The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
Say goodbye to your boring morning commute. New technologies are changing the way people drive their cars. It’s making them safer, more fuel efficient, and could reshape the way America builds its roads and cities. The only thing that could stand in the way...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
When the NSA surveillance news broke last year it sent shockwaves through CERN, the particle physics laboratory in Switzerland. Andy Yen, a PhD student, took to the Young at CERN Facebook group with a simple message: “I am very concerned about the privacy issue, and I was wondering what I could do about it.”There was […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
Let’s head back in time…In 2004, a mere decade ago, the US national debt rang the register at $7.4 trillion. That represents “debt per citizen” of over $25,000. You, me, your neighbor, your 4-yr old grandson, you name it and they’re portion of the U.S. debt is $25k.But flash forward to today and you’ll see […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
I was talking with one of my colleagues the other day, and he raised a very interesting question, one that deserves consideration by anyone worried about their digital privacy. He read an article that championed the idea that the more steps one took to protect their privacy by using anonymous Web-browsing tools like Tor, the […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
When you type a website address into a browser, you might have noticed that the letters “http” appear at the front. “HTTP” stands for Hypertext Transfer Protocol. In typing a Web address, you are actually sending an HTTP command to transmit that website to you. Hypertext Transfer Protocol is the means by which information is […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
Picture the scene. It’s 2020. You’re at the checkout in a convenience store with a carton of milk. But you’ve got no cash and you’ve left your cards at home. No problem. You scan your right index finger; the green light flashes. Purchase approved and you leave. Easy.Is this a realistic vision of the future, […]
“In the beginning, all the world was America.” — John Locke“The Garden of Eden was a perfect place,” my friend Manuel explained. “Man had free will. He could live in harmony with nature and God — and everything would be fine. But if he defied God, the stain of original sin would be on his […]
After a week of reckoning about the American oil and gas boom… I’ve got to get something off my chest.I can’t stand it when a coworker takes credit for something I did.Whether it’s a special report I wrote or just a little investing trick I found on my own — if someone takes it and […]
It might sound like the latest new product from Apple, but IPAB is actually the newest major legal challenge to Obamacare.Recently, a three-judge panel in the 9th Circuit Court of Appeals in San Francisco heard arguments about the Independent Payment Advisory Board, or IPAB, a 15-member panel created by the Affordable Care Act and empowered […]
Americans have come to believe that the IRS and the income tax are inevitable parts of our lives. After all, most everyone alive today has lived his entire life under federal income taxation.It wasn’t always that way. For some 125 years, the American people lived without having any tax imposed upon their income.The obvious question […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
“As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
In September 2009, when President Obama made a primetime speech pitching his not-yet-passed health care overhaul, he made the following promise: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.” To prove his seriousness, he further promised that “there will be a provision […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
I want gridlock. If the House of Representatives and the Senate both go Republican, as I expect they will, then the best chance for political paralysis may be a hostile Democrat in the White House. I want an angry Congress and a president with fingers itching to veto.
Ironically, a second-term presidency for Obama could well be America’s shining hope for fewer laws in the next four years. And less law is a situation to be devoutly desired, especially since it would come with a weakened presidency.
Political gridlock is a safeguard of freedom, and a constitutional restraint that the Founding Fathers consciously tried to place on power.
IN PRAISE OF AMERICAN GRIDLOCK
Political gridlock generally occurs in one of four ways: Congress is evenly enough divided so that no one party has the majority needed to push laws through; one legislature is Republican while the other is Democrat; the majority in the Senate is not large enough to overcome a filibuster; or,Congress and the executive are controlled by different parties. The opposite of political gridlock occurs when one party has across-the-board control.
Such a consensus of power produces strong or activist presidents. For example, both Franklin D. Roosevelt, who forged the New Deal, and Lyndon B. Johnson, who created the Great Society, had the advantage of one-party control during the entirety of their terms. This means they were able to push through sweeping social change that laid the foundation for much of today’s social control.
According to historian Bruce Bartlett, from 1856-2010, there were 91 years during which one party controlled the White House, Senate, and House of Representatives, There were 63 years during which power was shared. In other words, 59% of the time, the United States has had a consensus of power.
The Founding Fathers would have been appalled. They consciously sculpted a political structure in which power would be balanced or antagonistic so that there would be a high bar for the passage of law.
The most obvious check on power is the tripartite separation of power. During the Constitutional Convention of 1787, the delegates explicitly considered and rejected a parliamentary system similar to that of Great Britain. In that system, the prime minister heads the executive branch and, as a member of Parliament, also heads the governing party. Passing laws is comparatively easy.
Instead of a parliamentary system, however, the Constitutional Convention adopted a tripartite division of power. Three branches of government were given independent powers and responsibilities that act as restraints on each other: the executive, the legislature, and the judiciary. For example, while Congress controls the federal budget, the president can veto bills passed by Congress. In turn, Congress can override the presidential veto by a two-thirds vote in both houses. This makes it more difficult to pass and to enforce laws. (Some consider the American system to be a four-way division of power because of the bicameral Congress in which the two legislative houses often obstruct each other.)
Even the structure of the electoral process itself facilitates a check on power. The Federalist Papers, o 51 is titled “The Structure of the Government Must Furnish the Proper Checks and Balances Between the Different Departments.” In the essay, the constitutional architect James Madison highlights the danger that the legislative authority would dominate.
“The remedy for this inconveniency,” he concludes, “is to divide the legislature into different branches; and to render them, by different modes of election and different principles of action, as little connected with each other as the nature of their common functions and their common dependence on the society will admit.”
The executive and the legislature come from entirely different electorates, so those chosen are more likely to be diverse. Midterm elections ensure that most of the legislature comes to power at a different time than the president, so the elections act as a check on an unpopular leader. hat was the purpose of Madison’s “different principles of action”? To protect minorities from oppression by the majority, and no minority requires protection more than “the individual.”
From the juxtaposition of states’ rights and federal power to a political distribution that gives the same number of Senate seats to California as it does to Rhode Island, a salutary tendency toward gridlock is at the root of American government. The tendency has been strengthened by additions like the filibuster rule in the Senate. This rule allows a senator, or a series of them, to speak on the floor for as long as they wish unless or until “three-fifths of the senators duly chosen and sworn” bring the process to a close.
ADVANTAGES OF GRIDLOCK
Sometimes, actions that not taken are more significant and advantageous than the ones that are. For example, if even one legislative house and the president are at loggerheads, then budgets are less likely to be passed and the deficit may cease to climb at its present rate. Stephen Slivinski writes in the Washington Examiner (Sept. 15, 2010):
“Between 1965-2009, the average growth rate of real per capita federal spending in the divided-government years [one House versus the presidency] was 1.9%. For the years of united government, that average was 3.1%…. The take-home message for fiscal conservatives? If it’s a bad idea to put your faith in politicians, the good news is you can probably put a decent amount of faith in institutional gridlock.”
Yet political gridlock is most often discussed as a sign of dysfunctional government. In a 2011 hearing of the Senate Judiciary Committee, Justice Antonin Scalia offered a refreshing rebuttal of the dysfunctional claim:
“I hear Americans saying this nowadays, and there’s a lot of it going around. They talk about a dysfunctional government because there’s disagreement — and the Framers would have said, ‘Yes! That’s exactly the way we set it up. We wanted this to be power contradicting power’ because the main ill that beset us, as Hamilton said in The Federalist, when he talked about a separate Senate, he said, yes, it seems inconvenient, but inasmuch as the main ill that besets us is an excess of legislation, it won’t be so bad. This is 1787; he didn’t know what an excess of legislation was.”
And that’s why — even though I long for a fresh face to detest and long for a world without democratically elected dictators — there might be good reasons to prefer Obama over Romney as the next president.