Content by Issue > Economy

The US economy is crumbling and soon to freefall, due to the irresponsible policies of the US government—most recently during the Bush/Greenspan and the Obama/Bernanke regimes--both under the mandates of a Democrat-controlled Congress. The Feds rewarded consumers for going into debt (hmmm, let's tax capital gains but make home equity loans tax deductible!), inflating the real estate bubble (easy Fannie and Freddie mortgage money to unqualified borrowers on the insistence of Congress—replacing the dot-com bubble with a real estate bubble). Because of easy credit and paper profits to be made by flipping of highly leveraged homes that escalated wildly in price, mortgagees were swimming in paper profits, which they proceeded to spend. The feds characterized rampant spending of money borrowed against non-existent equity as "vigorous economic activity" when in reality it was an empty bubble that had to burst, just as every Ponzi/pyramid scheme ultimately must fail. Wall Street joined the fray by bundling and peddling these ticking time-bomb debts as secure, mortgage-backed securities (Collateralized Debt Obligations or CDOs) to institutions and individual investors.

When the house of cards collapsed, the Democrat-controlled Congress passed the blame on "Wall Street greed" when in reality it was Congress itself (and an adamant Congressional Black Caucus) with Barney Frank leading the charge, that forced Fannie Mae and Freddie Mac (and the banks through which mortgages are issued) to grant mortgages to people lacking sufficient down payments and/or the ability to repay the loans. Congress called it "affordable housing" which is liberal-speak for "housing that debtors could not afford."

Sub prime mortgage holders defaulted on their loans, followed by prime mortgage holders as home prices fell back to earth, and banks became as reluctant to approve new mortgages as they previously were eager to grant them. Tightening credit nationwide threw cold water on spending, which was a much needed, natural correction to an unstable, debt-driven market. But instead of allowing the free market to restore economic equilibrium, Congress interceded to keep the previously high rate of consumer spending going at high speed--re-inflating the bubble by cutting interest rates to again increase consumer debt and spending of borrowed money—exactly the same problem that led to the collapse in the first place!

Plunging the nation more deeply into debt merely postpones the day of reckoning while increasing the severity of the crash, creating a "perfect storm" for liberals to enact socialist legislation under he guise of "stimulus." Remember what Obama's chief of staff, Rahm Emanuel, said just after BHO won the election: “You never want a serious crisis to go to waste.”

Ever since, Congress has used the economic crisis it created, to reward its political allies, increase public dependence on government and advance it's far-left, socialist agenda in the form of T.A.R.P, Cap and Trade, Nationalized Healthcare, and other Marxist programs that are robbing American citizens of the freedom and liberty awarded them under the Constitution.

Self-identified liberals and Democrats do badly on questions of basic economics

By Daniel B. Klein
WSJ Opinion
June 8, 2010

"...In this case, (the) percentage of conservatives answering incorrectly (to basic economic questions) was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly..."

Federal Reserve's Inspector General (Coleman) has no idea where $9 trillion in off-balance-sheet transactions have gone

The Inspector General for the Federal Reserve (Coleman) has absolutely no idea where $9 trillion in off-balance-sheet transactions have gone! In addition, the Federal Reserve has conducted no investigation of Federal Reserve losses experienced since September 08! And nobody at the Federal Reserve is keeping track of the losses being incurred on what is now a $2 Trillion portfolio! Don't believe it? Listen to the Inspector General herself!

What ruined our economy?
House Republican Leader John Boehner (R-OH) points out that we’re not rescued.
The Blame Game
By Thomas Sowell
Jewish World Review
May 13, 2009

It was members of Congress (of both parties) who pushed the regulators, the banks and the mortgage-buying giants Fannie Mae and Freddie Mac into accepting risky mortgages.
Taxes too high? You ain't seen nothing yet.
By Ernesto Londoño
Washington Post Foreign Service
August 29, 2009

... the (Baghdad) embassy "will need more than $1.8 billion each year in 2010 and 2011, compared with this year's estimated $1.5 billion budget, according to the inspector general."
All You Need To Know About Bank Balance-Sheet Fraud

Saturday, March 6, 2010
by Karl Denninger

"The FDIC's experience with seizing banks thus far suggests quite strongly that all four [Bank of America, Citibank, JP Morgan/Chase, Wells Fargo] of these entities are lying about these valuations, and that were they to be seized the loss embedded in them (and for which you, the taxpayer would be responsible) is somewhere between $1.49 and $2.99 trillion dollars.

"Incidentally, neither the FDIC or Treasury happens to have either $1.49 or $2.99 trillion laying around, and it is highly questionable if they could raise it, should that become necessary."

Harry’s Debt Debacle

Thursday, October 22, 2009
By Gary L. Bauer

"Every day there are battles being fought on Capitol Hill that you are not hearing about. In these fights, conservative congressmen are going to the mat for your values. I know some of you don’t believe that because you don’t read about it in your local paper or see it on the news. But most of the media is leftwing. They have no desire to encourage you, so I’ll do it instead."

Bernanke Frets as Variable Notes Strip Taxpayers in NY, Texas
By Darrell Preston and Michael McDonald
April 16, 2009

Taxpayers face a catastrophe of unsustainable state and local government debt.
After Supporting Obama's Campaign, Powell Now Skeptical of President's Spending Priorities
[Powell] is concerned at the number of programs that are being presented, the bills associated with these programs and the additional government that will be needed to execute them.
The High Cost of Liberalism
Taxes too high? You ain't seen nothing yet.
By Pete DuPont
The Wall Street Journal/Opinion Journal
August 24, 2009

The many proposed tax increases reinforce the point. They not only would be economically damaging, but chart a very scary course for our country.
NJ Unemployment Rate Climbs to 9.8%

"Hopes that NJ had put the worst of the recession behind it were dashed this month with the release of preliminary State data showing a loss of 12,000 private-sector jobs in September. The job losses pushed NJ's unemployment rate to 9.8 percent, same as the US rate and the highest level in 32 years."

The devalued Prime Minister of a devalued Government
Conservative MEP, Daniel Hannan rips into Gordon Brown in a spectacular address that echoes the feelings of Americans facing similar governmental mismanagement.
Why Are We Bankrupt?
By Mark M. Lichterman
September 9, 2009

A 14-point collection of billions wasted on illegal aliens.
Paulson reveals US concerns of breakdown in law and order
By Stephen Foley
The Independent
July 17, 2009
Peter Schiff on 2009-2010 USA Hyperinflation
"...The longer it takes for us to change course, the harder it is to make the change, right? The deeper into debt we go, the more money the Fed prints, the harder it is to put that inflation genie back into the bottle, because the reason that the politicians are doing this is because they don't want to face the pain. They don't want to deal with reality. Well, the more they do this, the more painful reality becomes. So if they can't deal with the pain today, why would they deal with twice as much pain in the future? That is the flaw. In thinking that, well, they're just going to do something later on to stop it, they're not. If they really had the guts to anything, they'd do it right now. So this is extremely, extremely dangerous..."



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