Think About It
Congress made two previous attempts at a central banking system decades before it created the Federal Reserve Bank. A central bank is considered a “lender of last resort”, literally meaning it can “create” money to lend. Alexander Hamilton, a Federalist, advocated the first central bank. Thomas Jefferson and Patrick Henry asserted it was unconstitutional (Congress had been given no such authority). President Washington finally acceded to Hamilton and, in 1791, The Bank of the United States opened in Philadelphia. It was a PRIVATE bank, owned mostly by British and other foreign interests, with a 20 year charter. By 1793, Hamilton and the bank were accused of corruption and mismanagement. In 1811, Congress failed to renew the charter and the bank was dissolved.
In 1815, President James Madison vetoed a bill to create the Second National Bank on the grounds it was unconstitutional. By 1816, someone had convinced him otherwise, probably because of debts relating to the War of 1812. On January 1, 1817, the Second National Bank opened for business in Philadelphia, with a 20 year charter. Again, it was owned by PRIVATE interests. When it applied in 1832 for an early extension, Andrew Jackson vetoed it as being unconstitutional. In 1835, with the bank powerless, Jackson paid off the Federal debt for the ONLY time in history. He moved U. S. money into State banks. The Second National Bank tried to continue operating, but closed within a few years. In 1840 President Van Buren approved the Treasury Act establishing an independent Treasury, allowing the government to control its own money. In 1841 Congress repealed the independent Treasury Act, and left the nation again without a banking system. The Treasury once more deposited government money into State banks. Twice in 1841, Congress passed two separate Federal Bank Acts, but President Tyler vetoed them as unconstitutional.
In 1862, because of the Civil War, the U. S. government issued paper money with no gold backing it. By 1873, a flood of unredeemable paper money had thrust the nation into a long depression. In 1875, Congress passed the Specie Resumption Act, again allowing legal tender to be exchanged for gold, and the nation started to revive from depression. In 1907, another major financial panic came, and financier J. P. Morgan arranged loans of around $100 million in gold to various New York banks to avert their insolvency because of bank runs.
It was with this background in 1910 that U. S. Senator Nelson Aldrich, Chairman of the National Monetary Commission (and father-in-law of John D. Rockefeller, Jr.); with A. P. Andrews, Assistant Secretary of the Treasury, and a small group of the nation’s most prominent bankers went secretively to the Jekyll Island Club, then a private millionaire’s retreat off the Georgia coast; to plan a new central banking system for this country. Aldrich had spent the better part of 2 years in Europe studying their system, which included the Bank of England, a PRIVATELY owned central bank. Paul Warburg, a naturalized German representing the prominent Baron Rothschild of European banking fame, was also present.
The plans they devised would eventually become a prominent part of the 1912 Presidential campaign, which elected Woodrow Wilson. Republican William Howard Taft was known to be against central banking, and when former Republican President Teddy Roosevelt was encouraged to run on a third party Progressive (Bullmoose) ticket, it split the Republican vote and assured Wilson’s victory. Wilson signed the Federal Reserve Act on December 29, 1913, creating a central (yet de-centralized with 12 branches) bank owned by its PRIVATE member banks. It has through the years become more centralized again. And it has been reported that by as early as 1916, Wilson regretted the action and said he had unwittingly ruined his nation.
Friday, September 28, 2007
Thursday, September 27, 2007
STATE OF GEORGIA DEBT
Think About It
Someone older and wiser than me is quoted as first having said: “Government will expand to expend every tax dollar it receives.” The literal meaning is that government will not hasten to reduce our tax rates even though revenues generally increase year after year. Our duty as citizens is to let our legislators know we understand and want change.
The main causes of government revenue growth are population increase and inflation. Yes, it’s true that population increase requires additional government services, but you would think that the volume discount effect would kick-in somewhere. Inflation, on the other hand, is the greatest ally the government tax collector has.
We have already discussed in this column the growth of the Federal government. Now, we will turn our attention to the state government. In the 1970’s, Georgia passed its first $1 billion budget. The FY 2007 Georgia budget is $18.6 billion. The state revenue increase this year over last year is expected to be $753 million, which is nearly the amount of the entire 1970’s annual budget. Now, I am sure your household income has gone up in the last 30 years. But are you making 18 times what you were in 1976? The state population in the 1970’s was approaching 5 million. Today, it is just over 8 million. The population has not gone up even 100% in 30 years.
Worse than this, is Georgia’s growing bonded debt. Even with a budget that grew 18 fold in 30 years, the State has been borrowing money in addition. From the new Constitution of 1945 until the mid 70’s, Georgia could not go into debt. However, the General Assembly was creating authorities such as the Jekyll Island Authority, and allowing them to borrow with Revenue bonds, backed with anticipated revenues. In the mid-70’s, the State Constitution was amended to allow General Obligation bonds of the State of Georgia, because it was supposed to give debt control back to the Legislators. Since that time, Georgia’s bonded debt has grown to around $8 billion, with interest amounting to nearly 5% of the annual budget. We are headed down the same path to ruin blazed by the Federal government.
When the State House and Senate Appropriations Committees hold hearings, they are visited by all the state department heads. The drill goes something like this: Mr. Chairman, last year we had 678 full time positions (employees). This year we need 743 full time positions (employees), etc, etc, etc. A bureaucrat’s success is measured by the size of his bureaucracy. The State of Georgia issues about 75,000 payroll checks, not including the University System, which is about 25,000 more.
You, personally, are represented directly by one State Representative, one State Senator, the Lt. Governor, and the Governor. In a republican democracy, they are supposed to represent your will. You should make them all aware that you want state spending and state borrowing reigned in, and taxes reduced. One letter is not enough. You need to be a constant reminder. As they say, “the squeaky wheel gets the grease.”
Someone older and wiser than me is quoted as first having said: “Government will expand to expend every tax dollar it receives.” The literal meaning is that government will not hasten to reduce our tax rates even though revenues generally increase year after year. Our duty as citizens is to let our legislators know we understand and want change.
The main causes of government revenue growth are population increase and inflation. Yes, it’s true that population increase requires additional government services, but you would think that the volume discount effect would kick-in somewhere. Inflation, on the other hand, is the greatest ally the government tax collector has.
We have already discussed in this column the growth of the Federal government. Now, we will turn our attention to the state government. In the 1970’s, Georgia passed its first $1 billion budget. The FY 2007 Georgia budget is $18.6 billion. The state revenue increase this year over last year is expected to be $753 million, which is nearly the amount of the entire 1970’s annual budget. Now, I am sure your household income has gone up in the last 30 years. But are you making 18 times what you were in 1976? The state population in the 1970’s was approaching 5 million. Today, it is just over 8 million. The population has not gone up even 100% in 30 years.
Worse than this, is Georgia’s growing bonded debt. Even with a budget that grew 18 fold in 30 years, the State has been borrowing money in addition. From the new Constitution of 1945 until the mid 70’s, Georgia could not go into debt. However, the General Assembly was creating authorities such as the Jekyll Island Authority, and allowing them to borrow with Revenue bonds, backed with anticipated revenues. In the mid-70’s, the State Constitution was amended to allow General Obligation bonds of the State of Georgia, because it was supposed to give debt control back to the Legislators. Since that time, Georgia’s bonded debt has grown to around $8 billion, with interest amounting to nearly 5% of the annual budget. We are headed down the same path to ruin blazed by the Federal government.
When the State House and Senate Appropriations Committees hold hearings, they are visited by all the state department heads. The drill goes something like this: Mr. Chairman, last year we had 678 full time positions (employees). This year we need 743 full time positions (employees), etc, etc, etc. A bureaucrat’s success is measured by the size of his bureaucracy. The State of Georgia issues about 75,000 payroll checks, not including the University System, which is about 25,000 more.
You, personally, are represented directly by one State Representative, one State Senator, the Lt. Governor, and the Governor. In a republican democracy, they are supposed to represent your will. You should make them all aware that you want state spending and state borrowing reigned in, and taxes reduced. One letter is not enough. You need to be a constant reminder. As they say, “the squeaky wheel gets the grease.”
Wednesday, September 26, 2007
FEDERAL DEBT
Think About It
Do you know what the Federal debt is today? It is 8 trillion, 995 billion, 017 million and some odd dollars. To those of you who don’t remember, a trillion is equal to a million times a million. Then multiply this by 8.5 and you have our obligation. Your personal share is $29,678 and some odd cents. For a family of 4, their combined debt is probably more than their home mortgage. The Federal government raised the debt limit to $9 trillion on March 16 of this year and when it approaches that limit, they will raise it to $10 trillion, with no real plans to pay it back.
Sure, we owe some of it to our own richest citizens, who consider U.S. bonds the safest investment you can make. But estimates are that foreign interests now own about 45%, or nearly half of our government debt. They also own 13% of our corporate stocks, and 27% of our corporate bonds. America is selling itself out.
Too many candidates on both sides of the aisle now tend to believe they can best get elected by promising voters “something more from government.” We should remember that we are the government. We cannot give ourselves something for one pocket that is not paid for out of the other pocket, with a few dollars lost forever in the transaction. We should be looking for candidates who promise to give us less government.
Deficit and debt are two entirely different things. When the Federal government talks about surpluses and deficits, they are only talking about whether the current budget expenditures will be more or less than all the taxes collected for it this year, disregarding all debt. In 1980, the total Federal debt was less than $1 trillion. In the 1990’s, $2.8 trillion of new debt was added, more than the total debt from 1776 until that time. In the last 4 years, another $2.3 trillion has been added. Neither political party has really addressed trying to reduce it.
The U. S. was born in debt due to the Revolutionary War, leading to a debt of $75 million by 1791. Then it began to reduce until actually reaching zero in 1834, but never again. Hail to President Andrew Jackson! After World War I, debt was “only” $22 billion. It went down during the roaring 20’s, but the skyrocket began with the 1929 depression. FDR brought in the New Deal, and he hired a lot of men for government make-work jobs, trying to end the depression. Yes, I am from the south, and I know some might have starved without the work! But the inflationary trend was set in stone, and still it was only the next War which really brought us out of the depression. After World War II, the debt was $260 billion. It had increased nearly 16 fold from 1930 to 1950, a far greater multiplier than any other single 20 year period in our history. But regretfully, since 1980, it has multiplied another 9 fold.
Your primary concern should be this. In the mid 70’s, the debt interest expense alone amounted to 11% of annual budget expense. In FY 2006, the debt interest expense alone is 18.7% of budget expense, third in size behind only military and health care costs. It is steadily heading toward being the number one budget expense. The way the system works is this. If 300 million people raise enough fuss enough times about it, the debt will get reduced. I am one, how about you?
Do you know what the Federal debt is today? It is 8 trillion, 995 billion, 017 million and some odd dollars. To those of you who don’t remember, a trillion is equal to a million times a million. Then multiply this by 8.5 and you have our obligation. Your personal share is $29,678 and some odd cents. For a family of 4, their combined debt is probably more than their home mortgage. The Federal government raised the debt limit to $9 trillion on March 16 of this year and when it approaches that limit, they will raise it to $10 trillion, with no real plans to pay it back.
Sure, we owe some of it to our own richest citizens, who consider U.S. bonds the safest investment you can make. But estimates are that foreign interests now own about 45%, or nearly half of our government debt. They also own 13% of our corporate stocks, and 27% of our corporate bonds. America is selling itself out.
Too many candidates on both sides of the aisle now tend to believe they can best get elected by promising voters “something more from government.” We should remember that we are the government. We cannot give ourselves something for one pocket that is not paid for out of the other pocket, with a few dollars lost forever in the transaction. We should be looking for candidates who promise to give us less government.
Deficit and debt are two entirely different things. When the Federal government talks about surpluses and deficits, they are only talking about whether the current budget expenditures will be more or less than all the taxes collected for it this year, disregarding all debt. In 1980, the total Federal debt was less than $1 trillion. In the 1990’s, $2.8 trillion of new debt was added, more than the total debt from 1776 until that time. In the last 4 years, another $2.3 trillion has been added. Neither political party has really addressed trying to reduce it.
The U. S. was born in debt due to the Revolutionary War, leading to a debt of $75 million by 1791. Then it began to reduce until actually reaching zero in 1834, but never again. Hail to President Andrew Jackson! After World War I, debt was “only” $22 billion. It went down during the roaring 20’s, but the skyrocket began with the 1929 depression. FDR brought in the New Deal, and he hired a lot of men for government make-work jobs, trying to end the depression. Yes, I am from the south, and I know some might have starved without the work! But the inflationary trend was set in stone, and still it was only the next War which really brought us out of the depression. After World War II, the debt was $260 billion. It had increased nearly 16 fold from 1930 to 1950, a far greater multiplier than any other single 20 year period in our history. But regretfully, since 1980, it has multiplied another 9 fold.
Your primary concern should be this. In the mid 70’s, the debt interest expense alone amounted to 11% of annual budget expense. In FY 2006, the debt interest expense alone is 18.7% of budget expense, third in size behind only military and health care costs. It is steadily heading toward being the number one budget expense. The way the system works is this. If 300 million people raise enough fuss enough times about it, the debt will get reduced. I am one, how about you?
Tuesday, September 25, 2007
INTRODUCTION
Think About It
That’s the purpose of this column. My feeble effort to counteract the dumbing down of America, brought on by a number of reasons; chief among which is an insidious invention we know as television. Don’t come back here unless you are willing to use your brain for something other than a parking lot for the images and colloquy visited upon you by the electric intruder. What I want to do is encourage you to meditate, contemplate and investigate. Take one hour per day from television and devote it to the library, reading current event news articles, surfing the internet, or even just an intelligent discussion. You can devise your own subjects or start with the ones I raise. Shoot, I may even try to run you to a dictionary.
OK, you are entitled to an answer. Who is this guy? I’m a retiree with time on his hands, one who is proud to have been born an American. Dare I use the word “Patriot”? I firmly believe God blessed this country through our founding fathers, and we have the ability and opportunity to make it even better. But we must change directions. We must teach respect for our Constitution. We must realize that “we the people” are the government. We cannot give ourselves something for one pocket which does not come from the other pocket, with a little lost to the bureaucrats in the transaction. We must educate ourselves before we cast our votes, and we must vote. We must realize our manifest destiny as a nation is not to rule the world, but to improve the world. We must teach that giving a hand up is not giving a handout. We must refrain from that old saying, “Let George do it.” We must be willing to get involved. Whether you consider yourself a liberal or a conservative, I’ll make you angry before it’s over. But let’s hope we can disagree without becoming disagreeable.
My old granddaddy once said, “It is better to be a has-been than a never-was.” That perfectly describes me. My previous incarnations include Certified Financial Planner, stockbroker, Realtor, Insuror, Legislator, refrigerator salesman and super market produce clerk.
Today, I could best be described as a strict constructionist, fiscally conservative, socially moderate, evangelical Christian, good-looking senior citizen. It is now my wife’s duty to keep me up in the manner to which I have become accustomed. But, darn her hide, she still makes me cut the grass, rake the leaves and take out the garbage. Thank goodness, though, she does feed me well, and she loves me, in spite of myself.
Seriously, I love this country for the principles upon which it was founded, and the unlimited opportunity it provides. The men who framed our Constitution were geniuses. May we never forget they pledged their lives, their fortunes, and their sacred honor to establish and bequeath us this great nation. Should not we do no less for our heirs? Meet me back here and we will discuss it. We will try to present ideas in simple, concise, easy to understand language. Agree with me, disagree with me, quote me, laugh at me, mock me, even prove me wrong (God forbid). But if I get you to thinking, I won.
That’s the purpose of this column. My feeble effort to counteract the dumbing down of America, brought on by a number of reasons; chief among which is an insidious invention we know as television. Don’t come back here unless you are willing to use your brain for something other than a parking lot for the images and colloquy visited upon you by the electric intruder. What I want to do is encourage you to meditate, contemplate and investigate. Take one hour per day from television and devote it to the library, reading current event news articles, surfing the internet, or even just an intelligent discussion. You can devise your own subjects or start with the ones I raise. Shoot, I may even try to run you to a dictionary.
OK, you are entitled to an answer. Who is this guy? I’m a retiree with time on his hands, one who is proud to have been born an American. Dare I use the word “Patriot”? I firmly believe God blessed this country through our founding fathers, and we have the ability and opportunity to make it even better. But we must change directions. We must teach respect for our Constitution. We must realize that “we the people” are the government. We cannot give ourselves something for one pocket which does not come from the other pocket, with a little lost to the bureaucrats in the transaction. We must educate ourselves before we cast our votes, and we must vote. We must realize our manifest destiny as a nation is not to rule the world, but to improve the world. We must teach that giving a hand up is not giving a handout. We must refrain from that old saying, “Let George do it.” We must be willing to get involved. Whether you consider yourself a liberal or a conservative, I’ll make you angry before it’s over. But let’s hope we can disagree without becoming disagreeable.
My old granddaddy once said, “It is better to be a has-been than a never-was.” That perfectly describes me. My previous incarnations include Certified Financial Planner, stockbroker, Realtor, Insuror, Legislator, refrigerator salesman and super market produce clerk.
Today, I could best be described as a strict constructionist, fiscally conservative, socially moderate, evangelical Christian, good-looking senior citizen. It is now my wife’s duty to keep me up in the manner to which I have become accustomed. But, darn her hide, she still makes me cut the grass, rake the leaves and take out the garbage. Thank goodness, though, she does feed me well, and she loves me, in spite of myself.
Seriously, I love this country for the principles upon which it was founded, and the unlimited opportunity it provides. The men who framed our Constitution were geniuses. May we never forget they pledged their lives, their fortunes, and their sacred honor to establish and bequeath us this great nation. Should not we do no less for our heirs? Meet me back here and we will discuss it. We will try to present ideas in simple, concise, easy to understand language. Agree with me, disagree with me, quote me, laugh at me, mock me, even prove me wrong (God forbid). But if I get you to thinking, I won.
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