, CVT, the velocity of capital, etc all seem to be very correct.

What those things are used to justify, the bailouts and such, while they worked to some extent(they did stop the freefall), they haven’t actually reversed the feedback loop of shrinking deposit levels at the banks damaging their lending capacities(tho this does seem to be closing itself over time by itself).

Thank heavens we have plenty of Credit Unions and community banks that didn’t further inflate the stupidity going on in wall-street.

To be clear the Fed hasn’t printed a lot of money, this is an illusion coming from a misunderstanding of how the fractional reserve system works.

Nominally, their are two different ways money can enter the economy, via creation of new money(the way you point out), and via federal reserve discount window where a bank can barrow money up to the accepted leverage ratio allowed to banks(currently 15:1).

The Voodoo economics of Reagan, and the supply side bankruptcy have been the basis of our economic policy for the last 30 years or so, not Keynesian theory(and really this is an evolving theory it is not the same as it was).

@ebritt,

I can’t believe I’m saying this, but do you really think you’re owed reparations from a non-breathing entity? I wouldn’t say a corporation is non-living, but it definitely doesn’t breathe in the same sense that we do.

Considering that $243B out of $245B has been paid back out of TARP monies (not including interest which amounts to a total $274B that has been paid back), I would say they don’t owe us anything. That’s kinda like a company that makes widgets which has a negative public perception (it’s not doing anything illegal mind you, just bad PR) and saying it would be required to pay people that are not it’s creditors. That doesn’t make sense and it doesn’t owe us just because it has a negative public perception.

H.R. 1 is missing a critical policy rider. The rider that requires reparations from the financial industry that caused the financial crisis and the great recession.

If B.P. has off shore drilling accident, it is required to pay for the damages it caused. I find it ironic that the Republicans want to slash Medicare and Social Security because the financial crisis has reduced revenue to the government.

Americans believe in individual responsibility. The Finanical Industry, through reckless and irresponsible behavior, looted American taxpayers and doubled our deficit. An enterprising Congress member needs to draft a bill requiring the financial industry to pay reparations to the American taxpayers for the havoc it has caused.

Congress is pursuing the wrong agenda. Stop punishing our retirees, the disabled and the unemployed and go after the real culprits. I suggest nameing the bill "The Financial Crisis Reparations Act of 2011. Take away the industry’s tax exemptions.

I don’t buy into the Austrian/Neo Classical economic religions. Their economic “theories”(and I use the term loosely in this case) ignore all of the developments and understanding we have accumulated over the last 80 years or so, typically they follow closer to a ideology of anarchy, racism(in the case of Von mises), and “self evident axioms”.

The theories we have now still have holes in them large enough to drive trains through, but they are much closer to reality to any of the nonsense pushed by Hayek.

In all cases with economic “theory” more often that not it is all designed to prop up the ideological belief of how one wishes or thinks the world should work rather then in fact a serious study of how in fact it does work.

Anyone who pays attention knows that it is currently impossible to have an honest debate about any legislation, either in the legislatures or in public. Honest civil debate is a lost art in this country replaced by sloganeering, half-truths, and genuflecting.

The debate that needs to take place, and is attempting to take place, is not about what is right and wrong, but about what is the proper role of government. Planned Parenthood, CPB, Dept. of Ed, all do not qualify as proper functions. The EPA is a tricky one since there are some functions that it should be performing that are proper, but hamstringing corporations is not one of them.

Democracy, which is an over used term in the current sorry excuse for debate, is nothing more than mob rule. 51% of the people can legally usurp the rights of the other 49% simply because they have control.

I think you’re right on. The Free market will drive the economy if given the tools and freedom to do so

If you had read and understood the Constitution at some point in the past you would know that failure to mention something means that the federal government cannot regulate it. The Constitution defines limited powers for a federal government; everything else is left to the states and the people. And yes, before you ask, this does mean that the vast majority of federal government activities are blatantly illegal.

I for one hope the government stays shut down until it obeys its own laws.

hmmm…the Democrats failed to complete the appropriations process last year when they controlled Congress