Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

22 March 2011

The Hypocrisy of Democrat Caring - Inflation, Another of Many Examples

The Democrats always claim to care for the well-being of the poor and the middle class.  When we examine this claim critically, all we see is hypocrisy and the maneuverings of flim-flam artists in most cases.  Let us consider another such case.

When faced with a recession brought on by a spike in oil prices which then burst the housing and credit bubbles, the Democrats produced a huge porkulus bill to funnel more than $800 billion preferentially to their political followers, mostly overblown state and local governments, crony big business merchantilists, labor unions, trial lawyers, environmentalists, and community organizers.  This was a huge transfer of money from the productive private sector to the non-productive government sector and away from the jobs-producing small businesses of the free market.  The Democrats further restricted the free market with ObamaCare, so-called financial reform favoring big Wall Street firms over banks and financial companies of a smaller scale, threatened and real tax increases, cutbacks in coal mining and oil and gas extraction, and increased regulation burdens, especially by the EPA.  Job loss was quick to follow.  In December 2008, we lacked 15,287,000 jobs and by February 2011 we lack 23,108,000 jobs.  The Democrat control of the House, Senate, and White House quickly added a loss of 7,821,000 jobs, which was added to the 4,254,000 jobs lost in the second year they controlled the House and Senate in 2008.  The under-educated and low-skilled people the Democrats always claim as their own and to be so close to their hearts, were preferentially found among those now without a job.  The Democrats could not have done a better job of targeting them for grief and deprivation.

Also in keeping with Keynesian economic theory, long known to be balderdash, but much beloved by governments always looking for reasons to spend more money, the Democrats increased the money supply hugely.  Once that is done, avoiding a future bout of price increases is very nearly impossible.  Cutting back on the growth rate of the money supply, once the economy begins to respond to having increased cash, but decreased saving and investment values due to dilution, becomes painful to many.  Among the many who cannot cut back are the governments themselves.  To spend so much, they create huge new debt and that debt has to be financed.  Presently, the Federal Reserve Bank is buying 70% of U.S. Treasury notes!  Without a fundamental change in spending policies by the government, which it is clearly loathe to do given the unwillingness to reduce spending by even $60 billion in the face of a deficit for 2011 of about $1,600 billion, the Federal Reserve Bank will be the only buyer of U.S. Treasury notes for a long time.  They will lighten that obligation by causing inflation, so the debt becomes less burdensome over time.  This is a favorite way for governments to effectively tax the people, without having to pass a tax increase.

This has further consequences for those who are poor, out of a job, on fixed income, or are in the middle class.  Let us examine the consumer price index trends we are now seeing clearly:


Since July 2010, there have been only increases in consumer costs.  These increases are given in terms of annual rates so that adding the last 12 months given adds to 2.0%, but round-off loses 0.1% of the total 2.1% increase over the last 12 months.  The alarming message is that zeroes and negative numbers have been replaced since July with large numbers.  The average monthly increase since July has been 0.2875.  Projecting that alone forward would give us a consumer price index (CPI) increase from July 2010 through June 2011 of 3.45%.  Still more alarming is the fact that the trend is actually upward over that time.  It is more realistic to project at least a 4% increase in the CPI for this period.  Such an increase generates further uncertainty which will make businesses more reluctant to add employees.
 
These increases have been led by increased food costs and fuel costs.  Food and fuel costs are particularly difficult for the poor, those on fixed incomes, and even middle class families to bear.  As we know, medical costs continue their high rate increases, accelerated by ObamaCare. The hardship is increased when many more people are unemployed.  In 2009, the median U.S. inflation-adjusted household income fell 0.7% from 2008.  It is estimated that the median inflation-adjusted household income in 2010 was down by 1.0% compared to 2008.  Income has been going down and now prices, especially unavoidable ones such as food and fuel prices, are going up at a great clip.

Democrats, this is really the way to show how much you care for the poor and the middle class!  Your slip is definitely showing.  No, that would be much too nice.  That can happen to anyone, or at least any woman.  No, you are clearly revealed for the con artists you are.  You cannot put this flim-flam game over on the American people for long.  Surely they will catch on.  A 5% decrease in the ability to purchase goods and services (4% CPI increase, 1% income decrease) is hardly likely to go unnoticed.  Your snake oil is not working and sick Americans are going to notice they are becoming sicker.  You had better hightail it out of town, you flim-flam Democrat con men and women!  This is pure shades of Jimmy Carter replayed and the hopey-changey misdirection magic is not working anymore.

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