Many Conservative radio and television talk-show personalities take pride in referring to themselves as "Reagan Conservatives." While I agree with values represented by catch phrases such as: "personal responsibility", "limited government", "peace through military strength", "right to life", and "traditional family values" there is one aspect of Reagan Conservatism that has been very damaging to America. And that has to do with Reagan's economic policy. And I am not talking about his "trickle-down economic" tax cuts for the rich but his relaxation of anti-trust laws in America.
Robert Bork, Milton Freedman, Paul Volcker and Alan Greenspan were great advocates of our current "laissez-faire," "free market," "Chicago school," "just-in-time," "Walmart" economy. Robert Bork argued in his book "The Antitrust Paradox" against current anti-trust laws claiming that globalization and consolidation was more efficient and efficiency would bring about a greater consumer welfare. Robert Bork argued that the anti-trust laws should produce the effect of lower prices to the consumer only. With lower prices the sole goal of our economy, Bork and other economists were of the opinion that markets would run most efficiently when dominated by 2 or 3 global companies. Thus competition as well as efficiency would be preserved.
However, anyone who accepts Robert Bork's premise that the free market's only goal should be lower prices via efficiency as reflected in Adam Smith's "Wealth of Nations" is forgetting the original intent of the Founding Father's which is expressed in Alexander Hamilton's "Report on Manufactures". Free Trade vs. Protectionism was an issue at the heart of the Civil War. Northern States favored tariffs to protect their developing industries. The South had a low cost of manual labor, had little need of mechanization, and favored the freedom to purchase from whichever country sold goods at the lowest price. Protectionism proved superior during the Civil War as the North had 10 times the GDP of the South and then was able to blockade, out produce, and starve the South into defeat.
President William McKinley stated the United States' stance under the Republican Party as thus: "Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man. [It is said] that protection is immoral…. Why, if protection builds up and elevates 63,000,000 [the U.S. population] of people, the influence of those 63,000,000 of people elevates the rest of the world. We cannot take a step in the pathway of progress without benefiting mankind everywhere. Well, they say, ‘Buy where you can buy the cheapest'…. Of course, that applies to labor as to everything else. Let me give you a maxim that is a thousand times better than that, and it is the protection maxim: ‘Buy where you can pay the easiest.' And that spot of earth is where labor wins its highest rewards."
Protectionists view laws concerning Environmental Protection, Product Safety, Child Labor, Anti-Trust, Occupational Safety, Equal Opportunity, Intellectual Property, and Minimum Wage burden companies and place then at a disadvantage when they compete, both domestically and abroad, with goods and services produced by companies unfettered by such restrictions. Tariffs, quotas, and subsidies can even the playing field.
Critics of protectionism claim that the benefits of free trade over protectionism is 100:1 because of increased efficiency. Chicago School Economists said that out-sourcing jobs to the 3rd-world would raise the standard of living in those countries even if workers rights are not observed.
It is interesting how Free-Trade became a Republican mantra. During the Great Depression, FDR blamed Herbert Hoover's protectionist policies in worsening the Depression via the inactment of the Smoot-Hawley Tariff Act. Since then, free trade, which was once a major plank in the Dixiecrat platform has since been co-opted by the Republican party.
However, the real cause of the Great Depression was the fault of people borrowing money to invest in the stock market creating an economic bubble. Following the stock market crash on Black Tuesday on Oct 29, 1929, Banks began to fail because of fractional reserve lending. Fractional Reserve Banking means that Banks only have to have 1/10th of the money they lend on hand as fractional reserves. When stocks crashed, most US banks lost their reserves and could not operate. The Federal Reserve purposefully tightened the money supply and denied loans to most small banks which were forced to fail. Failing banks resulted in fewer business loans which resulted in layoffs, and rising unemployment. High Unemployment led to the beginning of the Socialization of America.
The original intent of the Founding Fathers was not efficiency and the lowest price, but stability, security, self-sufficiency and freedom. Under the ideals of the Founders, the producers of goods and services were to be free from any outside influence to negotiate with the consumer. There was to be no middle man. The producer was to have equal and free access to raw materials, as well as equal access to the consumer. However, under our current system, there are many obstacles and middle men. Our free market is far from being free and instead economic policy and products are controlled by a few ultra-rich, elite, corporate, government, and banking aristocrats. When companies and farms consolidate to form mega-conglomerates, jobs are lost because there is no need for a duplication of services. But the price of efficiency is security and stability.
Having robber barons, corporate czars, and kings is efficient, but because evil exists and we cannot guarantee that our CEO's will always be just, it has always been important that power is delegated to the local level to the individual as much as possible. Unfortunately, there has been both a Right Wing and Left Wing Conspiracy in America. Economic and Political Power is controlled by a few ultra-elite. Our current economic system benefits only a select few who amass huge amounts of capital and political power. Our current system at the same time is set up so large numbers of Americans are set up to fail. These same ulta-elite then turn to the poor and disadvantaged promising them social programs funded by the working middle class. The AMT is a great example of how this works. AMT only allows an upper middle class worker who makes between $100,000 and $500,000 to deduct so much from his tax return before AMT kicks in and requires that he pay at least 28% in income taxes. However, for those who make over $500,000, AMT doesn't apply and capital gains on stocks only requires 15% in taxes imposes no limits to deductions.
As I have said in other posts, who cares if a US produced good cost 10$ while the same good from China is only 5$. It's much better in the long run to keep 10$ in your local economy then send 5$ to China or into the pocket of an ultra-rich CEO. Remember that 10$ spent locally means 10$ toward a local job, 10$ more for someones health care and retirement program. If instead, I send 5$ to China, that is 5$ that the US government will end up borrowing back to fund social programs to stimulate job creation, and provide unemployment, health care and social security benefits to my unemployed neighbors.
Wednesday, March 24, 2010
Wednesday, March 17, 2010
My Journey From Darkness to Light
Dear Dr. Jones,
My name is David D. Brosnahan, MD, MS. I have a Masters in Biochemistry from BYU and I am currently an Emergency Physician living in Augusta, GA. I also took basic Newtonian Physics from you at BYU in 1997. I remember that the course began with a pre-test assessing our ability to predict the behavior of various falling, sliding, and colliding objects. I think that was one of the few tests I remember ever failing. And while I try never to dwell on failure, I will never forget the lesson you taught me that unless people would think in terms of physical laws, "common sense" alone would never help them arrive at a correct answer.
Last week, I looked up one of your 9/11 lectures. I was aware that you had been stigmatized for your theories regarding thermite being present in the 911 attack on the WTC. I was aware that you had been asked to resign from BYU. I was also aware that he mainstream media would not entertain any questioning of the official story. You were labeled a "conspiracy theorist" a "lunatik" and a "subversive." However, none of those labels sat well with me. I just couldn't believe that you had lost your mind.
I remember, early on, reacting very nationalistically when someone questioned the War in Iraq. I thought, how could a person trust people like Saddam Hussein and Bin Laden over our own President of the United States. But, as time has passed, I have slowly been better able to set aside my nationalistic passions and view things more objectively. I am not saying that I have lost any faith in the Constitution of the United States. I believe the US Constitution is inspired of God and I love this country and the principles upon which it was founded. However, I experienced a major paradigm shift while reading a Biography of Edwin Teller. In several instances the scientists needed to convince FDR to fund the Manhattan Project and later the fusion bomb. What surprised me was a trivial detail, which was included but not commented on, how FDR was not convinced by a signed letter by Albert Einstein but by an investment banker. That's when I knew who was pulling the strings in this country. Since then I have viewed the world in a whole different light.
Just last week I watched several of your lectures on YouTube for the first time and looked up several articles in the Journal of 911 Studies. And to my unexpected amazement, everything you have been saying is absolutely correct. The fall of the WTC is an absolute violation of the laws of physics. The near free fall velocity, the temperatures required to melt steel, the yellow-hot metal pouring out of the building, the complete collapse of WTC building 7, the unreacted reddish thermate paint chips, and the reacted thermate microspheres in WTC dust prove beyond reasonable doubt that the planes alone could not have caused the collapse of the WTC according to the official report.
An interesting detail I have been pondering is when and where was the thermate applied. In 1971 when the WTC was being constructed, there was an asbestos ban was imposed in New York. From what I can tell, only WTC1 had some asbestos to the 40th floor which as partially removed after the ban. This was also the building that failed to fall after the 1993 bombing. That leads me speculate whether the WTC buildings designed to be destroyed from the beginning? Was thermate applied to the steel as a coating from the very beginning or was it sprayed on later? Could the 1993 bombing be an excuse for someone to place thermate in the building instead of insulation? Since we see clear evidence that thermate was applied to the WTC, you would think that engineers would have learned from the Hindenburg disaster not to mix aluminum and iron oxide in surface coatings. Considering the facts, I am left to conclude that the presence of thermate in the WTC was purposeful. I would like to see more in the Journal of 911 Studies on Asbestos vs.other fire retardants used in the WTC.
Please accept my thanks for your courage in standing for truth despite the threats to your life, liberty, and reputation.
http://www.foxnews.com/story/0,2933,34342,00.html
http://www.foxnews.com/story/0,2933,34756,00.html
Sincerely,
David D. Brosnahan MD, MS
Problems with the 911 "official story":
1. Near Free-Fall Acceleration Violates Physical Law. The WTC towers fell at near free-fall velocity in violation of Newton's Second Law of Motion and the Law of Conservation of Momentum which says that an object exerting a force against another object in one direction experiences an opposite force in the other direction. Thus if the top of the WTC became unstable and begin to crush the floors below it; as it crashes through the lower floors, it would meet resistance resulting in an eventual deceleration and not a continued free-fall acceleration. This opposite force pushing back against the unstable top section of floors would absorb its potential and kinetic energy, decelerating it until it would eventually stop falling.
2. Equal and Opposite Forces. As the top section of the WTC falls through the building I would have expected it would develop some lateral or angular momentum causing it to slide or roll off the top. As it happened the top section of each WTC tower was said to have entirely crushed and pulverized the rest of the building from top to bottom without itself experiencing a "crushup" force until it reached the bottom. However, physics requires that as the top section is falling through the bottom section, the top section would be crushed at the same time as the bottom section was being crushed. Therefore, since the top section was shorter than the bottom section, at some point the top section would have been entirely pulverized by the bottom leaving a section of the bottom floors undamaged. However, as it happened, the top of the WTC above the impact of the plane accelerated through the bottom floors as if they they weren't there at near free-fall acceleration entirely into its own footprint leaving no undamaged portion of either tower.
3. Heat and Energy of the Airplane Insufficient. The heat and energy of the airplane smashing into the WTC is insufficient to cause a catastrophic failure of the WTC. The heat required to melt steel is 2500F. The heat of the jet fuel and office material could only reach 1500F at most. Weakening of the floor supports could occur but is still insufficient to result in the near complete pulverization of the building.
4. No Pancakes. The official story claims the floors of the WTC successively pancaked one on top of another. The problem with this is that we did not see pancaked floors at the bottom. What we did see is an unrecognizable mass of twisted iron and building that was nearly pulverized with WTC dust falling all over lower Manhattan. What we should have seen is the top of the WTC fall off, or a stack of pancaked floors, or a remnant of undamaged building surrounded by rubble but not a top to bottom near-complete demolition-like pulverization into its own footprint.
5. Black Body Radiation and Molten Iron. Yellow-Orange liquid metal is seen flowing out of the WTC buildings just prior to its sudden and complete pulverization and catastrophic collapse. This molten metal due to black-body radiation must be at least 2000F and cannot be molten aluminum from the airplane because liquid aluminum appears metallic at that temperature and does not glow yellow-orange like molten iron. Again, the fires from the plane, fuel and office are insufficient to melt iron at 2000F. If iron were so easy to melt, our species would have entered the iron age long before it did.
6. Thermate Found. Numerous samples of WTC dust has been collected and analyzed demonstrating unreacted thermate chip bilayers containing aluminum, iron oxide, and sulfur. Some of these reddish thermate chips also demonstrate partial conversion to metallic iron with metallic microspheres forming on the surface of the reddish layer in these chips. WTC dust contains large amounts of already reacted thermate in the form of metallic iron-aluminum microspheres. These microspheres demonstrate the same chemical and physical properties (fingerprint) as microspheres created by reacting thermate. Microspheres containing iron and aluminum together can only form if both elements cooled from a liquid state together at the same time requiring a temperature of over 2000F.
7. Molten Pools of Liquid Metal. Under the WTC debris was molten pools of liquid metal glowing yellow-orange hot. This liquid iron which was measured at over 2000F burned for several weeks. Aerial thermal imaging proves the intense heat of WTC fires under WTC buildings 1,2, and 7.
8. WTC 7 Annihilated. WTC 7 was not hit by an airplane yet it was suddenly and completely demolished just like WTC 1 and 2 and free-falling into its own footprint like a tower made of playing cards. This was said to have been caused by diesel fuel stored in its basement. Again, diesel fuel does not generate enough heat to melt steel and the same cauldron of liquid iron was found under its rubble. If the base of the building were to have melted and become unstable, we would expect the building to have fallen over, twisted, or pancaked with the preservation of many pancaked floors. Instead what we witnessed was the compete demolition-like pulverization of the building into its own footprint leaving few recognizable traces of its structure.
9. Other arguments and inconsistencies. There are many more theories out there that are weak, unverifiable, and detract from what is known and can be known about 911. Therefore, I will not defend them nor debunk them. Many of these weaker arguments hurt the what can be proven. I do not speculate about who knew and when with regard to 911. But what we do have is video tape of the event and the laws of physics. To date, the official story and NIST report conclusions do not reflect the video tape evidence nor explain the WTC collapse with respect to physical law. Therefore the official story must be revised or rejected.
My name is David D. Brosnahan, MD, MS. I have a Masters in Biochemistry from BYU and I am currently an Emergency Physician living in Augusta, GA. I also took basic Newtonian Physics from you at BYU in 1997. I remember that the course began with a pre-test assessing our ability to predict the behavior of various falling, sliding, and colliding objects. I think that was one of the few tests I remember ever failing. And while I try never to dwell on failure, I will never forget the lesson you taught me that unless people would think in terms of physical laws, "common sense" alone would never help them arrive at a correct answer.
Last week, I looked up one of your 9/11 lectures. I was aware that you had been stigmatized for your theories regarding thermite being present in the 911 attack on the WTC. I was aware that you had been asked to resign from BYU. I was also aware that he mainstream media would not entertain any questioning of the official story. You were labeled a "conspiracy theorist" a "lunatik" and a "subversive." However, none of those labels sat well with me. I just couldn't believe that you had lost your mind.
I remember, early on, reacting very nationalistically when someone questioned the War in Iraq. I thought, how could a person trust people like Saddam Hussein and Bin Laden over our own President of the United States. But, as time has passed, I have slowly been better able to set aside my nationalistic passions and view things more objectively. I am not saying that I have lost any faith in the Constitution of the United States. I believe the US Constitution is inspired of God and I love this country and the principles upon which it was founded. However, I experienced a major paradigm shift while reading a Biography of Edwin Teller. In several instances the scientists needed to convince FDR to fund the Manhattan Project and later the fusion bomb. What surprised me was a trivial detail, which was included but not commented on, how FDR was not convinced by a signed letter by Albert Einstein but by an investment banker. That's when I knew who was pulling the strings in this country. Since then I have viewed the world in a whole different light.
Just last week I watched several of your lectures on YouTube for the first time and looked up several articles in the Journal of 911 Studies. And to my unexpected amazement, everything you have been saying is absolutely correct. The fall of the WTC is an absolute violation of the laws of physics. The near free fall velocity, the temperatures required to melt steel, the yellow-hot metal pouring out of the building, the complete collapse of WTC building 7, the unreacted reddish thermate paint chips, and the reacted thermate microspheres in WTC dust prove beyond reasonable doubt that the planes alone could not have caused the collapse of the WTC according to the official report.
An interesting detail I have been pondering is when and where was the thermate applied. In 1971 when the WTC was being constructed, there was an asbestos ban was imposed in New York. From what I can tell, only WTC1 had some asbestos to the 40th floor which as partially removed after the ban. This was also the building that failed to fall after the 1993 bombing. That leads me speculate whether the WTC buildings designed to be destroyed from the beginning? Was thermate applied to the steel as a coating from the very beginning or was it sprayed on later? Could the 1993 bombing be an excuse for someone to place thermate in the building instead of insulation? Since we see clear evidence that thermate was applied to the WTC, you would think that engineers would have learned from the Hindenburg disaster not to mix aluminum and iron oxide in surface coatings. Considering the facts, I am left to conclude that the presence of thermate in the WTC was purposeful. I would like to see more in the Journal of 911 Studies on Asbestos vs.other fire retardants used in the WTC.
Please accept my thanks for your courage in standing for truth despite the threats to your life, liberty, and reputation.
http://www.foxnews.com/story/
http://www.foxnews.com/story/
Sincerely,
David D. Brosnahan MD, MS
Problems with the 911 "official story":
1. Near Free-Fall Acceleration Violates Physical Law. The WTC towers fell at near free-fall velocity in violation of Newton's Second Law of Motion and the Law of Conservation of Momentum which says that an object exerting a force against another object in one direction experiences an opposite force in the other direction. Thus if the top of the WTC became unstable and begin to crush the floors below it; as it crashes through the lower floors, it would meet resistance resulting in an eventual deceleration and not a continued free-fall acceleration. This opposite force pushing back against the unstable top section of floors would absorb its potential and kinetic energy, decelerating it until it would eventually stop falling.
2. Equal and Opposite Forces. As the top section of the WTC falls through the building I would have expected it would develop some lateral or angular momentum causing it to slide or roll off the top. As it happened the top section of each WTC tower was said to have entirely crushed and pulverized the rest of the building from top to bottom without itself experiencing a "crushup" force until it reached the bottom. However, physics requires that as the top section is falling through the bottom section, the top section would be crushed at the same time as the bottom section was being crushed. Therefore, since the top section was shorter than the bottom section, at some point the top section would have been entirely pulverized by the bottom leaving a section of the bottom floors undamaged. However, as it happened, the top of the WTC above the impact of the plane accelerated through the bottom floors as if they they weren't there at near free-fall acceleration entirely into its own footprint leaving no undamaged portion of either tower.
3. Heat and Energy of the Airplane Insufficient. The heat and energy of the airplane smashing into the WTC is insufficient to cause a catastrophic failure of the WTC. The heat required to melt steel is 2500F. The heat of the jet fuel and office material could only reach 1500F at most. Weakening of the floor supports could occur but is still insufficient to result in the near complete pulverization of the building.
4. No Pancakes. The official story claims the floors of the WTC successively pancaked one on top of another. The problem with this is that we did not see pancaked floors at the bottom. What we did see is an unrecognizable mass of twisted iron and building that was nearly pulverized with WTC dust falling all over lower Manhattan. What we should have seen is the top of the WTC fall off, or a stack of pancaked floors, or a remnant of undamaged building surrounded by rubble but not a top to bottom near-complete demolition-like pulverization into its own footprint.
5. Black Body Radiation and Molten Iron. Yellow-Orange liquid metal is seen flowing out of the WTC buildings just prior to its sudden and complete pulverization and catastrophic collapse. This molten metal due to black-body radiation must be at least 2000F and cannot be molten aluminum from the airplane because liquid aluminum appears metallic at that temperature and does not glow yellow-orange like molten iron. Again, the fires from the plane, fuel and office are insufficient to melt iron at 2000F. If iron were so easy to melt, our species would have entered the iron age long before it did.
6. Thermate Found. Numerous samples of WTC dust has been collected and analyzed demonstrating unreacted thermate chip bilayers containing aluminum, iron oxide, and sulfur. Some of these reddish thermate chips also demonstrate partial conversion to metallic iron with metallic microspheres forming on the surface of the reddish layer in these chips. WTC dust contains large amounts of already reacted thermate in the form of metallic iron-aluminum microspheres. These microspheres demonstrate the same chemical and physical properties (fingerprint) as microspheres created by reacting thermate. Microspheres containing iron and aluminum together can only form if both elements cooled from a liquid state together at the same time requiring a temperature of over 2000F.
7. Molten Pools of Liquid Metal. Under the WTC debris was molten pools of liquid metal glowing yellow-orange hot. This liquid iron which was measured at over 2000F burned for several weeks. Aerial thermal imaging proves the intense heat of WTC fires under WTC buildings 1,2, and 7.
8. WTC 7 Annihilated. WTC 7 was not hit by an airplane yet it was suddenly and completely demolished just like WTC 1 and 2 and free-falling into its own footprint like a tower made of playing cards. This was said to have been caused by diesel fuel stored in its basement. Again, diesel fuel does not generate enough heat to melt steel and the same cauldron of liquid iron was found under its rubble. If the base of the building were to have melted and become unstable, we would expect the building to have fallen over, twisted, or pancaked with the preservation of many pancaked floors. Instead what we witnessed was the compete demolition-like pulverization of the building into its own footprint leaving few recognizable traces of its structure.
9. Other arguments and inconsistencies. There are many more theories out there that are weak, unverifiable, and detract from what is known and can be known about 911. Therefore, I will not defend them nor debunk them. Many of these weaker arguments hurt the what can be proven. I do not speculate about who knew and when with regard to 911. But what we do have is video tape of the event and the laws of physics. To date, the official story and NIST report conclusions do not reflect the video tape evidence nor explain the WTC collapse with respect to physical law. Therefore the official story must be revised or rejected.
Wednesday, March 10, 2010
HOW TO FIX AMERICA (2)
1. Until private citizens provide for the needs of all our people whether they deserve it our not, the Socialists will be empowered. You can tell people all day they should just face the consequences of life and lay down and die, but these people will accept a faceless government handout every time.
2. In nearly every community, all people get necessary health care through the ER and through charitable community medical clinics staffed by volunteers or supported by public and private grants.
3. Just consider what would happen if we cut off a certain segment of our population from getting basic needs such as food, shelter, and health care. They would turn against rob and murder the working class. And the Fascists throughout history have played the poor class against the working class again and again.
4. The real problem with health care costs is how hospitals are financed. Banks and financiers that provide the capital to build hospitals reap a majority of the money produced by hospitals. 15% of the hospital bill goes to doctors. 15% to insurance companies. The rest is the facility fee. Only 50% of the facility fee goes to the nurses, support services, pharmacy, and lab. The other 50% goes into the pocket of the mortgage holders or stock holders.
5. The US operates on FRACTIONAL-RESERVE BANKING. This allows Federal Reserve members to borrow 1$ from the FED and lend 10$. This is creating money out of thin air. And its not the Federal Government creating the money but private financiers. If our government would operate on FULL-RESERVE BANKING, then the US Treasury would collect prime interest on all the money lent out and not just a fraction of it. If we allowed local banks to borrow directly from the US Treasury, at FULL RESERVES, then there would be more accountability and responsibility because there would actually be risk and not just the illusion of risk. If financiers create money by the MONEY MULTIPLIER PRINCIPLE, there is not risk when someone defaults on an amortized loan because they only borrowed 10% of the money, they collected interest up front, and they will repo your assets and resell it.
6. The US needs to exercise the power of the TARIFF to keep money and jobs in the US. So what if you spend 10$ on a manufactured in the US product vs. 5$ on a Chinese produced good. If we continue to send 5$ to China, then that will be 10$ less in our community, which means 10$ less to pay for a US job, 10$ less for health insurance, 10$ less for retirement program and 10$ more that the federal government will have to end up paying in the end. And then the US government will turn to China to borrow at least 2.50$ by selling T-Bills to China who have all these excess dollars and then our children will end up paying at least 5$ in principal and interest. So, why does it make sense to buy Chinese because its cheaper when the money saved will end up being paid by our children?
7. The good of our capitalist system is that it allows that certain individuals benefit extraordinarily well. Certain fortunate few amass enormous sums of money or capital. This capital can then be used to invest in grand projects such as railways through Africa, fleets of ocean greyhounds, and aquariums in downtown Atlanta. We like aquariums and we like venture capitalists like Kleiner Perkins to invest in Google, Amazon, and Bloom Energy. Or at least we are told we do. We need the capital. The problem is that our capitalist system lets too many fall off the wagon. So, the question is, how do we keep everyone on the wagon and still have a system that creates the capital and is able to apply it to great ideas.
Monday, March 08, 2010
Monopoly and the Walmart Economy
While taking my children to piano lessons today, I was listening to the Sean Hannity show when a caller attacked Walmart and suggested that US citizens should buy American instead of sending our dollars to China. In response, Sean Hannity attacked the caller, calling him a free-market hating liberal. According to Mr. Hannity, there is nothing wrong with Walmart. Thanks to Walmart and free-market economics, the US consumer pays much less for things. I have been reading Cornered: The New Monopoly Capitalism and the Economics of Destruction by Barry C. Lynn and I am more convinced that our current economic system is threatening the long-term safety and independence of the United States. I am a constitution-loving conservative, but our current just-in-time, distributor-controlled economy is far from what the Founding Fathers had in mind for this nation.
Let me say from the start, that I am not a Walmart hater. Our current state of the economy is not necessarily Walmart's fault alone. What has happened since the Reagan Era is a relaxation of our traditional anti-trust and anti-monopoly laws. It used to be that anti-trust laws were designed to protect the producers over the distributors. The Law did this in two ways. First, the laws said that the producers retained control to determine how much they would sell their products for to a retailer and they could also determine how much their products would be sold for by the retailer. The laws no longer work to protect producers any more.
Walmart and Rubbermaid are a good example of the shift in anti-trust law. Rubbermaid is a top brand in storage and kitchen ware. This is just the kind of brand that a company like Walmart would need to offer. So, intially Walmart and Rubbermaid had a deal worked out. Accordinly, Rubbermaid invested millions in new US production factories. However, after the initial orders, Walmart came back to Rubbermaid demanding an even lower price on future product. Rubbermaid couldn't accept because of rising costs of petroleum. Consequently, Rubbermaid was dropped as a brand entirely. This led to Rubbermaid nearly going bankrupt and being bought out by Newell (35 brand conglomerate) in 1999. As all conglomerates do, nearly all of Rubbermaid's US operations were closed (80 factories and 5000 jobs) and production was outsourced to China.
You can see that if a powerful distributor like Walmart made a deal with a competitor to hurt a particular business, they could simply drop them, place their product on the bottom shelf, or raise the price on their products in comparison to the competition. In addition to allowing the producer to dictate the retail price their product, the second protection of producers is access to raw materials. If company A and B both produce the same product, and company A wants to put company B out of business, they could simply buy up all the companies that produce the raw materials necessary to produce their product. They could then charge company B high prices for those raw materials and put them out of business, or hurt their stock making them vulnerable to being bought out.
Companies have been forced to defend against mega-distributors by becoming monopolies or mega-conglomerates themselves. Companies like Newell, Proctor & Gamble, Kraft, Coke, Pepsi, Unilever and Luxottica own handfuls of companies, bands, and products so that they can protect themselves against the monopolistic distributors. As soon as companies have any cash on hand, they are forced in our current economy to look for the next big merger, acquisition, or hostile take-over. It has become a dog-eat-dog economy.
The power of distributors over producers is not a new problem. This goes back to John D. Rockefeller's Standard Oil Company which was initially divided into Exxon, Mobil, Chevron, Texaco, Gulf, Shell, and Amaco. Together with ConocoPhillips and BP there have been several mergers since. Other distribution-controlled sectors include the Music Industry. Artists have traditionally made very little money when signing over the copyrights for their music to record companies like Universal, Sony, Warner, and EMI who themselves own multiple labels. These companies guarantee that the music will play on their radio stations which they also own and the artist will make their money selling concert tickets. AOL/Time Warner, Disney, General Electric, News Corporation, Viacom, Vivendi, Sony, Bertelsmann, AT&T and Liberty Media are the parent companies which control nearly all the media distribution in the country.
Dell Computers is another distribution driven company. Dell has been so successful putting computers together, that they have caused big problems for IBM, Hewlett Packard, and Compaq. HP bought out an ailing Compaq, and IBM had to get out of the PC business entirely. The current contract negotiations between NFL players and owners is another producer-distributor debate. NFL owners want salary caps so they say so they won't overspend a team into bankruptcy. The players want to retain the rights and control to as much profits as possible. We will be watching to see how this plays out.
The upside to having mega-conglomerates is the promise of efficiency. The ideal supposedly mirrors US politics. The most efficient markets have 2 major players like the Republican and Democrat party with a couple of minor 3rd parties like the Libertarian and Green parties which are really mostly insignificant except when they can used as pawns to hurt the one of the major parties. Accordingly, 2 major companies in any sector is enough to keep them honest.
The downside to this way of playing is that these big conglomerates destroy jobs and outsource to China. I mean, with all this consolidation, have prices really gone down? Coke used to be 5c a bottle. Now it cost $1.50. And so what if buying American costs more. Lets say you can buy an American-made product for 10$ while the same product made in China is only 5$. In the short run you save 5$. But on the long term, that is 5$ less to pay for an American job, which is 5$ less for healthcare, education, and retirement benefits. Consequently, that same 5$ to China becomes 5$ that the Federal Government has to dole out in Medicare and Social Security funds which it doesn't have money for. Consequently, the Federal Government is forced to raise taxes and then borrow at least 2.50$ back from the Chinese who because of our trade deficit have nothing better to do with all those extra US dollars but buy up our T-Bills. The end result of saving 5$ by sending it to China is that our children will one day end up paying at least 5$ back because of interest. So, I think, is it really worth saving 5$ today, when it will cost my children 5$ tomorrow as well as costing them their jobs?
The other downside to allowing mega-cooperations and conglomerates to buy out handfuls of small companies is that again, it costs jobs. When a large company buys another smaller company, there is a lot of duplication of effort. What really happens is that all the parent company really wants is the rights to the band name and the secret formula. The parent company will usually shut down all US production and outsource it to some 3rd-world country. If a particular brand competes with another of their brands, they may discontinue it completely. It used to be that a business owner dreamed of building up a business that he could leave to his sons. Today, small business owners aspire to be bought out by one of the behemoths. In addition to losing local jobs in small-town America, I think the current system also stifles innovation. Once a mega-corp buys up a brand, they usually are no longer interested in making it better, only making it cheaper. Also, if a company has several products and the mega-corp is interested in just one; they may just abandon all the others which suddenly disappear if they cannot be sold off.
The real danger of our current economy of consolidation is that of self-sufficiency as a nation. Today in America we import most of our petroleum, pharmaceuticals, and textiles. Other basic commodities like grain and food oil are being imported at an increasing rate. Another danger we are already seeing. When there is an outbreak of Salmonella in spinach or the accelerator goes bad on a few cars, because cars and spinach are controlled by only a few producers, there are massive nationwide recalls. More than ever before, our country is becoming increasingly vulnerable to any disruption to the transportation system or by a potential world-wide calamity like a flu pandemic.
Total Imports $2.1 Tril
National Debt Owned by Foreign Governments = 28% = $3.7 Tril
Top US Imports
Crude Oil $342 Bi
Cars $126 Bil
Pharmaceuticals $78 Bil
Automotive Accessories $65 Bil
Household Goods $62 Bil
Computer Accessories $61 Bil
Petroleum Products $52 Bil
Cotton Apparel $50 Bil
Telecommunications $45 Bil
Video Equipment $41 Bil
2006 debt numbers
national debt ($9 trillion),
non-bank corporate debt ($9 trillion)
mortgage debt ($9 trillion)
financial institution debt ($12 trillion)
unfunded Medicare liability ($30 trillion)
unfunded Social Security liability ($12 trillion)
external foreign debt ($3 trillion)
annual trade deficit ($817 billion)
Let me say from the start, that I am not a Walmart hater. Our current state of the economy is not necessarily Walmart's fault alone. What has happened since the Reagan Era is a relaxation of our traditional anti-trust and anti-monopoly laws. It used to be that anti-trust laws were designed to protect the producers over the distributors. The Law did this in two ways. First, the laws said that the producers retained control to determine how much they would sell their products for to a retailer and they could also determine how much their products would be sold for by the retailer. The laws no longer work to protect producers any more.
Walmart and Rubbermaid are a good example of the shift in anti-trust law. Rubbermaid is a top brand in storage and kitchen ware. This is just the kind of brand that a company like Walmart would need to offer. So, intially Walmart and Rubbermaid had a deal worked out. Accordinly, Rubbermaid invested millions in new US production factories. However, after the initial orders, Walmart came back to Rubbermaid demanding an even lower price on future product. Rubbermaid couldn't accept because of rising costs of petroleum. Consequently, Rubbermaid was dropped as a brand entirely. This led to Rubbermaid nearly going bankrupt and being bought out by Newell (35 brand conglomerate) in 1999. As all conglomerates do, nearly all of Rubbermaid's US operations were closed (80 factories and 5000 jobs) and production was outsourced to China.
You can see that if a powerful distributor like Walmart made a deal with a competitor to hurt a particular business, they could simply drop them, place their product on the bottom shelf, or raise the price on their products in comparison to the competition. In addition to allowing the producer to dictate the retail price their product, the second protection of producers is access to raw materials. If company A and B both produce the same product, and company A wants to put company B out of business, they could simply buy up all the companies that produce the raw materials necessary to produce their product. They could then charge company B high prices for those raw materials and put them out of business, or hurt their stock making them vulnerable to being bought out.
Companies have been forced to defend against mega-distributors by becoming monopolies or mega-conglomerates themselves. Companies like Newell, Proctor & Gamble, Kraft, Coke, Pepsi, Unilever and Luxottica own handfuls of companies, bands, and products so that they can protect themselves against the monopolistic distributors. As soon as companies have any cash on hand, they are forced in our current economy to look for the next big merger, acquisition, or hostile take-over. It has become a dog-eat-dog economy.
The power of distributors over producers is not a new problem. This goes back to John D. Rockefeller's Standard Oil Company which was initially divided into Exxon, Mobil, Chevron, Texaco, Gulf, Shell, and Amaco. Together with ConocoPhillips and BP there have been several mergers since. Other distribution-controlled sectors include the Music Industry. Artists have traditionally made very little money when signing over the copyrights for their music to record companies like Universal, Sony, Warner, and EMI who themselves own multiple labels. These companies guarantee that the music will play on their radio stations which they also own and the artist will make their money selling concert tickets. AOL/Time Warner, Disney, General Electric, News Corporation, Viacom, Vivendi, Sony, Bertelsmann, AT&T and Liberty Media are the parent companies which control nearly all the media distribution in the country.
Dell Computers is another distribution driven company. Dell has been so successful putting computers together, that they have caused big problems for IBM, Hewlett Packard, and Compaq. HP bought out an ailing Compaq, and IBM had to get out of the PC business entirely. The current contract negotiations between NFL players and owners is another producer-distributor debate. NFL owners want salary caps so they say so they won't overspend a team into bankruptcy. The players want to retain the rights and control to as much profits as possible. We will be watching to see how this plays out.
The upside to having mega-conglomerates is the promise of efficiency. The ideal supposedly mirrors US politics. The most efficient markets have 2 major players like the Republican and Democrat party with a couple of minor 3rd parties like the Libertarian and Green parties which are really mostly insignificant except when they can used as pawns to hurt the one of the major parties. Accordingly, 2 major companies in any sector is enough to keep them honest.
The downside to this way of playing is that these big conglomerates destroy jobs and outsource to China. I mean, with all this consolidation, have prices really gone down? Coke used to be 5c a bottle. Now it cost $1.50. And so what if buying American costs more. Lets say you can buy an American-made product for 10$ while the same product made in China is only 5$. In the short run you save 5$. But on the long term, that is 5$ less to pay for an American job, which is 5$ less for healthcare, education, and retirement benefits. Consequently, that same 5$ to China becomes 5$ that the Federal Government has to dole out in Medicare and Social Security funds which it doesn't have money for. Consequently, the Federal Government is forced to raise taxes and then borrow at least 2.50$ back from the Chinese who because of our trade deficit have nothing better to do with all those extra US dollars but buy up our T-Bills. The end result of saving 5$ by sending it to China is that our children will one day end up paying at least 5$ back because of interest. So, I think, is it really worth saving 5$ today, when it will cost my children 5$ tomorrow as well as costing them their jobs?
The other downside to allowing mega-cooperations and conglomerates to buy out handfuls of small companies is that again, it costs jobs. When a large company buys another smaller company, there is a lot of duplication of effort. What really happens is that all the parent company really wants is the rights to the band name and the secret formula. The parent company will usually shut down all US production and outsource it to some 3rd-world country. If a particular brand competes with another of their brands, they may discontinue it completely. It used to be that a business owner dreamed of building up a business that he could leave to his sons. Today, small business owners aspire to be bought out by one of the behemoths. In addition to losing local jobs in small-town America, I think the current system also stifles innovation. Once a mega-corp buys up a brand, they usually are no longer interested in making it better, only making it cheaper. Also, if a company has several products and the mega-corp is interested in just one; they may just abandon all the others which suddenly disappear if they cannot be sold off.
The real danger of our current economy of consolidation is that of self-sufficiency as a nation. Today in America we import most of our petroleum, pharmaceuticals, and textiles. Other basic commodities like grain and food oil are being imported at an increasing rate. Another danger we are already seeing. When there is an outbreak of Salmonella in spinach or the accelerator goes bad on a few cars, because cars and spinach are controlled by only a few producers, there are massive nationwide recalls. More than ever before, our country is becoming increasingly vulnerable to any disruption to the transportation system or by a potential world-wide calamity like a flu pandemic.
Total Imports $2.1 Tril
National Debt Owned by Foreign Governments = 28% = $3.7 Tril
Top US Imports
Crude Oil $342 Bi
Cars $126 Bil
Pharmaceuticals $78 Bil
Automotive Accessories $65 Bil
Household Goods $62 Bil
Computer Accessories $61 Bil
Petroleum Products $52 Bil
Cotton Apparel $50 Bil
Telecommunications $45 Bil
Video Equipment $41 Bil
2006 debt numbers
national debt ($9 trillion),
non-bank corporate debt ($9 trillion)
mortgage debt ($9 trillion)
financial institution debt ($12 trillion)
unfunded Medicare liability ($30 trillion)
unfunded Social Security liability ($12 trillion)
external foreign debt ($3 trillion)
annual trade deficit ($817 billion)
Friday, March 05, 2010
How to FIX America
It seems clear to me that the answer to most all US problems is to reform our banking and lending system. Unfortunately, I have not heard any one clearly explain how our current system really works. And consequently, I haven't heard many real solutions. After the Dot.com bust, the housing market was not affected because of government stimulus. This led to banks giving Mortgage-Backed Securities their AAA rating. Banks operating on deregulated fractional reserves were leveraging their accounts by trading their fractional reserve dollars for these volatile MBS derivatives. When the housing market turned, these toxic assets were worthless due to Mark-to-market rules after ENRON. Banks couldn't lend having lost their fractional reserves. This let the FED, the lender of last resort, to pick winners and losers.
Now we were told that the downturn was the fault of sub-prime loans. But this is only partly true. The truth is that the rich defaulted on their mortgages on their second homes as much as the poor did. The problem is that amortized loans collect 95% interest for 20 years on a 30 year loan. This means that, assuming minimum payments, a family can only gain equity on their home if the price of the house goes up. This force has been a major driver of inflation which has led to a constant rise in cost of living and has forced both mom and dad into the work place at the same time. With both mom and dad working, emotional needs are not met and that means more vice, drugs, overeating, emotional shopping, divorce, and illegitimacy. This lending system creates class in America. There are those that collect interest and those that pay. Then there are those that are crushed by the system and end up on social programs. The rich then turn the poor against the working and the working against the poor thus turning the attention away from them. The working envy the rich and despise and neglect the poor while the poor resent the working and praise the elite who promise the social programs paid for by the working class.
However, due to fractional reserve lending, financiers borrow tax dollars from the FED and due the money multiplier, they can lend 10$ or more for every $1 borrowed. This means there is no risk in lending at all. If a person defaults and the financiers repo your house, and they sell it for 50c/1$, the financiers made 40c/1$ plus all the interest paid, and the PMI claim. Banks make money when they repo your house. There is no risk. AIG who sells PMI on all subprime loans couldn't pay. But the US government bailed them out. The banks got their insurance claims, but still were in trouble because the MBS that the banks owned in order to leverage their deregulated fractional reserves were now worth zero. So, Bernanke proposed the 700 Billion TARP (toxic assets relief program) to buy the MBS. But the money went free to the banks and the the banks kept the MBS on top of everything.
This affects health care because 15% of health costs goes to the doctor. 15% goes to the insurance. The rest is the facility fee. Most of this facility fee goes into the pocket of financiers and shareholders. If communities owned their hospitals, and hospitals were non-profits, that would save 50% on health care. Financiers claim that they deserve these profits because of the risk. But remember that for them, risk is only an illusion.
What we need to do in the US is end fractional reserve lending. With full reserve lending the US would make prime on all money created and not just on the fraction lent. Instead of 45 billion the FED makes, the US Treasury could make 10X or more that that. We need to end the FED and end all financier middlemen. Let local banks borrow directly from the US Treasury. If we switch to full reserve banking, we may be able to print 12.5 trillion dollars and pay off debt and soak up the extra dollars and prevent inflation and devaluation of the currency. The extra revenue from the 8% saved on debt interest and earning prime on all money lent, would balance the budget. Instead of mortgages with unfair amortization schedules, lending and borrowing could be done without collecting usury/interest like Sharia Law Banking and only charging a fee like local banks do anyways. With cheap money, the US must also enforce anti-trust law and prevent hostile takeovers, mergers and aquisitions. The US must support industries that make us self sufficient (like natural gas over petroleum) and use tarrifs to protect US jobs and industry.
Now we were told that the downturn was the fault of sub-prime loans. But this is only partly true. The truth is that the rich defaulted on their mortgages on their second homes as much as the poor did. The problem is that amortized loans collect 95% interest for 20 years on a 30 year loan. This means that, assuming minimum payments, a family can only gain equity on their home if the price of the house goes up. This force has been a major driver of inflation which has led to a constant rise in cost of living and has forced both mom and dad into the work place at the same time. With both mom and dad working, emotional needs are not met and that means more vice, drugs, overeating, emotional shopping, divorce, and illegitimacy. This lending system creates class in America. There are those that collect interest and those that pay. Then there are those that are crushed by the system and end up on social programs. The rich then turn the poor against the working and the working against the poor thus turning the attention away from them. The working envy the rich and despise and neglect the poor while the poor resent the working and praise the elite who promise the social programs paid for by the working class.
However, due to fractional reserve lending, financiers borrow tax dollars from the FED and due the money multiplier, they can lend 10$ or more for every $1 borrowed. This means there is no risk in lending at all. If a person defaults and the financiers repo your house, and they sell it for 50c/1$, the financiers made 40c/1$ plus all the interest paid, and the PMI claim. Banks make money when they repo your house. There is no risk. AIG who sells PMI on all subprime loans couldn't pay. But the US government bailed them out. The banks got their insurance claims, but still were in trouble because the MBS that the banks owned in order to leverage their deregulated fractional reserves were now worth zero. So, Bernanke proposed the 700 Billion TARP (toxic assets relief program) to buy the MBS. But the money went free to the banks and the the banks kept the MBS on top of everything.
This affects health care because 15% of health costs goes to the doctor. 15% goes to the insurance. The rest is the facility fee. Most of this facility fee goes into the pocket of financiers and shareholders. If communities owned their hospitals, and hospitals were non-profits, that would save 50% on health care. Financiers claim that they deserve these profits because of the risk. But remember that for them, risk is only an illusion.
What we need to do in the US is end fractional reserve lending. With full reserve lending the US would make prime on all money created and not just on the fraction lent. Instead of 45 billion the FED makes, the US Treasury could make 10X or more that that. We need to end the FED and end all financier middlemen. Let local banks borrow directly from the US Treasury. If we switch to full reserve banking, we may be able to print 12.5 trillion dollars and pay off debt and soak up the extra dollars and prevent inflation and devaluation of the currency. The extra revenue from the 8% saved on debt interest and earning prime on all money lent, would balance the budget. Instead of mortgages with unfair amortization schedules, lending and borrowing could be done without collecting usury/interest like Sharia Law Banking and only charging a fee like local banks do anyways. With cheap money, the US must also enforce anti-trust law and prevent hostile takeovers, mergers and aquisitions. The US must support industries that make us self sufficient (like natural gas over petroleum) and use tarrifs to protect US jobs and industry.
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