Moon Shot helped blow out the U.S. economy

When I was a kid growing up in the 60s, I was enthralled by the Space Program, especially the Moon Shot, whose 40th anniversary is being celebrated. I read numerous books on space exploration, watched all the launches on TV, and even once cut Saturday catechism class to watch a Gemini launch.

But a lot has happened since then, including the ongoing bankruptcy of America. A few thoughts:

Regime uncertainty

Robert Higgs has come up with a useful concept: “regime uncertainty.” Is the government a) helping businesses grow and create jobs by keeping the currency stable and reducing taxes and regulations; then the regime is certain and stable.

Or is the government b) hammering businesses with inflation and wild new spending coupled with new taxes and regulations. Then there is “regime uncertainty. Nobody knows what’s going to happen next, so economic planning and investment are difficult, sometimes impossible.

LBJ’s wild spending

So let’s look at the last 45 years:

After LBJ’s 1964 landslide, he and the Democratic Congress did b), greatly increasing “regime uncertainty.” They went on a spending binge on his Great Society socialist schemes. The cost of them, over the years, has been immense — tens of trillions of dollars.

In 1965, he escalated the Vietnam War, eventually putting 550,000 troops in Nam. The total cost of the war (1965-1973) was $100 billion then, about $3 trillion today factoring inflation and population growth — about the same cost of the Iraq War (so far).

And he (and JFK and Nixon) wasted $10 billion on the Moon Shot, about $300 billion in today’s money.

With the federal budget buckling, in 1968 LBJ pushed through a 10% income tax surtax that brought on a recession. He and the Fed also began inflating the currency — the usual government tactic of cheating people by paying them with money actually worth less than what’s written on the bills.

Nixon’s the One!

The recession, Nam, Great Society welfarism, riots, and the whole mess of 1968 brought us Nixon. If he had had any sense, he would have demanded that Congress make the Vietnam War legit by declaring war; Congress would not have done so, so he could have ended it posthaste, saving about half the final cost in lives (58,000 Americans dead, 3.2 million Viets dead) and treasure. He didn’t. He should have fought LBJ’s Great Society. He didn’t, instead funding and expanding it (for example, with affirmative action).

And Nixon should have ended the inflation by returning to a rock-solid gold standard at $35 an ounce. Instead, in 1971 as part of his New Economic Policy (same name as Lenin’s), he took us off gold for the first time under the Constitution (except for Lincoln’s greenbacks), sparking the inflation that has plagued us ever since. He also increased taxes and tariffs.

The cost of the spending binge

So, add up the LBJ-Nixon spending binge, in today’s adjusted dollars: $3 trillion for Nam, $300 billion for the Moon Shot, tens of trillions for the Great Society.

Although the Moon Shot wasn’t the main part of the spending binge, it was a large part of it.

In addition in 1972 Congress indexed Socialist Security to the inflation rate, with Nixon’s backing. Except the index was to the cost-of-living rate, NOT to wages — a completely idiotic thing to do. The result is that at times like these in 2009, when jobs are dying and pay is stagnant, oldsters still get a cost-of-living increase in Socialist Security — 5.8% for this year.

Did you get a raise of that much? I didn’t think so. Yet you’re forced to pay for the SS increase.

1970s-2000s

The 1970s were the Malaise. In the 1980s, Reagan stabilized the dollar, cut taxes and regulations for a few years and sparked growth. Bush I was a disaster.

In the 1990s, Clinton was a disaster for his first 2 years in office, then for his next 6 years, ever slick, actually cut taxes and was not too bad on spending.

In the 2000s, Bush II panicked after 9/11, inflated the currency, spent wildly on war and domestic waste, and enacted tax cuts that will expire next year. Now we have Obama, who is continuing Bush’s disastrous policies so much he should be adopted by the Bush family and dubbed Bush III.

No wonder the system is going bankrupt.

It’s even worse now

As bad as the 70s were, it’s even worse now — because now our manufacturing base is greatly eroded and the country is much less Christian. The whole superstructure of war, deficits, debt, inflation, and wild spending is collapsing like a cheap card table. There shall be wailing and gnashing of teeth.

Republicans finally good for something…

I’ve been bashing Republicans pretty well lately. And they deserve even more bashing.

But I’ve finally found a reason for their existence: All the Republicans in the U.S. House supported Ron Paul’s bill, H.R. 1207,  to audit the evil, secretive, anti-democratic, inflationary Federal Reserve Board. It’s also got 60 Democrats supporting it, and is advancing in the Senate.

Here’s a YouTube explaining it:

Is the gold standard “Mission: Impossible”?

I wonder if our government ever is going to wise up and put America back on the gold standard to prevent inflation and currency uncertainty. We’ve now suffered almost 38 years rampant inflation — with no sign of abatement.

Even Republicans refuse to heed the sage advice of Ron Paul on returning to the gold standard.

(Tell me, again, why Republicans refused to nominate Ron Paul for president? Oh yeah, that’s right: They’re losers.)

I was reminded of how long we’ve been off gold — and on the “funny money” dollar — while watching a DVD of the old “Mission: Impossible” TV show. It included a reference to the currency turmoil after President Nixon foolishly took America off the gold standard on August 15, 1971.

The “Mission” episode is called “Underwater” and aired on TV on Nov. 6, 1971. It was produced a couple of months before the air date — that is, right after Nixon’s action.

The plot involves diamond smuggling by “The Syndicate,” the show’s continuing euphemism for the Mafia, used so as not to bring down Italian-American boycotts.

At about 6 minutes into the episode, Casey, the blonde bombshell secret agent, says:

$75 million is a lot of money, Jim.

Jim Phelps, the head of the Impossible Missions Force (IMF), explains:

Well, the Syndicate’s gone in very heavily for stolen gems, Casey. With international currencies so unstable, they make a perfect investment.

What he doesn’t point out is that his own U.S. Government, which runs the IMF — a kind of super CIA — caused the currency instability problem in the first place. Before 8/15/71, the dollar was pegged to gold at $35 an ounce, and all major world currencies were tied to the dollar. So during this period, 1944-71, there was great currency stability, which facilitated trade and growth.

For example, in 1957 a barrel of oil cost $3.14, while in 1970 it cost $3.39. That’s only slight inflation of about half a percent a year (most of which, if you click on the chart, occurred in the late 1960s as the dollar weakened).

38 years of inflation

Since then, gold has risen in price to about $925 today, July 14, 2009. That’s a 2,642% increase. No wonder everything costs more.

For example, back in 1970, crude oil was $3.39 a barrel. Today it’s $59.37. That’s a 1,751% increase. It shows how closely gold/oil are connected.

The $75 million in gems back in 1971 would be about $2 billion in today’s inflated money — the inflation caused by the U.S. never going back on the gold standard.

In the TV show, the IMF beats the “Syndicate,” catching the gem smugglers/killers.

But the real crooks, Nixon and the whole U.S. government Syndicate/Mafia, go unpunished. And their successors in government are still profiting from “unstable” currencies by keeping us off gold.

Inflation hits…

I’m going to write down inflation I see. If you see something in your area, let me know.

My apartment just raised the price of a load of washing 25 cents, to $1.25 a load, a 25% increase.

The local 99-cent store a couple of weeks ago charged 99 cents for a dozen eggs. Now they charge 99 cents for half a dozen eggs, a 100% increase.

Why oil is dropping in price

Why is oil dropping in price, down to $80 a barrel as I write on Oct. 10, 2008? That’s down  from $147 a barrel in July, a drop of 46%.

Here’s why.

1. We are not “running out of oil.” There is no “peak oil.”  There is enough oil — and other energy sources — to last thousands of years. More proof here and here.

2. In times of peace, such as the 1990s, oil’s price usually is about 15 barrels per ounce of gold. As I write, the price of gold is $892/ounce. That means, as I write, an ounce of gold will buy about 11.2 barrels of oil. But that’s much better than in July 2008, when an ounce of gold would buy only 6 barrels of oil.

If you read my blog, you know I’m a “gold standard” guy. As I say, gold is the only real money. Everything else is priced in relation to it. Since 9/11, Bush-Greenspan-Bernanke inflated the dollar by reducing its value compared to gold, from about $300 to today’s $892. So, the dollar is worth 1/3 what it was before their disastrous inflation. That’s why the gas you pump into your car has tripled in cost. And that tripling in cost is what destroyed the market for SUVs, putting the Big Three auto makers in Detroit on the verge of bankruptcy.

3. Oil temporarily goes up in price (in relation to gold) for disturbances such as refineries blowing up and hurricanes. Those are short-term problems that don’t affect the long-term price of oil. Even political problems, such as the bans on drilling that Republicans attack Democrats for, are minor factors, because this is a global market.

Oil also can temporarily go down in price for such things as recessions and depressions. The current economic crisis indicates there will be a declining demand for oil in the coming months or years, so prices are dropping. But even that price adjustment will be temporary as oil producers cut back production.

4. The key phrase in #2 above is “in times of peace.”  In times of war or the rumors of war, in particular in the Middle East, supply is disrupted, or could be disrupted. Oil soared to $147 a barrel earlier this year (6 barrels of oil for an ounce of gold) because it looked like Bush or Israel might attack Iran. Iran then might have shut down oil shipping in the Straits of Hormuz, sharply reducing the world’s supply of oil. But such an attack has become less likely every week since then. A month ago Bush reportedly stopped Israel from launching such an attack. If Iran were attacked, oil could soar to $200 or $300 a barrel — the last thing we need in this economic crisis.

If peace — or at least the stability of the 1990s — were somehow achieved in the Middle East, oil again would return to its natural level of 15 barrels per ounce of gold.

Inflation is back — big time

I’ve long been warning you about inflation on this blog, and for years before that when I was at The Orange County Register. Now the evidence is obvious:

Wholesale prices rising at fastest pace since 1981
Tuesday August 19, 9:00 am ET
By Martin Crutsinger, AP Economics Writer

Wholesale inflation surged by 1.2 percent in July, more than double what had been expected WASHINGTON (AP) — Wholesale inflation surged in July, leaving prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.

“Economists” might not have expected it, but I did, and so did you if you read my blog.

The reason is simple: The government is printing too much money. You can see that by the price of gold, which has almost tripled in recent years (despite a recent decline). Check out this chart:

And note the date on the AP story that I began with: highest inflation since 1981. That’s the year Ronald Reagan was inaugurated, cut taxes and (along with Fed Chairman Volcker) stopped inflating the dollar. Those two actions — tax cuts and sound money — broke the back of the 1970s “stagflation” (stagnation + inflation) and formed the foundation of the prosperity we have enjoyed the past 27 years.

Now, President Bush, the anti-Reagan, has inflated the currency, along with Fed chairmen Greenspan and Bernanke (the anti-Volkers).

And stagflation is back.

There is NO energy crisis

I was somewhat surprised to find The Orange County Register’s blog, Orange Punch, worrying about “our reliance on Middle East imports” of oil. This is similar to McCain and Obama coming up with schemes for “energy independence.”

In fact, we don’t “rely” on oil imports from the Middle East or anywhere. We “rely” on the free-market to deliver us the energy we need. The oil business is an old, mature business that is well organized to deliver us petroleum products. The only thing the government should do is get out of the way, including pulling all American forces out of the Middle East.

Nor are we “running out of oil.”  Actually, the world is awash in oil.

But, if you’re still worried about “our reliance on Middle East imports,” here’s a list, from the Department of Energy, of oil imports to the U.S. in May from the top 15 countries (thousands of barrels per day):

Canada           1,840
Saudi Arabia    1,578
Mexico            1,116
Venezuela       1,030
Nigeria              851
Iraq                 583
Angola              464
Algeria              440
Brazil                318
Kuwait              263
Colombia           245
Ecuador            162
Russia               119
Libya                  96
Equat. Guyana     93

Most of the countries aren’t even in the Middle East. The top country is Canada, last I heard friendly to us (even though they did export to us Peter Jennings). Third is Mexico, another friendly neighbor.

The Middle Eastern countries are Saudia Arabia, a close ally since World War II. Their military depends entirely on U.S. aramaments. Iraq: run by a puppet U.S. government. Kuwait: a U.S. dependency since Saddam was kicked out of there in 1991.

That’s it. Libya and Algeria are North African countries, but friendly to the U.S. nowadays. Venezuela is now led by nutty President Chavez. But who cares? He can’t drink the oil. He has to sell it to us. And when an oil crash comes, his people will be starving and kick him from office.

This whole foreign-oil dependency and oil crisis hullabaloo is much ado about the wrong thing.

The real reason energy costs so much is the inflation caused by the U.S. government. This is not an energy crisis, but an inflation crisis. The inflation crisis is caused by us not being on the gold standard since 1971. A secondary cause is U.S. meddling in the Middle East.

Go back on the gold standard and get the U.S. military out of the Middle East and the “crisis” will be over.

But you know what, even this “crisis’ isn’t that big. I started driving back in 1971, just before Nixon stupidly got us off gold. I remember paying 31 cents a gallon. Since then inflation has been more than 1,000%. So gas should cost at least $3.11 per gallon. Yet a gallon of gas even here in Taxifornia is $2.99. So gas actually is cheaper because capitalists have discovered cheaper methods to bring it to me.

Moreover, the car I drive — roughly the equivalent of my father’s car I started driving back in 71, but with a CD player instead of an 8-track — is at least 50% more gas efficient as Pop’s 67 Oldsmobile 98.  So I’m actually paying less to drive every mile.

It’s still amazing that, for about $400 in gas, you can drive across the whole United States in a mid-level sedan with the air conditioning on and your Elvis CDs blasting out your ears.

So where’s the energy crisis?

Inflation and pink elephants

Since around 2002 I’ve been warning about inflation, first when I was at the Orange County Register, then on this blog. Inflation usually begins as a cheap way for the government to pay for a long war, as this history of inflation notes. The Iraq War now is more than five years old, with no end in sight. It’s the second-longest war in American history, after the Vietnam War — itself paid for by the late 1960s-1970s inflation.

Look at the graph in the upper right. It shows how the inflation of the 1970s was sparked by a sharp rise in the price of gold. And how gold has more than tripled against the dollar since 9/11. That now is translating  into inflation across the board. Now we’re getting it — good and hard.

Isn’t that obvious? When you supply too much of something, its value goes down. With inflation, too much money is created — is put in circulation — so the value goes down against gold.

Why can’t Bush and the Federal Reserve Board see that and stop printing so much money, thus cutting the price of gold to around $350, where it was for most of the previous 2 decades?

The inflation sequence…

First commodities go up: hence the oil and gas price hikes.

Then manufactured goods go up.

Next, services and retail goods go up.

Depending on interest rates and other factors, sometimes a real-estate boom ensues, then goes bust. We’re going through that with the boom/bust in housing values and ensuing spike in foreclosures.

Finally — and last — wages. That’s why consumers get slammed, hard. AP is reporting:

Most inflation this year has come from food and fuel, as retailers resisted passing along to strapped consumers the higher prices manufacturers charged them, but coming increases from companies such as Johnson & Johnson and Hasbro Inc. may leave them with no choice.

“While these increases have not for the most part been passed on at the retail level, it is inevitable that they will be at some point,” said Dean Baker, co-director of the Center for Economic and Policy Research. “Car dealers and other retailers cannot continue to absorb rising costs at the wholesale level and not pass some of these increases on to consumers.”

Sherwin Williams Co. on July 17 announced its third price increase in eight months. The company has been having “difficult discussions” with retailers, Chris Connor, chairman and CEO, said on its quarterly conference call….

The increases keep coming.

Dow Chemical Co., the second largest chemical company in the world after Germany’s BASF, is raising some prices by as much as 25 percent this month, following June price increases that were as high as 20 percent on all products. The increase is sure to put more pressure on manufacturers, since Dow’s chemicals are used in everything from packing peanuts to frozen-food trays to diapers.

Some of us remember the 1970s

It was all so predictable, especially if you lived through the 1970s inflation, with most of our lawmakers and policy makers did, including Fed inflationist bosses Greenspan and Bernanke.

Maybe the explanation is that President Bush spent the 1970s getting drunk, so he doesn’t remember anything from that decade except pink elephants…

I WARNED you about inflation

Since 2001, I’ve been warning about inflation, including on this blog the past year. Now, the inflation is becoming obvious.

U.S. consumer prices soared 1.1% in June, about 13% per year. Do you hear me now, America?

Here’s the process of inflation:

1. The Federal Reserve Board creates too much money, as it has since 2001. After 9/11, then-Fed Chairman Alan Greenspan panicked and flooded the market with new dollars, supposedly to prevent an economic collapse.

2. Gold rises in value to reflect the inflation. Gold has more than tripled in value against the dollar since 2001.

3. Other commodities are closely liked to gold, so they rise in value as well. That’s the main reason oil has risen in price. The secondary reason is Bush’s wars in the Middle East oil areas. Check out this analysis and chart.

4. It takes a while, but eventually everything else goes up in price. The diary farmer pays more for the energy used in his cow-milking machines and farm trucks. The wholesaler pays more for gas on his trucks to bring the milk to market. Your local grocery store passes on that cost, plus its own higher energy costs, to you, the consumer. Because it’s harder to feed your family, you demand a raise at work, and maybe get it. To pay for your raise, your company charges more for its products.

5.  Eventually, the inflation house of cards collapses because the prosperity all along was phony. It was created from the nothingness of funny money. Foreclosures rise, unemployment spikes, businesses fail.

6. If we had a gold standard, the price of the dollar would be fixed to that of gold — as it was before 1971. Then there would be only minor, temporary price fluctuations, as during wars and natural disasters. There would be no inflation and its disastrous consequences.

So, let’s not blame the Arabs, the Muslims, the Middle-Eastern countries, commodities speculators, the lack of oil drilling in America (a minor factor), the “lack” of regulation, capitalism — or anything but the inflation caused by creating too much money, and the Bush Wars that have used so much money and encouraged the Fed to goose the economy with inflation.

If gold stops going up in value, eventually the inflation will end. If gold’s price drops to, say, $400 an ounce, less than half its current price, then the inflation will be mostly reversed.

It’s that simple.

$4.479 for gas

On Saturday, June 14, I paid $4.479 for gas at Sam’s Club. That’s up 46 centavos from the $4.019 I paid just paid two weeks ago at the same place, the cheapest I can find in these inflated parts.

That means gas is going up almost $1 a month. So it could be, if this keeps up, $10 a gallon by the November election.

It’s hard to see how McCain can win with gas going up this much. Here’s the reason gas is going up:

1. Inflation to pay for the The Iraq War. Bush-Greenspan-Bernanke decided to pay the bills by inflating the dollar. Gold now is at about $870 an ounce, almost tripling from when Bush came into office. (Commodities closely follow gold prices.) That accounts for most of the rise in gas prices, from about $1.13 a gallon when Bush took over to the $4.479 now (where I live in Orange County).

2. The Iraq War itself, and the expected Iran War, which have disrupted the oil supplies.

Either way, you have to blame Bush and the Republicans, who also controlled Congress during most of this inflationary period.

McCain has no alternative to the inflation. He wants to keep the Iraq War going, and his favorite song is, “Bomb, bomb, bomb, bomb, bomb, Iran,” which he actually sang to the tune of “Barbara Ann.” (YouTube here.)

Obama doesn’t have an alternative either. He’s not talking about returning to the gold standard, the only way to stop the inflation. And he has become eager to “Bomb, bomb, bomb, bomb, bomb Iran,” too.

So save your pesos and expect to pay even more for gas. We’ll even likely end up with 1970s-style gas rationing, too, as under the inflationary Nixon-Ford-Carter “malise” years of the 1970s.

McCain’s folks might be right that Obama would bring us Jimmy Carter’s second term. But what they don’t tell you is that McCain would bring us Nixon’s third term.