Monthly Archives: April 2013

THE GREAT DIVIDE

Last week’s tragic events at the Boston marathon was a perfect example of what happens when religious fundamentalism converges with one’s sense of delusional victimization. Two young brothers, with virtually their entire lives ahead of them, decided to destroy those lives as well as the lives of as many innocent victims as they could kill. They were immigrants from Chechnya; but had been in this country for about 10 years and seemed to be melding into the the mores and activities of our society. The younger brother had even become a naturalized citizen. But somewhere along the way, the older brother allowed himself to be deluded by Islamic jihadist religious fundamentalists. The only true objective of these jihadist imams is the destruction of western society. To accomplish that, they preach the vilest hatred toward anything western, and by the force of their “religious” preachings, are able to convince scores of young, vulnerable minds to destroy themselves while committing acts of terrorism. Chechnya has been fighting decades-old wars with Russia to gain independence; so it would appear that the older brother’s beef would have been with Russian domination and suppression of Chechnya’s quest for for freedom. But young, vulnerable minds can be so easily manipulated, apparently, to the point of where the U.S. instead of Russia become the evil villain in the older brother’s delusional thinking process. He then, obviously, brainwashed the younger brother into also destroying his life through some holy grail act of terrorism.

There is a great divide in values between western society and those of mid-eastern Moslem nations. Osama Bin-Laden said it best when he stated that western societies value life, while mid-eastern Islam values death above all else. Thus, the highest honor for a jihadist is to become a martyr by killing others and himself in an act of terrorism. (Notice I made the distinction between mid-eastern jihadism and the beliefs of other Moslem societies. For example, Indonesia, which is the largest Moslem nation in the world, seldom indulges in such jihadist fantasies.) The delusions that fuel jihadist terrorism probably go back a thousand years to the time of the crusades; when Christian knights from Europe set off on a “religious” mission to rescue the “holy” land of Jerusalem from the Moslem “infidels.” Grievances can be nursed a long, long, time, and the human tendency to play the victim is woven into the very fabric of the human condition. But what the jihadists really despise, is how much more advanced western society is, when compared to most Moslem societies, in every aspect: scientific, technological, economic, cultural, living standards, and so on. So instead of working to bring Moslem nations up to levels achieved by western societies, jihadists act to do just the opposite. Destroy western societies through acts of terrorism so they descend down to Moslem-nations standards. Which is generally where the west was about 700-800 A.D. Although this will never happen, that bit of reality will never be allowed to enter the jihadist’s planet of delusion.

In the late 1970s and early 1980s, Russia brutally invaded Afghanistan and took over control of that country. When Ronald Reagan became president in 1981, he decided that the U.S. should provide military aid to Afghan freedom fighters fighting a guerilla war against the Russian invasion. In particular his administration provided Stinger surface-to-air missiles to the Afghans which was especially effective in bringing down Russian fighter planes. Eventually, Russia found it too costly to continue the occupation, and withdrew their troops back inside Russian borders. One of the Afghan freedom fighters was a tall, lanky guy named Osama bin-Laden. The Reagan Administration never considered what the follow-on consequences would be once the Afghans obtained their freedom. It never considered that once the Afghans, and the Islamists that came from other Moslem countries to join the battle, gained their freedom, they would then turn their wrath on the west and the U.S. in particular. It took less than a decade for the Islamists in Afghanistan to reset their focus away from Russia and toward the United States. By the mid-1990s various terrorist activities began cropping up in different parts of the world, including in this country, often as the result of a group no one had heard about before. They called themselves Al-qiada, but who cared about some obviously deranged individuals who were killing innocent victims just for the pleasure of it. Until 9/11/2001. Then the whole world took notice.

The terrorist mindset is always one of victimization seeking revenge. We, of course, know that in this country we have have our own breed of murderous nut cases. Less than a decade-and-a half ago, our own home-grown Timothy McVeigh, because of some imagined, delusional grievances against the Federal Government, managed to slaughter 168 people going peacefully about their business, by blowing-up a Federal office building in Oklahoma City. Scores of these victims were very young children attending a day-care center. On a slightly smaller scale, we’ve experienced a series of recent heinous murders in Connecticut, Colorado and Arizona because of deranged “victims” that were out for revenge.

We all know that delusional nut jobs exist in our very midst. Some of us may even know some one like that. Law enforcement can only provide so much protection. Since law-enforcement officials are still just human beings, people with murder on their minds will fall through the cracks. As the 2 brothers did in Boston. Eventually terrorism, either home grown or imported, will strike despite our best efforts at prevention. Yes, the FBI was provided certain information that might have prevented the Boston tragedy. But since FBI agents are also human, mistakes were made.With the enormous proliferation of hand guns, rifles, bomb-making materials and other weapons so readily available in our society, terrorist acts become ever more easy to pull off. So welcome to life in the early 21st century. Where terrorism, serial killings, revenge killings, or just plain, good old-fasioned acts of murder become the new norm; to live with on a day-today basis.

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BUDGETARY BLUES

I’ve written before how most people wrap themselves in a warm, velvety blanket of self-deception, or delusion, in order to smoothen out the jagged edges of harsh reality that often exists in their lives. I’ve written about how this delusion has led so many into literally taking the bible at face value as the word of God. Despite all the ridiculous contradictions and mythologies embedded in both the old and new testaments. About how people are still searching mountain tops in Turkey looking for the remnants of Noah’s Ark, in spite of the implausibility of such a fable. About how poll-after-poll shows that less than half the people in the U.S. believe in Darwin’s Evolution. Even though one visit to a museum of natural history in any major city would show them overwhelming proof of Evolution’s existence. So too, does this blanket of self-deception spill over into the political arena. This came to mind with the recent death of Briton’s Margaret Thatcher and the cozy relationship she had with our Ronald Reagan when he was President.

Much has been written about about the “iron lady” as she was called; but all these words seldom gave a full picture of her administration. At the time she became Prime Minister in 1979, England had gone pretty far down the path of democratic socialism. The British government had nationalized large, entire industries such as coal-mining, steel production, airlines, shipping and telecommunications; and was doing a very poor job running their operations. The unions had become all-powerful, and had begun a series of crippling labor strikes that was grinding the economy into the dust. Thatcher’s achievement was to get the government out of the business of operating major industries (which it was doing so badly), and to break the back of the trade union’s stranglehold on the economy. For those accomplishments she was either praised or demonized, according to one’s political beliefs, by major segments of the British population. But in trying to paint Thatcher as a dyed-in-the-wool conservative, few columnists have pointed out that she was also a stout defender of the British universal healthcare system. She had no tolerance for anyone attempting to minimize or cut their benefits.

The media also failed to recognize how proud Maggie was for securing the largest single year payment increase since the end of WWII (about 11%) in Briton’s old-age pension system (our Social Security system.) Or how, for the first 10 of her 11 year-reign, the marginal tax rate on the wealthy was 60 percent. In her last year, that rate was reduced to 40%, still a tick higher than what the Democrats have been able to achieve in this country. Because the reality is, that Conservatives in England, and indeed, throughout all of Europe, are still more liberal than Democrats in this country. Every first-world country, including all of Europe, has universal healthcare except the U.S. And it usually extends to such lesser things as post-natal care. For example, in France, when a mother gives birth, a nurse is sent to her home for several days after, to help in her recuperation. So while Margret Thatcher and Ronald Reagan did have a special relationship, they were often miles apart in their accomplishments.

According to propaganda, fable and mythology put forth by Republicans in this country, Ronald Reagan was the great conservative that slashed government spending to the bone. Nothing could be further from the truth. Here’s where those pesky little things like facts come into play. (They always seem to ruin a nifty delusion, don’t they?)  For 39 presidential administrations covering more than 200 hundred years, the accumulated budget deficit in this country amounted to a little over $900 billion. Under 8 years of Reaganomics, the budget deficit mushroomed to $2.8 trillion. I’m not a mathematician, but it seems to me that Reagan accomplished more than a 300% increase in our deficit spending during his 2 terms in office. How did he achieve this magnificent accomplishment? In 2 ways. First, while he did cut some fringe social spending around the edges, he vastly increased military spending. You know, to stick it to the “evil empire” as he called it, or the old USSR. And secondly, he sharply reduced tax rates, especially for the rich, whose marginal rate went from 60% down to 28%. Of course, this, in turn, sharply reduced the amount of revenue the government was able to take in.

Right-wingers and Republicans (is there really a difference between the two) like to pretend that, somehow, the Department of Defense is not subject to the same budgetary constraints the rest of the government has to deal with. That Defense really gets its funding from the money-tree that grows in the Pentagon court-yard. Indeed, in this past election, while Mitt Romney was castigating President Obama for huge budget deficits, and promising to balance the budget if elected, he went on about how Defense was so under-funded. He promised to significantly increase Navy ships, and fighter jets, and ground troops, etc. But those things don’t come cheap. If those promises were implemented, they would increase the $700 billion existing Defense budget by another $100-$200 billion annually. But he would somehow still balance the total federal budget. Must be that getting resources from the money-tree thingy again.

The fact was that Reagan really didn’t care about the ballooning federal deficit, as long as he got his way on vastly increasing Defense expenditures. He’s given credit for significantly improving the ailing economy he inherited when taking office. But it was a completely different set of circumstances in 1981 versus today. Back then, there were raging inflationary pressures throughout the economy, versus very low inflation and interest rates today. Inflationary pressures didn’t begin to come under control until Paul Volker, then head of the Federal Reserve System, began raising interest rates to astronomical levels. This cooled off wild spending impulses, and sucked some of the excess dollars out of the economy. As inflation became tamed, the economy started to significantly improve. But most of the credit for that should be given to Paul Volker.

Today, in the 25 years since Reagan left office, the federal deficit has grown from $2.8 to almost $17 trillion. Certainly not a good thing. The GOP likes to blame a big chunk of the increase on too much spending by the Obama administration. But the fact is, spending has become almost static in the last several years. The most prominent reason for huge budget deficits in the lack of revenue taken in by the government. Part of that is due to the recession and the high rate of unemployment we’ve experienced. But part is also due to the low rate of taxation that currently exists and that was put in motion by Ronald Reagan. We are currently number 31 on the list of taxes collected by the world’s nations. Virtually every country in Europe and the Americas has a higher rate of tax collection than we have.

I call it the free-lunch-syndrome, so craftily exploited by Ronald Reagan. You want a strong national defense? You want a vast array of social, crime-fighting, and other government programs? Fine. We’ll give you all of that. And the best part, we’ll hardly charge you for any of this. After-all, who doesn’t like a free lunch. So now, this has resulted in the ultimate dysfunction as far governance is concerned. Republicans are vowing no more tax increases, despite the fact that we are so obviously under taxed; and Democrats are vowing no further cuts or reforms of social programs, even as they become more and more costly. Maybe, the first step toward sanity in governance, would be to dispel all the delusions and mythologies surrounding past history’s prominent figures. Maybe infusing those that would govern, with a strong dose of reality and rationality would finally put us on the path toward resolving some of these issues.

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THE ABYSMAL OR THE ABYSMALER

Even though the presidential election has long since passed, I’m still getting e-mails from both the Republican and Democratic parties asking for donations. I guess, these days, as soon as one election is over it’s time to start campaigning for the next one. Thus, the race is already on for the congressional elections in 2014, followed by  the next presidential race in 2016. The early favorites in 2016 are Hillary Clinton for the Democrats and Marco Rubio for the Republicans. So if you thought the previous election cycle was the height of obnoxiousness, be prepared for this obnoxious overkill to continue nonstop until the end of time. In any event, when the Republican e-mail arrived, instead of a donation I sent back my own e-mail. I said that I considered the Republican agenda to be, on the fiscal side: trickle-down-economics, tax-cuts for the rich, and slashing government assistance to the poor, the sick and the elderly. On the social side it was anti-abortion, anti-gay rights, anti-immagration, and anti-gun control. I told them to let me know when any of that stuff changes, and then, maybe I’ll toss a few shekels into the kitty.

On the Democratic side it becomes more complicated. While usually operating with the best of intentions, Democratic ineptitude is so mind-boggling, that Democrats themselves, become their own worst enemies. (There used to be a saying in Washington, that the Democratic version of a firing squad was to form a circle.) A perfect example is Obamacare. It was the Democrats intent to enact universal health-care, certainly an admirable goal. But instead of doing it smartly, they bungled the whole enterprise, and now everybody hates the resulting legislation. The smart way was to have legislated Medicare for everyone, from the moment of birth. When Obama became President in 2009, the Democrats had a two-thirds majority in both houses of Congress. Within 6 months they could have passed a 10-page piece of legislation that would have given everyone the right to enroll in Medicare from the moment one was born. If anyone couldn’t afford the very modest Medicare fees, they could be enrolled in Medicaid. To pay for all this, Congress could have passed a 5-10% value-added tax, (sales tax) on all products except for food and medicine. This is how all the first-world countries of the world pay for their universal health-care, which they all have.

Instead, the Democrats screwed around for 2 years and finally passed this 2600 page Frankenstein, who everyone opposes, including the health insurance companies which initially supported Obamacare. It would be as if you were planning a trip from Baltimore to Boston; but instead of booking a direct flight between the 2 cities, you booked a flight that went from Baltimore to Atlanta; to Denver; to Phoenix; to Los Angles; and then back to Kansas City; on to Chicago; and then, finally, to Boston. Now major headaches loom as the new law is supposed to be implemented starting later this year and early 2014. Most Republican governors in the 30 states they control are vowing not to implement the health exchanges that are at the heart of Obamacare.

Democratic ineptitude shows up in other areas as well; such as the weak economy, huge and mounting budget deficits and disintegrating foreign affairs. Unemployment numbers remain stubbornly high as the economy barely limps along like a wet noodle. That alone will be enough to doom Democratic chances for complete congressional control in 2014. Plus, Democrats are refusing to acknowledge the damage that is being wrought by a gargantuan accumulated budget deficit nearing $17 trillion, and annual deficits running in the vicinity of $1 trillion. While China has bought about $1 trillion, and other nations own smaller portions of our debt, the largest debt-holder by far, is the Federal Reserve System. As I pointed out last time, that is the height of an incestuous relationship-one government agency buying the debt issued by another government bureau. It means printing up and flooding the market with dollars which become more and more valueless, thus risking hyper-inflation. Right now interest rates are at historic lows; but when they start to rise due to inflationary pressures, it will cost the government hundreds of billions of dollars more to pay the interest on the debt. Eventually, there won’t be enough money left in the world to service our debt; and at that point the entire economy will collapse.

On the foreign affairs front, North Korea is threatening us with nuclear war while Iran plows ahead unchecked with their development of a nuclear arsenal. In Syria, between 70-80 thousand civilians have been killed in a civil war that has been raging on for 2 years with no end in sight. So, if you feel that the bad guys around the world are on the ascendency, there is ample justification for those beliefs. Yet we have an incredibly weak foreign policy of “leading from behind,” while evil appears to be triumphant.

I know that many young people feel that all these “political” problems are beyond their scope of attention. It’s stuff for the old fogies to be concerned with. Besides, there is so many more important issues to worry about, such as which of the Kardashians is getting divorced or having a baby, or who will be the next American Idol. But just the opposite is true. Seniors like myself can probably muddle through the rest of our lives until it’s time to go cloud-dancing, before the really, really bad stuff comes crashing down. It’s young people in their 20s or 30s or even 40s that will have to face the consequences of a collapsing economy or nuclear, world-wide disaster, if world events continue on their present courses. So young people here, and around the world, really need to pay attention and attempt to change the course of these destructive human events.

Thus, when I get requests from 2 political parties asking for donations, I view them as a choice between the abysmal and the abysmaler, and it’s not a very entertaining choice. Both parties, these days, seem far more interested in winning elections and grabbing power, than in fixing the overwhelming problems that beset us. So for the time-being, I think I’ll keep my money in my wallet, and view the world as it spins on its wobbly axis.

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ARBITRARY VALUES

“But square-cut or pear-shaped, these rocks won’t lose their shape; diamonds are a girl’s best friend.” So sang Marilyn Monroe, provocatively, in the 1953 hit movie-“Gentlemen Prefer Blondes.” I believe she was also accompanied by Jane Russell, another one of Hollywood’s sexiest bombshells. And it’s true, not only for girls, but for guys too, if you’re among the fortunate ones to have been able to acquire and hold on to diamonds through the years. Priced in the thousands, tens of thousands, hundreds of thousands, or millions of dollars depending on the size of these carbon-based stones, diamonds have produced extraordinary monetary value throughout the centuries. But what makes these stones so valuable when compared to other stones that are more readily available. As I’ve said, diamonds are almost exclusively carbon-based, and carbon is one of the is one of the most common elements on the planet. Coal is also exclusively carbon-based, but no one pays comparable prices for coal as they do for diamonds.

It’s often the assignment of of arbitrary values by mankind that prove to be durable throughout the ages, that determines value. In the case of diamonds, it’s based on the fact that they are the hardest, most imperishable, and brilliant of what are considered precious stones. They’re formed when carbon deposits begin to harden deep within the Earth’s surface and under enormous pressure. This pressure results in diamonds being thousands of times harder than corundum, the next hardest substance, and from which rubies and sapphires are formed. Their hardness is often valuable in certain commercial enterprises, when cutting through other hardened materials can only be accomplished by diamonds. And diamonds can also be made in factories. But these have only a fraction of the value of those dug out of the ground. In the end, what determines the monetary value of diamonds versus any other stone dug out of the ground, or made in a laboratory, is whatever mankind is willing to pay for these items.  A totally arbitrary process.

The same is true with gold, another element dug out of earth. Throughout mankind’s history, gold has been put on a very high monetary pedestal by virtually all societies. Being more durable, and perhaps considered more beautiful than other minerals, gold has been often used as currency from before ancient Roman times, by almost all civilized societies, or what have been considered civilized societies by various historians. It could just as well have been copper, or nickel, or bronze, or any other metal. But gold was the chosen one, (to a lesser degree, silver also.) There go those arbitrary values again. Adding more to the value of diamonds or gold and silver was the prestige factor of ownership. Having lots of gold and diamonds has meant that you own membership in the most elite, privileged, and powerful sectors in any society. Membership based on stones and metals dug out of the earth. How arbitrary.

Which brings to the usefulness of gold as a currency in the U.S. Since 1879, the U.S. had been on a monetary gold standard, which meant that gold coins could be used interchangeably with paper currency. Supposedly, paper bills could be exchanged at any bank for gold coinage, and there had to be a fixed amount of gold held by the Government to support the entire supply of paper money. But in 1933, with the Great Depression in full swing, Franklin Roosevelt, on becoming President, declared a bank moratorium to prevent further bank failures. As part of this moratorium, banks were to end the practice of issuing gold coinage in exchange for paper fiat, and everyone was required to turn in all the gold coinage they owned (except for a nominal amount), and receive paper bills in return. The price of gold, then at $21 per ounce, slowly rose to about $35 an ounce over the next several decades. But as Government budgets kept expanding with the expansion of the welfare state, it became more and more impossible to tether the amount of paper currency in circulation to the amount of gold held at Fort Knox.

Thus, in a stunning reversal of previous history, and having no other choice, President Richard Nixon, in August, 1971, announced this would no longer be U.S.policy. That the U.S. would no longer convert dollars to gold at a fixed value, and  big banks, foreign governments or any other holder of U.S. debt, could not ask to be repaid in gold. Since then, the amount of paper money in circulation has expanded dramatically. The price of gold has rocketed from $35 an ounce to about $1600 an ounce (and an ounce is an awfully small quantity.) The price of gasoline has gone from about a quarter a gallon, to near $4 a gallon. Indeed, the dollar today will buy only one-sixth of what it could buy in 1971. And the amount of Government debt, which totaled $1 trillion from the beginning of George Washington’s administration to the early days of Ronald Reagan’s administration, (1981), now totals almost $17 trillion. Add to this, the fact that we are accumulating debt of nearly $1 trillion a year, and the fiscal picture looks none too rosy in the coming years.

Also to be considered is the fact that the Federal Reserve is currently “buying” most of the newly issued Government debt. While the Fed is supposedly quasi-autonomous, it really is an arm of the Government. Thus, you have one portion of Government (the Fed) “buying” the debt issued by another portion of the Government, the Treasury Department. Talk about an incestuous relationship. The Fed really doesn’t have money of its own, so it, in effect, just “prints” money to buy all this debt. The money supply keeps expanding and the value of this money keeps decreasing. Maybe those old-fashioned arbitrary values like the gold standard weren’t so bad after all.

So how do we get out of this mess. We start by raising the eligibility age for Social Security and Medicare to 70, dramatically cutting the Defense budget so we are no longer the world’s policeman, raising taxes on the wealthy who can well afford such increases, and eliminating the considerable amount of Government waste that currently exists. Know any politicians that have the “stones” to make that happen?

 

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