Monday, March 14, 2016

The De Facto Keynesian/Statist Coup d’ Etat as Revealed in the Last Republican Debate

By David Stockman

You can give it this much. The Thursday night GOP debate was civil, and probably the last one, too. Rubio is done, Kasich is on vapors and Senator Ted will never stop the Trump Express.
In short, The Donald didn’t blow it, and therefore he is the presumptive GOP nominee. And probably the 45th President of the United States. For better or worse.
Here follows an essay on the worse, as amplified in the Miami debate. What the latter showed is that the remaining GOP candidates represent the worst of both worlds and that The Donald was mainly right in the thick of it——echoing much of the same beltway bunkum, fibs, and falsehoods as the other three.
That is, to a man they wanted to extend the foreign interventionism and imperial over-reach which is bankrupting us at home and fostering mayhem and jihadist blowback abroad. Indeed, the saber-rattling got so far out of hand as to put you in a mind of a warmongers’ jamboree.

At the same time, they presented themselves as clueless, gutless wonders when it comes to basic fiscal math. Rather than addressing the painful policy choices that will be needed to avert the budgetary trainwreck rapidly hurtling toward American taxpayers, they offered up such rhetorical puffery as to make smoke and mirrors seem credible.
And that wasn’t the half of it. There was nary a mention—-let alone a full-throated attack—-on the real evil elephant in the room.
To wit, if you claim to have a plan for economic revitalization and jobs on the main street, yet don’t bother to lower the boom on the economy wreckers in the Eccles Building, you’re just tilting at windmills.
There has been a de facto Keynesian/statist coup d’ etat that has usurped both the free market and political democracy in America. It has put the essence of our economic and political governance into the dangerous hands of the 12 unelected academic scribblers and power-hungry apparatchiks who comprise the FOMC.
The latter has turned the nation’s printing press into an instrument of main street economic suffocation, even as it gifts Wall Street with unspeakable financial windfalls. So doing, it has destroyed honest price discovery in the money and capital markets and crippled the vital processes of efficient capital generation and allocation.
At length, the money printers at the Fed have caused the C-suites of corporate America to morph into stock trading rooms. There, trillions of capital have been strip-mined from balance sheets in order to fund stock buybacks, LBOs and empire building M&A deals.
Likewise, if you want to know why American productivity is crumbling and net investment is at modern lows, look no further than the foolishness of zero interest rates and QE. If you want to understand why savers are being punished and impoverished, while speculators are waxing in riches, you need merely to examine the Fed’s reprehensible doctrine of “wealth effects”.
Since the turn of the century, the balance sheet of the Fed has expanded from $500 billion to $4.5 trillion or by 9-fold. Yet the 71 million breadwinner jobs—manufacturing, mining, construction, distribution and white collar professionals and managerial——reported last Friday forFebruary was still a million jobs below early 2001 levels.
That is to say, for the better part of this century, the Fed has been conducting a monumental financial fraud. There is no other honest description for $4 trillion of public and GSE debt monetization in 15 years. Yet it has left 100 million households on the main street—-all except the top 15%—–struggling to make ends meet and facing a rapidly diminishing outlook for jobs and economic advance.
Given that damning bill of particulars, what condign punishment did our GOP debaters offer Janet Yellen and her destructive band of Fed money printers?
You might as well call it amnesty. Not one of them even mentioned the joint!
That’s right. Tens of million of savers and retirees have been criminally assaulted by an institution so far down the rabbit hole of monetary central planning that it has not even noticed that the nation is swamped under Peak Debt. Nor is it cognizant of the fact that this $62 trillion of public and private debt is now crushing what remains of capitalist enterprise in America, and that, accordingly, no amount of interest rate cutting can induce more borrowing by households that are already tapped-out.
Yet our GOP champions of restoring capitalist prosperity did not think to pin the donkey’s tail where it belongs. Namely, squarely on the nest of arrogant anti-market interventionists and statist usurpers who occupy the Eccles Building and who slavishly do the bidding of their Wall Street masters for fear of provoking a hissy fit in the casino.
And then it got worse. The only Washington faction more nefarious than the Keynesian money printers in the Eccles Building are the neocon warmongers scattered all around the Imperial City.
Indeed, they have so coopted the narrative and corrupted the intellectual and moral fabric of the nation’s capital that even a once and former son of the anti-interventionist middle border like Governor Kasich spent the evening foaming at the mouth about imaginary demons abroad.
Indeed, his shrill hawkishness was so pointless and ill-informed as to be downright embarrassing. Doesn’t the ex-Congressman know that the sand bars in the South China Sea are a folly of the failing regime in Beijing that have absolutely nothing to do with the safety and security of citizens in Dayton Ohio or any place else in America? Doesn’t he know that the Sprately Islands have been claimed by Chinese regimes since time immemorial, including by Washington’s stalwart cold war ally, Chaing Kai-Shek?
By the same token, Kasich got himself all lathered up about the purported menace of Vladimir Putin, chastising Obama because he “won’t arm the freedom fighters in the Ukraine” and because he “let the Russians trump up some excuse in the business of Russian-speaking people”.
C’mon. That’s warmed-over rightwing  propaganda of the type we wrote-up in “Captive Nations” resolutions during the 1970s for our congressional bosses who had lots of Poles, Ukrainians, Lithuanians and other eastern Europeans in their Midwest districts.
But that was then. Here’s now. There are no “freedom fighters” in Kiev! What’s there is just a bunch of crooks, hardline Ukrainian nationalists, and crypto-Nazis that overthrew a constitutionally elected government during the February 2014 Maiden coup?
The latter was not only funded and instigated by the Washington-based “regime change” crowd at the CIA, State Department and so-called Endowment for Democracy, but the putsch they installed in power while Putin was minding his own business at the Sochi Olympics was crawling with adherents of the “Right Sector”. The latter is a fascist movement that looks to a World War II Nazi collaborator, Stepan Bandera, as its national hero.
That’s right. The prime minister is chosen by US Assistant Secretary of State and card-carrying neocon, Victoria Nuland, and affectionately known as  “our man Yats” was part of a neo-Nazi cabal.  And his story had everything to do with “the business of Russian-speaking people” that Kasich so ignorantly cited.
The fact is, Crimea has been part of Russia since 1783 when Catherine the Great bought it from the Turks for hard cash. Thereafter she made Sevastopol the homeport for the Great Black Sea Fleet that was seen by czars and commissars alike as the fundamental bulwark of Russia’s national security.
It only became part of the Ukraine’s geography by happenstance during the Soviet era of the mid-1950s. In a fit of drunken stupor, it is said, Kruschev transferred it to his Ukrainian compatriots as a reward for their help in the deathly struggle for Stalin’s succession.
Moreover, the fact that Crimea and the nearby industrial heartland of the Donbas are Russian speaking is not something “trumped up” by Putin. In fact, it is soaked in an 85-year history of blood.
During the 1930s, Stalin populated the eastern industrial region (Donbas), which was the coal, steel, machinery and chemical backbone of the Soviet Union, with transplanted Russians for a perverse reason. He knew the Ukrainian Kulaks that he had liquidated in their millions during his catastrophic forced collectivization campaign were seething with hatred for the red regime in Moscow and could not be trusted to remain subjected.
Sure enough. The Ukrainian nationalists of Kiev and the western regions joined the Nazi Wehrmacht on its way to Stalingrad, liquidating Jews, Poles and Reds by the tens of thousands as they marched east in 1943; and after the Red Army finally broke the bloodiest siege in history, the Russian-speakers of the Donbas joined the Red Army on its march back to Germany, liquidating Ukrainian Nazi collaborators in their tens of thousands in retaliation.
Yet this ill-educated Republican pol from Ohio had the temerity to brag about how he helped Rumsfeld crank-up the Pentagon war machine on the eve of the disastrous Iraq invasion—-even as he flaunted his abiding ignorance about the Ukraine’s History of Horribles. The current renewed flare-up of this tragic history was self-evidently and wantonly triggered by Victoria Nuland’s coup; it was not some nefarious aggression by Putin!
The fact is, the whole mess with Putin and eastern Europe can be laid directly on the doorstep of Imperial Washington, which Kasich has been an integral part of since the early 1990s. When the cold war ended, the reason for NATO and our huge conventional forces of power projection and occupation also ended.
NATO should have declared victory and been disbanded. The defense budget should have been drastically reduced to a homeland defense force because there were no industrial state enemies left in the world.
There still aren’t. Russia is a failing petro-state that has a smaller GDP than the New York City metropolitan area, and China is a $30 trillion tottering tower of debt that will ultimately collapse upon itself. Besides, it has only one used aircraft carrier that it brought from the Ukraine!
Why, instead, did NATO double in size to include nationlets like Slovenia, Latvia and 12 other former Warsaw Pact countries, including those on the very border of Russia? In a word, it was because politicians like Kasich needed to keep their piece of the military industrial complex in fiscal food and drink.
To wit, the US already has roughly 9,000 of the most lethal M-1 tanks in the world—–a fleet of destructive firepower that is multiple times greater than that possessed by the rest of the world combined. But there is a tank production line in Lima Ohio that must be kept open. That’s ultimately where the Governor’s hawkish feathers actually originate.
And so for the rest of it. Kasich beat upon Obama for shrinking from his “red line” in Syria, for example. Perhaps the governor was too busy expanding Medicaid to read anything except the War Street Journal to get his information about the situation there.
Had he bothered to inquire, he might have recognized that the so-called “moderate” opposition never really existed; and that it has always been a front for radical Sunni Jihadists who hated the fact that the last remaining Baathist regime in the middle east was a secularist state that had eschewed Sharia law. Indeed, for more than four decades the Assads had protected the minority Alawites, Druse, Christians, Kurds and countless others from the Sunni majority.
At least The Donald got that one right. Being an amateur unacquainted with the self-serving delusions of the beltway War Party, he had the common sense to say you can’t make war on Assad and ISIS at the same time.
By contrast, Governor Kasich and the rest of them had no compunction about plunging deeper into what is a Sunni-Shiite sectarian and tribal war entering its 13th century. To a man, they signed up for 20,000 to 30,000 boots on the ground in Syria/Iraq and another war of invasion and occupation.
Yet when is the last time that such a small force got the job done? More importantly, isn’t it obvious that American boots would simply function as a giant magnet attracting multiples of that many fighters to the Islamic State’s demented cause?
Every time since General Westmoreland advised LBJ that a sharp escalation of American forces would get the job done quickly in Vietnam, Washington has ended up in bloody quicksand, instead. Yet after the sorry history of Vietnam, Afghanistan, Iraq and countless lesser adventures, Governor Kasich had the nerve to say he’d listen to the military chiefs, hit ISIS hard with American forces on the ground, and then rapidly bring them home, leaving the rest of the job to our “Arab allies”.
Puleese! That is fatuous full-frontal flim-flam.
There is obviously an alternative way to end the barbaric scourge of the Islamic State. Let the Shiite Crescent with the airpower of its Russian ally finish them off in a manner that has nothing to do with crusader boots on the ground; and which does not require US Air Force bombs and drones to wreck havoc on Arab villages, schools, hospitals and all the other places that end up as “collateral damage” during the Pentagon’s campaigns.
That’s right. The Iran Revolutionary Guards, the remnants of Assad’s military, and the Hezbollah-Shiite majority of Lebanon are the natural and motivated enemy of ISIS. And they have more than enough resources and military capacity to shoulder the job.
But that wasn’t even mentioned as a possibility Thursday night because these four sunshine patriots were too busy lobbing insults and threats at the Ayatollah Khamenei and the Iranian regime. That is, in propagating still another Big Lie of the War Party——this time that Iran is a terrorist state hell-bent on acquiring nuclear weapons and riding roughshod over its neighbors.
The truth is exactly the opposite. The GOP candidates were just reciting a false demonization of Iran that the War Party in Washington and Tel Aviv have been propagating for 30-years now because its serves their political ends.
And in the case of Washington, yes, the Iranian Republic’s founding myth lies in the historic grievance and anger of the Persian nation at America. After all, they endured a quarter century of the brutal and larcenous rein of the Shah because the CIA overthrew Iran’s democratically elected government in 1953 and installed him on the Peacock throne.
So what? We still vilify King George on the 4th of July. The so-called “hatred of America” lathered about by the War Party neocons isn’t much more substantial.
On matters of actual substance, in fact, even the top sixteen US intelligence agencies which issue the National Intelligence Estimates (NIEs) have acknowledged since 2007 that the Iranians never had a significant nuclear weapons program. That truth has now been validated by the International Atomic Energy Agency’s recent investigation in conjunction with the nuclear arms accord.
Plain and simple, there never was a nuclear weaponization program in Iran that proceeded beyond even bench scale investigations. The fatwa’s against nuclear and chemical/biological weapons issued by the ayatollahs have been for real.
Kasich is supposed to be the experienced, temperate alternative to the bombastic Donald Trump. Yet in the face of Rubio’s comical recitation of an anti-Castro meme from a 60-year old time warp, the Governor could not even man-up the nerve to say that the Cuban embargo should have been lifted ages ago; and that he would now keep the new Embassy open and would encourage US companies to do business on the island.
This guy spent the whole evening talking about Obama’s weakness and the “need to negotiate tough deals”. Yet he didn’t even have enough gumption to stand-up to the octogenarian Cuban refugees who rule the Republican roost in Dade County.
Nor did he venture to contradict Senator Rubio’s reckless promise to tear-up the Iranian nuclear accord on day one in office. Yet ending the vilification of the regime in Tehran and bringing the 83 million strong Iranian nation back into world commerce and the community if nations are the only hope for stopping the spread of jihadi terrorism in the middle east and beyond.
Indeed, Kasich added insult to injury by demagogueing about how “we turn our back on Netanyahu when he comes to Congress to talk about his concerns of the Iranian deal”.
Really? Who is he kidding? Netanyahu came to Congress in order to sabotage the White House and bury the best hope for peace in decades because it was inconvenient to the continued fear-based rule of Bibi’s toxic coalition of right wing extremists and religious fanatics in Tel Aviv.
If you want an unabashed warmonger and neocon toady in the White House, why bother with all the puffed-up claims about Kasich’s decades of “experience” in the Imperial City? Ted Cruz is the real thing.
At least, the Senator from Texas does not pretend that he is some kind of born-again “moderate” of the George H. W. Bush ilk. That is, an advocate of the wrong-headed “pragmatism” that led to the folly of the first gulf war, the American occupation of the so-called “sacred” soil of Arabia, the consequent rise of al-Qaeda and all that followed thereafter.
And that get’s us to the fiscal follies. All four of the candidates promised to “restore” and “rebuild” the US military, which would mean hundreds of billions of additional defense spending. And for what plausible reason?
Containing and defeating ISIS is the job of the Shiite Crescent. By contrast, arming and aiding the butcher now ruling Egypt, as Kasich advocated, has precisely nothing to do with America’s freedom and security.
Nor does regime change and meddling anywhere else in the middle east. Hasn’t Washington created enough failed states—-Iraq, Syria, Libya, Afghanistan, Yemen, Somalia etc.—–already?
At least, the Donald got it right on the matter of imperial overreach. He was absolutely correct in saying that rather than a military build-up, we need a “build-down” of our outmoded presence in Europe/NATO, the Korean peninsular, Japan and 150 other locations around the planet.
Still, to a man the GOP debaters said they would not touch Social Security benefits or raise taxes, even as they urged pumping more hundreds of billions we don’t have into the Pentagon’s swamp of waste.
Yes, Senator Rubio explained the Washington GOP’s current Social Security ruse and a cop-out. That is, workers his age or younger should expect benefits to be reduced several decades down the road, but that no one will touch his currently retired mother’s benefits when Marco is in the White House.
Ok, don’t cut social security benefits for anyone now retired or eligible for benefits during the next ten years. That amounts to a free pass for $10 trillion of spending, including for the top ten million or so of beneficiaries who have more than adequate alternative sources of income and investments, and didn’t fully earn their combined social security/medicare entitlements, anyway.
The point is the affluent duffers who live on Florida golf courses and similar snazzy places did not come close to paying enough payroll taxes over their lifetime to fund the $50,000 per year of social security and medicare benefits which they and their spouses now collect. They should face a stiff means test. And it can’t wait another two decades. Social security will be bankrupt long before that—–and as early as 2025 if you use realistic economic  assumptions and wage growth projections.
That’s right. The combination of unreformed social security, medicare and the national security apparatus will cost a minimum of $35 trillion over the next decade. At the same time, the certainty that the business cycle has not been repealed and that the next recession will bring the return of trillion dollar annual deficits has an unmistakable implication. Namely, that the national debt is heading for a minimum of $30-35 trillion by the middle of the next decade or a Greek-style 140% of GDP.
In that context, there is only one way to describe the grossly irresponsible budgetary math employed by the four candidates on the Miami stage Thursday evening.
Folly……everlasting Fiscal Folly.

1 comment:

  1. Hey Dave...
    Me thinks part of it is just that we're getting old.
    That is part of it.
    Thank you for sharing still.
    You are a good man.