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Fixing American 'dumbocracy'

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By Bill Costello

The world has been turned upside down: Socialism is on the rise in the U.S. and capitalism is on the rise in China. The former is a result of an uneducated electorate that fails to understand socialism’s history of producing poverty; the latter is a result of pragmatic leadership able to put aside communist ideology to embrace capitalism because it produces prosperity.

Thomas Jefferson, recognizing that the cornerstone of democracy rests on the foundation of an educated electorate, said that “whenever the people are well-informed, they can be trusted with their own government.”

Unfortunately, Americans are not well-informed about economics. If they were, they would have learned from the economic failures of socialism—in China, Cuba, Eastern Europe and all of the other places where socialism took root—and elected a pragmatic leader who supports capitalist policies.

Instead, they elected Barack Obama, an ideologue who supports socialist policies that promote big government, class warfare, and redistribution of wealth. During the election, Obama demonstrated his lack of pragmatism and economic understanding on several occasions. For example, during a debate with Hillary Clinton, Obama said he would favor raising the capital gains tax “for the purposes of fairness,” despite the fact that doing so would decrease tax revenues. This should have been a clue to the American electorate that punishing the rich is more important to Obama than improving the economy for all Americans.

Now that he’s in office, Obama is ignoring the advice of White House economic adviser Christina Romer, who published a paper with her husband in the June issue of "The American Economic Review" that concludes that tax increases kill growth. Obama is still raising capital gains taxes. Ideology trumps pragmatism.

In the book, "The Myth of the Rational Voter: Why Democracies Choose Bad Policies," George Mason University economics Professor Bryan Caplan argues that typical voters have strong opinions about economics despite the fact they never studied the subject. Those biases tend to compel voters to support economic policies that are not in their best interest. For example, typical voters are irrationally biased against markets and interacting with foreigners.

This does not mean the democratic process is flawed; it means the American electorate needs to be better informed about economics.

China’s pragmatic leaders learned from the economic failures of socialism and decided to embrace markets, monetary discipline, and pro-capitalistic tax policies. China is being richly rewarded for that decision.

Obama, the ideologue, still believes in socialism. An uneducated electorate voted him into office. The U.S. is paying the price for that decision.

As developing countries observe the economic center of gravity shifting from the West to the East, China begins to emerge as an alternative model to the U.S. The long-held assumption that capitalism requires democracy is being challenged by China, which has adopted some capitalist ideas while retaining an authoritarian government.

To prevent the economic and political centers of gravity from shifting to the East, the U.S. needs an educated electorate that supports capitalism, not socialism. This can be accomplished by establishing mandatory economics courses at all levels of education.

Until then, the outcome of the U.S. education system will continue to be a “dumbocracy.”

Bill Costello, M.Ed., is the president of U.S.-based Making Minds Matter, LLC and the author of "Awaken Your Birdbrain: Using Creativity to Get What You Want."

© Japan Today

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This guy is a moron doesn't know what socialism is himself, many liberal social democracies especially in northern Europe

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Is this idiot for real. Calling the US electorate uneducated when his man did not get in, calling it socialism when the other guy implements a program of social changes that help the lowest sector of society. Using China as an aspirational example, where oppression is the norm, seems to be a further reason to assume that it is Bill Costello who is part of the dumbocracy. JT - why are you publishing this stuff

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"Unfortunately, Americans are not well-informed about economics." "An uneducated electorate voted him into office."

This essay is so full of unsubstantiated sweeping claims that it borders on satire(for his sake I hope it is) Making Minds Matter couldn't be a worse choice for the title of this company.

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This guy is a total idiot. China did not learned from the economic failures of socialism, all they did was hire kids to work in sweat shops. China is wealthy today because everything in the world is made in China. Without the outside world having their products made in China, China would be a very poor country like probably North Korea. As of Economics in America, Americans are being lied to about almost everything and that is why america is having a very hard time reforming itself. Obama is trying to do a job that most of the people in the white house are against. Plus one thing that I think Obama has made a big mistake on is that there is more money going out than coming in. Obama needs to slash politicians salaries and cut wasted government spending. To revive a bank account, you have to first control your spending and concentrate on making money which the American government isn`t doing.

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People need to do what is right for their neighbor whatever economic system you call it. Corruption in any system will destroy it. Without morals (remember we might no longer make judgements based on a common morality as judge Walker stated) one cannot stand. It will be a free for all. However, Judge Walkers reasons for his judgement is being questioned (not the conclusion) because there is a common good. Isn't there? Natural law must stand to keep America's democracy because it reflects man himself. The crazy rest is just democracy in action. God bless it. I hope China follows for we need them and it will be easier to live with each other.

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this guy is one of the talking heads that helped create the american 'dumbocracy.' he doesn't even know what socialism is. also, of what relevance is this article to japan?

Moderator: It does not have to be relevant to Japan? Like all major news websites in the world, JT does not publish material only about its host country.

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I kind of like this guy.

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I suspect that the next ten years will bring surge in popularity of articles like this, using China as an example to bash the U.S.A., much like many leftists did in the eighties with Japan and the U.S.A.

Been there, done that, thanks.

Although I do agree that in general, electorates are much less educated than they should be (not only in the U.S. but everywhere).

This is simply because a politician has about a minute of attention span time to convince voters to vote for him/her, AND humans don't have an intrinsic grasp of economics. (Ref. Steven Pinker, How The Mind Works.)

The reason Obama was elected and not McCain is that he was much better at promising things in that small window of attention span, as well as he was seen more "not Bush" than McCain was.

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Excellent article. Spot on about the state of America under the rotten Obama Administration. Its not Socialism thats on the rise in America under Obama, its enforced Marxism. The world has indeed been turned upside down.

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Failures of socialism? Haven't socialist policies worked out great for several northern European countries recently ranked among the best countries in the world by Newsweek?

But Obama isn't a socialist anyway, so it's irrelevant. But Bill Costello, the idealogue, is dumb.

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For example, during a debate with Hillary Clinton, Obama said he would favor raising the capital gains tax “for the purposes of fairness,” despite the fact that doing so would decrease tax revenues.

This is a "fact" that Mr Constello rather conveniently fails to support with any reasoning or data whatsoever. In fact, it is a cherished bit of right-wingo fairy tale, nothing more. We've had eight years running of lower taxes for the rich, and we are now living with the result.

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a result of an uneducated electorate that fails to understand socialism’s history of producing poverty

How about the result of rampant capitalism that failed to produce an educated electorate?

This article is living proof of how dumbed-down parts of America have become.

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In the book, “The Myth of the Rational Voter: Why Democracies Choose Bad Policies,” George Mason University economics Professor Bryan Caplan argues that typical voters have strong opinions about economics despite the fact they never studied the subject.

Excellent description of the author!

Mr. Costello is clearly of the dim-witted sort who thinks that everyone is faced with a stark choice between unfettered free market capitalism that is, essentially, anarchy, and some sort of centrally controlled Soviet gulag economy.

Smart government means knowing where free markets work and where they don't, and designing government accordingly. All of the evidence--and I mean ALL of the evidence--shows that progressive tax rates and the government provision of certain services (including health care or health insurance) works better than the Mad Max free-for-all that people like Costello get horny thinking about.

Modern republicans are just a bunch of tough guy wanna-be 12-year olds.

American government would work much better if the Left shifted a little further to the Left and the Right were Eisenhower Republicans. Then we could have an honest, fruitful debate.

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Seriously? The people who froth at the mouth about socialism actually taking hold in America have their heads so far up their behinds they are going to need their hospital cards. It's mental, ridiculous, absurd to believe that socialism will ever take hold in America. It's the bastion of not-socialism. And any anti-Obama pundits who think they can scare people into believing it are not only deluded, but don't have the simplest grip on politics as it is.

Health care for all isn't socialism. I'll say it again. Health care isn't socialism. Isn't. Socialism. How many times do I have to say it? Plenty of great democratic countries have govt-organised healthcare - across Europe and through Asia. It's only sad that Americans have gotten used to a ridiculously overpriced user pays system and think of it as normal.

The final irony is how backhanded this article is to the general populace. While I'm sure most are uneducated about international affairs, suggesting they are dumb enough to fail to see the one thing our pop culture inculcates against is pretty insulting.

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"Socialism is on the rise in the U.S."

We're going to do something about that, starting in November.

Obama and the Democrats ( and some non-conservative Republicans ) have put my country into debt so deep, it'll take decades to pay it off.

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Sarge,

Remember them Bush tax cuts? How about a pair of wars?

You don't know dirt about deficits.

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"Socialism is on the rise in the U.S." We're going to do something about that, starting in November. Obama and the Democrats ( and some non-conservative Republicans ) have put my country into debt so deep, it'll take decades to pay it off.

Thank you, Sarge, for your regular posts. They are effective reminders of the truth to banker David Hannum's observation about a sucker being born every minute.

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Beel - Heh, I noticed you didn't refute what I said.

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We had seen similar "news" all the years in the 80s, only that China was Japan. I assume in 20 years we will leave the Chinese model behind and read how the "African model" will take over the US as Number One.

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Honen: "Remember them Bush tax cuts?"

I do. They resulted in MORE tax revenue for the government when people, rich and poor, had more of their money to spend. Which is why even some Democrats think it's a good idea not to let them expire, at least for the lower-income people.

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The long-held assumption that capitalism requires democracy is being challenged by China, which has adopted some capitalist ideas while retaining an authoritarian government.

Capitalism never needed democracy, just look towards Singapore.

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the American electorate needs to be better informed

This blog rant should have stopped here. If you read the comments on sites about US politics, economics, and science you will run across a huge section of US society who can't put together a coherent sentence, who can't spell, who can't find the CAPS key, who confuses innuendo and rumor with fact, who has abandoned logic for emotion, who replaces thought with name-calling, and who equates religion with science.

Plus, as many others have pointed out, his 'facts' are not. For example, if he thinks China has turned away from socialism, wait until Chinese leaders decide 'Western decadence' has gone too far and, bam, the doors to China will snap shut so fast his head will spin.

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Sarge,

Here's analysis from 2004--before the financial meltdown and the Obama administration--showing the scoop on the Bush tax cuts:

http://www.cbpp.org/cms/index.cfm?fa=view&id=1811

Read up!

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de Tocqueville had it right when he observed back in the 19th Century that, as wonderful as American democracy was, it was doomed as soon as half the electorate learned that it could vote its way to getting the wealth of the producing class (a rough paraphrase).

That's what you see in America today. Sponges and parasites taking money in the form of benefits and tax credits from those who studied, worked, saved, invested and took risks. Obama is a resentful fool with a big chip on his shoulder. He rewards the grasshoppers and steps on the ants, inverting the fable and its lesson.

Of course the grasshoppers are uneducated and ignorant, otherwise they would understand the lesson of another fable, that of the Golden Goose. It's a lesson the grasshoppers always learn the hard way, whether it is in Detroit, USA or Zimbabwe (or as it was known in its golden goose days, Rhodesia) or Greece. Make it unprofitable to work hard and the industrious will cease to do so. They will either work less, or leave.

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I think many of you fail to realize that this guy's only goal here is to be provocative. Period.

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Bebert61,

I'm not familiar with that quote. Are you thinking of the one usually attributed to de Tocqueville but actually said by Tytler?

Wikipedia snippet: The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.

* This is a variant expression of a sentiment which is often attributed to Tocqueville or Alexander Fraser Tytler, but the earliest known occurrence is as an unsourced attribution to Tytler in "This is the Hard Core of Freedom" by Elmer T. Peterson in The Daily Oklahoman (9 December 1951): "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy." * Variant: The American Republic will endure, until politicians realize they can bribe the people with their own money.

If that's the quote you were thinking of? If so, it has nothing to to with the poor taking from the rich, and everything to do with Congress buying votes. As it stands, the US currently has the opposite problem of what you were thinking of. The poor in the US don't have the clout to have more than a few Congresspeople offering them bribes out of the public treasury. The rich, though, are another story. The Bush tax cuts are just such an example of democracy-destroying fiscal irresponsibility carried out to win/maintain the support of people who should know better.

Apologies if you were thinking of a different quote.

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So let me guess : this guy's a Republican? Easy for him to bash Obama without facts, but that's exactly what the Americans who post here do on a daily basis. I'm American, but I had a good laugh when I read this article.

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Actually the author is right. Capitalism is the force that is changing in socialism which is worse then capitalism. At the same time, the U.S. government want to expand her role in monitoring businesses which will only have a negative impact on the consumers and the people in the long run. The U.S. was build on capitalism not socialism. The tide have changed and there is no going back.

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I find it strange to find this kind of senseless Obama bashing printed in Japan. As an American, this article serves nothing more than to spread mis-information and distoring what really is going on over here. We're trying to stop the slide, and it's tough. But the Japanese people know that all to well.

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I think that JT felt obligated to publish something from him since he mentions them on his site. This article was first published on Aug. 3rd and is aimed solely at freepers. It's actually a good thing to see it published like that. We can really see what the ultra-right political activists read on a daily basis. I totally disagree with him but his article is a good example of disinformation.

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Honen,

Wikipedia is not a reliable source. In the past I have used Wikipedia, but one must remember that Wikipedia is not a valid source when anyone can contribute to the article without credential as to what they are writing about.

People need to study American history and the current events to understand the direction the country is heading, and the consequences if the wrong decisions are made. The same thing with China.

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mummet said: This guy is a moron doesn't know what socialism is himself, many liberal social democracies especially in northern Europe

This was apparent in the first paragraph, and then I quit reading and jumped straight to the comments.

that fails to understand socialism’s history of producing poverty

Communism has a history of taking a country that was 98 percent poverty and 2 percent super wealthy ruling elite, and making it 100 percent poverty. Communism has not fixed any economic woes, true. But has torn down some true bastards.

But that is communism. Socialism is doing just fine.

Okay, back to the article... Bah! Enough. He uses traditionally poor places to prove that socialism makes people poor in the third paragraph. What self-fulfilling prophecies!

Who did this moron pay to get his M.Ed. anyway?

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skipbeat,

It seems you may be right about the (un)reliability of Wikipedia, as I'm finding other sources saying it wasn't Tytler either.

The point, though, is that if anyone is benefiting in the US from the phenomenon described, it is not, as the other poster suggested, poor people taking money from the rich. Quite the opposite. In looking for the source of the quote, I found this apt commentary:

http://www.correntewire.com/what_was_never_said_and_who_never_said_it

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The funny thing is, I agree with Mr. Costello's basic premise--that America is suffering as a result of having an uneducated electorate. Where I differ with the author, though, is in my awareness that the author himself is one of the uneducated referred to. It's a shame he hasn't figured that out yet. If he had, we wouldn't have to read this garbage.

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US politics is power politics not idealogical politics. Looking at it that way... Well the article is kinda pathetic...

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Oh dear, here we go again! Those old litanies for those poor rich people!

The richest 1 percent of Americans have 38 percent of all the wealth. Half of all the wealth is owned by 5 percent of the people. The top 20 percent own over 80 percent of the wealth, meaning 80 percent of us have to share just 20 percent of the wealth.

Now someone is going to try to tell us they got there by hard work, rather than just owning means of production, preferred stock, land, etc. Yeahright!

Look, the rich got rich and keep getting richer by leeching off us. Yeah, we leech off them a bit too, but they leech off us more, which is why they have so much more wealth. The system of ownership is pretty crappy, and hard work is not where the rewards go. That is a myth. Smart work is where the rewards go, as in playing the system of ownership correctly. It also helps to have no shame whatsoever. You have a family of 5 not paying their mortgage because of hard times, you toss them out for a single guy with a steady job.

I tell you, it does not get much dumber than hearing non-rich people come out batting for them. Look, if you are not rich you are not going to be rich. Stop dreaming and PYHOOYA! You don't need to be rich to be happy, and defending the rich against all the evidence won't make you rich anyway!

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When I read the first sentence I thought it was intended as some sort of amusing caricature of the paranoid, completely irrational and incoherent ramblings that one sometimes encounters from morons who think they understand economics because they watch Glenn Beck and invest all their money in gold coins.

Then I kept reading and it was like "Holy crap, he meant that to be taken seriously?"

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Yes, capitalism was working just fine two years ago when the whole system collapsed. Even Bush blinked and set up TARP to the tune of $700 billion more dollars added to the bush red ink. But without this infusion of casf depression would have set in. So in fact socialism saved capitalism in the USA. The author is clueless.

The author is so clueless he defeats his own premise with his own words. China business is mostly state owned and now its number two in GDP in the world. It passed Japan which is more socialist than capitalist in an American sense. So the second and third economies are socialist in form and nature. Yes that socialism just does not work out. Europe too, what a failure socialism is there. The EU GDP is bigger than the US, but tfat does not fool the hapless author.

Anyway the neocons are intellectually bankrupt and have proven over and over again they reality is just beyond their limited intellect. 2007 and 2008 did not happen for them I guess.

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OMG!! The Reds are taking over America!! ... tres pathetic people. This article is reminisicent of the McCarthy era. The author doesn't quote any sources to support his economic opinions, and ignores the most basic flaw in his entire argument, that the lack of education in America is a product of the American system which prioritises tax breaks for big business over adequate social and educational programmes (you can't have education without stability in the surrounding society).

In short this article is a prime example of the "dumbocracy" of which it speaks, a series of unsupported fear-mongering comments that, when analysed by an educated critical thinker show themselves to be nothing more than a web of lies.

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I smell a Right Winger! Probably looks up to the former quitting governor of Alaska, Palin, who is still trying to master the English language. It's funny he talks about "dumbocracy" because typically the Repug electorate is the rural uneducated who are feared/fooled into believing their lies which are all geared around making themselves wealthier at the expense of everyone else.

He sounds like a classic American Right-wing nutter who totally ignores Europe as a model for successful balance of capitalism and actually caring enough to take care of it's citizens at the same time.

If you ever meet one of these 'dumb' Americans, ask them to give examples of countries that successfully follow their ideals of almost no taxes and no social services. Where people are basically free to do whatever they want without regulations to make money and if you don't make it, too bad for you. In Asia, the Philippines is a great Repug model of "screw you" capitalism which is exactly what they are preaching.

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ridiculous bashing of Obama as well as wholly ironic; considering the Republicans have destroyed America. Congrats I guess

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Even Japan for all its politics could have showed the writer a thing or two about transit, and walkable livable communities not 100% dependent on the car.

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I've lost track. Is English evolving or am I getting senile? Somebody update me:

What's the difference between "socialism" and "communism"?

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fairly low-brow article. Surely there are more respectable authors that JT can publish instead of this drek

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more to the point though, as America dwindles in significance, will Japan simply follow it down the drain, or can it realize not all bonds are indivisible? If South Korea and Japan can work out history such that they are on closer terms yet more equally respectful of each other than now that might offset such a loss

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Not sure the writer understands what socialism is. Seems like he's part of the dumbocracy.

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@Honen - www.heritage.org/Research/Reports/2007/01/Ten-Myths-About-the-Bush-Tax-Cuts

Read up!

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I've lost track. Is English evolving or am I getting senile? Somebody update me: What's the difference between "socialism" and "communism"?

That's like saying what's the difference between consumerism and facism.

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Right off the bat this article gets it wrong: Socialism is on the rise in the States? Huh? How does this "author" arrive at this? Was it the figures showing the greatest concentration of wealth in the hands of so very few ever? Hmmmmm, doesn't this have another term?

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FentonFalsitt said: I've lost track. Is English evolving or am I getting senile? Somebody update me:

Third option: You are a brainwashed American. Crack a book. Learn.

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Wow. Either he is a) a classic example of an American bubble boy idiot. Just another fool who hasn't realized the game has changed. You can believe anything you want, and chose whatever "facts" and "reality" you want on the way up. That is how it works in a bubble. Keep thinking that way on the way down and you'll be back in the cotton fields soon enough.

Or b) he doesn't believe a word of it. Just another spin doctor for the kleptocracy working to protect the corporate welfare state.

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I think the author was trying to be satirical.

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I think the author is just trying to be creative (with the facts) to get what he wants (money).

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OK, I want to add a few parting shots to this "commentary" that more properly belongs on somebody's personal blog than a news site.

The author spends about half of it complaining about how Americans don't study economics. Yet it is obvious from the content that he himself has never studied the subject, save perhaps to trawl it for a few talking points to support his already-formed political opinions. Having an "M.Ed." from an undisclosed institution does not make one an economist.

Further, the second to last paragraph (well, the last full paragraph)is just dumb. For one, its naive in the extreme to believe that "establishing mandatory economics courses at all levels of education" would somehow create an educated electorate that "supports capitalism, not socialism." For lack of a better phrase "things just don't work that way" as someone who purports to have an education background should know. I'd also be curious to see the survey results showing that Americans support "socialism" over "capitalism" BTW. The mere fact that they elected Obama just isn't going to cut it as evidence that they do, sorry.

Probably - no undoubtedly - more "dumb" is the notion that all you need to do is institute mandatory economics classes at all levels of the American education system to "prevent the economic and political centers of gravity from shifting to the East." I just don't know where to begin with how stupid that statement is. Does the author actually believe that making American kids study economics will somehow put a halt to a global, historical process that has been progressing for decades, supported by a myriad of factors? Actually, screw it, he probably does.

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"Socialism is on the rise in the States? Huh?"

Um... yes. Have you missed the part about the U.S. government bailing out all these companies, becoming the majority owner of General Motors, and on the verge of taking over the health care industry? Check it out.

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"mandatory economics courses"

My first college economics "teacher" almost never showed up to teach the class, she would just have someone turn on the pre-recorded tape she had prepared and had delivered to the classroom. The few times we did see her, she would be spouting about how great the Democratic Party is, and that it's "the party of the people," lol.

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No, didn't miss the part about that corporate welfare, but I don't think that's the type of socialism the "author" is talking about. An is this the same GM that's issuing an IPO soon, thanks to tax-payer money transferred to the hands of the elite?

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If you check out his website, it is yet another right-winger who visits Japan, a slew of pictures of Nara and Kyoto, and then is the "expert." Here to tell us ALL about the virtues captialism. You know, the capitalism that has people working for FREE for 100 hours a month. The capitalism that tosses people out on the street at the slightest downturn. But, but, but, we have to really ask is Japan capialistic? I mean, when there is SO much cooperation and AID from the government, propping up the yen, major subsidies, foreign aid that is designed to help Japanese companies, etc, etc, etc. And that socialism in Finland and Sweden and Holland (which has the highest ranking in happiness) looks pretty good to me. Yes, when there are dumb people guiding the companies (AIG, Enron, Citibank, etc, etc,) or in charge of governments, then bad things happen. I really wish these morons would go away. They are so 1980s! Reagan is dead--you goons. Go away!

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Um... yes. Have you missed the part about the U.S. government bailing out all these companies, becoming the majority owner of General Motors, and on the verge of taking over the health care industry? Check it out.

Is not the government trying to get out of these positions asap? Like forcing GM into an IPO in a time when they really should be waiting or forcing AIG to sell off its assets to repay the government? If it's socialism it's a strange brand of socialism never seen anywhere else...

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"The capitalism that tosses people out on the street at the slightest downturn"

Or, the capitalism that has made the United States the #1 economy in the world, with an incredible high standard of living compared with most of the rest of the world, including #2 economy China.

"Reagan is dead"

Yeah, but his spirit lives on.

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A number 1 economy on the decline since Reagan--thanks to brutal capitalism. The U.S. has always prospered with a strong and secure middle class. Reagan and his legacy set out and continues to destroy the middle class.

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"Reagan and his legacy set out and continues to destroy the middle class"

Sure, just make up stuff and post it, lol.

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"A number 1 economy on the decline since Reagan"

What about Clinton? Was that decline too?

OK, it's been on the decline since the last year of the 8-year Bush presidency. It might have been on its way back had Barack Obama not been elected, lol.

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Sarge said: Or, the capitalism that has made the United States the #1 economy in the world

What made America's economy was not a system, but rather finally tapping into all those resources so late in the historical game plus, being able to. That, plus hard work. And let us not forget greed. And, economy is not everything. I can't say America is number one, because, really, how do you measure economy? But I can say that if you take so much pride in being number one in economy, your priorities are out of whack.

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Sarge,

I figured you'd link to some Heritage propaganda.

I don't have the time or energy to refute all 10 claims right now, so I'll deal with the first two, which presumably are the "big guns".

"1. Myth #1: Tax revenues remain low. Fact: Tax revenues are above the historical average, even after the tax cuts."

What Heritage didn't realize at the time of writing (January 2007), though, was that GDP (their benchmark) was extremely bubble-inflated in 2006. hence, the "percentage of GDP" approach is pretty skewed. The authors concede this themselves in reference to the dot-com recession, saying "it is now clear that the pre-recession level was a major historical anomaly caused by a temporary stock market bubble." The same can, here in 2010, easily be said of 2006/2007.

"2. Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit. Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline."

So, you have a baseline that is only kept steady by a housing/derivatives bubble, and then you pile two wars on top of that. Presto! The budget deficit resulted from spending above baseline.

Really, Sarge, you have to do better than that.

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Hmm, dumbocracy in the Un-tied States...is the truth finally coming out?

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"What's the difference between "socialism" and "communism"?" "That's like saying what's the difference between consumerism and facism."

here's a better one... what's the difference between the "USA" and a "paradox"?

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Socialism has the potential to produce much more wealth than americanism. Moreover, socialism can also solve problems in a rational way. In contrast, americanism is an inhumane system, which causes the degeneration of humankind and immense suffering. Americanism is leading towards a holocaust for this entire planet, and the inhabitants of the planet cannot go on with such system.

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At the end of the day, economic arguments aside, "Democracy" in America is a fallacy. During the latest elections there was a lot of commentary on the role of campaign managers, campaign funds and the effects of advertising. What came out in the wash was that whoever has the most money wins, it's not about platforms or even how good they are at governing, it's just about money. Campaign managers could guarantee that X advert run in Y timeslot would yield a Z increase in votes... to a 95% level of confidence, which is the same as used in most scientific experiments.

In short the vast majority of American people are sheep, so dumb that they need advertising to tell them how to vote, and whoever advertises most wins. This is the true "dumbocracy", a so-called democracy where campaign budgets matter more than good governance. This is why the U.S. is in decline, because those in power need more sheep to vote for them.

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"and then you pile two wars on top of that"

I'll admit the two wars didn't help with the budget deficit. Yeah, it would have been better just to do nothing and hope that the EU or somebody would take care of everything, lol.

Hey, Honen, looking foward to your refutes of Myths 3 to 10, lol.

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In short the vast majority of American people are sheep, so dumb that they need advertising to tell them how to vote, and whoever advertises most wins.

And yet somehow Hillary lost... strange isn't it...

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you forget bush ruined the economy before obama came in . bush also wanted to privatize social security. if that had been approved all old americans would be homeless now . bad article ! bad article !!

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Frungy said: This is why the U.S. is in decline, because those in power need more sheep to vote for them.

I don't think America is in decline. In fact, the number of willing sheep we have is part of our strength. We can suit them up and send them half way around the world with guns and they will actually think they are protecting America, spreading freedom, saving lives, etc. etc. And you can move the goalposts and it won't phase them. They will come out batting for the rich and protecting George Bush despite the messes he got us into which are sucking us dry. When the troops are back home they will work like slaves to replenish our stores. Our sheep may be low on brains, but they have a lot of gumption to be used to serve the rich and the powerful. You wait and see.

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nicely done, it is true, in the USA dumb people do vote

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Mr Costello,

There is nothing socialist about a single policy that Barack Obama has introduced aside from one: bail outs. Which are in fact opposed by the left and were widely supported by republican - especially when Bush was president.

Fiscally responsible does not equal socialism. Republican leadership has wasted all of America's wealth on wars that build profits for companies and havent produced an rise in the quality of life for American people. Simultaneously reducing taxes on the rich -widening the economic gap and therefore spending the fed budget into a huge hole that SOMEBODY was bound to pay for at some point. To pay off republican debt, we MUST raise TAXES or face perpetual debt. Thanks Bush.

China is a whole other story. I think if it's so great there maybe Mr. Costello should move there where 90 % of the population is kept as de-facto slaves that provide expendable labor. There is no democracy whatsoever (unless you're stupid and think that there is). And little freedom at all; human rights and democracy campaigners get arrested all the time. Mr. Costello and his republican friend would actually fit in perfectly there.

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Actually id like to also add that the reason that China is so wealthy now is because they have almost free labor which helps the government owned companies produce ultra cheap products and increase their profits. None of this is spent on people - it's just used to invest in more and more infrastructure to make profits. I'm not even going to expand on the fact that they're cheating by artificially reducing their currency value. The government only has to provide anything for it's urban elite population - which is cheap. That's because most of the people in China don't demand any return on anything - BECAUSE THEY CANT.... THEY HAVE NO RIGHTS.. see Tiananmen Square... that was so "PRAGMATIC" of China's leadership wasn't it, Mr Costello?

But not a big deal - governments can murder thousands of innocent people. no problem. because they are the government. and they are legitimate. That you right wingers supported the invasion of Iraq.

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@Sarge

www.heritage.org/Research/Reports/2007/01/Ten-Myths-About-the-Bush-Tax-Cuts

The date on that article is 2007. It claiming all these gains that were basically wiped out in a matter of months. If the gains were really because of tax policy then why did the gains get wiped out? Because the article is BS. Your argument is BS. Our gains were based on a number of bubbles created by Bush era Anti-Regulation, hands-off business policies.

It also cites out of control spending at many points, but doesn't say that the spending was almost all Bush's Iraq War. Nor does it really connect the dots that the spending was known at the time of the cuts. I remember the republican talking point at the time was "well, as a percentage of GDP it's not that much debt..." Here we are in 2010, how's that working for us? The republicans knowingly put us into debt. The republicans got us into the war in Iraq. The Republicans ruined our economy. The Republicans spend a good part of the last decade selling our future to China.

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Well, 1 in 5 Americans think Obama is a Muslim................. and ya gonna teach these folks economics?! Ha!

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This editorial is ridiculous. Obama has absolutely nothing of a socialist, in most western countries, he would be seen as a center-right politician. Neither is he an ideologue, he has revealed himself to be an extremely pragmatic leader, ready to throw ideological positions under the bus to get reforms through (like his sacrificing the public option in the health care reform). He has enraged a lot of the left-wingers in America because he governs straight from the center.

OK, he cares a bit more about a fair distribution of wealth... as he should. A fair distribution of wealth is necessary for sustainable growth, if all the wealth is concentrated in a few hands, this kills consumer demand without which the economy stagnates or falls, and this leads to the richest acquiring new "wealth" by speculation instead of by investing in the real economy. This creates huge financial bubbles which end result is an economic crisis that has a chance of becoming a depression.

It's not a coincidence that 1929 was the year where wealth was most concentrated in American history, and not a coincidence that a very unfair distribution of wealth has been observed in recent years, preceding the present economic crisis. It's not a coincidence that the greatest growth ever experienced in the western world has been after WWII where policies tended to insure a fairer distribution of wealth.

That's not to say that the more equally wealth is distributed, the better it is, the truth is that there is probably an optimal balance, and right now the US is situated to the right of that balance, meaning wealth is too condensed for its own good.

Note also that China is not that capitalist, its government own the banks and forces foreign investors to partner up with local chinese businesses. Note also that China is growing faster than other countries like Bangladesh, Thailand and the like that are if anything more capitalistic than it is. The truth is China is a mercantilist nation with strong government controls on the levers of the economy, but that is friendly to foreign investors.

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I wonder: seeing that tax revenue is so important for the USA, why the moronic immigration policy? For instance, how does lobbying for illegal low-skilled Mexican immigrants bring better tax revenue plus less burden on the judicial, healthcare, and educational systems, than encouraging foreign professionals educated in the top US universities to work in the US? Chinese and Indian scientists seem to be leaving the US in hordes because of president Obama's immigration lunacy (which is bizarre coming from a person with his background). In a country like the US, economic and immigration policies are necessarily intimately interconnected; it is only commonsense to adopt some classification of immigrants to distinguish skilled from unskilled labour. But then I guess big corps interests won't be served properly by virtually free disposable labour from poor and vulnerable Mexican people: Some resemblance to China in this respect.

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Agree with most posters here. Article is poorly researched flamebait with conclusions that aren't even supported by the "facts" mentioned in the piece.

The author sets up a false choice between capitalism and socialism, when in fact capitalism and socialism have existed side-by-side in the US since its founding. Political, social, and economic policy exist somewhere on a continuum between the two over time. The US did a fine job of becoming a big and wealthy country in spite of all the "socialist" elements in its midst. Arguing otherwise is revisionism.

Anyone in the US ever had their kitty pulled out of a tree by the raging socialists at the fire department? Ever call the socialist cops to handle a noisy neighbor? How about those income redistributing SOBs that set up Social Security and Medicare? Fact is, There still isn't a good way to get capitalism to effectively manage resources for the public good. Even the "founding fathers," so affectionately quoted by those who wish to virtually abolish the role of government, understood this.

Society has not, and cannot, thrive without elements of socialism AND capitalism. It's a question of how much of each you throw into the mix. The US is having a fierce debate over this. If anything, a good economics education would help people realize that there are some things unregulated capitalism simply can't do, and that socialism, like capitalism, and even some elements of communism are necessary evils.

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"The Republicans ruined the economy"

During the 8 Bush years, the national debt increased by around $4.9 trillion to around $10.6 trillion. That sounds bad, but wait til you see this: During the past 1.6 years of Obama, the national debt has increased by another $2.7 trillion to make it around $13.3 trillion, with no end in sight to the increases.

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Obama, the ideologue, still believes in socialism. An uneducated electorate voted him into office. The U.S. is paying the price for that decision.

Who was it then that elected Bush? The educated electorate?

I guess the US needs a stronger communist party and Bill Costello as the General Secretary of the 'Politburo Standing Committee'.

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Sarge,

3 and 10, huh? OK.

First of all, "myth" three is pretty pointless, because I've never actually heard an anti-supply-sider suggest that supply-siders believe that all tax cuts pay for themselves completely. In fact, I've only heard this idea voiced by a few of the dumber variety of supply-sider. However, it is telling that Heritage feels the need to argue the point. Although they are arguing it in general terms, you can read it as an admission that the Bush tax cuts have not, indeed, paid for themselves, as you and many others now seem to be arguing.

As for "myth" ten, I was hoping you'd bring that up! Imagine a society of 10 people, 1 of which is fabulously rich and 9 of which are not. The rich guy pays $10 a year in taxes, and the other people pay $2 each. That's $28 in taxes, of which the rich guy pays about 35%. Now say you design a tax break that gives $4 back to the rich guy and gives $1 back to each of the other nine people. You have just shifted the percentage burden to the rich (it's now 40%). But this is all at the aggregate level. In fact, you have just given the one rich guy $4 that he doesn't need and, while giving only $1 each to the people who could really use the money. At the individual level, the tax breaks are indeed tilted towards the rich. There are just fewer rich people, so the pittance handed out to the poor is, all told, larger than the big break given to the rich. It really is that simple. Heritage HAS to know this; it's fairly obvious. Spin, spin, spin, spin.....

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Ahh, anyone remember Abbot and Costello? Costello was the easily befuddled person who panicked easily. After reading the article, I was reminded of that comedy duo from bygone days.

As for the uneducated electorate... I guess the "Hanging Chad" victories of Bush show the results of an "educated electorate?"

So why didn't people vote Republican in the last election? The short version: 2 Vietnam-like wars going nowhere. Oil and airline prices up, but economy down in the dumps during the Republican Bush Era. People out of jobs all across the country, while Execs. from Lehman's, etc. use their golden parachutes to flee any responsibility. Big Business without rules for protecting the little guy is a common theme for Republican Manifestos. But apparently the masses weren't going for it this time.

And of course, we have McCain who rambles on about the same policies that Obama is offering. And finally, there's the mishandling of Palin. No matter what your opinion of her or her ability, her own party mishandled her so badly that the American public saw her as only a cardboard cutout meant to keep up with Obama choosing Clinton for his cabinet.

so, in the end, on election day, there was a choice between Obama, who spoke clearly and elequently about something everyone belived in... a need for a change. or Mccain, who sounded like Obama, and seemed eager to copy everything he did...

So, if the TEA PARTY wants to blame someone for the election results, blame their own party... which hasn't changed much since the last election, and isn't offering much different with this one either.

Come election day, you'll still see the same republican faces for the most part, and whether they get a majority or not, the economy won't be fixed any faster. Obama has actually done a lot for his campaign promises. We're out of Iraq, and Healthcare has passed. That's only 2, but its a lot more good than what Bush did in 8 years. Bush bankrupted the country and left Obama with the bill. Now Obama has to fix the problems with solutions that people don't like? well, if you don't like socialist programs like Welfare, Police, Fire, and emergency services, go ahead and move to a country like China. If you like their communist-capitalism so much Mr. Costello, take a flight over there. See how long you can last... and what happens to you, when you try and complain about it.

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It's hard to know where to start with this article, but nice to see a number of posters have taken a good crack at it. I'll add this.

First, the cherry-picking of Jefferson's quote to try and justify the author's economic fundamentalism. Thomas Jefferson's vision for America was for an agrarian, de-centralized economy, with a deep distrust and opposition to banks, corporations, and the concentration of wealth. If he could read this article, he would probably scream "See, this is exactly what I am talking about!!!"

Second, as somebody pointed out above, the reality is that Obama is a center-right politician who is pragmatic to the point that he doesn't actually get much of anything done. He is a socialist only in the fundamentalist fantasy land. And no, handing out money and bailouts to banks and corporations is not "socialism", it is corporate welfare and wealth transfer from the bottom to the top.

Third - "despite the fact that doing so would decrease tax revenues." So it is now a "fact" that increasing taxes decreases tax revenue is it? Even the Laffer curve didn't make that ridiculous claim. Somehow the logical assertion that at a certain point tax increases may become counter-productive has morphed into "all taxes decrease tax revenues". Well, excessive consumption of carrots can become toxic and fatal (fact), but nobody says don't eat carrots.

Bottom line is that going back to Nixon's going off the gold standard, and then supercharged by Reagan, the US (and world) economy has been built on an inflationary, asset-price speculative bubble. In that situation, tax cuts without spending cuts CAN increase GDP and revenue, simply because they are feeding the bubble. But after the bubble bursts, the effects of low taxes and concentration of wealth will go into reverse and feed the Depression. The author thinks he is talking about a left vs. right issue, when what he is really promoting is economic suicide.

And before I get accused of being a left-wing Socialist, the idea that the last 30 years or so were a bubble were stolen directly from the Economist and the Financial Times. If you want to know what is happening in the world, find out who Irving Fisher, Hyman Minsky, and Steve Keen were and are, understand what they say, and then ignore all propaganda by the likes of Mr. Costello and the others trying to keep on bleeding the system dry to line their own pockets. That's my advice for the day!

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Let's put silly names like socialist and so forth on the burner and talk about things that are happening. Obama has spent a lot of money cleaning up Bush's flawed policies, and many don't see the return on the money spent.

It boils down to which is better: 1) be dumb and do nothing and spend less while empowering rich people who keep it for themselves or 2) be smart, spend more and get nothing for it while punishing rich people

Both are bad. I think Bush was dumb but I also think Obama spends too much money for nothing back.

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the U.S. needs an educated electorate that supports capitalism, not socialism. This can be accomplished by establishing mandatory economics courses at all levels of education.

Until then, the outcome of the U.S. education system will continue to be a “dumbocracy.”

What did you learn at school today, dear little boy of mine?

http://www.youtube.com/watch?v=VucczIg98Gw

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SIGH.... consider the source. I guess he is using creativity to get whatever he wants.

"Bill Costello, M.Ed., is the president of U.S.-based Making Minds Matter, LLC and the author of “Awaken Your Birdbrain: Using Creativity to Get What You Want.”

I read this thinking that someone wanted to discuss educational reform in the US, or even long-term social problems that are being bred in trailer parks and football stadiums (anybody see the movie IDIOCRACY?). But no. It turns out that the author wants to DUMB DOWN social dialogue to the level of pie throwing.

What it comes down to is that the government must serve the polity. Sometimes that means that the elite have to pony up to keep the good times rolling. They should complain, but not resist, because bringing the system down is going to disproportionately harm those who have benefitted the most. If they resist and create resentment, it eventually devolves to class rivalry and conflict.

My indictment is that the elite are not solving the problems that they are supposed to be solving. If they can't, then they should distribute resources, through some bargain, process, or policy, to those who can. If the system worked, that would have been done already. What seems to be true is that the interests of the elite are opposed to those of the polity these days, and history shows that ugliness usually follows, and people start heading for the lifeboats. Rhetoric like that used by Bill above is used to hide that, but that is what is happening.

The rise in the yen shows that Japan is the biggest lifeboat going these days.

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"During the 8 Bush years, the national debt increased by around $4.9 trillion to around $10.6 trillion. That sounds bad, but wait til you see this: During the past 1.6 years of Obama, the national debt has increased by another $2.7 trillion to make it around $13.3 trillion, with no end in sight to the increases."

You forgot to add that you think Bush is better because he spent the money on killing people, whereas Obama used it to save jobs and keep the economy going. GM, TARP, FNMA... AIG... that is all Bush era stall-mucking that Obama has had to do after Bush bought the horse, rode it to war, whipped it, shot it, and sold the carcass for glue and dog food.

Debt is debt, but war debt is the nastiest of all. Nothing learned, nothing created, nothing gained, and we are left with a lot more weapons, a lot more teenaged paraplegics, a lot more enemies, and a lot less freedom. The hawks get richer, the doves get poorer, and taxpayers get the bill. I could understand why someone would want to ignore that, Sarge, so that gets you off the hook, but that truth should not be hidden no matter how optimistic someone would want to be.

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Sarge,

Timely reading here:

http://www.nytimes.com/2010/08/23/opinion/23krugman.html?_r=1&hp

Of course, being who you are, you will refuse to believe anything Krugman says. But I'm putting this out there anyway.

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"You forgot to add that you think Bush is better because he spent the money on killing people"

I don't think that.

"war debt is the nastiest of all"

Well then why is Obama sending even more troops to Afghanistan?

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Honen,

( sigh ) I read it. Paul Krugman is a liberal who thinks it's better for the government to spend the people's money than have the people spend their money as they see fit. You agree with him, and I don't.

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The American democracy is no worse than Japans dumbocracy. At least they keep their President for an 4 years or more at a time.

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Sarge, thinking that the government can spend people's money better than themself is not always wrong. But, like in many cases, nuances must be made. The truth is, when you buy a given good through the government, the government has an ability to negotiate the price in a way that private individuals cannot. That means that in certain cases of public utilities where people's needs don't differ much, government spending may be better than individuals' spending.

A clear example of that is health care costs, systems that favor individuals purchasing health care by themselves are notoriously more expensive than health care where the government either pays directly or is involved importantly. The reason is that private individuals have little capacity to judge whether or not the prices of what is offered to them is fair or not. If they get told that the operation they want costs 5 000$, 99% of the population is unable to determine if that price is fair or if it's outrageously high, so in doubt, most will pay become they feel they have no other choice. The government on the other hand can use experts to estimate appropriate costs and reimburse those, thus avoiding the gouging of customers. In a wholly private system, even if one private individual is informed and refuses to pay the asking price, the health care provider may just let him go because he knows that demand for health care is higher than supply, so if that person refuses to pay, the next one will. That private individual doesn't have the leverage to negotiate much better prices. However, if you are on a single-payer system for instance, if the government decides the price is too high and refuses to pay it, then the health care provider loses a lot of potential customers, so it may be better to accept the lower prices and small profit margins.

Seriously, the principle of having someone else who is better informed do something for you shouldn't be shocking. When people put money in mutual funds, they accept that someone else does know how to spend (or in this case, invest) their money better than themselves.

The idea that governments always spend money worse than individuals is pure dogma (as would be the opposite idea, but I don't know anyone who thinks that). Reality is more complex than that, and you need a case-by-case evaluation to know whether it's true or not.

As to Krugman, I have never seen him argue anything like what you accuse him of, of thinking government always spends money better than individuals. I invite you to debate real people, not the straw men of them put up by their ideological enemies.

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"Democracy" only ensures that the most POPULAR course of action will taken, not the CORRECT course of action. Democracy is not a panacea, nor is it mechanism for discovering truth. It is actually a horrible and dangerous way to run a country ... which simply happens to be slightly less horrible and dangerous than all the other ways humans have run countries over the ages.

Yes, an educated electorate CAN make more rational decision, but WILL it ? So far as I can tell, the answer is "No", or at least "probably not".

Politics, like religion, has a considerable emotive content attached - what you feel is as important as what you know - and this means that both logic and education can disappear when it's time to put that 'X' by a candidates name.

In the USA right now, the single over-riding concern in choosing political ledership is what political PARTY they're associated with.

You see, everyone from the OTHER party is a stupid, uneducated, greedy, vile, anti-American scuzzball .... so it hardly matters if YOUR candidate is an idiot pushing idiotic policies so long as he's with YOUR party.

Anywhere you find strong partisanship you'll find a similar situation.

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"The American democracy is no worse than Japans dumbocracy. At least they keep their President for an 4 years or more at a time."

And that would seem like a good thing, until you consider... 4 years of Abe, 4 years of Hatoyama, 4 years of Kan... A whole generation could go by before anything more than a budget bill could get passed. It seems that the J system is not working out perfectly for Japan these days, but it could be worse.

Consider that the US system replaces thousands of bureaucrats every four years, not just ministers and vice ministers. Basically, they throw out the talent and replace them with rookies, and you think amakudari is bad in Japan? Ha! All that talent goes to the private sector as lobbyists and consultants.

I was going to refer Sarge to the Krugman article too. I am sure he read a few lines and just let it go. Sarge has his own "confirmation bias" thing going, so best to just let him go with that. It is a good article though. I like the little bit about rounding up 1000 people and finding the richest one, and then giving that person all the money. That's America! Someone can deny that until they are blue in the face, but that is what it is all about. The rich in America have a bunch of people living in trailers supporting their agenda and buying lottery tickets.

If you just follow the buzzwords in this "dumbocracy" article, you can see that it is a propaganda piece. When you call something communism or socialism, you can get the average American to believe it is evil no matter what it is. Grapes of Wrath? Communist.

Anyway, this article is spicy. You start with some capitalism/capitalist (4 times), democracy (3), and throw in "well-informed", White, and pragmatism (4), then add Obama (7), socialism (6) and then foreigners, with dash of China and Hilary and you get a rich stew with bile pre-added to aid digestion. Some words make you feel good and others make you feel bad, but it hits all the buttons and produces the desired effect. The gist is that rich America wants poor America to vote to continue the tax cuts of 2000.

Krugman says he is losing hope for America. Well. Yeah. What is the point of trying to build something when you know it is going to be torn down by the next Republican administration or bought by the Chinese and leased to Lockheed? Or maybe it will be foreclosed upon and sold at auction to fatten up Goldman's real estate portfolio?

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so how are those treasury bills doing? 1/4 owned by China. Let me know when you sell out 51% okay? Then a capitalist country will be wholly owned by a communist one. Hilarious

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taxes have to go UP. Everyday Americans are sold the line that they can get something for nothing is another day America slides. From a generation of prosperity who worked, to a generation of entitlement who sit. Sad really.

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An alarmist article if I ever saw one, and totally disingenuous. The US will never move anywhere near the type of Socialism China has had for the last 60 years, and the writer knows that. Mixing some socialist pepper into the recipe is a metaphorical hug for your fellow countrymen. And if that's what the people voted for, then he has to suck up the reality of democratic systems and embrace it. Not merely suggest the folks are just plain dumb; "This does not mean the democratic process is flawed; it means the American electorate needs to be better informed about economics." The US is desperately in love with Capitalism. It will never stray too far from that.

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Investor cynicism is quickly evolving into complete lack of confidence in the public capital markets, period. With no confidence Wall Street appears more like the Las Vegas strip than a place to thoughtfully and carefully invest into corporations that are doing things right. To get confidence back to the investors, the ethics and accountability has to come back from corporations.

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( sigh ) I read it. Paul Krugman is a liberal who thinks it's better for the government to spend the people's money than have the people spend their money as they see fit. You agree with him, and I don't.

Geez, Sarge, you really think Americans, if they had an extra 50 dollars in their pocket, from a tax cut, would turn the country around. Maybe buy, what, a Iphone, made in China. Or maybe, if they saved and saved, a flat-screen TV, made in CHINA. Nah, I go with horrible "redistribution" concept of remaking the roads and investing in schools. By the way Sarge, they are not turning asphalt roads into gravel roads in West Virginia because they can not maintain them any more. Uh, because there is no more tax revenues. So.....Like, going to the third world status, that is where your free-market concept will get us.

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I believe the root of US political problems centers in it's political approach of dividing any and all issues into a bi-polar partisan debate.

There isn't really a right and/or wrong to any issue if you study it closely and there will be time when one out weighs the other while while completely wrong the next. Take for example social infrastructure development, there are times when you need a massive input due to various reason like aging and/or as a stimulus to the economy but you do not need the same amount of budget each and every year. When making purchase volume does count and the nation as the denominator will always win against any individual purchase intensive. This all leads to a big government vs small government debate which connects to democrats vs republicans. The problem is people are blindly supportive of a party that they miss the individual issue in which the debate is separated.

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@Sarge:

It's not just TheRat that agrees with the economist Paul Krugman. It's called the "Free Rider Problem.". Unfortunately, the only practical solutions we have to this bargaining problem are government and taxes. There are some theortical approaches to eliminating it, but no one has actually tried. That's why every modern government has a mixture of capitalist and socialist elements.

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Well, that's one of the reasons why, anyway...

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Actually Krugman only scratches the surface. Until now the Bush tax cuts were paid for with borrowed money and not spending cuts. Now the US government is starting to cut spending, and those cuts will not be offset by spending by the rich, who will save most of their money. Which means deflation of the money supply, which is the whole problem in the first place.

The point is that in a debt-money, fractional/fictional reserve financial system, concentration of wealth and unequal incomes lead to a breakdown and then collapse of the system. The money has to circulate to pay off the debts. So in the end the rich in the USA will pay their taxes, just a question of how. They will pay with a collapse of the US dollar, or a collapse in the value of their assets, or a collapse in the bank and banking system where they have their savings. Or they can hand over some tax money to the government to try and keep the system breathing. But they will be taxed one way or another.

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Very true all of it. "Socialism" never works, it only leads to poverty. And of course, there aren't varying degrees of socialism either—it's full on Soviet coercion or nothing. This is of course why Sweden happens to a) be one of the fastest growing countries in Europe right now b) maintains a good social security system, based on a high taxes, while still achieving that stated under a), and c) is ranked as one of the best places in the Western world for foreign investment and innovation, juuuuuust possibly because wealth is redistributed into a system that makes it possible for people of all walks of life to get higher education.

Guys, just send all Republicans to the Moon with limited food supply. The world would be a much better place if you did.

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By the way, please remind me: Wasn't it unfettered capitalism...... that triggered the global financial crisis? No, sorry, you're right, it must have been the "socialists". Apologies, my bad.

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I think In Africa we have media controlled state nobody trust but in US "free" media giving their version of facts without being objective that many trust. Before being fired I like the US so peace :)

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Hey theres nothing wrong with Socialism...until you run out of other peoples money..

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"Instead, they elected Barack Obama"

I submit that electing Barack Obama president is like marrying someone without knowing anything about them. And that usually happens when you're drunk and in some place like Las Vegas. And when that happens, you usually go for a quickie divorce. We can't do that, so we're kinda stuck with this for another 2 and a half years, lol.

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Republican party free anti-Obama advertisement. Very rude, slanted article that shows no understanding of either socialism or economics. Some of us still remember that when Obama took over in January 2009, the USA was headed for a depression, not a recession. Ford Motor company, for instance, was selling for 2 dollars a share (now it's almost 12). Remember TARP? That wasn't Obama who started it http://www.huffingtonpost.com/2009/01/09/bush-give-me-the-rest-of_n_156716.html Remember AIG? Bush again. http://edition.cnn.com/2008/POLITICS/09/17/aig.bailout.congress/index.html Disagree with Obama all you like, but it you want to talk about government money going to people being socialism, let's at least not forget government handouts of people's money to business. Redistribution of wealth out of people's pockets. Not everyone has forgotten.

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What is the point of this article? Firstly, it has nothing to do with Japan, and secondly it is an alarmingly slanted opinion piece. Opinion on JT is left to the posters, not shoved in our face like some conservative shock-jock.

This article is written by someone so intellectually insecure that he has to put M.Ed after his name, a qualification about as relevant to American voting behaviour as a boy scout's knot tying badge.

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I submit that electing Barack Obama president is like marrying someone without knowing anything about them. And that usually happens when you're drunk and in some place like Las Vegas.

No. People turn to Wife #2 when Wife #1 turns out to be a good-for-nothing liar who wrecks your house, your cars and your savings, and otherwise turns everything she touches into donkey fizoo.

2 simply can't be any worse.
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@yabits.

I think Obama and the democrats were no.2

You're forgetting about 2000-08. McCain probably should have one, but then he teamed up with Palin and all hell broke loose.

The statement that "Socialism works until you run out of other peoples money" is so lame. Americans need to produce to survive in this world, period. When they stop doing that, no economical system can save them.

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Public education is socialist. The fire department is socialist. So is the post office.

There are many successful, stable countries much more socialist than America (Canada, Sweden, Germany, etc etc).

This writer grossly misrepresents the issues.

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Is this article a joke? I'm half-laughing because I enjoy the irony of someone arguing that the US has become a dumbocracy while failing to understand capitalism or socialism (or really indicating an understanding of the difference between communism and socialism). And really, it's not even that simple. There are socialisms not one kind of socialism, capitalisms not capitalism. Anyway, the punchline is glorious: mandatory economics classes (which, in case you're not familiar with the American education system, never cover Marxist economics) will result in people favoring capitalism. That's like saying everyone who studies English Lit will like Dickens! har har har! Was this article taken from The Onion?

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I agree 100% with the author that Americans are not well informed about economics.

Some people say that one reason why some wealthy people donate money to universities is to ensure that certain truths are not taught there. There are so very few economy experts on TV that say anything close to what is truly going on, the great majority are either intentionally deceiving or they just have no clue.

The only way we can have a well-informed population, like Thomas Jefferson was hoping for, is to have an honest press and the ability to discuss freely.

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Unfortunately, Americans are not well-informed about economics.

That is very much by design. If Americans were well informed, they would get rid of the Federal Reserve, and imprison all those behind it and confiscate their wealth. Actually, if they were well informed in general, they would do the same to most members of their government and their advisers.

If they were, they would have learned from the economic failures of socialism - in China, Cuba,...

In Cuba, the people were not doing very well before socialism. And much of the problems that came after were probably largely due to America's reaction to it.

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This is a boring article. However most Americans are pre occupied with a 2 dimensional approach to politics. Right wing vs left wing. The never ending battle between the left and right is keeping the brain washed ignorant American in the dark from the bigger picture. This is the part of the design to control it's clueless population.

For every single dollar produced by the central bank is loaned at interest. That means every single dollar produced is actually the dollar plus a certain percent of debt based on that dollar. And since the central bank has a monopoly over the production of the currency for the entire country, and they loan each dollar out with and immediate debt attached to it, where does the money the pay for the debt come from? It can only come from the central bank again. Which means that the central bank has to perpetually increase its money supply to temporarily cover the outstanding debt created which in turn, since that new money is loaned out at interest as well, creates even more debt. The end result of this system without fail is slavery for it is impossible for the government, and thus the public, to ever come out of a self generating debt.

The Federal Reserves is a private institution which is owned by the Crown of England. Until this day, Americans are paying the City Of London debt in order for ordinary Americans to use their currency the $ Bill. The land of the free and freedom which clueless Americans like to talk about. You guys are enslaved and owned but please do believe in the myth that you are free.

Now the country is bankrupt and dependent on foreign aid from China just not to fall apart.

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"Now the country is bankrupt"

Hey, don't blame me, I voted for McCain ( OK, we still would have been bankrupt, but not to this level, lol).

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Yes, many Americans are dumn, illiterate, etc... but we have BERKELEY UNIVERSITY, STANDFORD, and all those crummy cold, ivy league unis back east, so who has the most brains in the world??? Yes, the USA has them in the palm of it's hands!

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Hey, don't blame me, I voted for McCain ( OK, we still would have been bankrupt, but not to this level, lol).

Those trillion dollar wars we started aren't helping at all.

(And if I was the President we would be in this mess either. SMH)

No one knows what any other person would do in the Presidents shoes. Keep making it up. McCain woulda, Gore woulda. Let's deal with the facts and reality, not make believe and conjecture, please. It's not funny.

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Fact it most of the increase in the debt comes from bush programs and his wars, plus the downturn which started when bush let Wall Street run wild and leverage up their crazy financial program of destruction, as Buffet called them, up to 40 to 1. Obama, as all democrats must do, is cleaning up the mess left by the previous failed republican leaders.

And Sarge, if you think you can spend your money better than the government please start paving the streets outside my home, and monitor food safety, and build a jet while you are at it. Public goods lad, look it up.

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Blame Fox news

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@neogreenjapan:

You are familiar with where that phrase you quoted comes from, right? It comes from a book by Michael Hardt and Antonio Negri. Michael Hardt is a literary theorist and Antonio Negri is a Marxist sociologist. They've written a tome that has been described by some as the communist manifesto of 21st century.

Asking these two to comment on the usefulness of a central bank is like asking Rush Limbaugh to comment on the usefulness of the Clinton presidency -- you know exactly what answer you're going to get. To say that these two will take a somewhat less than entirely objective look at the function of a central bank, ANY central bank, is an understatement.

Either way, neither of them are economists or financial analysts, so it could be fair to say their opinions should be taken with a grain of salt.

The notion that the Federal Reserve is owned by the Crown of England is pure conspiracy theory. If you are going to make such a sweeping statement, please provide some sort of evidence.

Before you trash the Americans about how two dimensional their politics are or about how clueless they are, you should closely examine your own assumption about the facts.

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I tried to quote it with Italic with no luck. It does not matter if the people who said this are commies or nazis. It does not make a difference. The fact is, the Federal Reserves is a Private Corporation which lends out money to the US government. Ron Paul among others have wanted to scrap this system and make Federal Reserves a part of the American government and he is no commie or nazi either.

I am positive that the Federal Reserves is owned by the English Crown. 1976 Chart 1 reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn, Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914.

http://news.goldseek.com/GoldSeek/1095269452.php

To this day, Americans pay money to Bank Of England in order for ordinary Americans to use their Dollar Bill. Americans are enslaved believing that they are free. USA is an illusion. USA is no more than a milking cow for the City of London. Now, if I was American, I'd want to change this system of exploitation. It is ordinary Americans who have to pay the price and they are going fro broke. Americans did not fight for their independence. It was more an agreement. As long as you pay us you can get your independence is a more accurate description. Why this is not taught at schools make me wonder? Instead it's all about democrats blaming republicans or vica versa. It does not matter if it is Bush, Clinton, Bush, Reagan, Obama. The country is now bankrupt and it would not have made much difference who the President of the country is as they do not have much control. It is the people with the cash which got the real power. English Crown.

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@neogreenjapan:

I think our disagreement about the history of the Federal Reserve is a misunderstanding of terms. I am referring to the Federal Reserve System of the United States. This system was established by the Federal Reserve Act of 1913.

Please link to something more authoritative than conspiracy theorists to prove your point. Why should I, or anyone else, believe that Wayne N. Krautkramer knows what he is talking about? I can create a web page saying Mickey Mouse runs the Federal Reserve, but that doesn't make it right!

Also, I'd like to point out that the fact that Hardt and Negri are "commies" or "nazis" is not the reason I am doubting what they say. It's the fact they are not economists or financial analysts. I am doubting their qualifications, not their political views. Although their political views do speak to potential bias.

I'm merely suggesting that these two individuals are no more qualified to evaluate the role of a central bank than I am. If you can provide the opinion of economists who share their views I think that would help.

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@jamal2609

Hello. jamal2609. Thank you for your post.

The web page I quoted this from is a finance page. If you do not believe me, please do a Google search. Federal Reserve ownership. It is no secret that Federal Reserve is owned by the Crown of England. JP Morgan is a branch of and owned by the Bank of England who again is a part of the City of London which is a part of Crown of England. This is no conspiracy and putting a label conspiracy will not strengthen an argument.

When England lost the war with America they made sure to maintain the control by controlling the banking system, the printing of $, and the debt attached to it. In 1913 when the latest act came in effect in US, it made sure that the Federal Reserve became private and lend the money out to the government with an interest. The American government gave power to private Bankers, who called themselves the Federal Reserve Corporation owned by the Crown of England. Look it up. Or please come with some arguments telling me that I am wrong.

The only US politician who has openly discussed this issue was Ron Paul in the last election. All the other leaders were too busy bashing each other. Democrats vs Republicans. Instead of criticizing each other over how to spend the money it makes much more sense to go straight to the source.

USA is not free, never has. US has been and is and will be for a long time enslaved by the Crown of England on it's way to become a 3rd world country. A drastic change is needed. I do not think the wold really wants to have a US with an even weaker economy.

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"Now the country is bankrupt" Hey, don't blame me, I voted for McCain

I voted for Ron Paul. He wanted to end the fed and also supported a flat tax as long as it was zero. We had our chance to reduce wasteful government spending and we blew as Ron Paul is probably too old now.

we have BERKELEY UNIVERSITY, STANDFORD, and all those crummy cold, ivy league unis back east, so who has the most brains in the world??? Yes, the USA has them in the palm of it's hands!

Most of the grad students in those schools are not American. If you look at a typical engineering department, it'll be 90% non-U.S. citizen enrolled.

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"And Sarge, if you think you can spend your money better than the government..."

Sheesh, zurcronium, give me at least a little credit! I don't think I can spend my money better than the government, I KNOW I can, and I know that the vast majority of my countrymen can too.

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It's sad that I have to come to JT to read this commentary. Searching the web shows that no well-known American news outlets picked up on this. This very same topic has been discussed countless times in America, except it's only done in Policy circles. The discussions I have witness seem to come to similar conclusions, albeit less blunt. Unfortunately most do not believe there is a solution. Add in today's 15-sec flashpoint sensationalizing media, there is not much hope for change any time soon. Thank goodness that you (the commenters) are proving that there is still intelligent discussions out there. Unlike the average American, you are reading information not spoon-fed by the biased and hyped up American media. Good for you.

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@neogreenjapan:

Thanks for the clarification. As you suggested, I did a Google search on Federal Reserve ownership, and the first link that comes up is an essay by economist Edward Flaherty of the University of Charleston debunking the conspiracy theory regarding ownership and control of the Federal Reserve. This is a very insightful essay that makes verifiably factual claims about ownership and control of the Federal Reserve. Take a look at it when you get the chance, it's good reading. Spoiler Alert: it's not the Crown of England.

I found several links, including the one you quoted in your comments about the Federal Reserve being owned by the Crown of England. GoldSeek is a commodities website discussing gold prices, right? I also found links to pages debunking that very same theory.

Significantly, the ownership claims you refer to were made chiefly by Eustace Mullins first, and later Gary Kah. I don't know if you are familiar with these two, but I strongly suggest you investigate their backgrounds and take a look at their work. The reason I say this is because Eustace Mullins is a conspiracy theorist of the highest order, and I've heard of him before. He's a crackpot -- check it out.

I'm not quite sure who Gary Kah is, but after an admittedly brief Google search I was only able to find his web site www.garykah.org. It doesn't list all of his qualifications or experience, by I was able to determine that he was the Trade Specialist for Europe and the Middle East for the government of the State of Indiana. I don't know how long he was in that position, but I'm not sure if that qualifies him as an authority on Federal Reserve ownership.

I would like to see someone with skin in the game make the same claim about Federal Reserve ownership. I'm more inclined to believe an economist from an accredited unversity that makes a factually verifiable argument than spurious claims from a known conspiracy theorist. WSY?

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Who is this rightwing moron? And why does he lack any grasp of the political reality he claims to address in this article?

He clearly knows nothing of socialism or would not call any activity in the current US political system "socialism." Likewise he fails to understand that the world has yet to see anything resembling true socialism. What we have seen in the 20th century was a centralized form of capitalism. Something economists call "State Capitalism" in the forms of China and the former Soviet Union.

He fails to acknowledge that past socialistic measures such as the new deal helped propel the US out of the last depression and to the economic power it needed to be to win WWII.

This article is essentially an essay of right wing nonsense with little or no point but to cast stones at Obama and continue the cycle of denial that socialistic programs can and do work as many nations in Europe have proven.

Fluffy nonsense from an illinformed author.

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Eustace Mullins is a conspiracy theorist of the highest order

What is wrong with being a conspiracy theorist? There ARE conspiracies. Is there anything specific that you disagree with in his discription of the FED?

It is clear that the FED act of 1913 was imposed by deceptive means, and it should be eliminated and those behind it punished (and their wealth confiscated).

I don't quite buy the idea of the FED being owned by the the crown of England, but the City of London does play an important role. Archibald Maule Ramsay (an ex British MP) describes well how these criminals managed to take control of the Crown, among other things:

http://www.iamthewitness.com/books/Archibald.Maule.Ramsay/The.Nameless.War.pdf

There are so few economy "experts" that seem to have any clue as to what is going on. Max Keiser is one the best, in my opinion.

One reason why the vast majority of Americans are clueless is that those who are fleecing America (and most of the world) do not want them to see what is happening to them

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@sabiwabi:

There's nothing wrong with conspiracy theories per se, and I agree that some conspiracies exist, just as you suggest. The problem with conspiracy theories is many of them end up being short on evidence or are refuted altogether.

If you take a look at the essay by Edward Flaherty I refer to in my response, you'll see that the author directly refutes the claims made by Eustace Mullins and others, and the quote in the post submitted by neogreenjapan earlier. I won't copy-paste the relevant text of the essay here because it's BIG, but you are welcome to Google it and check it out for yourself. If you Google "Federal Reserve ownership Edward Flaherty," it'll be the first link.

You can believe whatever you want, but if you are going to call those poor Americans two dimensional or clueless based on the writings of Eustace Mullins et al, I would say you should check your own facts first. Edward Flaherty makes good arguments as to why these conspiracy theories are false.

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"What is wrong with being a conspiracy theorist?" Because most of the their theories lack any grounding in reality. Others are just extremists in one bent or another.

"One reason why the vast majority of Americans are clueless..." Not really true. If you are interested in what is going on, you can find out. The real problem, globally is apathy and not some conspiracy to keep people in the dark. Ordinary people world wide just don't care enough to get involved in politics or to learn more.

Try spending less time looking for silly conspiracy theories and more time looking the the patently obvious problems with many of the political and economic systems out there. We have been propagandized by the cold war into thinking that only Capitalism is beneficial to the welfare of humanity. Despite the fact that rabid consumption and the lack of sustainable behavior is endagering our very existence. It is time to rethink the entire picture and to do so with intelligent, grounded evidence and ideas that can be put into action. And not the wasted paranoya and finger pointing of conspiracy theories.

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Amen, tkoind2.

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jamal2609,

I had a look at Flaherty's article. What a waste of time, thanks a lot. Its just disinformation trash. If you still don't believe me, have a look at The Money Masters, you should be able to find this excellent video on the web.

"What is wrong with being a conspiracy theorist?" Because most of the their theories lack any grounding in reality.

Funny then that these "conspiracy theorists" have continually been spot on in predicting the problems in the economy, while the "experts" have continually been so wrong.

Here is another interesting video (are these people incompetent or liars?):

http://www.youtube.com/watch?v=2I0QN-FYkpw

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@sabiwabi:

I'm sorry you think Flaherty's article is a waste of time. Did you read the part where it said anyone owning 5 percent or more of the outstanding shares of a publicly traded firm be made public, or that member banks sold shares to other members, and that no public stock was ever sold to the non-bank public?

How about the part where he says that each member bank gets 1 vote, regardless how many shares they hold, and there are 1,000 of them, so influencing the voting behavior of over 500 banks would cost hundreds of billions of dollars? Sounds like herding cats to me.

Of course, this is all based on the assumption that the Federal Reserve Bank of New York is the Federal Reserve, which is in and of itself wrong, and I quote:

"A brief look at how the Fed's powers over monetary policy are actually distributed shows that the key assumption in the Mullins-Kah conspiracy theory is erroneous. The Federal Reserve System is controlled not by the New York Fed, but by the Board of Governors (the Board) and the Federal Open Market Committee (FOMC). The Board is a seven member panel appointed by the President and approved by the Senate."

The link to the conspiracy theory provided by neogreenjapan above also discusses the theory of foreign ownership of the 12 regional reserve banks. But, if you understand how the Fed really works (as quoted from Flaherty above) you can quickly see that even if foreigners controlled the 12 regionals and the New York Fed, they still would not be able to control the Federal Reserve System.

That is a verifiable fact.

Interestingly, conspiracy theorists don't agree among themselves which countries supposedly control the Federal Reserve. I think you can safely say we are not dealing with a "Peter Schiff Was Right" scenario here. That was an interesting video, however. Watching all those Fox News analysts falling all over themselves was entertaining. Thanks :)

My point throughout this post has been that using conspiracy theory to show that someone else, in this case the Americans, are two dimensional and clueless is itself perilous. The reason is because it's so easy to shoot holes in your argument. I recommend using more credible sources than Mullins and his followers.

BTW, I think Peter Schiff was qualified to make his assertions about the direction of the economy in 2006/7 considering his background. It's too bad no one listened to him.

I can't say the same for Mullins or Kah.

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If you want the US economy fixed, you'll have to go with Mitt Romney or Ron Paul.. more than likely Ron Paul because he would be best at controlling spending.

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sabiwabi: conspiracy theorists (and the austrian economists' fans) have been predicting a major economic crisis every year for the past 50 years. So they have a record of being wrong more than 90% of the time.

Considering that we know that some economic crisis is always bound to turn up in the end, this turns their predictions into even more of a joke. It's like someone asking you to draw a card from a deck of cards and predicting it will be the ace of spades. When it is not, he tells you to put the card aside and draw another one, and he makes the same prediction. And again, and again, and again... until you do draw the ace of spades and then he proclaims he's a psychic.

It's not that they're good at predictions, and it's certainly not because the reasoning behind their predictions make sense.

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Bill Costello, M.Ed.

What does an M.Ed now about economics? It is an educational specialization isn't it? How do these people get published?

...the economic center of gravity shifting from the West to the East, China begins to emerge as an alternative model to the U.S.

Please. China is simply the factory of the world and, just like Japan, once the price of labor goes up they will lose that crown to some poorer and hungrier country. The sign of a good system is one that can survive this transition successfully. Japan dropped the ball and it is yet to be seen if China does the same. In the 80's there were those who talked about the economic center moving away from US to Japan, but now Japan is a stagnant, debtor nation with no real political power, US is still powerful and the EU is gaining strength.

Unfortunately, Americans are not well-informed about economics. If they were, they would have learned from the economic failures of socialism—in China...the economic center of gravity shifting from the West to the East, China begins to emerge as an alternative model to the U.S.

Contradiction?

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