Just printing more money

Historian Richard Striner proposes a solution for our economic woes:

Using the monetary methods of Lincoln, updated to employ the inflation-fighting tools of the Federal Reserve, we could pay for a faster recovery and a great many worthy projects without higher taxes, without more national debt, and believe it or not, without inflation. How? By letting Congress exercise a little-known power that is used (very quietly indeed) by the Federal Reserve: the power to create new money.

If you’re skeptical about this assertion, ask Federal Reserve Chairman Ben S. Bernanke. In an interview with 60 Minutes on March 15, 2009, Scott Pelley asked Bernanke to state the cost to American taxpayers of the Fed’s attempts to prop up banks.

Bernanke: “It’s not tax money. The banks have accounts with the Fed … so, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money.”

Pelley: “You’ve been printing money?”

Bernanke: “Well, effectively.”

If the Federal Reserve can create new money, couldn’t Congress do the very same thing? The answer is yes, and here’s the precedent: the Legal Tender Act of 1862, in which the Republican-controlled Congress authorized creation of “United States Notes,” known as greenbacks, that were printed up and spent into use.

via The American Scholar: How to Pay for What We Need – Richard Striner.

He is serious.  His reasoning about how this could work defies excerpt, so read it yourself.

Obama’s Teddy Roosevelt strategy

President Obama gave a speech in Osawatomie, Kansas, in which he wrapped himself in the mantle of Roosevelt.  Teddy Roosevelt, that is.  And, according to liberal columnist E. J. Dionne, laid out the strategy that will bring him re-election.

President Obama has decided that he is more likely to win if the election is about big things rather than small ones. He hopes to turn the 2012 campaign from a plebiscite about the current state of the economy into a referendum about the broader progressive tradition that made us a middle-class nation. For the second time, he intends to stake his fate on a battle for the future.

This choice has obvious political benefits to an incumbent presiding over a still-ailing economy, and it confirms Obama’s shift from a defensive approach earlier this year to an aggressive philosophical attack on a Republican Party that has veered sharply rightward. It’s also the boldest move the president has made since he decided to go all-out for health insurance reform even after the Democrats lost their 60-vote majority in the Senate in early 2010.

The president’s speech on Tuesday in Osawatomie, Kan., the site of Theodore Roosevelt’s legendary “New Nationalism” speech 101 years ago, was the Inaugural address Obama never gave. It was, at once, a clear philosophical rationale for his presidency, a straightforward narrative explaining the causes of the nation’s travails, and a coherent plan of battle against a radicalized conservatism that now defines the Republican Party and has set the tone for its presidential nominating contest.

In drawing upon TR, Obama tied himself unapologetically to a defense of America’s long progressive and liberal tradition. The Republican Roosevelt, after all, drew his inspiration from the writer Herbert Croly, whose book “The Promise of American Life” can fairly be seen as the original manifesto for modern liberalism. Thus has the tea party’s radicalism encouraged a very shrewd politician to take on a task that Democrats have been reluctant to engage since Ronald Reagan’s ascendancy.

Obama was remarkably direct in declaring that the core ideas of the progressivism advanced by Theodore and Franklin Roosevelt were right, and that the commitments of Reagan-era supply-side economics are flatly wrong. He praised TR for knowing “that the free market has never been a free license to take whatever you can from whomever you can” and for understanding that “the free market only works when there are rules of the road that ensure competition is fair and open and honest.”

A White House that just a few months ago was obsessed with the political center is now not at all wary, as a senior adviser put it, of extolling “a vision that has worked for this country.” But this adviser also noted that Obama implicitly contrasted the flexibility of the Rooseveltian progressivism with the rigidity of the current brand of conservatism. The official pointed to Obama’s strong commitment to education reform, including his critique in Osawatomie of “just throwing money at education.”

“You can embrace it [the progressive tradition] if you can make the point that philosophies and political theories can evolve as facts on the ground change,” the adviser said. The liberalism Obama advocated thus contains a core of moderation that the ideology of the tea party does not. Finally, Obama has realized that the path to the doors of moderate voters passes through a wholesale critique of the immoderation of the right.

via Obama’s New Square Deal – The Washington Post.

First of all, I keep hearing Teddy Roosevelt, who was indeed a Republican,  being praised by conservatives.  But wasn’t he the leader of the ‘Progressive” movement?  Or did he represent a kind of conservatism that preserved free markets by reining in monopolies and trusts that destroy free markets?  Or what?

Second, do you see anything to prevent such a strategy of running against conservatism from working?

Payroll tax cut conundrum

An issue is before Congress that has both Republicans and Democrats tied up in ideological knots.  Republicans oppose deficit spending.  They also are in favor of tax cuts.  Democrats are usually fine with government spending, which they are willing to finance with higher taxes.  So what do they do about extending the payroll tax cuts?

Part of President Obama’s stimulus package was to cut the amount people have to pay into social security, thus adding some dollars to their paychecks.

Now that provision is expiring, and the Obama administration wants to extend it.  But some Republicans are arguing that social security is already being starved and is headed for bankruptcy.  So it isn’t responsible to just take even more out of social security funding.

So now Democrats, including the President, are accusing Republicans of wanting to increase taxes!

See Republicans split on Democratic plan to extend payroll tax cut – The Washington Post.

What would be the statesman-like thing to do, as opposed to the political-rhetoric thing to do?

Occupy foreclosed houses

The Occupy Wall Street folks, who in many cases are being evicted from their downtown campsites, have started a new strategy:  Occupying foreclosed houses.  This includes blocking efforts to evict people, disrupting auctions, fixing up abandoned homes and giving them to homeless people, and just moving into abandoned properties.

See  Occupy protesters take over homes, block evictions – Dec. 6, 2011.

Good-bye to next-day delivery

If you put first class postage on a letter, it used to be delivered the next day.  Lately, you can’t count on that, but sometimes it happens.  But now the U. S. Post Office has announced that it won’t even try, that to save money first class mail will now be delivered in two days at the soonest:

Unprecedented cuts by the cash-strapped U.S. Postal Service will slow first-class delivery next spring and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day.

The estimated $3 billion in reductions, to be announced in broader detail later Monday, are part of a wide-ranging effort by the Postal Service to quickly trim costs and avert bankruptcy. They could slow everything from check payments to Netflix’s DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines delivered by postal carrier to far-flung suburban and rural communities.

That birthday card mailed first-class to Mom also could arrive a day or two late, if people don’t plan ahead.

“It’s a potentially major change, but I don’t think consumers are focused on it and it won’t register until the service goes away,” said Jim Corridore, analyst with S&P Capital IQ, who tracks the shipping industry. “Over time, to the extent the customer service experience gets worse, it will only increase the shift away from mail to alternatives. There’s almost nothing you can’t do online that you can do by mail.”

The cuts would close roughly 250 of the nearly 500 mail processing centers across the country as early as next March. Because the consolidations would typically lengthen the distance mail travels from post office to processing center, the agency would also lower delivery standards for first-class mail that have been in place since 1971. Currently, first-class mail is supposed to be delivered to homes and businesses within the continental U.S. in one to three days; that will be lengthened to two to three days, meaning mailers could no longer expect next-day delivery in surrounding communities. Periodicals could take between two and nine days.

The Postal Service already has announced a 1-cent increase in first-class mail to 45 cents beginning Jan. 22.

About 42 percent of first-class mail is now delivered the following day; another 27 percent arrives in two days, about 31 percent in three days and less than 1 percent in four to five days. Following the change next spring, about 51 percent of all first-class mail is expected to arrive in two days, with most of the remainder delivered in three days.

via Cuts to first-class mail to slow delivery in 2012 – BusinessWeek.

When I was in graduate school, I used to work for a professor who was editing the unpublished manuscripts of Walt Whitman.  That included some of his correspondence.  We were finding that letters from New York City to Whitman’s home in Washington, D.C., were arriving the next day!  In 1862!  During the tumult of the Civil War!

Yes, electronic communication is making snail mail obsolete.  But it is still necessary to transport “things,” including everything we order online.  Private companies like UPS and Fed-Ex are taking up the slack.  Presumably even the post office will still offer overnight delivery with Express Mail, for $30+ or whatever it costs.  One would think that technology could also offer ways to speed up mail delivery and at a lower cost.  At any rate, this is where we are.  So remember to mail your bills and your greeting cards that much earlier.

Does America need to defend everybody?

Frank Sonnek, frequent commenter on this blog, has found some interesting data and raises some interesting questions about our defense budget:

our military spending exceeds ALL global military spending if you don’t count china, which spends about 15% of what we spend.

some analyses relate military spending to GDP, but I am not sure what the relevance of doing that is, as opposed to absolute spending.

let’s say we cut our military spending to be maybe 1/2 of the next top military spenders combined…. would those nations not work to defend peace and commerce? are we unfairly subsidizing the peace rather than having other nations chip in their fair share of spending?

http://www.economist.com/blogs/democracyinamerica/2010/10/military_spending

and now look at this chart:

http://www.globalsecurity.org/military/world/spending.htm

and this one… the pie chart is sort of eye-popping. the usa represents nearly half of ALL global military spending according to the pie chart.

http://www.globalissues.org/article/75/world-military-spending

Summary: I am really challenged to believe that significant cuts in the military will threaten world peace.
It would appear that the United States of America really is the policeman of the world and budgets accordingly.  Is it that we are enabling other countries to spend so little on defending themselves that they can afford free health care and all of those other welfare state benefits?  Does our status as leader of the free world mean that we have to have the capability of defending every other country, as well as our own?   Couldn’t we expect our technological superiority in warfare, expensive as it is, to result at some point in savings?
Granted that national defense is one of the few legitimate functions of the federal government and that it has to remain an important priority in this still-dangerous world, given our massive deficits, should our defense budget be scaled back?