Economics
The Meaning of Uncertainty
Def: uncertainty – n. 1. The quality or state of being uncertain, 2. Doubt, 3. Stresses lack of faith in the truth, reality, fairness, or reliability of something or someone.
Many have been saying it, including Democratic party leader and fund-raiser Terry McAuliffe, who recently announced on Hannity that “U.S. corporations are sitting on three trillion dollars that could be used to rev up the American economy, but they are holding it back because of uncertainty in the nation.”
Uncertainty.
I’ve heard that word dozens of times in the past few months. Banks are uncertain. Lending institutions are uncertain. Businesses are uncertain.
Uncertain of what?
Even the people that control the money supply, the Federal Reserve, are concerned about uncertainty. The following article is from Marketwatch on September 1, 2010: (I will bold the dreaded word for impact.)
“Political uncertainty about taxes and the costs of hiring workers is holding back the U.S. economy, a Federal Reserve official said Wednesday.”
“‘What is restraining the economy is not a shortage of current liquidity; rather, it is uncertainty, high household debt burdens and a lack of confidence in future income growth,’ said Richard Fisher, president of the Federal Reserve Bank of Dallas, during speech in Houston. A copy of his remarks was made available in Washington.”
“Fisher repeated a theme he’s hit before: Businesses are reluctant to hire and to expand because they aren’t sure about tax and regulatory rules. Politicians are acting ‘in a capricious manner that makes long-term planning, including expanding payrolls, difficult, if not impossible,’ Fisher said.”
“Some business owners have said that they aren’t hiring because of uncertainty about what will happen with taxes as well as about health insurance, credit availability and the cost of energy.”
“As long as political uncertainty is the main obstacle to growth, Fisher said the Fed shouldn’t create more money to stimulate the economy. ‘Further accommodation might be pushing on a string,’ he said — and in the worst case, it could ignite inflation,’ he added.”
Obviously “uncertainty” is a big problem.
When I think of the word “uncertainty” I usually think of things that are completely out of my control–like the weather. I’m uncertain whether we’re going to have rain or sunshine today. Or I’m uncertain about who will win the football game on Sunday. Used this way, it’s normal to talk about “uncertainty” because nobody is ultimately responsible.
Uncertainty usually mans we don’t have any control over what is about to happen.
But is that what we’re talking about when we use the word “uncertainty” to describe the American current economic climate? I don’t think so.
Here’s the meaning of uncertainty in 2010:
Will socialism succeed in America?
Or worded another way, will the Obama Administration succeed in fundamentally changing the American nation from a free, self-governing people into a bloated and bankrupt European style social democracy? The entire world is waiting for an answer to that question. It may just determine the direction of history in the coming years.
All of the uncertainty relates to changing America’s freedom-oriented economy to a controlled one. Vast amounts of government spending and stimulus, the threat of increasing taxes to fund the welfare state, and the increased costs of health care via a government managed system will fundamentally alter the United States of America.
Entrepreneurs and businesses are looking at these changes and holding their breath–and money. If these trends are not reversed, they may not survive and cannot expand. They also can’t create jobs because they will not be affordable. If socialism succeeds in America, then the entire game changes.
Let’s state an obvious truth after twenty months of observation. Barack Obama is a socialist–plain and simple. He believes the Federal Government should “manage” the economy of the United States and “redistribute” vast amounts of money from the wealthier parts of society to various interest groups.
Twenty months of taking over banks, financial institutions, car companies, and the health system of America (Obamacare) , plus appointing “czars” over every area of America life clearly reveal the goal of the present administration.
They don’t like “America”– the land of the free. They want to radically change it from a faith-and-freedom based nation to a secular-based socialistic state.
“Yes We Can” means the triumph of social democracy. Barack Obama and his appointees do not believe in freedom. They believe in controlling your life.
Yes, there have been other presidents with controlling, socialistic tendencies. Woodrow Wilson was cut from the same cloth and desired a “League of Nations” that would control the world. Franklin Delano Roosevelt’s New Deal policies created the devouring federal monster we face today.
But President Obama is different from Wilson and Roosevelt in a number of ways.
First, he does not love and respect the heritage and exceptional principles that created the United States of America. As Dinesh D’Souza points out in his hard hitting new book The Roots of Obama’s Rage, Barack Obama’s roots (via his father) in Islam and Marxism give him a very jaded, colonial view of the nation that he leads. He does not believe in our past and wants to change our future.
D’Souza summarizes the Obama worldview this way:
“We are today living out the script for America and the world that was dreamt up not by Obama but by Obama’s father. How do I know this? Because Obama says so himself. Reflect for a moment on the title of his book: it’s not Dream of My Father, but rather, Dreams from My Father. In other words, Obama is not writing a book about his father’s dreams; he is writing a book about the dreams that he got from his father.”
“Think about what this means. The most powerful country in the world is being governed according to the dreams of a Luo tribesman of the 1950’s—a polygamist who abandoned his wives, drank himself into stupors, and bounced around on two iron legs (after his real legs had to be amputated because of a car crash caused by his drunk driving). This philandering, inebriated African socialist, who raged against the world for denying him the realization of his anti-colonial ambitions, is now setting the nation’s agenda through the reincarnation of his dreams into his son. The son is the one who is making it happen, but the son is, as he candidly admits, only living out his father’s dream. The invisible father provides the inspiration, and the son dutifully gets the job done. America today is being governed by a ghost.”
Secondly, our current president does not appear to understand nor appreciate our unique Christian foundations which made America a light to the world for over two centuries. Barack Obama says he is a Christian, but his “conversion” came through an Afro-centric, America-bashing pastor–Rev. Jeremiah Wright–who was the founder of a quasi-Christian cult. Obama’s “faith” seems to be more of a political calculation than a heart-felt conviction.
Exhibit A is that Barack Obama is far more comfortable with secularism and Islam than he is with the claims of Christ. That’s why the vast majority of his policies on abortion, sexuality, marriage, economics, and foreign policy are largely pro-secular, pro-Muslim, and anti-Christian. He even canceled the National Day of Prayer activities at the White House and while welcoming Muslim gatherings and prayer sessions.
And finally, Barack Obama does not share a deep and abiding faith in human liberty and freedom. He believes that political elites know best how to control and guide the economies and social structures of nations. This can only be accomplished through massive government spending, redistribution of wealth, higher taxes and increased regulations.
He is doing everything is his power to establish socialism in America as he sees it practiced in Europe.
That political fact has created uncertainty in 2010.
Will socialism succeed in America?
Good question.
The Heritage Foundation looks at it this way:
“The stakes couldn’t be higher for our nation at this moment. In the coming months, Americans will help choose which direction our nation’s future will take. Will the federal government continue to spend more, tax more, control more, and defend our liberties less? Or will we choose a new and bolder direction that returns power to the people? All indications are that we are approaching one of those pivotal moments in our political history, a tipping point. It will be a test of our national character. “
I agree.
Maybe the November 2 elections–and much prayer beforehand–will help us answer that vexing question of uncertainty.
Why Liberalism Cannot Cure the American Economy
Liberal politicians in Washington, D.C. are very nervous about the upcoming elections. The American economy is stuck in the doldrums–if not headed for a double dip recession–and the people just might vent their wrath against those holding the reins of power.
In fact, President Obama’s team is so concerned that they’ve been meeting around the clock to try to come up with a solution. Should they enact another stimulus? Should they unleash a new set of tax credits or incentives? How should the government intervene to get the economy going?
We are told that the president will make a major speech this week about what they plan to do.
There’s just one problem. Liberal solutions to economic problems don’t work. They do not “reckon with reality,” so they are doomed to fail. Liberal politicians and their media cronies just don’t get it.
It’s freedom that we need. Not more government.
As Ronald Reagan once wisely stated: “Government is not the answer to our problems. Government is the problem.”
I recently read a book that opened my eyes to the blindness and bias that exists in both liberal political and media circles. Peter Goodman’s Past Due: The End of Easy Money and the Renewal of the American Economy, was given to me by a friend who wanted my opinion on it. Mr. Goodman is an economics writer for the New York Times who previously served for ten years as a Washington Post correspondent.
Reading books like Goodman’s is a healthy thing to do. It helps me understand what the other side is thinking and keeps me honest in my own beliefs. If you don’t read your philosophical opponents, then you must be unsure of your own principles or afraid to have them challenged. I am neither. As a pursuer of truth, I am open to find it wherever it may be found—sometimes in unusual places.
My friend thought I might be helped by a book from the bastion of liberal thought—the New York Times. I was sadly disappointed. Though Mr. Goodman is an engaging and thorough writer, I was amazed at the conclusions he drew from his analysis of where the American economy went wrong and what we must do to right it.
To be fair, Mr. Goodman rightly points out that many American institutions and individuals got hooked on easy money and credit over the past couple of decades. We spent beyond our means because we used the increasing equity in our homes as a cash cow to fund a debt-ridden lifestyle. He is right in this analysis. Americans got careless with debt during the Reagan-led boom that lasted from 1982 to 2007.
So far, so good.
Goodman weaves many personal stories into his narrative to prove his point. All of these people, from many walks of life, over spent, over borrowed and got shellacked when the mountain of debt became due. He discusses how the big banks and financial institutions did the same—apparently motivated by capitalism and greed. There are some elements of truth here as well.
But then the analysis reverts to the liberal bias. George Bush is consistently mocked throughout the book because he was a believer in unrestrained free enterprise. He also takes to task Bill Clinton’s reform of welfare, Robert Rubin’s and Larry Summer’s leadership during the Clinton years, de-regulation policies, and especially Alan Greenspan’s guidance of the Federal Reserve which was too laissez-faire.
The biggest culprit is what Goodman calls “faith based markets.” He says, “The intensity of the recession… was the direct result of a massive abdication of regulatory authority, one that enabled Wall Street and Madison Avenue to get rich by selling the dream of immediate wealth.” In other words—the government wasn’t involved enough. He calls this neglect “living in a fantasy world or Neverland.” He labels the free enterprise proponents as modern day Peter Pans.
Thus Mr. Goodman shares a fond affection for the Keynesian view of economics—that government must assume control of the economy and take the lead. He says, “The government must once again regulate the financial system to protect the economy from investment binges.” His desired direction is the government establishing “seed investments,” especially in bio-tech and renewable energy (he’s really big on wind and solar), and should finance health care through expanding Medicare and Medicaid and promote a “collective enterprise” between government and industry.
Let’s just say it as it is. Goodman is a socialist—or a fascist. They’re the same thing in his Liberal Neverland. He decries Wall Street and Main Street—but he a cheerleader for “State Street.” Goodman wants the government to control it all.
That’s why he is admiringly pro-Obama and his liberal economic ideas in the book. There is not one negative or cautionary word about the president’s policies. He lauds the fact that the president declared on inauguration day, “We must pick ourselves up, dust ourselves off, and begin the re-making America.”
This re-making included the massive federal stimulus bill which Goodman applauded because it “took the edge off the worst economic fears and raised hopes that the suffering would diminish. It would generate needed paychecks. It would provide relief to those laid off. It would spare jobs that otherwise would have been lost by sending aid to cash-strapped states.”
Talk about Fantasyland. The so-called stimulus was a trillion dollar failure. And normal Americans don’t agree with Goodman’s enthusiasm over the government takeover of health care. They reject it by nearly a sixty to forty margin.
Goodman–and the Obama administration–believe that Big Goverment with its massive income re-distribution priorities are the best masters of the free enterprise system. What they fail to realize is this: It is government intervention that is the problem. Centralized governments always grossly misallocate currency and capital resources that are better guided by individual market decisions. The choices of millions of consumers provide much better checks and balances than a few bureaucrats do.
Here’s what Goodman amazingly missed in his research. He says that banks and other greedy financial institutions lent money they shouldn’t have. They were careless, reckless, and this is why the housing bubble inflated. There was too much money floating around with people abusing it via their home equity loans and re-financing schemes to get rich. He says there wasn’t enough regulation (government control) of the money supply.
But where did they get the money? Private companies cannot print money. Only governments can. It was short-sighted government regulation, through Richard Nixon, in 1971, that removed American finance from the gold standard, allowing trillions of dollars to be printed in the last thirty years that are backed by nothing. In 1971, gold was at $35 an ounce and the dollar was “pegged” to it for stability and strength.
In 2010, gold is over $1200 an ounce and the dollar remains incredibly weak. Bad government regulation has “inflated” our financial institutions with too many dollars. They simply used what they were unwisely given.
You can’t blame the Monopoly players when bank (the Government) is at fault for circulating all the funny money. If the government had left the money supply pegged to gold, there would have been no inflated home prices and no crash. The central planners messed up the system.
Goodman and his liberal friends are also disingenuous about other government agencies that heavily contributed to the financial meltdown. In Past Due, Goodman discussed the giant mortage companies Fannie Mae and Freddie Mac. He calls them “private companies” and places no blame at their feet for the collapse of the housing market.
But they are not private entities. They are government subsidiaries that tried to regulate people into homes they couldn’t afford, breaking all the normal laws of wise lending practices. Freddie and Fannie are in bed with the liberals and contribute heavily to their campaigns.
Here’s the bottom line: The US government bears the major responsibility for screwing up the American economy by grossly inflating the money supply and then lending it to unqualified buyers. If the government had stayed out of the markets, they would have been far more stable and self-correcting.
They didn’t–and set us on a course that looks an awful lot like sinking Europe, depressed Japan, and the disgraced and fallen Soviet Union.
Peter Goodman and his ilk now want the Federal Government to lead the American renewal with what? More controls! This is not only dumb–it is suicidal.
Past Due: The End of Easy Money and the Renewal of the American Economy is a propaganda book with a ludicrous conclusion. I think it should be re-titled: Past Due: The End of Liberal Dis-Information About the Virtues of Big Government.
America’s economic engine runs on the fuel of faith and freedom–characteristics that liberal thinkers neither understand nor promote.
Fortunately, the American people are seeing the light and will be voting for freedom in November, not for more government regulations. They know that liberalism cannot cure the economy because it puts its faith in the wrong thing–the Almighty State–instead of Almighty God who dwells in the hearts and minds of a self-governing people.
Job Killers Vs. Job Creators
Since the number one household issue in the United States right now is jobs–the need for a free and robust economy–I thought it would be helpful to share with you the best article I’ve seen on the subject this year.
Newt Gingrich is certainly one of the clearest political thinkers in America today. He has also undergone a spiritual transformation in his life which shows in his writing and speaking. I encourage you to watch his new documentary, Nine Days that Changed the World, that shares the moral and spiritual backdrop of the fall of the Iron Curtain. It’s liberation was not accomplished by men–but by the power of God through faith and prayer.
This Economics 101 lesson is the bottom line of the fall elections. It’s interesting to me that Speaker Gingrich uses the terms “Killers” vs. “Creators.” Isn’t the real battle in the world between Lucifer, a killer of men’s souls and livelihoods, and God, our magnificent Creator and Sustainer? RB
July 21, 2010 – Job Killers vs. Job Creators
By Newt Gingrich, former Speaker of the House
The campaign this fall can be boiled down to a simple choice: job-killers versus job-creators.
With so many Americans out of work, candidates will win decisive victories if they can show their opponent’s policies will kill jobs and their policies will create jobs.
Governing is about having the right principles, policies, processes and people.
Successful leaders hold principles that work in the real world, and these principles lead them to the right policies. And because they are determined to measure results, they develop processes that work. Finally, with the right principles, policies, and processes, they look for people who are driven, practical, and experienced to get the right things done the right way.
Unfortunately, under the Pelosi-Reid Congress and the Obama presidency, government has become a job-killing system thanks to a set of principles, policies, processes and people that are completely disconnected from reality.
I describe this alien ideology in my book To Save America: Stopping Obama’s Secular-Socialist Machine. It is a fundamentally anti-work, anti-investment, anti-entrepreneurial ideology that has led to economic stagnation and spiritual decay wherever it has been tried.
We can already see the results of this radical ideology in America.
The American work ethic is being replaced with a mindset that favors “gaming” the system to get away with working as little as possible.
American productivity is being replaced with a set of union work rules and bureaucracy that makes us too slow, too expensive and too cumbersome.
The historic American commitment to local representation and local control is being replaced by an emphasis on federal concentration of power and rule by bureaucrats and judges that is stripping Americans of their rights and responsibilities.
A commitment to religious freedom and God-given rights is being replaced by a secular oppression that increasingly resembles the government-imposed atheism of Soviet totalitarianism. (I encourage you to watch the documentary Nine Days that Changed the World, which Callista and I host and produced, to learn about the plight of the Polish people under Communism and the brave moral leadership of Pope John Paul II that helped topple the Soviet Union.)
The secular-socialist machine of the left has made the recession worse by suppressing the natural resiliency of the American economy and setting the stage for even worse economic challenges in the future.
For President Obama, the years he spent studying and teaching the radicalism of Saul Alinsky laid the foundation for a job-killing, anti-business attitude.
If you believe business is bad, you will convince it to go away.
If you are determined to tax small business owners, entrepreneurs, successful corporate leaders, investors, and innovators they will either avoid taxable behavior or leave the country entirely.
If you impose absurd regulatory controls totally out of touch with reality, you will kill jobs.
The Obama Administration’s moratorium on offshore drilling has already sent high-paying good jobs and tax-paying, profitable companies out of the United States. Obama has been good for jobs in Egypt and the Congo (where the first two oil rigs have gone) but he has killed jobs in Louisiana.
The President’s proposed energy taxes will kill jobs in America but they will create jobs in China (which this year passed America as the world’s largest user of energy).
The recently passed government control of the financial system will be good for jobs in London, Tokyo, Frankfurt, Shanghai and other foreign financial centers but it will kill jobs and profits in the United States.
We have seen job killers implement job-killing policies before.
President Carter had a whole series of job-killing policies from 1977 to 1980 and they worked. They killed a lot of jobs.
Politicians in Detroit have been killing jobs for two decades. Only with Mayor Dave Bing’s new job-oriented approach has there been any hope of rebuilding Detroit’s economy.
We have all seen the state governments of New York and California adopt policies that kill jobs and drive businesses and successful individuals out of their states.
On the other side, we have seen a job creator like Gov. Rick Perry implement policies which in 2008 led Texas to create as many jobs as the other 49 states combined.
Governors Mitch Daniels in Indiana, Tim Pawlenty in Minnesota, Haley Barbour in Mississippi, Sonny Perdue in Georgia, and Bobby Jindal in Louisiana are all examples of principled job creators whose policies work.
We are in the worst economy since the Great Depression.
The only recent improvements in unemployment numbers have come about because people have quit looking for work and so are no longer counted as unemployed.
Under this model, if President Obama could convince every unemployed American to quit looking for work, we would have zero percent unemployment.
The number would be great but the reality would be horrible.