On the Economy

In discussions with liberals here in New York, whenever I mention Obama’s deficit and taxes, the standard retort is that Obama has lowered taxes, and that I probably paid $400 less than during President Bush’s administration. Obama actually wants me to thank him for this “reduction”.

Leaving aside the falsehood of this statement, I like to mention to my liberal friends that we have been hit by the most corrosive and regressive tax in existence since the invention of money: Inflation. This tax, and a tax it is, since it is the result of government policies and printing money, is a super whammy. First it affects low-income families more than rich ones, it is not tax deductible and it is self-perpetuating. Studies have demonstrated that when inflation reaches 10%, consumers tend to panic and spend their money before it depreciates further. This rush to spend by purchasing goods, leads to higher prices, which leads to inflation, which leads to people panicking, which leads to higher…

Historically, when my wife and I spent above $100, it would take us four trips from the car to the apartment carrying our bags. The last time I went shopping we spent $135 and it took us two trips to carry our bags upstairs; and the bags were not any larger. Soups were between 2 and 3 dollars a can. Oranges were on sale, 2 for a dollar, cans that used to be filled with a pound of merchandise, now had 11 oz., boxes 9 inches long contained tissues 8 inches long, my favorite rye bread was $3.39, but the texture was like angel cake, full of air.

Well, the suspicion that Obama's policies will bring inflation is well justified. Associated Press reports that “wholesale prices rose more than expected last month as food prices surged by the most in 26 years. But excluding food and energy, prices were nearly flat.”

Of course, AP couldn't resist spinning for Obama.  I love the last sentence in the above paragraph. Besides the patient’s cancer having metastasized to the lungs, liver and pancreas, the rest of his vital signs are okay.

Read the Associated Press report

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Las night I was watching a History Channel program on the technology of gambling and casinos. When the program ended I watched the news and a report on the finance reform bill promulgated by Obama and the democrats in conjunction with some republicans that know that you cannot go wrong when bashing banks and Wall Street. I was struck by the similarity between this bill and the problem that casinos have with cheaters. As casinos implement ways to prevent cheating, cheaters are busy designing new ways of cheating. Similarly, lawyers on Wall Street are already studying the loopholes that will allow banks and investment houses evade the regulations imposed by this bill.

By the way, if this bill is so terrific, why does it not apply to AIG, Fanny Mae and Freddie Mac?

You want to bring discipline to Wall Street? Let them fail.

Finally, when my mother didn’t let me play in the living room, I played in the bedroom. But play I did. Implement regulations that will hurt Wall Street, and in a few years we will buy derivatives and mortgage packages from financial centers in Dubai, Hong Kong, Singapore, and a hundred places around the world where the speculating will be much more risky than in Wall Street.

Speculation will go on, but Americans will be the losers..