Conservatives, although liberals as well, fall for the same old trap. I guess it’s really great to be the chairman of the Federal Reserve. Ultimately, you’re the one guy who controls the economy and the majority of the people don’t know it. Everyone forgets about you and the role you’ve had in either the booms and the busts. Everyone’s forgotten about the monetary fundamentals in 2008, and didn’t learn the one absolutely important thing that everyone should have from that experience:

"Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy…"

Friedman was absolutely right, near-zero interest rates are an almost foolproof indicator that money has been too tight. Were he still alive, I can’t even imagine what he would think of the views being expressed by his fellow conservatives…

Actually money has been tight. And those construction jobs were mostly lost in 2007 and early 2008, when employment was still high. The serious unemployment problem developed in late 2008 and early 2009, and reflected a generalized drop in AD across the entire economy. And manufacturing has also shed lots of jobs.

Those quotes are from a blog by Scott Sumner (the first being a quote from Friedman) written a year ago. Sumner has been making this argument since early 2009 when his blog began, if not earlier. As a matter of fact, all the tools at the Federal Reserve’s disposal have shown them that interest rates really need to be NEGATIVE, not simply at ZERO. They can’t actually do that, though (without instituting a penalty on reserves). They do have many other tools at their disposal to loosen money and get the economy going.

People blaming Obama for everything, as too many people commenting to Bruce’s posts do, are completely dismissing the role of the Federal Reserve in this entire fiasco.

The housing bubble burst was contained – it hurt our economy, but it was contained. We would have recovered just fine. All we needed to do was have the Federal Reserve answer the call for more money. They saw that the housing bubble was going to lead to a slower economy, so they shouldn’t have feared inflation. They should have met demand for money with supply, and they failed at that in 2008.

From a friend at modeledbehavior.com at his previous blog:

Beginning in 2006, headlines featuring odd acronyms like “CDS” and “CDO” became more and more common. The story that was unfolding was a grim tale of a housing boom that was coming to a violent end. Markets in California, Arizona, and Florida became inundated with high levels of foreclosures, write-downs, and unsold housing inventories. This seemed to be a regional phenomenon, as the economy continued to growth throughout 2006. 2007 marked the official NBER start of the recession. It also marked the start of an energy price rally — as crude oil began to soar in price. GDP continued to grow weakly throughout 2007 and 2008, along with the continuing rise in oil prices…but starting in 2008:Q3, real cracks began to appear.

In late June/early July, the energy price bubble collapsed, sending commodities downward in a vicious spiral. This is where the Fed enters the story once more (not that they were ever gone, check out the Financial Crisis Timeline to see an exhaustive list of Fed actions).

Recall that the Fed uses a Taylor rule to forecast the setting of the Fed Funds Rate. Well, an integral identity of the Taylor rule is a measure of the previous period’s inflation rate. For its intents, I believe that the Fed uses CPI (but I could be wrong, however, it is no matter — they use a backward-looking indicator). This is a problem, as rises in energy prices cause core inflation to rise. However, due to the energy price bubble, this was highly misleading. During August and September, as the market (as estimated by the TIPS spread — the difference in interest rates between nominal Treasury bonds and indexed bonds [or TIPS] — began forecasting falling real inflation rates (the Fed has an implicit rate of 2%), the Fed held nominal interest rates. This caused money to become inadvertently tight.

The majority of Americans haven’t heard or read any of this – and the media is mostly to blame for this since it’s easier to blame and shout: OBAMA!!!111

Undermining Americans’ belief in their own institutions of self-government remains a prime GOP electoral strategy. But if this technique falls short of producing Karl Rove’s dream of 30 years of unchallengeable one-party rule (as all such techniques always fall short of achieving the angry and embittered true believer’s New Jerusalem), there are other even less savory techniques upon which to fall back. Ever since Republicans captured the majority in a number of state legislatures last November, they have systematically attempted to make it more difficult to vote: by onerous voter ID requirements (in Wisconsin, Republicans have legislated photo IDs while simultaneously shutting Department of Motor Vehicles (DMV) offices in Democratic constituencies while at the same time lengthening the hours of operation of DMV offices in GOP constituencies); by narrowing registration periods; and by residency requirements that may disenfranchise university students.

Newly retired Republican congressional staffer of 28 years, Mike Lofgren, speaks his mind on the current state of the Republican Party. If you think this is all angst and conspiracy talk, reflecting no real truth and that he’s just a turned liberal who left the party, burning bridges in his wake, look no further than one of the major Republican Party-aligned websites for an even more solid understanding. According to the American Thinker, Registering the Poor to Vote is Un-American:

Why are left-wing activist groups so keen on registering the poor to vote?

Because they know the poor can be counted on to vote themselves more benefits by electing redistributionist politicians.  Welfare recipients are particularly open to demagoguery and bribery.

Registering them to vote is like handing out burglary tools to criminals.  It is profoundly antisocial and un-American to empower the nonproductive segments of the population to destroy the country — which is precisely why Barack Obama zealously supports registering welfare recipients to vote.

The Republican Party seeks to return to an era in the United States where wealth and landownership were the only ways to merit the ability to vote. It seems that despite previous reporting that the Tea Party is only a small subsect of the Republican Party, it seems to either be directing the party or is emboldened to act less opaquely than they have in the past. They block everything the legitimate presidential administration attempts to do, including blocking any nominations, leaving important posts empty, and they install cronies and ineffectual people in office when they are in power.

Here is a dialogue between Thomas Frank and Bill Moyers from Moyer’s Journal on PBS, with Frank speaking of how the Republican Party sees government and explains how the Republican Party makes bad government a reality, creating a self-fulfilling prophesy:

THOMAS FRANK: Government is– yeah, government is a perversion. And to believe that the federal government can be operated, you know, with all of its programs, can be operated well and do things that are good for the people, is, as you say, is a perversion.

And they look at someone like Barack Obama and it makes them seethe. Because that’s, you know, that’s what he’s trying to do. What conservatism in this country is about is government failure. Conservatives talk about government failure all the time, constantly. And conservatives, when they’re in power deliver government failure.

BILL MOYERS: Not merely from incompetence, you say, but from ideology, from philosophy, from a view of the world.

THOMAS FRANK: And sometimes from design.

BILL MOYERS: From design? What do you mean?

THOMAS FRANK: Not always from design, but often. The Department of Labor, for example, the conservatives when they in office, routinely stuff the Department of Labor full of ideological cranks. And people that don’t believe in the mission.

And the result is that it doesn’t– they don’t enforce anything. Towards the very end of the Bush-era, the Department of Labor had been whittled down. It was a shell of its former self. And at the very end of the Bush Administration, one of the government accountability programs did a study of the Department of Labor. And, I’m smiling, because it’s kind of amusing. It was like an old spy magazine prank.

They made up these horrendous labor violations around the country and phoned them in as complaints to the Department of Labor to see what they would do, okay? They responded to one out of ten of these, you know, where they called in as like, "Well, we got, you know, kids working in a meat packing plant during school hours. You know, can you, you going to do anything about that?" "No." Or you look at something like the Securities and Exchange Commission. These guys are supposed to be regulating, you know, the investment banks, okay? Goldman Sachs, Morgan Stanley, that sort of thing. These guys were so under-funded, and not just under-funded, but you had people in charge of it who didn’t believe in regulating Wall Street.

BILL MOYERS: So, they made the Securities and Exchange Commission a laughing stock, if you will. They really did.

THOMAS FRANK: Right…

The Republican Party is finally showing its true face: bold and without mercy. And they’re winning.

Gandalf:
All has turned to vain ambition. He would even use his grief as a cloak. A thousand years this city has stood. Now, at the whim of a madman, it will fall. And the White Tree, the tree of the king… will never bloom again.

Pippin:
Why are they still guarding it?

Gandalf:
They guard it because they have hope. A faint and fading hope that one day it will flower. That a king will come and this city will be as it once was… before it fell into decay. The old wisdom borne out of the West was forsaken. Kings made tombs more splendid than the houses of the living and counted the old names of their descent dearer than the names of their sons. Childless lords sat in aged halls, musing on heraldry or in high, cold towers, asking questions of the stars. And so the people of Gondor fell into ruin. The line of kings failed. The White Tree withered. The rule of Gondor was given over to lesser men.

Today, we squabble and fend for the scraps. Bill Gates recently said: “If all you care about is America’s relative position, every day since the end of World War II has really been bad for you.” For many, America’s position is not even a big part of their plan; most of our politicians stand only for themselves and the few constituents that will get them into office and feed them more power. The Republican Party has taken advantage of the Tea Party populist rage machine and is basically casting them away for later use. Sarah Palin has created a false image of herself as a mamma grizzly hunting every day woman when in fact she can’t even shoot the gun she’s always pictured holding. These people do this for the sake of picking up the scraps America’s got left. Politicians today are like a business buying out another in order to squeeze the life out of it, smart-sizing it and reorganizing it in order to make it more efficient (but probably more fragile) in order to sell it to the highest bidder at a profit. Instead of producing a better product, they suck the life out of it just to make sure they get theirs.

Today we have a real recession. It’s been officially over for a while, at least in the eyes of those who seem to matter most in this country. The wealthy are making do with increased gains as the rest of the country remains fragile. Childless lords sit in mansions, musing over the wealth their daddy and mommy left them; they sit in their cold towers, asking questions on how to best make their concerns heard. They care more about making their legacy and wealth as great as possible and their homes and tombs castles while the rest of society rots in their shit piles, spouting Marxist clichés, living in an "autonomous, anarcho-syndicalist commune", throwing fruit from the stands with their atrophied arms.

… for the sole purpose of arguing whether their masters should get tax breaks.

Here’s the list:

Case:
Antec Nine Hundred Black Steel ATX Mid Tower Computer Case

Motherboard:
ASUS P6X58D-E LGA 1366 Intel X58 SATA 6Gb/s USB 3.0 ATX Intel Motherboard

CPU:
Intel Core i7-870 Lynnfield 2.93GHz LGA 1156 95W Quad-Core Processor

Video Card:
SAPPHIRE 100281-3SR Radeon HD 5870

Hard Drive:
Western Digital Caviar Black WD1002FAEX 1TB

And I’m going with Windows 7 Home Premium 64-bit for the OS.

Of course, the actual list is 16 items long but I’m not going to bore this post even more by including the cables and crap. As a matter of fact, I’m not sure why I’m posting any of this. Go away!

I would love to see where all these items are manufactured, though, just to see exactly which country my stimulus dollars are going to this Christmas season.

The elderly in the US should either be turned into soylent green, which would actually make use of these otherwise pointless bags of saggy flesh, or be put to pasture (and used as fertilizer). That, or we should really make sure they’re not entirely demented or schizophrenic before allowing them to vote.

Where is all this rage coming from? Well, I’m simply borrowing some from those nice little grandmas and grandpas who are putting a shotgun to everyone else’s head. Yes, that lovely little old lady isn’t so lovely. She treats everyone nice but then goes around and votes in the most moronic way possible.

Via Jonathan Gait, here’s Byron Tau:

Voters over 65 favored Republicans last week by a 21-point margin after flirting with Democrats in the 2006 midterm elections and favoring John McCain by a relatively narrow 8-point margin in 2008….

In the 2006 midterm campaign (regarded as a more useful basis of comparison than high-turnout presidential elections), voters 65 and older essentially split their vote evenly between Republicans and Democrats — a stark comparison with 2010. But that’s not the only noticeable change in voting patterns: In this cycle, in addition to losing the senior vote by more than 20 points, older voters also grew as a share of the overall electorate. In 2006, seniors made up 19 percent of the voting public; this year, they represented 23 percent.

You ask: Why does that matter? I mean it’s not like it means anything. Of course older people will vote conservative values!

Here’s the problem: Republicans want to rape old people. Old people are voting them into power, hoping to keep from getting raped. Republicans’ form of rape is by dismantling entitlement reform. Yes, they want to get rid of Social Security and Medicare, the very same things these rotting brains voted Republicans back into power in order to save.

“What!?” you ask?

As Matt Yglesias said:

But the question is: What about deficits matters? You often hear deficits discussed as a kind of morality play. Government should “live within its means,” whatever that means. Or else you hear conservatives—who don’t care even the slightest bit about deficits—complain about “deficits” when what they mean is “spending when a Democrat is in the White House.”

Yes, of course Republicans don’t care about deficits. Surprised? You wouldn’t be if you were honest and actually paid attention. This Ezra Klein piece, “Which party is better on the deficit? Maybe the one trying to reduce the deficit.” explains everything you need to know in order to come to the realization that Republicans don’t give a damn about deficits.

Contrast the Democrats’ health-care reform bill with the Medicare Prescription Drug Benefit, which was paid for by the deficit. Or the Bush tax cuts, which were paid for by the deficit. Or "CutGo," in which tax cuts would never have to be paid for.

McArdle has two examples of Democrats not only trying to pay for things, but making unpopular choices to pay for things. Then she’s got a bill in which Democrats decided to pay for more than the whole thing, and made a bunch of unpopular decisions to do so — decisions which Republicans are attacking mercilessly. And this is her evidence for a post which asks the question, "Which Party Is Better on the Deficit?" and finds it impossible to answer.

OK, I’ll give Republicans that: they did give old people Medicare Part D, which was and is still completely unfunded and is basically a handout to old people. Of course they’d win more votes from old people, right? That’s what happened.

What also happened is that Medicare Part D made Medicare an even bigger target than it was before. Medicare, because of Med Part D and the long-term growth of medical costs in the country, are going to lead to our bankruptcy. The whole country. Republicans are basically making Medicare so impossible to fund that we’re going to have to either reform it significantly or just get rid of it and let old people die. Right now, I’m leaning towards the latter. The only reason I’m not going all the way is that I, too, have old people I love and care about and don’t want to see drying up or eating cat food. All the other old people, though? I don’t care. Use them as fertilizer.

See, the elderly voted against Democrats because Dems tried to make cuts to a huge subsidy to insurance companies called Medicare Advantage. This is a completely overfunded, inefficient way to pay for Medicare insurance. Republicans, with the help of their media arm, Fox News, made the case that Democrats were trying to kill old people by getting rid of their Medicare when, in fact, Democrats were trying to make Medicare more cost-efficient to keep it sustainable. Republicans want to blow up Medicare to the point of unsustainability. Republicans want to love old people to death.

Me, I just want to turn them into fertilizer.

Here’s why I think old voters are dumb as rocks. Republicans keep saying we need to make cuts to entitlements. That means Social Security and Medicare. So, if old people were voting against Democrats for cutting inefficient subsidies to insurance companies, why are old people voting for people who want to cut Social Security and Medicare? Because they’re demented, schizophrenic, old people, that’s why.

Democrats want to give everyone what old people are getting. Yes, old people have paid their dues and just want to get back what they’ve funded throughout their lives. So do young people… because by the time they get old, today’s youth won’t have the Social Security and Medicare benefits our current old are getting – thanks to the inefficient overfunding of these entitlement programs by our government elite. I blame both Democrats and Republicans for this future we’re heading into for not taxing efficiently enough and leaving the problem to fester.

So, thanks, old people, for voting against your personal interests while keeping the young from theirs.

Enough said.