President Obama's Leadership Crisis; Pro-Homo Blue Dog Faces Tough Issues/Let Tax Cuts Expire

President Obama and the lame duck Congress appear ready to cave in to the regal sounding litigious Mitch McConnell class Republican demands that wealth be concentrated and historically low taxes continue for the ultra-rich. The Congress may sign off on across the board tax cuts without correspondingly cutting spending significantly in order to help Wall Street continue to rise and let Scrooge plan his global strategies better. Just let the tax cuts expire and find some way to rebate those earning less than $100,000 annually.

http://www.foxnews.com/politics/2010/12/04/obamas-leadership-scrutiny-amid-negotiations-gop/

Extending unemployment benefits again-going on 18 months is unprecedented -another charge it to those for the decline and fall period of American history. Tax cuts, a jobless recovery and rising unemployment (9.8%) with more free trade pacts (S. Korea) and a public debt today of...
$13 trillion, 849 billion, 512 million and some change...

http://www.brillig.com/debt_clock/

One wonders how long this can continue?

I believe the secret lay within monetary theory and a theory of capital.

Von Mises and the Austrian school of economists began an investigation into the nature of capital and money around the turn of the 20th century. For about eighty years right unto Milton Freedman monetary and capital theory pondered the deep question of the relationship of money to material wealth asking such questions, as is the capital in the goods producing capability of a factory or in the goods themselves?

The market disequilibria between capital, money and bad investing that precipitated the 1929-30 stock market collapse brought the theories of John Maynard Keynes as well as the pragmatism of Franklin Delano Roosevelt to the fore. Laugher and supply side economics with a neo-Keynesianism deficit spending pump priming of the post Vietnam era economic readjustment and slump set the United States onto a course of economic growth fueled by federal military spending and energy development. There was a critical event in the Nixon administration though that allowed the Reagan economic revolution to proceed; the dollar was taken off the gold standard.

Detaching the dollar from any material direct value association meant that the Federal Reserve had no responsibility to value dollars in relation to gold supply in federal possession. If the Federal Reserve hitherto had printed new dollars it diluted the value of the dollars in relation to the gold. From the Nixon administration on the value of a dollar was just in the full faith and credit of the U.S. Government and in its exclusive right to print dollars that cannot be counterfeited.

Federal Reserve Chairman Bernanke's decision to quantitatively ease money supply and print 800 billion dollars of new money in effect to buy U.S. debt (bonds) simultaneously devalues the relative value of the public debt. Perhaps that is the secret elixir of solvency in the voodoo economic policy of the U.S.A.

On the gold standard money supply could not be increased without deflating the value of the dollar. Now, money supply can be increased locally without creating any measurable equanimity between holders of the dollar objectively. The dollar is simply one exclusive though universal currency that has value so long as the traders in dollars honor it against other currencies. It is entirely possible that the dollar one day might be regarded as worthless as confederate dollars if dollar holders defect en mass to another currency through the minting of new exchange paper while the dollar is destroyed.

When the dollar entered the realm of fiscal relativism during the Clinton and Bush II administrations a variety of financial schemes were perpetrated- often enabled by federal economic policy-that paid off in the eventual 2008 economic debacle and present shadow of the past recession. Fiscal relativism is somewhat equivalent to moral relativism and has an essential origin in conflicts in value theory or what philosophers sometimes call axiology.

Moral values do have a true role in value theory. A society may regard full employment and the well being of all citizens and the environment as a high value. A society may consider that a stable monetary policy and enterprise market is no more important than a stable labor market; the working class should not have perennial uncertainty regarding labor supply from legal and illegal foreign immigrants. The producer class should have reduced uncertainty regarding tax rates. Tax rates should be such that wealth is not concentrated to such extent that democratic parameters and national self-interest of the citizen majority are defeated. Taxation creating surpluses can be spent on environmental reconstruction and space habitation, for example.

Dollars may be tied to any given material or existential thing that can be quantified. Historically these things were rare minerals or metals yet the choice is circumstantial and historical. Economic development and methods of exchanging definite value units should function to positively reinforce democratically defined social goals, or at least to proscribe select activities from value unit reinforcement.

The federal policy today of a high entropy global economic phenomenon serviced with dollars valued in fiscal relativism and a large U.S. public debt of phenomenal and uncertain value is evidently an unstable economy best suited to mal-develop the developing nations into ecologically harmful high consumption, non-renewable economic activity. Nationally the policy has permitted the degradation of millions of Americans displaced from real opportunity from meaningful employment such that they could afford to pursue their own preferred self-interests. Work for wages enables citizens to afford graduate education and to become educators instead of being unemployed, collecting food stamps and experiencing their lifetime trickle away in futility.

The Obama administration and national democratic party should let all the tax cuts expire and develop alternative means to reinforce those out of work and drawing unemployment benefits-the benefits should at least be cut in half if extended. New ecological economic reform actions and far better ecologically innovative Mexican border control of illegal migrant labor needs to be advanced strait away. Specific policy actions to identify and put to work all those out of work can be made-yet traditional economic logic detached from pragmatic functionality is what F.D.R. was able to overcome while others would go stand out on an office ledge.