Following the 2012 election which saw Barack Obama re-elected as President of the United States, after his economic policies increased the national debt to $16 trillion and grew food stamp and Medicaid rolls to the highest they have ever been, it is clear that the American voting public has little understanding of economic issues or concepts.
Therefore, the Prudence Paine Papers introduces a new category: Economics With Prudence.
Here we’ll provide quick takes on economics issues of the day and seek out the best economics learning tools available on the Internet. To maintain a free nation, we have to fully understand that government money doesn’t magically appear out of the air or a politician’s promises. It’s a real thing (even if the government does create mass amounts of it out of paper and ink) and it has real consequences that affect the lives of real citizens of all income-levels.
To set the starting point, let’s mark where we are economically as a country with a tidbit from a National Review Online column by Mark Steyn, titled “The Edge of the Abyss”:
In the course of his first term, Obama increased the federal debt by just shy of $6 trillion and in return grew the economy by $905 billion. So, as Lance Roberts at Street Talk Live pointed out, in order to generate every dollar of economic growth the United States had to borrow about five dollars and 60 cents. There’s no one out there on the planet — whether it’s “the rich” or the Chinese — who can afford to carry on bankrolling that rate of return. According to one CBO analysis, U.S.-government spending is sustainable as long as the rest of the world is prepared to sink 19 percent of its GDP into U.S. Treasury debt. We already know the answer to that: In order to avoid the public humiliation of a failed bond auction, the U.S. Treasury sells 70 percent of the debt it issues to the Federal Reserve — which is to say the left hand of the U.S. government is borrowing money from the right hand of the U.S. government. It’s government as a Nigerian e-mail scam, with Ben Bernanke playing the role of the dictator’s widow with $4 trillion under her bed that she’s willing to wire to Timmy Geithner as soon as he sends her his bank-account details.
If that’s all a bit too technical, here’s the gist: There’s nothing holding the joint up.
The situation is dire.
Before we can solve the problem, we have to understand the problem. We’ll try to provide that information in as simple a manner as possible. No math degrees required.
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Last week, CNBC’s Squawk Box had Reps. Marcy Kaptur (D-OH) and Jeb Hensarling (R-TX) on to discuss President Obama’s laughable budget submission. I found it amazing how this long-term congresswoman who sits on the budget committee has such a paltry understanding in economics, math and other reality-based sciences. Instead she relied on Democrat talking points that sound all pleasant to brain-dead Democrat voters, but have no substance or credibility as true economic policies.
The exchange starts out pleasant enough. Yet it becomes obvious that Kaptur is woefully ill-versed in the economic problems of the country, let alone how to resolve them. Her (and Obama’s) plan: simply pour more stimulus money into crony coffers to “create jobs,” which will magically save Social Security and Medicare without having to do anything at all to stop them from bankrupting us and destroying our children’s future. When the financially knowledgeable hosts have put up with enough of her pie-in-the-sky economic pattycake and expect her to address the illogic in her plan, she pouts and lashes out, telling the CNBC anchors that they just don’t care about jobs.
If you don’t want to watch the whole thing, at least move towards the end and hear Michelle Caruso-Cabrera’s sharp reply to her insult. (Things start to heat up around 8:30. Caruso-Cabrera’s stony glare around 11:15 says it all.)
It’s interesting that Kaptur and Rep. Dennis Kucinich (D-OH) have been redistricted to have to run against one another for the same seat. I know little to nothing about Ohio state politics, but I would bet the Ohio Democratic Party had a hand in creating that matchup to push her out of office if they have to lose a seat there.
While the White House’s Poetry Slam invitation to rapper Common created an uproar due to his lyrics praising a cop killer, an even bigger outrage occurred without a bit of attention from the media.
In innovative music videos, pseudo-John Maynard Keynes and faux-F.A. Hayek have been going toe-to-toe in two rap battles, educating listeners about their economic principles and using rhymes to explain how their theories would fix current economic woes.
But did they get an invite to the White House shindig? Noooo. You can bet Common couldn’t explain these concepts nearly as well.
Rap Battle Round One: “Fear the Boom and Bust”
I love how they present current elite opinion so accurately, having everyone fawn over Keynes, a man highly responsible for our lack of economic recovery. Meanwhile the brilliant Hayek politely awaits his turn.
Come on, Hayek! Get in there and duke it out. You’re the sure winner.
Rap Battle Round Two: “Fight of the Century”
Producers John Papola and Russ Roberts resurrect our two rapping economic philosophers for another round. Fellow Austrians, brace yourselves for the end. It ain’t pretty, but it’s today’s reality.
To learn more about their economic philosophies, I suggest reading Keynes’ The General Theory of Employment, Interest, and Money and F.A. Hayek’s The Road to Serfdom. If you only want to buy one, I am huge fan of Hayek and the Austrian school of economics, and I believe that the abysmal failure of the Obama stimulus and bailout programs and financial regulations and market interventions and so on have thoroughly discredited the Keynesian model. Therefore, I recommend Hayek first and foremost.
My copy just arrived from Amazon yesterday evening. A quick skim shows it to be both enlightening and entertaining. Just as with last week’s Best Book—Thomas Sowell’s Basic Economics—this one also tackles an essentially economic subject with simple, lively laymen’s language and not one chart or graph to be seen in it.
Under subchapter headings such as “Karl Marx, Lady Gaga and the Labor Theory of Value,” “Worker’s of the World, Attack Each Other,” and “Big (Socialist) Oil,” Williamson combines history, theory and modern culture to illustrate how socialism operates, how it has failed over and over again, and how it is alive and growing like kudzu in America.
Therefore, for its efforts to sound the alarm to alert all patriots and arm them with the facts they need to fight the good fight, the Prudence Prize selection committee (me) has chosen The Politically Incorrect Guide to Socialism as the Best Book of the Week. Click the title to go order it now.
The book contains no charts or graphs; there’s no daunting math to intimidate the numerically challenged. Quite a feat for an economics book, but if anyone can pull it off, it’s Thomas Sowell. Just as with his weekly columns, he writes so plainly, simply and compellingly that readers are just stunned that they didn’t know all of this before.
Sowell is a national treasure for his clear thinking and application of economics to the modern problems of our society.
For these reasons, the inaugural Prudence Prize for Best Book of the Week goes to Thomas Sowell and his classic Basic Economics. Buy one for yourself, and one for your liberal friend.