In an op-ed in the Washington Times, Senator Susan Collins calls into question the constitutionality of the czars. While I completely agree, I’d ask the senator where she has been all this time?

When it comes to accountability and transparency, who is actually in charge and making the policy decisions? Is it the secretary, whom the Senate confirmed, or is it the czar, whom the president unilaterally appointed? These czars operate outside the established structure of checks and balances.

As ranking member of the Senate Homeland Security and Governmental Affairs Committee, I also am concerned about the management dysfunction that so many czars create. They duplicate or dilute the statutory authority and responsibilities Congress has conferred on Cabinet officers and other senior officials.

Unfortunately, because czars can circumvent the constitutionally mandated process of “advice and consent” and because the president’s advisers have informed me that no White House czars will be allowed to testify before Congress, we cannot ask them for the answers.

Czars bypass the constitutional oversight authority of Congress, tipping the balance of power in favor of the executive branch.

via Reining in the czars – Washington Times.

The czars without a doubt undermine the constitution. If I was President and wanted to become a tyrant, one of the things I would do is put my select people in places and positions where they could seize control at the right time. While I am not saying this is Obama’s intent, although everyday I wonder, once the precedent is set,  it allows future Presidents to do the same thing. If one of those Presidents has the intention of becoming a tyrant, he’ll have precedent on his side.

While I agree with Collins on this issue, I would hope she’d be consistent in her concern for the constitution. The congress violates the constitution with almost every bill they write. Will we see an op-ed about the constitutionality of health care reform, cash for clunkers, bailouts, etc?

Ron Paul, who seems to be the only politician with a clue, writes in Forbes about how the Fed is the cause of our current crisis, and how they are doing the same thing now that they did to create this crisis. Many talk about our current crisis as the result of building the housing boom out of house of cards. What happens when you find out your entire currency and banking system is built out of the same cards?

Be Prepared for the Worst

Ron Paul, 10.29.09, 09:20 AM EDT

Forbes Magazine dated November 16, 2009

The large-scale government intervention in the economy is going to end badly.

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

via Be Prepared for the Worst – Forbes.com.

In the International Business Times’ article on the coming inflation, they talk about government debt being at record levels. This is true, and I’ve already talked about how we are enslaving our children with with ever increasing debt. The paragraphs below also mentions how much we are already robbing ourselves. In 2008, the government paid $451 billion in interest on the debt. How much production was eaten up by that $451 billion? How much would that have stimulated our economy? This was before the massive almost $2 trillion deficit Obama is running in 2009. Instead of benefiting from our production, we will be paying for yesterday’s waste. We’ll be robbing ourselves to pay for the bailouts of yesteryear. The bailouts that benefited none of us. They only benefited Geithner and Paulson’s buddies at Goldman Sachs. Couldn’t this classify as modern day enslavement by the rich and politically connected?

2: GOVERNMENT DEBT IS AT RECORD LEVELS

Canada’s budget surplus has turned into a multi-billion dollar deficit as a result of the credit crisis. But Canada’s problems pale in comparison to those of its neighbour to the south. The richest country in the world is drowning in debt.

Let’s examine for a moment the sorry state of US indebtedness. Due to ongoing bailouts and stimulus packages, the US will experience a record $1.75 trillion deficit in 2009. US debt (accumulated deficits), as tracked by the famous US National Debt Clock in Manhattan, stands at a staggering $11.8 trillion and counting. In 2008 alone, the government paid a staggering $451 billion in interest, according to the government’s own website, TreasuryDirect.gov. And that number is expected to rise substantially in 2009.

That figure – $11.8 trillion – is a mindboggling amount of money. But it represents only a part of America’s total liabilities. If Social Security and Medicare obligations are included (which they should be), obligations rise to over $106 trillion dollars, according to the US Treasury.

None of this money has been set aside, but has instead been borrowed by the government for its own use. When combined with the debt of nearly $11.8 trillion, total debt soars to an astonishing $118.6 trillion, or nearly ten times total GDP, or $300,000 per person.

via The Next Crisis: Spiralling Inflation – Part 1 – International Business Times -.

Just to be clear to populist liberals, government will not solve this. The government is the means of the enslavement, so they cannot be expected to set us free.

The International Business Times has a great article on the coming inflation. They highlight below how the government has distorted the true inflation we have experienced since 1983. If the government doesn’t like something, they just redefine it to get the results they want. All Americans know though how much food, energy and housing have increased despite governments claim of low inflation.

3: THE CPI INFLATION INDEX DOES NOT REFLECT TRUE INFLATION

In both Canada and the US, inflation is hurting our pocketbooks, but you wouldn’t know it from the Consumer Price Index (CPI). That’s because the CPI is understated by as much as 7 percent per year according to economist John Williams, who has been tracking US CPI for many years (see Figure 2). In addition, North American investors and consumers seldom hear the “headline” inflation number. Instead, the financial media usually report only the “core” inflation number, which excludes food and energy. This was done, ostensibly, to remove volatility from the CPI. But food and energy account for about 23 percent of consumer spending, so how can they be ignored? Governments have a major incentive to understate CPI because trillions of dollars’ worth of pension funds, health benefits and wage increases for public sector employees are indexed to it.

Today’s CPI is substantially understated because it is calculated using a complex re-weighting formula that is riddled with substitutions, exclusions, hedonic adjustments and geometric weighting. If we were to recreate the CPI using the original 1983 formula, we would discover that even though we have experienced asset depreciation following the credit crisis, price inflation for goods and services has not gone away. And if the monetary authorities had decided to factor home prices into the CPI, the bubble would have been far more obvious from the beginning.

via The Next Crisis: Spiralling Inflation – Part 1 – International Business Times -.

Last night, Ron Paul was on Larry King after Michael Moore. Ron Paul, who seems to be the only congressman who understands economics, rightfully explains that Michael Moore doesn’t seem to know what the free market is. He’s mixing corporatism with capitalism. As I’ve always said, if you listen to liberals talk about capitalism, they are never talking about capitalism. They are talking about whatever they put before capitalism. How many times have you heard crony capitalism, corporate capitalism, greedy capitalism, etc? Their complaint is not about capitalism. Their complaint is with cronyism, corporatism, and greed. None of them are synonymous with capitalism. They are more closely synonymous with government, the very solution that they then propose. Anyway, here’s Ron Paul.

http://www.dailypaul.com/node/112628

In a her column today, Ann Coutler explains why the parts of health care that aren’t covered by many insurance plans are the ones providing faster service, declining prices and more innovation.

She also explains how health insurance and the mess that has ensued from it was created by guess who? The Government. Great read. Check it out.

http://www.pittsburghlive.com/x/pittsburghtrib/opinion/s_650562.html

Rather than letting the free market deliver credit to consumers, Chris Dodd needs to grandstand for his constituents. He wants the government to limit interest rates on credit cards.

Senate Banking Chairman Chris Dodd has been hearing from constituents upset because banks have been raising the interest rates on their credit cards. This week Mr. Dodd decided to do something about it. He proposed a bill imposing an immediate freeze on those rates.

“At a time when families are struggling to make ends meet, jacked up rates can quickly create crushing debt,” Mr. Dodd said in a statement. “People need to be responsible with their money, but they shouldn’t be taken to the cleaners by outrageous rates.”

If customers are being taken to the cleaners, it is because lawmakers like Mr. Dodd sent them there. In May, Congress passed the Credit Card Accountability, Responsibility and Disclosure Act, which bars rate increases without a 45-day notification. To reduce their risk under this law, banks are rushing to raise rates before it takes effect in February. Thus the Senator’s latest political grandstand.

via Dodd Tries to Freeze Credit Card Rates – WSJ.com.

This is no different than price caps. What do price caps do? In order for price to be driven down, you need demand to decline while supply remains steady, supply to increase while demand remains steady, or demand to decrease while supply increases. If you artificially limit price, while not lowering demand, you automatically lower supply. It will happen no other way, so while Dodd does some showing off, he is decreasing credit in the market, which we are told is one of our biggest problems right now. I have an idea. How about Dodd tells his constituents to quit borrowing money. The credit card companies can’t charge you if you don’t ask for their services.

We may have the dumbest people in America running the country. Even most of the politicians pushing for the expanded Fed powers admit that the Fed caused the housing bubble. So, what is their fix? I think most rational people would say let’s take power away from the Fed. Oh no, not the geniuses sitting in the Capital. They want to give the Fed more power to screw up the economy. Apparently, this disaster isn’t bad enough yet. They want to see if the Fed can collapse the entire system.

By SUDEEP REDDY

WASHINGTON — Get ready for a fiery debate about the role of the Federal Reserve.

The latest financial-regulation legislation moving through Congress would give the Fed new oversight powers, including the authority to force large firms to shrink if their size threatens the broader economy.

The draft bill, released this week by House Financial Services Committee Chairman Barney Frank (D., Mass.) gives the central bank more direct authority than outlined in a proposal earlier this year.

The expansion of the Fed’s role is sure to become a flash point in the debate over the overhaul of financial regulations.

On one side are Mr. Frank and Treasury Secretary Timothy Geithner, who favor giving the Fed broad authority. On the other side are lawmakers who want power spread out among agencies. Many also charge that the Fed’s regulatory missteps helped to cause the financial crisis.

via Congress Weighs Scope of Fed’s Authority – WSJ.com.

As I’ve explained in previous posts, the free market in order to make the most profit utilizes resources to their highest and best benefit. Efficiency reigns. Government always has the opposite effect. Government intervenes in order to divert resources for political means. What this does is lower our economic output and value, in other words, it lowers our standard of living below what it would other wise be. Here is a perfect example of the government not caring what’s best, but instead they care what is politically best for the politician. So much for self-interest being the purview of the free market.

By NEIL KING JR.

Montana Rep. Denny Rehberg was no fan of the $58 billion federal rescue of General Motors Co., saying he worried taxpayer money would be wasted and the restructuring process would be vulnerable to “political pressure.” Now the lawmaker says it’s his “patriotic duty” to wade into GM’s affairs.

Along with Montana’s two Democratic senators, the Republican congressman is battling to get GM to reinstate a contract with a Montana palladium mine nullified in bankruptcy court. “The simple fact is, when GM took federal dollars, they lost some of their autonomy,” Mr. Rehberg says.

Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members — 100 U.S. senators and 435 House members.

Since the financial crisis broke, Congress has been acting like the board of USA Inc., invoking the infusion of taxpayer money to get banks to modify loans to constituents and to give more help to those in danger of foreclosure. Members have berated CEOs for their business practices and pushed for caps on executive pay. They have also pushed GM and Chrysler to reverse core decisions designed to cut costs, such as closing facilities and shuttering dealerships.

via Politicians Butt In at Bailed-Out GM – WSJ.com.

Wow, can’t wait till these jackasses taking over health care and are making political decisions with our lives.

In a great article on Reason.com, the view that the Fed caused our current crisis is highlighted in great detail. While the article focuses on the anti-Fed movement in general, you can see from the quotes and understanding of politicians and economists that the Fed is responsible for the housing boom.

Blame-the-Fed sentiment now stretches across the spectrum of economic thought, from Keynesians such as DeLong to monetarists (who generally want the bank to maintain a fixed rate of money supply growth). In October 2008, the monetarist Anna Schwartz, co-author with Milton Friedman of one of the most important books of monetary economics, A Monetary History of the United States, told The Wall Street Journal: “If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset. The particular asset varied from one boom to another. But the basic underlying propagator was too-easy monetary policy and too-low interest rates that induced ordinary people to say, well, it’s so cheap to acquire whatever is the object of desire in an asset boom, and go ahead and acquire that object.”

While Anna Schwartz believes the Fed is neccessary, she admits that the Fed’s expansive monetary policy causes a boom in an asset market, the most recent being the housing market. The last one being the tech bubble.

Even the Obama administration has gotten into the act. “Monetary policy around the world was too loose too long,” Treasury Secretary Tim Geithner told PBS interviewer Charlie Rose in March. “And that created this just huge boom in asset prices, money chasing risk. People trying to get a higher return. That was just overwhelmingly powerful.”

Even Geithner, although he doesn’t blame Greenspan and the Fed directly, basically said the Fed’s low interest rate policies caused the spike in housing prices and encouraged the risk that politicians now blame on greed. Did Geithner forget he was on TV?

In this time of political ferment, Stephen Axilrod, a longtime Federal Reserve staff director and monetary policy guru, has issued a memoir from MIT Press titled Inside the Fed. Axilrod admits that Fed interest rate actions precipitated the crisis without letting that fact dent either his admiration for the institution or his belief in its necessity. Still, Axilrod notes something that should encourage Fed skeptics of all varieties: that “a country’s monetary policy is almost necessarily limited by conditions generated from the political, philosophic, and social ethos of the time.”

Here former Federal Reserve, and lover of the Fed, admits the Fed’s actions caused the housing bubble. He then says the Fed is only as powerful as political, philosophical, and social conditions permit.

But the Fed doesn’t have a stellar track record of timing monetary shifts with scientific precision, and any actions that rein in inflation, thereby cutting off the short-term stimulative effect that governments love, are bound to be politically dangerous both to the Fed and to the president who appoints its overseers. As Bernanke admitted at his televised town hall meeting in July, the Fed can maintain its independence only if it can “show that we are producing good results,” and while he added lip service to independence, the people he must show those results to are Congress and the administration. Though he was appointed to a new four-year term in August, if he flubs inflation, Bernanke will be facing a whole new wave of political attacks.

Bernanke states here that the Fed must show results to Congress and the Administration, which highlights the biggest problem with the Fed. While we have plenty of confirmation that the Fed caused the housing bubble, we still have politicians that want it to exsit. Why?

Because they want the Fed to, as Bernanke said, “produce good results.” What are good results? Was all Americans owning a home a good result? Was refinancing your equity away to drive up consumer spending a good result? Was as Austrian economist show, driving up unwarranted business investments a good result?

This is at the heart of the problem for any government institution. While the Fed claims its independence, it is swayed by politics.  The market delivers based what billions and billions of individual transactions say. It is fine tuned by every transaction made. Government on the other hand tries anticipating what the market needs, and it is always wrong. This is why communism was an abject failure. Government cannot conceive of the circumstances and motivations of billions of transactions. There is no difference in the ability of communist dictators trying to decide the right amount of light bulbs to be produced, and the Fed trying to decide what interest rates should be. Both of them are trying to decide for the market what they believe should be over what would normally be decided by millions of individuals acting in their own interest.  It has never worked, and it will never work. It eventually led to the collapse of the Soviet Union. Now let’s hope it leads to tearing down the wall of the Fed.