National Inflation Association Article Comment

US-Inflation-by-year
Inflation chart by user Monkeyman (Creative Commons SA 3.0)

Things got heated in my comments section back in 2010-2011 on

Fact Checking The National Inflation Association And its Hyperinflation Fear-Mongering.

I didn’t have the time to address all the bad information. And honestly I didn’t consider it worth my time even if did have it.

But I have some extra good free time lately, some more health care policy wisdom, and the power of hindsight. Why not?

A user named Flagrantbagel left a supportive comment on my NIA article:

The following is an unedited copy of someone’s reply to Flagrantbagel.

Left January 14, 2011 at 2:45 pm

Deepblue

You won’t support someone because they’re supported by Steve Forbes, but you’ll support someone financed and endorsed by George Soros?

I’d suggest you research the “Quantum fund” and find out how the “Man who broke the bank of England” made his money. Note also that this very same man, George Soros, was branded (and convicted) in Thailand as an “economic war criminal” who “sucks the blood from the people” after causing the Asian Debt Crisis in ’97. Soros, the man also behind the collapse of the Russian currency, the ruble, in ’99 and afterward publically boasted that “the former Soviet Empire is now called the Soros Empire.”(Google “Russiagate”). Just look up Soros’ *** latest conviction *** in June of 2006 in France for his attempt to takeover the Societe Generale bank.

Soros is the most notorious derivatives trader in History.. and who are we told created America’s financial crisis by every pundit? Deriviatives traders and speculators. Odd that such a speculator would be the largest financial contributor to the “just happened to inherit it” administration and all it’s various supporting “progressive” organizations, isn’t it? Yet you seem to support this all unabashedly.

Here’s a suggestion. While you’re busy NOT doing your research, you might want to glimpse at Article I, Section 8, Clause 1 of the United States Constitution, also known as the Taxing and Spending Clause… a.k.a. – “The Power of the Purse.”

It declares that it is *** Congress *** and *** NOT *** The President who is in control of all spending. Even More specifically, that this power rests in the House of Representatives, where *** ALL *** spending (“Appropriations”) bills are introduced.

Fact check this. It is a list of Speakers of the House by year:

Carl Albert (D) 92nd – 94th Congress 1/21/71 – 1/03/77
Tip O’Niell (D) 95th – 99th Congress 1/03/77 – 1/03/87
Jim Wright (D) 100th – 101st Congress 1/06/87 – 6/06/89
Tom Foley (D) 102nd – 103rd Congress 6/06/89 – 1/03/95
Newt Gingrich (R) 104th – 105th Congress 1/04/95 – 1/03/99
Dennis Hastert (R) 106th – 109th Congress 1/06/99 – 1/03/07
Nancy Pelosi (D) 110th – 111th Congress 1/04/07 – 1/03/11

Now compare the Federal deficit by who controls the House (spending) on this handy dandy ‘Chart of Federal Debt’ published in the left-wing rag Esquire Magazine.

http://www.esquire.com/blogs/politics/federal-deficit-graph-071210

You will see that spending increased from the moment Democrats took control of the House in 1955 until they finally lost control of the House in 1995 and note the MASSIVE decrease which caused the “surpluses” IMMEDIATELY coincided with Republican takeover of the House of Representatives, and continued under the Republicans right up until the morning of September 11th, 2001. Wonder what happened then?

But don’t trust me. Go confirm it for yourself. Go straight to the horse’s mouth and hear Clinton tell you WHY *** HE *** shut down the Federal Government to prevent the budget from being balanced by 1997 under the Republican plan – SIX YEARS before he was willing to allow it to be done. Note once again that the President’s *** ONLY *** budgetary power is to VETO appropriations bills.

Because all spending comes from Congress, when a President repeatedly VETOES the Appropriations bills, the government runs out of money and must be “shut down.”

Source – Bill Clinton’s radio address 12/16/95 regarding the House’s proposed 96 budget:

http://www.c-spanvideo.org/program/PresidentialRadioAddress79

According to Clinton, the *** ONLY *** possible way to balance the budget is to follow HIS plan, which is to “balance” the budget by 2003 – 3 YEARS AFTER he has left office. Balancing the budget any sooner, according to Clinton, will:
• Deny Children Health Care
• Deny them Schooling
• Eliminate the School Lunch program
• Deny Children Safe Places to live
• “Deny them Air and Water that is safe to breath and drink”
• Eliminate Head Start
• Cut efforts to keep drugs and violence out of our schools
• Undermine “Our efforts to meet educational standards of excellence”
• End the Americorp program
• Eliminate 350,000 scholarships
• Take away “the Best student loans programs”
• “will raise taxes” – Note, “raising taxes”, in this context is liar speak meaning that because government will not be able pay people’s expenses, they will be forced to pay for things themselves… i.e. Paying for things is a “tax”
• “Children will be exposed to hazardous Waste”
• There will be larger class sizes
• “10 MILLION” people will be “forced to live near toxic waste sites” that “will not be cleaned”
• Fewer children will be immunized
• Millions will be force from Medicaid and onto Medicare adding millions to the Medicare roles
• Millions will be denied adequate medical care
• “1 MILLION people will be forced into poverty”

Listen to it yourself. I entreat you.

…”And THIS is why I William J Clinton will shut down the government by vetoing the REPUBLICAN BALANCED BUDGET AMENDMENT… because “I will not let them hurt our children” 12/16/1995

Note: the dramatic Medicare cuts which Clinton is attributing to child rape, torture, and murder was claimed, by Democrats, to “Slash” Medicare by *** $38.5 billion a year *** for 7 years.

http://www.nytimes.com/1995/09/16/us/gop-s-plan-to-cut-medicare-faces-a-veto-clinton-promises.html

Funny how a greatly exaggerated $38.5 billion Republican cut caused all of that, but when a Democrat (Barrack Obama) cuts over HALF A TRILLION DOLLARS – a.k.a. over FIVE HUNDRED BILLION – from an already insolvent Medicare system, it will only “add efficiency” and cut “waste”.

Liar. Thy name is Democrat.

First I want to clarify I am article OP, not the comment OP – Flagrantbagel. I personally have no love for nor advanced conceptualizations of George Soros.

I am not tricked into thinking billionaires’ have great content of character just because they own some philanthropic organizations.

> “Fact Check this”

Oh, I will.

Deepblue did a massive information dump, which is a handy trick to sound smarter than you really are in debates. I will address this by order of importance of his claims.

Medicare

Romney’s right: Obamacare cuts Medicare by $716 billion. Here’s how.

Sarah Kliff: “The majority of the cuts, as you can see in this chart below, come from reductions in how much Medicare reimburses hospitals and private health insurance companies.”

If Deepblue wants to come back and argue about health care policy, I am more than willing to do that. I personally believe that top hospital administrators need to get paid less in order to tackle the budget problems of administrative bloat. Cutting Medicare reimbursements is a necessary step towards balancing the entitlements portion of the national budget.

I am not happy with how the think tanks lately have been discussing cutting Medicare reimbursement by 40% for Medicare-for-All. That is too steep, too fast and could potentially disrupt services.

The ACA cuts that Deepblue refers to, however, were no where near that drastic and the Medicare-For-All bill at this point is more symbolic than a hard proposal.

Bill Clinton’s Speech

I took up his offer and listened to this C-span speech he linked. From 1995. Since apparently these “Liar, thy name is Democrat” people can’t let Bill Clinton go years later.

The thing about budgets, a fact that that Deepblue skirts, is that they are mostly planned FOR THE FUTURE. Federal, state, local budgets. They are all decided on in advance and don’t kick in as soon as they are passed, except for the immediate money needed to keep services running.

All those bullet points are indeed possibilities of Republican proposed tax cuts. Both now and in 1995. Children, students, and the chronically impoverished are extremely different affected populations than those affected by Obama’s Medicare reimbursement cuts, which are mostly eaten by the hospitals and insurance companies.

“you might want to glimpse at Article I, Section 8, Clause 1 of the United States Constitution”

I have inside info that Flagrantbagel might actually be lawyer. I’m sure he HAS looked at Article I, Section 8 of the Constitution sometime at school.

You do not want to get into an argument about the case law precedent of presidential powers involving taxation with me or Flagrantbagel, Deepblue.

You will not win.

That is all for today.

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Fact Checking The National Inflation Association And its Hyperinflation Fear-Mongering.

This is a response to this youtube video with over a half million hits, posted by the mysterious The National Inflation Association:

http://www.youtube.com/watch?v=eb1n1X0Oqdw

First off, it’s always good to ask who is funding the organization and the video production.   From their website http://inflation.us/ (Ooh,  dot us. Flashy domain name. Very patriotic.) I can’t say for sure.

But here’s a good guess:

“One of our missions at the National Inflation Association is to discover and profile companies that we believe will prosper in an inflationary environment. Typically we will bring to you producing, profitable, Gold and Silver companies with strong balance sheets. We believe these stocks have a chance of becoming some of the best performers of the next decade.”  Most of their 22 companies on their stocks page are gold or silver companies.

Now I’m not going to bash Gold and Silver as a means to hedge long-term financial risk, because I’m not an economist.  But here’s an article that does:  http://www.huffingtonpost.com/alan-schram/is-gold-a-good-inflation_b_443927.html “Gold does not generate cash flow (indeed it has a carrying cost for storage, insurance etc.) and does not have any intrinsic value, and therefore it is of dubious value as a long term investment.”  The same thing that gives gold its value, faith, is the same thing that gives money its value.  Makes sense to me.

Onward to the youtube video.

Commentary:

I’m not going to fact check all the numbers, but a lot of the statistics in the video seem to be reasonable.  The video also cites some legitimate facts about the financial crisis and legitimate concerns about the US’s ability to pay for impending SS and Medicare.  But there are a lot of interpretations of these statistics and facts that are misleading, fear-mongering, and just plain wrong.

9:45  “The average American might have to eat less and stop air conditioning and heating their home just to afford gas for their car.”

I like the word ‘might’.  And aren’t we obese and energy-hungry anyway?   Doesn’t a third to a half of our food go into the garbage and not into our mouths and out our ass?   Maybe we shouldn’t have killed the electric car, before the lithium ion battery took off.

10:40  Peter “Dr. Doom” Schiff calls Social Security a Ponzi scheme.

While there are parallels between the concepts, it’s not fundamentally true, because technological advancements have exponentially increased economic output over the last century.   According to Michael Mandel of Business Week:   “The U.S. population has more than tripled since the early 1900s, while the U.S. economic output has gone up by more than 20 times… Assuming that technological progress continues over the next 70 years, and output productivity growth continues over the next 70 years, the finances of Social Security are relatively easy to fix. A fairly minor cut in benefits, combined with a relatively small increase in taxes, will bring the system back into balance again. (the latest Social Security report projects a 75-year deficit of $4.3 trillion. That sounds like a lot of money, but over 75 years it’s roughly $60 billion a year…not chicken feed, but not overwhelming).“

13:18  “The only way our economy can truly recover [from the crisis caused by trillion dollar deficit] is for the government to dramatically slash spending across the board and eliminate unnecessary departments like the Department of Energy… and the Department of Education.”

The video tries to link the rise in private tuition costs to the rise in Dept of Ed. Spending.  I don’t get it.  It also fails to mention that the Dept. of Ed only has 5,000 employees and that most of the increase in spending was because of Bush’s No Child Left Behind.  And Dept of Energy?  Um, isn’t the one that deals with our nuclear waste?

15:42  They try to bash breastfeeding protection laws.  Fail.

16:55  They claim a Republican administration would have supported the health care bill.  Um, no?  From what I remember, the health care bill had to go through extensive Senate reconciliation after the Dems lost their supermajority with Massachusetts.

24:15 “We conservatively believe the real rate of inflation to be 3-4% higher than what is indicated by the CPI.”  Thanks for giving us the formula for how you calculated that.

25:34 Suggestion for fed funds rate to increase to 5.31%  Again, no math evidence.

25:05:  FIRST GOLD PITCH HERE

I skimmed through the next 10 minutes. It was Gold Gold Gold Gold Gold.

37:45  Selective statistics about debt.  You can see the full debt story in chart form here: http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms

Post-WWII our deficit was briefly over 100% relative to GDP.   In the last 30 years, it went up with Reagan and HW Bush and lowered with Clinton.  Obama inherited an 83.4% rate from Bush and it is currently rising.

42:10  The video suggests we “go back to our roots” to fix our economy.  I love 12 hour work days, child labor, sub-minimum wage, and sweatshops.

The rest of the movie was more OMG DEFICIT and Gold Gold Gold Gold Gold.

50:15  I love how the movie links inflation to the “destruction of family values.”  Inflation will soon make a $20 bill worth more as an implement to snort coke out of a hookers ass than its value!

50:38  Somehow the government is “transferring money to Wall Street through inflation.”  Really? I thought it was the deregulation (by the ironically Democratic senate) in the late 90s and early 2000s causing Wall Street to systematically restructure itself into unsustainable pyramid schemes.

The entire movie seems to forget a basic Econ lesson:  Businesses don’t look at national debt and think, “Let’s raise prices!”  Growing economies and demand make prices go up.  A recession—like what’s happening now—makes selling stuff harder, so prices go down.  That’s why inflation is down.

The deficit needs to take a backseat right now to the higher goal of economic growth.  And it’s noteworthy that we borrow from China because they have relatively low lending rates.  Really, what’s China going to do; invade us if we default?  The US and China are economically co-dependent, which is not a great place to be, but safe for the moment.  Right now the Obama administration is attempting to do what it needs to do, focusing on unemployment and GDP growth.  Whether it’s succeeding or not is another post for another day.

[edit]: I wrote a Follow Up Post in response to some of the comments on this page.  Less Sarcasm.  More go suck it, Austrian school of economics:  https://scandalousmuffin.wordpress.com/2011/05/25/nia-article-comment-reax/