Jen Kuznicki
On Wednesday night, Mark Levin played audio of the recent Letterman Show that Obama attended as a guest. Obama has been widely criticized for making time for Letterman, but not for Netanyahu.
Many pundits focused on the things Obama said during the interview, but Mark Levin heard something that nobody picked up on, except for him.
While responding to a question Letterman posed about the national debt, Obama said,
“But, we don’t have to worry about it short term, right now interest rates are low because people still consider the United States the safest and greatest country on earth, rightfully so, but, it is a problem long term, and even medium term.”
Mark Levin responded,
“Couple of things. Why don’t we have to worry about it short term? We have to worry about it, period. Obama’s creating massive, massive deficits, year after year. So we don’t have to worry about it, why, because he’s creating them? This is what we mean when we say the government is monetizing the debt. The government is issuing debt to cover debt! And the government is printing money regardless of how many of you buy treasury bills. But the big story in this comment is, you don’t have to worry about the debt in the short term. In other words, if he’s reelected, he’s not gonna worry about the debt. That’s big. Very big.”
You can hear the segment from the Mark Levin Show below.
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This monetary policy of printing and spending survives without affecting us for only as long as interest rates remain low but it cannot even do this forever; it creates another deleterious effect as explained below. The Federal Reserve is both printing (lending) the money and setting the interest rate. Because it is their money, they as lenders, can determine what they wish to charge. Oh yes, one more thing. Our government (that means you and I) is now responsible for that debt because it is money that is lent to government (us). We did not even lend the money to China; we burdened ourselves. That is called monetizing the debt. We (our government) owe the Federal Reserve for what we borrowed. It is like the second coming of Fannie and Freddie, which were quasi government backed enterprises that partnered with the private sector because now, with this recent stimulus designed to pay down bad mortgages, that same debt is totally government owned and backed and to achieve this we have also diluted the money supply. Printed money is really an IOU. No, it is not actually printed but, instead of being backed by gold, it is backed by a note, which is an American Government promise to pay back what we are now about to spend.
The CRA, Fannie Mae and cheap (low interest) Federal Reserve Money caused the crisis in the first place because the money was easily given to poor risk borrowers which created an artificial market and even further exacerbated the problem by artificially increasing prices that warranted large loans the borrows could not pay back. So now the thinking runs something like this. If our government is given the money, by the Federal Reserve, it will lend the money to the banks holding the bad mortgages and those banks will then lend to new homebuyers to buy some of the massive housing inventory and additional bad mortgages. Now the new homeowners owe the banks, the banks owe the government (us) and the government (us) owes the Federal Reserve. Does this sound ok? It is not because the money was essentially created, in the first place, from thin air.
Ask yourself how an economy can grow strong enough to provide the necessary tax revenue to pay off this new debt (and a lot more debt coming in the form of old debt entitlements and unfunded new entitlements). It is almost impossible, especially in the face of new taxes and regulations that slam business so hard that they stop producing products and services. BTW, that translates into additional jobs lost. Borrowing again to pay down old mortgages does not create many jobs unless taxes and regulations do not molest business. Since they do plan to stop spending on government-established bureaucracies, friends of government and entitlement recipients (of all sorts) to keep their voting base happy and since they will also usher in regulatory and tax policy harmful to business, job growth, must and will, fall off.
What makes the US government unique is that it can partner with the Federal Reserve Bank to print money (borrow) and keep interest rates low. Theoretically that can go on for a modest (not very long) time but the effect has to ultimately inflate the cost of goods and services simply because diluted money (more debt) buys less and, additionally, it depresses the production of these same goods and services (supply) to further increase their costs.
So what Obama is saying is that as long as he is President he can keep the lid on the eventual crisis. That crisis translates into failure to pay back what we borrow or an inflation substitute. And the latter is what will occur. In short the currency is devaluated and that must create inflation. Inflation is like getting very old and very sick simultaneously. It robs everyone of what they have saved in terms of deposits, bonds, SS, pensions, certificates of deposit and even their stock market portfolios. These amounts represent finite quantities that do not rise to the occasion. Hard asset prices do; they cost more; yet even that does not always translate into home price appreciation for various other reasons.
So, in essence, devaluating the currency is theft of the first order. Other terms might include larceny, bank fraud, scam, pyramid scheme, shell game, counterfeiting, embezzlement, looting, extortion and stealing. So when it takes a wheelbarrow of money to buy an orange you can think back to what Obama once said. And maybe at that time some republican President will get the blame because the bomb, which was built by this Administration, goes off on his or her watch. And it may occur (very likely) very soon.
Let’s see what the forty-seven percent have to say after their pensions, fixed incomes, entitlements and deposits (which does not now produce interest income) no longer allow them to afford their new inflation induced life styles.
The US credit was downgraded last year and was again downgraded this year and that downgrade is likely to be recognized by other credit agencies very soon; the outlook is more than grim yet the man who claims he did not know the national debt when he arrived in office had no problem, while he ran for office, calling G. Bush unpatriotic for producing that same debt. Of course that was because of Bush's wars. What is Obama's excuse four years later?
If people wonder why Obama and Romney are neck and neck in the polls you only need look at Letterman to understand that an enormous number of Americans are as least as dumb as he is and a lot more are even dumber thanks to an expensive nationalized education system run by union thugs that produced the geniuses that think the problem is that the Republicans refuse to become bipartisan and approve the additional spending that Mr. Obama wants to continue despite the fact that not one of his own democrats endorsed his budget ideas.
If that is not enough you need only ask what would you expect from the likes of Barry, Bill and Hillary who are trying to sell the idea that an obscure grade D movie, instead of their policies, is responsible for a Muslim maelstrom of international anti-American hatred and anti-Semitism? Of course the proffered solutions are additional spending, more apologies and new laws designed to prohibit Americans from using their First Amendment protection to criticize religion. But those laws will never stop the likes of Harry Reed from using his Senate Podium, to maliciously defame and slander Mitt Romney for tax law violations since his speech, from that location, is safe from even slander laws. Unlike Harry Reed I don't have to worry about Mitt Romney using his taxpayer funded government job to become wealthy. Mitt Romney is already wealthy and he did it on his own which is something that cannot be said about the rest of the Washington Insiders' Club who leave their government jobs far wealthier than when they first arrived.