Nemo me impune lacessit

No one provokes me with impunity


No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.

Article 1, Section 9, Constitution of the United States

If this is the law of the land...why in a republic (little r) and as republicans, do we allow mere POLITICIANS to the right to use a "title of office" for the rest of their lives as if it were de facto a patent of nobility. Because, as republicans, this should NOT be the case...just saying...

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Thursday, November 12, 2009

Stimulus Package Is Killing Jobs

Finally, there is genuine proof that massive government spending (the "stimulus package") is actually sucking funds from the private sector and stifling job creation. Money that would usually be spent by small businesses in job creation through the use of loans is going into government bonds to pay for the stimulus. Banks have in real terms, ceased loaning money to medium and small businesses and are instead purchasing Treasury Bonds.

Historically, small businesses have been the creators of most jobs, but unable to gain those loans that have in the past been used to create jobs, or new businesses, job creation has fallen dramatically. Thus, we have the highest unemployment rate in more than 26 years. Not since Mr. Carter's recession of the late 1970's and early 1980's has unemployment been so high, nor is it likely to end in the near term.

Small businesses-especially new small businesses-account for essentially all net job growth. However, business creation and expansion requires capital, and more and more of the nation's capital is being commandeered by the U.S. Treasury in the name of "stimulus".

The FY2009 Federal deficit was $1.4 trillion. This was almost a trillion dollars higher than FY2008. The capital to buy this additional debt had to come from somewhere, and much of it was squeezed out of business. Here are some indicators, both statistical and anecdotal:

• During FY2009, "Gross Domestic Private Investment" fell by 25% (almost $500 billion/year). It would have needed to grow by 5% to keep the unemployment rate from rising from an already-too-high 6.2%.

• Many venture capital firms are informing entrepreneurs that there is no money available for new startups. The firms say that they must husband their capital to meet the needs of their existing portfolio companies.

• The 500 largest U.S. non-financial companies now hold more than $1 trillion in Treasury bills, amounting to more than 10% of their total assets. Corporate cash flows are rising, but the money is being invested in government bonds, rather than growth.

• Banks have cut credit card credit lines by 25%, or $1.25 trillion. Because small businesses are often financed with personal credit cards, this has a direct impact on small business survival and growth.
So unemployment rates above 12% are not just likely, but will occur for much longer than had been forecast. Real jobless rates above 14% are more than just possible.
The "headline" (U-3) unemployment rate of 10.2% vastly understates the magnitude of the jobs crisis in America. John Williams' "Shadow Government Statistics" unemployment number for October is 22.1%. Williams estimates that we would have to create 22.6 million new jobs in order to get to "true" full employment. At $313,000 each, the private sector would have to invest an incremental $7.1 trillion to accomplish this.
Thus the Stimulus Package hasn't just been an object failure, it is causing much higher unemployment now. When you consider adding in a $1.3 trillion dollar Health Care seizure as well as a $1.5 trillion dollar "Cap & Trade" program, the economy will probably take at least a decade to recover, if then. At this point radically reducing Federal spending and cutting taxes, as Mr. Reagan did in the early 1980's is the only real solution to this depression. FDR's programs didn't end the Great Depression, World War 2 did, but at a cost to the world that is unimaginable today.

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