His appearance was so positive that they end up telling him that he should come on the show as a special guest (as they have from time to time) for the full 2 hours of the show. Paul makes a joke in response. Check it out below.

by Peter Schiff, president of Euro Pacific Capital and author of Crash Proof 2.0: How to Profit from the Economic Collapse

The GDP numbers out yesterday, which showed economic growth at 3.5% in the third quarter, brought a deafening chorus from public and private economists who all agreed that the recession is officially over. With such a strong report, they are happy to tell us that not only has the Fat Lady finished her aria, but she has left the building and is sipping champagne in the bath. As usual, it falls on me to rain on the parade.

Even the giddiest commentators admit that the upside GDP surprise resulted almost entirely from government interventions. But, by pushing up public and private debt, expanding government, deepening trade deficits, and pushing down savings rates, these interventions have succeeded only in putting our economy back on an unsustainable path of borrowing and spending. Accordingly, they have prevented the rebalancing necessary for long-term health. Could there be a simpler illustration of trading long-term pain for short-term gain?

Rather than asking these pre-K economists to make such a three dimensional leap, it may be easier just to give them a brief history lesson.

During the decade that corresponds to the Great Depression, annual GNP expanded for six years and contracted for four. After nose-diving in the early years of the decade, GNP turned positive in 1934 and then logged three more years of solid growth (the four year average annual growth rate was 8.5%). But does anyone really believe the Great Depression ended in 1934, when the economy first stopped contracting? Unemployment reached 19% in 1938, nearly the peak of the entire Depression, almost a full decade after the stock market crashed! Why will we be so much luckier this time around?

The unpopular truth is that rather than curing the economy, government stimulus has made it sicker. The Bush Administration and the Greenspan Fed pursued this policy recipe in the 2002-2003 recession. The result was four years of phony growth, greater global imbalances, and the development of unsupportable asset bubbles. Clearly we have learned nothing from those mistakes.

Third quarter ‘growth’ was largely driven by a 23% increase in residential construction (the largest quarterly increase since 1986) and a 3.1% increase in consumer spending, which included a 22% jump in durable goods purchases – mostly automobiles – and 2.3% gain in government spending. Since the increase in consumption outpaced the increase in production, the trade deficit expanded, reversing the positive trend for most of 2008 and 2009. Because the increase in spending outpaced the increase in incomes, the savings rate plunged from 4.9% in the prior quarter to 3.3%.

The sizzling numbers for housing and autos resulted from heady cocktail of policy stimulants: near-zero interest rates, government-guaranteed mortgages, Federal Reserve purchases of mortgaged-backed securities, tax credits for homebuyers, bailouts for auto finance companies and ‘cash for clunkers’ for car buyers.

But the last thing our economy needs is for scarce resources to be wasted through uneconomical incentives.

If the government were not ’stimulating the economy,’ higher interest rates and falling home prices would have hamstrung residential construction. That would have been the right move. Instead, based on the false economic signals of the ’stimulus,’ we continue to build houses for which no legitimate demand exists.

The same is true for cars. Because of stimulus money, Americans are buying cars that they otherwise would not have. In a free market, the money would have been used for a more constructive purpose. Perhaps it would have been saved, used to pay off existing debt, or spent on a less expensive mode of transport, like a used motorcycle.

The economy ran into a wall in 2008 because consumers bought houses and cars that they really could not afford. That is why the institutions that provided the loans, such as banks, Fannie & Freddie, and GMAC, went bankrupt. It should be obvious that the solution to our economic problems will not be found by redoubling these efforts. This is akin to a drunk having a few more drinks in order to get sober!

A recent article in the Wall Street Journal detailed the myriad ways in which Senators and Congressman are now compelling General Motors to make business decisions that are solely driven by the legislators’ own political considerations, not the best interest of the taxpayers who now own the company. Such a dynamic is now underway in nearly every facet of our economy. An efficient allocation of resources – the only path to economic growth – is only possible when market forces, not Beltway bureaucrats, call the shots.

In the end, this stimulus, just like prior doses, will only worsen the condition it is meant to cure. When it wears off, the resulting recession will be even bigger than the one that everyone assumes has just ended. Until the impulse to fight recessions with government stimulus is quashed, genuine economic growth will never return. A string of ever-worsening recessions will eventually lead to what will be the next Great (Inflationary) Depression. But for now, enjoy the bubbly.

For a more in-depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar, read Peter Schiff’s 2008 bestseller “The Little Book of Bull Moves in Bear Markets” and his newest release “Crash Proof 2.0: How to Profit from the Economic Collapse.” Click here to learn more.

More importantly, don’t let the great deals pass you by. Get an inside view of Peter’s playbook with his new Special Report, “Peter Schiff’s Five Favorite Investment Choices for the Next Five Years.” Click here to dowload the report for free. You can find more free services for global investors, and learn about the Euro Pacific advantage, at www.europac.net.

In this interview they discuss the U.S. foreign policy in Afghanistan, Ron Paul’s new book “End the Fed“, and how the Fed can be audited and eventually abolished.

Watch it in two parts below.

(Thanks to great Minnesota Chris for the videos, check out his blog)

Originally published October 20, 2009 at http://towneforcongress.com/economy/abolish-the-federal-department-of-education-1

Last night with the Liberty Bell Center of Constitutional Studies, I was part of a panel answering questions on public education with the Concerned Citizens of Bethlehem Area School District. The BASD has been plagued with financial troubles stemming from OTC derivatives purchases, and previously I gave an educational presentation to this group on financial derivatives.

After the lecture from LBCCS founder Paul Fiske who related how our founding fathers viewed education, Ryan Burgett, chairman of LBCCS and I (as a member of LBCCS) took questions and there was one question I was unable to answer without a projector, which was the breakdown of spending by the federal Department of Education, which is below or can be viewed online here. I also gave a short synopsis of the history and issues I have with this Department.

For the first 177 years in American history, there was no federal Department of Education, which was reserved to the states and localities to handle as they saw fit. This was also in agreement with the Constitution of the United States, which does not provide any justification whatsoever for federal power over education; in fact, the 9th and 10th Amendments make such action both unconstitutional and illegal.

This changed in 1953 when Republican President Dwight Eisenhower created the Department of Health, Education, and Welfare. Prior attempts by Presidents Harding and Roosevelt had failed. This department has another black mark as it is the only one created solely by presidential authority without the permission of Congress.

The powers of this department continued to grow until Democrat President Jimmy Carter, envisioning a “compassionate” federal government, spun off the Department of Education (known as ‘ED’) in 1979. For close to the next 20 years, one of the major distinctions between the Republican and Democratic parties was concerned this department. In the 1980s, President Ronald Reagan was in favor of abolishing the department, he was not able to do so. As recently as 1996, the Republican Platform read:

“Because we trust our fellow Americans, rather than centralized government, we believe the people, acting through their State and local elected officials, should have control over programs like education and welfare - thereby pushing power away from official Washington and returning it to the people in their communities and states… We support elimination of the Departments of Commerce, Housing and Urban Development, Education, and Energy, and the elimination, defunding or privatization of agencies which are obsolete, redundant, of limited value, or too regional in focus.”

Under Democrat President Bill Clinton, ED continued growing from spending of $32 billion in 1992 to $38 billion in 2000. However, ED received its fastest growth under Republican President George Bush II. From 2000 until 2008, Bush II more than doubled the budget, from $38 billion to a maximum of $100 billion spent in 2006 with spending plans like “No Child Left Behind.”

ED lowlights in 2008 included:

• $68.5 billion spent by the Department of Education in total
• $24 billion spent on post-secondary education, including many loans to college students
• $38 billion spent on elementary and secondary education
• $5.6 billion spent in what can best be described as ‘R&B’ – research and bureaucracy

Now, spending lots of money on education may seem like a good thing to the uninformed, but there have been no tanglible results over the past couple decades, if anything the exact opposite. Why is this so? Well, besides the wasteful spending on bureaucracy, a few points:

1. Similar to health care best being dealt between doctors and patients, education is best handled on the local level between parents and teachers. Both health care and the education of children are very important. Remember that when a Washington bureaucrat’s authority over the spending of funds is required, it is the child who suffers.

2. Federal mandates on education has the effect of stifling local diversity and choking off competition. What we want is a healthy competition of “50 laboratories” from state-to-state and between local areas, not a universal “one-size-fits-all” education. The more self-rule and autonomy by local communities provides local diversity and overall greater satisfaction for individual families.

3. The redistribution and control of federal funds (and certainly also on the state level) to localities makes local areas subservient to bureaucrats, even though, in most cases these are the exact same funds the taxpayer paid in to the federal and state governments. More local autonomy over funds increases both the efficiency and self-ownership over the spending of these funds.

4. It is also far easier for a parent to hold a local school board official accountable if this official is entrusted with all of the necessary responsibilities. Local communities that wanted to spend more on education could do still so, through either local taxation or – if one thinks outside the box for just a moment – fundraisers, fairs, and PTAs.

5. While Perkins Loans and Pell Grants for the purpose of college education seem like the greatest invention since sliced bread, their overall effect is to put bureaucrats in charge of the decisions in who receives which loans. Ever hear a parent complain about the cost of their kid’s college tuition? By flooding the market with credit, these government programs lead to colleges to both charge more and also become less efficient on fund allocation. [Note: The money-printing of the FED (inflation) is another root cause of rising tuition costs, to learn more read here.]

The Department of Education is one of many federal departments that, if they were to be abolished and disappeared off the face of the earth tomorrow, almost no one would notice. The bureaucrats all would have to seek healthy new jobs providing goods or services in the private economy. The grant and loan programs could all be halted and existing accounts closed out.

A final point in closing: one should keep in mind that ED’s budget of $68 billion dollars is sufficient to pay for the entire core federal government. We could pay for all of these federal government departments: the US House, US Senate, the White House’s staff, the Supreme Court, FBI, and the federal court system. Hmmm…   just another reason why we don’t need a federal income tax.

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Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties. Jake also writes at www.LibertyMaven.com, www.NolanChart.comand www.CampaignForLiberty.com. A novel campaign website where you can comment on articles and start discussions is available at TowneForCongress.com.  [Reach the Author Here!]

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We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

Tu ne cede malis sed contra audentior ito. Do not give in to evil but proceed ever more boldly against it.

As usual Dr. Paul defends the free market even when asked rather convoluted questions about “how much” the government should support the market. I found the interview a bit odd. In that both the host and Paul were trying to find some kind of middle ground between a government managed economy and a free market position. The common point implied that the government shouldn’t be bailing out these big Wall Street firms like Goldman Sachs yet they continue to use tax payer money to do so.

Check out the video below. NOTE: The audio/video sync appears to be off as is custom on some videos processed by Youtube.

by Peter Schiff, president of Euro Pacific Capital and author of Crash Proof 2.0: How to Profit from the Economic Collapse

While all the talk at present is about economic corners turned and markets charging ahead, no one is paying much notice to an American economy deteriorating before our eyes. These myopic commentators seem to be simply moving past the now almost-universally held conclusion that before the crash of 2008, our economy was on an unsustainable course. If these imbalances had been corrected, then perhaps I too would be joining in the euphoria. But evidence abounds that we have not veered at all from that dangerous path.

Last week, the Bureau of Economic Analysis reported that consumer spending as a percentage of U.S. GDP has risen to 71%, a post-World War II record. This level is notably higher than other wealthy industrialized countries, and vastly higher than the levels sustained by China and other emerging economies. At the same time, our industrial output is contracting, our trade deficit is expanding once again (after contracting earlier in the year), and our savings rate is plummeting (after an early year surge).

The data confirms that government stimuli are worsening the structural imbalances underlying our economy. The recent ‘rebound’ in GDP is not resulting from increased economic output, but merely from the fact that we are borrowing more than ever. That is precisely how we got ourselves into this mess. An economy cannot grow indefinitely by borrowing more than it produces. Not only is such a course untenable, but the added debt ensures a deeper recession when the bills come due.

This soon-to-be-called depression will not end until the pendulum of consumer spending habits swings violently in the other direction. This will be a jarring change, but it is the splash of cold water that we need to return our economy to viability. I believe that consumer spending as a share of GDP will need to temporarily contract to roughly 50% of GDP, before eventually moving toward its historic mean of 65%. Such a move would indicate a restoration of our personal savings, a decline in borrowing and trade deficits, and an increased industrial output. That would be a real recovery.

In the meantime, the higher the spending percentage climbs, the more painful the ultimate decline becomes.

Consumers and governments must spend less so their savings can be made available to businesses for capital investments. Businesses, in turn, will produce more products and employ more people – increasing domestic prosperity. However, rather than allowing a painful cure to return our economy to health, the government prefers to numb the voting public with a toxic saline-drip of deficit spending and cheap money.

The primary factor that enables our government to peddle economic snake oil is the dollar’s unique role as the world’s reserve currency, and our creditors’ willingness to preserve its status. By buying up dollars and loaning them back to us through Treasury debt, productive countries give American politicians carte blanche to play Santa Claus.

Ironically, as foreign governments finance our spending spree, they are simultaneously scolding us for our low savings rate. At the recent G20 meeting in Pittsburgh, all agreed – including President Obama – that resolving the global economic imbalances was a top priority. By definition, this would require Americans to spend less and save more. However, with foreign central banks continuing to buy our debt, the President has shown no political will to encourage this change.

Normally, if politicians run up the government deficit, voters soon suffer the unpleasant consequences of higher inflation and rising interest rates. Yet, if foreign central banks keep supplying the funds, these consequences are indefinitely postponed. As a result, there is no need for American politicians to ever make the tough choices required to solve our problems.

Instead, the burden may fall squarely on the citizens of those governments doing all the lending. The conflict is that within the creditor states, a vocal minority actually benefits from this subsidy (owners of Chinese exporters, for example) while the overwhelming majority fails to make the connection. Thus, foreign politicians have the same incentives as ours to keep playing the game.

The bottom line is that foreign governments can lecture us all they want about the need for prudence but if they keep lending, we’ll keep spending. Any parent knows that if you give your child a curfew yet never impose any penalties when it’s violated, it will not be respected. My gut feeling is that foreign governments are tiring of our conduct and on the verge of finally imposing some discipline. That means the dollar’s days as the world’s reserve currency are numbered, and the days of American austerity are about to begin.

For a more in-depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar, read Peter Schiff’s 2008 bestseller “The Little Book of Bull Moves in Bear Markets” and his newest release “Crash Proof 2.0: How to Profit from the Economic Collapse.” Click here to learn more.

More importantly, don’t let the great deals pass you by. Get an inside view of Peter’s playbook with his new Special Report, “Peter Schiff’s Five Favorite Investment Choices for the Next Five Years.” Click here to dowload the report for free. You can find more free services for global investors, and learn about the Euro Pacific advantage, at www.europac.net.

Earlier this year, I predicted that the 2009 rally in U.S. stocks could bring the Dow Jones Index as high as 10,000. It looks like that level has been achieved. If, at this point, the index reverses course, I would have made a fairly good prediction.

However, it is important to get beyond the charts and look at the fundamentals. The furious six-month rally in the stock market has certainly not been mirrored by the economy as a whole. Instead, the country remains in recession, with unemployment continuing to rise and corporate earnings continuing to decline. This has pushed up trading multiples to the point that where value is now a distant memory. How could the stock markets have recovered so strongly in the face of economic recession?

First, this rally is mostly about the financial sector. The U.S. government decided that, no matter what the cost to the citizen, the major banks had to be saved. Bank losses were transferred to public books and unprecedented funds were showered on the banks to keep them solvent. Bank borrowing costs were reduced to near zero and, for the first time, interest was paid on reserves held at the Fed. Many of these banks were designated as ‘too big to fail,’ so they became a nearly risk-free bet.

The result: bank profits skyrocketed. Just today, JP Morgan reported that profits surged sevenfold from the second to the third quarter of this year! In fact, over the past six months, stock performance of financial sector firms was 66% better than the S&P 500 as a whole.

Second, the rally is mostly inevitable bounce. In the third quarter of 2008, in the face of collapsing stock and commodity markets, investors piled into cash instruments such as Treasuries. However, once the crisis appeared to pass, the same investors fled these zero-return ‘investments’ back into corporate debt, and then equities. Such massive fund flows have provided the tide upon which the current rally is based.

Third, despite the fact that the economy is in recession and corporate earnings are falling, government officials have been furiously attempting to boost market sentiment. They have been strongly supported by Wall Street cheerleaders in the media, with statements such as “earnings came in ahead of estimates” and “we see recovery in the next quarter.”

Finally, even shell-shocked private investors have been drawn into equities, seemingly desperate to make good their losses of the past year. Normally, such a surge in private investment would presage a fall in markets. All the while, despite extensive new government hiring, U.S. unemployment has risen to an official level of 9.8 percent, and retail sales have fallen. In fact, the real rate of unemployment has reached almost 20 percent!

Meanwhile, the U. S. dollar continues to plunge, taking a large bite out of the true gains made by the surging Dow. U.S. interest rates are likely to rise, making bond and stock markets increasingly dangerous. In other words, to the extent that the rally persists, it appears to be growing longer in the tooth. But can as much be said for similar rallies happening around the world?

The worrying economic and financial conditions in America are in stark contrast to those of countries such as Brazil, Russia, India and China (BRIC), and those such as Canada, Australia and New Zealand (CAN), who supply the BRIC countries with much of their raw materials. Some American investors have indeed increased their exposure to BRIC-CAN stock markets. However, in view of the real health and strength of these economies relative to those of the United States, it is surprising how under-weighted they remain in most Americans’ portfolios.

It’s best to rebalance before this ‘rally’ is declared dead. Though troubling for their irrationality, situations like these can be very profitable for the fundamental-focused investor.

For a more in-depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar, read Peter Schiff’s 2008 bestseller “The Little Book of Bull Moves in Bear Markets” and his newest release “Crash Proof 2.0: How to Profit from the Economic Collapse.” Click here to learn more.

More importantly, don’t let the great deals pass you by. Get an inside view of Peter’s playbook with his new Special Report, “Peter Schiff’s Five Favorite Investment Choices for the Next Five Years.” Click here to dowload the report for free. You can find more free services for global investors, and learn about the Euro Pacific advantage, at www.europac.net.

Originally published on September 29, 2009 at http://towneforcongress.com/economy/on-the-dollar-congressman-charlie-dent-answers-a-question-from-jake-towne-1

At the last town hall Congressman Charlie Dent gave on September 21, I attended so that I could hear what he and our fellow citizens had to say. I also delivered a paper copy of my plan for the Open Office. The Congressman gave me a chance to ask a question, which I commend him for. I did not have a chance to start my camera to record my question, but it was done in a very polite manner, and went something like:

“Congressman Dent, since 1913 the Federal Reserve has destroyed well over 95% of the purchasing power of the dollar. I am very concerned about the future of our currency, the dollar. You just talked about saving money by not voting for the health care bill, but a couple months ago you voted for HR 3081, which awarded close to $50 billion in overseas foreign military and economic aid. HR 3081 gave over $2 billion in military aid to Israel, $1 billion in military aid to Egypt, $150 million in military aid to Jordan, $60 million in military aid to Colombia among many other nations. And just last week youapproved to spend $4.125 billion on government-sponsored car technology research in HR 3246. My question to you is this: what are you doing right now to prevent a collapse in the dollar?”

Congressman Dent gave his reply which was videotaped here:

“The question is what am I doing right now. Specifically is not spend money unnecessarily. The money I am talking about is the $787 billion stimulus plan, it cost over a trillion dollars, which I voted against. It overspends. It borrows too much. It spends too much. It delivers far too little. Now, that is just one very specific example of what we can do to help us.

“I am very concerned about inflationary pressures at some point. The deficits that are being run up right now in this administration I think are unsustainable. I think are unsustainable. We are talking deficits in excess of 12%, 13% of gross national product. Now it’s true this country has run up deficits throughout much of its modern history. In the depression we did. Second world war we certainly did. And since the second world war we have generally – we have often run deficits. The worst deficit we have had this year was in the early ’80s in 1981 or 1982 of a deficit of about 6% of gross national product during the Reagan years and a Democratic Congress. Even during the war our deficits were 20% of gross national product but today, I think largely because of this stimulus in particular. I think that we are seeing, again, an unsustainable debt level.

“Here I have now [holds up copy of HR 3200, the old Obama health care bill]. This is one reason why I oppose this bill because what it does is further drive our deficits well into the future. And its not just the first 10 years. Its the second 10 years. The federal government does a lousy job of projecting long-term entitlement costs. We don’t do a good job of it. We usually say, OK, Medicare 1965 is going to cost whatever was projected. It has cost far greater than that. We just don’t do a good job of it. I believe that the costs here in this legislation [Obamacare bill] are significantly understated.

“He talked about the, uh, aid bill. We have treaty obligations with Israel and Egypt and Jordan and a bunch of our aid actually goes to countries like Pakistan and Israel Egypt. Part of it is going into the help for the search for Osama Bin Laden. That’s a big part of what we are doing in Pakistan. So we do have some obligations that we are going to have to deal with that are non-military. But it does support our efforts globally.”

The conversation moved on, and I received my answer. He is doing very little to preserve the integrity of our currency. I must mention before criticizing him, that Congressman Dent could have mentioned he has co-signed HR 1207 to audit the Federal Reserve (whose monetary policy has NEVER been audited), but this only occurred after a 3-month letter and phone campaign by many others, myself and many other patriots. Two days after my first open letter, he co-signed the bill. Now, who says open letters don’t work?

Now, let’s breakdown the statement:

“Specifically is not spend money unnecessarily. The money I am talking about is the $787 billion stimulus plan, it cost over a trillion dollars, which I voted against.”

Now, this infers that the $49 billion for foreign military and economic aid and $4.125 billion for car industry research are necessary. One must wonder why $3 billion was not sufficient for the car industry, or if research is so productive, why $6 billion was not awarded from the taxpayer’s pocket. The obvious answer is that bureaucrats have no idea how to allocate capital, and this is why this problem should be left to the free market, which naturally regulates investment and capital flows.

These are just two of the recent examples of what he has done within the past several months, and voting against the Obama stimulus plan came at the beginning of 2009. However, if one remembers back to late 2008, Congressman Dent voted FOR the Banker Bailout, which awarded a similar chunk of the people’s money to the banking industry and special interests. Dent’s logic is quite flawed as he does support stimulus plans. Excessive spending has caused our problems, and in effect Dent is recommending more spending to solve them. Again, my point about how much bureaucrats should allocate to different economic sectors holds true.  Congress really has no idea, and it is made far worse since government operates either by plundering taxes from the current generation or creating debt – a tax on the next generation which, quite conveniently, does not have a vote in this matter.

Now, if Congressman Dent earnestly believed that his stimulus plan was better, he should have been hard at work writing one and offering it to the public to read – which was never done, and the Republican stimulus plan was very similar to the Democratic one, with a $600 billion price tag and a higher allocation to infrastructure. Instead, he could be found watching the Super Bowl with the Obamas. Newsweek even reported: “Charlie Dent wanted to vote for Barack Obama’s stimulus package. Obama really wanted Dent to vote for it.”

“I am very concerned about inflationary pressures at some point. The deficits that are being run up right now in this administration I think are unsustainable.”

This is a very misleading statement as the Congressman infers that he has no responsibility on this matter. “Inflationary pressures” are created by the excessive money-printing and credit expansion of the Federal Reserve, as I outlined in this plank. It does not take a genius to realize that creating more dollars leads to the inflation of prices, and this power was delegated to the FED by Congress. Now, who is responsible for allowing the FED to create these dollars and credit? Congressman Dent is responsible!

Now, of course our deficit is unsustainable. However, one must also look at the past Bush administration. Who was to be found voting again, again, and again over the past 5 years for more federal spending?   It was none other than Congressman Charlie Dent. Plus, if Dent truly believes the deficit is unsustainable, why would he award $49 billion in foreign military and economic aid?  Why give away $4.125 billion for car research?

“This is one reason why I oppose [the Obama health care] bill because what it does is further drive our deficits well into the future… The federal government does a lousy job of projecting long-term entitlement costs.”

As I outlined to Congressman Dent in “Health Care: Another Open Letter to Congressman Dent from Jake Towne“, what are the costs of HIS proposed health care plan? And even if they were listed, if the government does a lousy job in projecting costs, why should we trust the figures? Dent should seek practical solutions as I outlined in my health care plank instead of favoring more and more government interference in our health care, while he utilizes the elite congressional health care plan for his family. (I have made a campaign promise to not enlist in this plan, nor the lucrative congressional pension plan, which Dent will qualify for, that will award him up to 80% of his pay for the rest of his life.)

“We have treaty obligations with Israel and Egypt and Jordan and a bunch of our aid actually goes to countries like Pakistan and Israel Egypt.”

This is a lie. The below list only encompasses a portion of the bill, and while there is likely bureaucratic horse dealing behind each line item, there is simply no authority to disburse public funds to foreigners without the approval of Congress. In the house floor speeches, there is no reference to any existing treaties, although much of the debate time is specifically spent on supporting the $2 billion in military aid to Israel. And even if there were “obligations,” Dent could have joined the 106 other members of Congress who voted against the bill. In fact, HR 3081 only cites the Foreign Assistance Act of 1961 for its authority and precedence. In defense of the Congressman, I have requested a list of HR 3081’s treaty obligations from his office for each of the below line items, and will gladly publish an apology if I am proven incorrect – although I still maintain that Dent should still not have voted to give away $49 billion.

• $2.2 Billion to finance the Israeli military

• $1.04 Billion to finance the Egyptian military

• $150 Million to finance the Jordan military (a Middle Eastern nation-state)

• $60 Million to finance the Colombian military

• $250 Million in “economic support” to Egypt of which at least $25 Million is to be spent on “democracy, human rights and governance programs in Egypt” and $25 Million on “education programs”.

• $11 Million to support “scholarships, administrative support of the scholarship program, bicommunal projects, and measures aimed at reunification of the island and designed to reduce tensions and promote peace and cooperation between the two communities” on the island and nation of Cyprus

• $363 Million for “economic support” of the Middle Eastern nation of Jordan

• $400.4 Million for “economic support” of the West Bank and Gaza

• $200.7 Million for “alternative development/institution building programs in Colombia”

• $18 Million “to the International Fund for Ireland”

• $722 Million in aid to either “Eastern Europe and the Baltic States” or “Independent States of the Former Soviet Union”

• $102 Million to support peacekeeping missions in Somalia

• $300 Million in military arms deals and economic aid with Haiti

• $1 Million to finance Guatemala’s Air Force, Navy and Army Corps of Engineers

• $3 Million to finance “International Narcotics Control and Law Enforcement” in Guatemala

• $83 Million to finance “International Narcotics Control and Law Enforcement,” and “Foreign Military Financing Program” in Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama

• $7.3 Million for “economic support” of Tibet (part of China)

• Undisclosed amount for “expanded international military education and training” in Angola, Cameroon, Central African Republic, Chad, Cote D’Ivoire, Guinea and Zimbabwe in Africa.

• Undisclosed amount for economic aid to Sudan

• Up to $20 Million to finance the Indonesian military

• $24 Million in economic aid to Burma and Thailand, with up to an additional $12 Million more for victims of Cyclone Nargis

• $7.8 Million to support International Broadcasting Operations’ into North Korea

• Up to $30 Million to finance the Philippine military

• $175 Million in “Assistance for Women and Girls” of Afghanistan

• $175 Million for the “National Solidarity Program” in Afghanistan

• $25 Million (each) for “conservation programs” in the Amazon River Basin and Congo Basin

• Up to $1 Million for demining civilian areas in Sri Lanka

• $120 Million for “the promotion of democracy globally”

• $1.7 Billion for “necessary expenses” to “meet annual obligations of membership in international multilateral organizations”

• An umbrella of $2.1 Billion for “international peacekeeping activities”

• $100 Million for the “National Endowment for Democracy” of which not less than $250,000 must be spent in Tibet

• $125 Million to for the “necessary expenses to establish, support, maintain, mobilize, and deploy a civilian response corps”

• $877 Million for “preserving, maintaining, repairing, and planning” of foreign buildings owned or leased by the US government, such as embassies

• $21 Million to the American Institute of Taiwan

• $19 Million to the Asia Foundation

• $734 Million for “international broadcasting activities” to Cuba and the Middle East

• $49 Million for the United States Institute of Peace

• $2.4 Billion for “global health and child survival”

• $5.4 Billion for “for the prevention, treatment, and control of, and research on, HIV/AIDS”

• $830 Million for “international disaster assistance”

• $2.5 Billion for “development assistance”

• Up to $236 Million to combat drug trafficking in Mexico

“Part of [the aid] is going into the help for the search for Osama Bin Laden. That’s a big part of what we are doing in Pakistan.”

Congressman Dent is confused here with yet another foreign aid act he voted for that I did not bring up in my question. This bill was for $10.6 billion, where he voted to award Afghanistan $6 billion in nation-building and the remainder to fund their military. If the intent of the bill is simply to catch Bin Laden, I must remark that the funds for HR 1886, the Pakistan Enduring Assistance and Cooperation Enhancement (PEACE) Act of 2009, would have been better used to increase the bounty for Bin Laden from a paltry several million to several billion. Compared to the vast expense of supplying an army of tens of thousands in the field for close to a decade, not to mention hundreds of dead soldiers, this would be a far more judicious use of funds to achieve the aim of capturing Bin Laden.

Congressman Dent did not mention a single action he would proactively take to maintain the integrity of the dollar, which is part of his job description in Article 1, Section 8 of the Constitution of the United States. He voted to give away literally billions in aid to foreigners rather than to at least have the decency to use it domestically. He wags his finger and says we must be wary of spending too much while he himself opened the floodgates last year by voting for the Banker Bailout, and approved $63 billion this summer just in the three bills mentioned above.

Please read my Federal Reserve and Bailouts planks to find out what I would do as Congressman, besides making the easy decision to not award foreign aid, both military or economic.

While the hour-long presentation is of course only a snapshot, or a look at the critical pieces of puzzle, I emphasize the importance of the gold market, and view the housing crisis as merely a symptom of the causes – excess FED inflation and artificially low interest rates that were held too low for too long.  The irony is not lost that currently the FED interest rates is roughly 0.15%, far lower than previously.   In the interests of time and for simplicity, I omitted the Treasury market almost entirely – just a brief mention in the slide on the national debt.  The Treasury market is definitely also quite critical.

Jake Towne for US Congress PA-15 – The Financial Crisis (WEB) (Sept 2009)

Jake Towne for US Congress PA-15 – The Financial Crisis (WEB) (Sept 2009)

The discussion lasts about 14 minutes. Following the interview Beck reiterates that he doesn’t agree with Ron Paul on some things, but when it comes to the Fed Glenn says he is “Dead Right.” Following that Beck goes into a discussion on foreign policy as it relates to Afghanistan.

Listen to the audio below.

Download audio file (rp-beck-endthefed-09302009.mp3)

Quote of the Day:

“It has been argued that full disclosure of details of funding facilities like TALF and PDCF, that enabled massive bailouts of Wall Street, would damage the financial position of those firms and destabilize the economy. In other words, if the American people knew how rotten the books were at those banks and how terribly they messed up, they would never willingly invest in them, and they would fail. Failure is not an option for friends of the Fed. Therefore, the funds must be stolen from the people in the dark of night. This is not how a free country works. This is not how free markets work. That is crony corporatism and instead of being a force for economic stabilization, it totally undermines it.” — Congressman Ron Paul

You’re not allowed to know who got how much, and under what terms. This information was NOT heard at the hearings about the “Audit the Fed” bill. Therefore, the only way to learn the answers is to . . .

Audit the Fed!

Please use our Educate the Powerful System to send Congress another letter demanding that they pass the Audit the Fed bill.

Use your personal comments to say something similar to what I’ve said in my own letter to Congress . . .

The “Audit the Fed” hearings proved that the Federal Reserve will not reveal its activities without an audit. A majority of the House has co-sponsored the Audit the Fed bill. This leads me to wonder what dark forces are keeping it from coming to a vote. I elected you to represent me, so please do your job. Force the leadership in the House and Senate to bring this bill to a vote! You must lead your “so-called” leaders. Make it happen! I URGE YOU TO DO IT NOW!

You can send your letter here.

Share this message with others. Digg it on our blog so more people will see it. Spread the word on Twitter and Facebook. Audit the Fed!

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If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don’t want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore.

Read the whole article.