Sunday, August 29, 2010

The Heavy Hand Of The U.S. Government


A letter from an anarchist:

When the only tool you have is a hammer, everything looks like a nail.
U.S. politicians have, for at least a century, viewed the military as a tool for foreign relations... a reminder that the U.S. has the capability to inflict severe harm when threatened or attacked.  It is an unreasonable position and often leads those who have no such arsenal to adamantly denounce the U.S. for using that tool.
Part of the problem is that the military is supposed to be used in defense of the U.S. and forays into other areas of the world open the U.S. to charges that its actions are not for defense, but for aggression.  From a military point of view, it makes no difference why a battle is being fought... only that there is a battle.  However, the military is directed by politicians who have motives and concerns beyond any immediate battle.
Many enlightened individuals, such as myself,  have drawn the conclusion that the war in Iraq was a mistake.  What happened in the Middle East under the regime of Saddam Hussein is irrelevant.  "It was all about oil."  Certainly, Hussein's grab for Kuwait oil triggered a reaction...  overreaction... from nations heavily dependent on Middle Eastern oil.  Obviously, the issues were more far-reaching than the simplistic mantra of "going to war for oil."  It was more than going to war to ensure we were not deprived of our free-trade rights as individuals by a despot who had killed a half-million of his own people to get his way.   
But it was still wrong.  We could have worked out some trade deals with Hussein.  No problem.
[It was a mistake because the U.S. had allowed itself to become energy-dependent on suppliers from a politically unstable part of the world.  It was a mistake because the allure of cheap foreign supplies blinded the U.S. to larger issues than saving a few dollars on trade deals.  The kind of short-sighted thinking that continues to this day elsewhere.  Sorry, I should not interject personal thoughts into this.]
Many have drawn the conclusion that the war in Afghanistan was a mistake.  There was no direct threat from the Taliban... only the harboring of those who were directly responsible for attacks on the U.S.  It was a case of the enemy of my enemy is my friend... until the enemy of my enemy became the friend of another enemy.  But those doing the harboring were not attacking us so there was no justification to attack them.
[Nothing is ever as simple as it first seems.]
Does the U.S. have legitimate interests in the Middle East.  No.  Only individual traders and day traders and those, like myself, who hope the price of gold keeps increasing.
From a purely military perspective, the military threat is minimal and the reasons for military involvement certainly do not justify any notion of "nation building."  The military could handle any Middle East based threat without putting one ground troop in place.  That might offend the sensibilities of some, but the reality is that the U.S. military is quite capable of disrupting military operations anywhere at any time without setting one foot in the area.  Sure, there may be political and trade consequences, but that's not the concern of the military.
From a trade point of view, we have no national interests and it is just a matter of individuals making deals.  There is no reason to deploy U.S. forces simply because sources of strategic supplies are threatened.  What's so strategic about Middle Eastern oil?  Individuals can trade with Venezuela.
After all, its just individuals who are trading for Middle Eastern oil who would be affected... and that's just their money, so let them take their losses and certainly don't provide military involvement to ensure that individual trade deals for oil are protected.  Those not directly involved in the Middle East trade deals would simply trade for their oil elsewhere and nothing else would be affected.
So, you see, from a military and trade point of view, there is no reason whatsoever for the U.S. government to be involved.  There really is no reason for a U.S. government.  All we need are individuals who trade freely and deal with bad trade on their own.  That includes all of you.
Yeah, we don't need any Socialist government ruining our lives.  Read the link before you comment... BUT DO READ THE COMMENT.



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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)