Karl's Weekend Reading

As we continue to write the last chapter in US History here at Ushanka.us, two items deserve attention as two of the main components of Obama's destruction of the US as it was intended: monetary policy and entrepreneurship.

Arthur B. Laffer writes in the WSJ, Get Ready for Inflation and Higher Interest Rates: The unprecedented expansion of the money supply could make the '70s look benign.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.
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Reduced demand for money combined with rapid growth in money is a surefire recipe for inflation and higher interest rates. The higher interest rates themselves will also further reduce the demand for money, thereby exacerbating inflationary pressures. It's a catch-22.
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Alas, I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury's planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds.

If we weren't on the same boat as the current generation of corporate liberal elites that voted for this administration, we'd be laughing ourselves silly. They fell for the liberal trick: Vote for us because what you have today under Republican leadership - we can make better! Well, we're less than 6 months into that plan. How's it working for you?

There are two reasons why the top rungs in corporate America have been traditionally Republican - 1) to preserve the environment that allowed their success, and 2) to give future leaders the same fair shot they had. Well, idiots that run most of the businesses in Silicon Valley chose to differentiate themselves from their predecessors last November, and it will not surprise us to see the pendulum jolt back, assuming there is still such thing as private business in 2012.

Michael S. Malone warns "Be careful what you wish for" in his Pajamas Media post, The Obama Surprise:

The first surprise to many Valleyites is how innately anti-entrepreneurial the new Administration has turned out to be. Candidate Obama looked like a high tech executive - smart, hip, a gadget freak - and he certainly talked pro-entrepreneur. But the reality of the last six months has been very different. One might have predicted that he would use the best tool in his economic arsenal - new company creation and the millions of new jobs those firms in turn create - to fight this recession. But President Obama has instead appeared to be almost exclusively interested in Big Business as the key to economy recovery.
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...the tech giants are now discovering they may have made a devil’s bargain. The Administration’s brute force handling of the Chrysler and GM take-overs, seemingly violating contract law in the process; its mutterings about managing executive bonuses; its creation of industry czars without the need for Congressional approval; and the prospect of endless debt, economic stagnation and runaway inflation waiting in the wings - all have to be making the same CEOs pretty darn nervous these days . . . and asking themselves if they’ve made a terrible mistake.