That 70's Show

George W. Bush, Hank Paulsen, and Ben Bernanke -- along with, well, the entire US Congress -- are starring in a new reality TV show.  I'll call it "That 70s Show".  Despite a strong record of tax cuts during his Presidency, George W. Bush has done his damndest to thrust American back thirty years into stagflation, driven by high inflation, dramatic overspending, horrific energy policies, and eventually... very high interest rates.

One is forced to wonder when W will appear before the American public sporting a sweater, sitting in front of a fire, and talking about mayonaise.. oh wait, I mean malaise.

Despite a significant and welcome tax cut program that saves that average American nearly $2,400 in income taxes on a yearly basis, W's drive off a cliff into Compassionate Conservatism with massive new spending like No Child Left Behind, Medicare Part D, and his absolute refusal to veto spending legislation (especially the nefarious earmarking) has led to massive spending we could not ill afford.  Especially in the midst of a war.  It is as if LBJ was reincarnated into George W. Bush.

That is the fiscal nightmare.  The 10,000 lb hog at the trough, starving out all the little hogs just trying to make it.

The monetary side is even worse.  The Federal Reserve has been pursuing a cheap-money policy for too long, and as a result, foreign investors have been selling dollars and buying oil futures and Euros.  Even the Swiss Franc is worth more than a US Dollar.  This is one of the reasons oil has topped $100 a barrel.  It's not just about demand anymore. It's that oil is valued worldwide in dollars.  As they are worth less, the cost of oil increases.

And now that Fed is litterally printing money to keep firms like Bear Stearns running -- firms who seriously mismanaged and miscalculated their investments and were victims of absolute fraud that their own internal controls SHOULD HAVE DETECTED -- the problem will only grow worse.

Contrary to what the Fearsome Threesome believe, you cannot cure the mortgage investment crisis by printing money. In fact, you will only be adding fuel to the fire, as inflation acts as the "hidden tax' to make products and services MORE EXPENSIVE for consumers, making them less able to afford house payments they shouldn't have in the first place.

So what to do?

First, reestablish King Dollar.  This won't be easy.  It will require raising interest rates slowly.  That will hurt holders of ARMs, but it is necessary.  The Fed should also start purchasing T-Bills, in effect buying back dollars already in the marketplace.

Second, stop bailing out investment companies that made absolutely stupid decisions.  The US Government needs to start holding investment companies accountable for the decisions they make. So the next time Merrill Lynch pays out $7 billion in bonuses, make it clear to them that they will not be covered under any sort of bailout program.  Part of capitalism is the risk/reward equation.  If they take unacceptable risks, they should not be given unnacceptable rewards.

Third, CUT SPENDING RIGHT GODDAM NOW.  Across the board, cut all discretionary spending.  Then start ratcheting in so-called "entitlement" programs.  Every year, billions are budgeted but never spent.  The baseline for every department and agency in the Federal Government should be what they actually spent, not what they are actually budgeted.  Then cut that 10%.  Veto any bill sent up with earmarks that were not voted on.  Don't pussyfoot with those bastards on Capitol Hill.  Start cutting the federal workforce.  Did you know that there are more employees in the US Department of Agriculture than there are farmers in the United States?  That's something to think about.

If the government does not act quickly to restore the US Dollar to its preeminent  place as a world currency, the US Government is going to face a pretty pissed off, angry, and well armed voter in November.

And that is just me.  And I didn't like the 70s the first time.