Deficit spending means a debt owed to someone, whether it is owed to a foreign entity or to ourselves. Money borrowed must be repaid. Selling trillions of dollars in Treasury bonds to China or to anyone else means we are borrowing with the understanding that we will repay the debt. Ultimately, if the spending becomes too reckless, our lenders will begin to seriously question our ability to pay, and to express concern over the falling dollar with which they will be repaid. After all, what good is being repaid on a debt when what you are being repaid with is essentially worthless? Where Obamanomics is such a radical departure from Keynsianism is the size of the deficit – it is virtually inconceivable that it will ever be paid back. The rhetoric coming from the president and his administration that such spending and deficits are “unsustainable” and ”unacceptable” ignores the fact that they continue to spend and increase the deficit with even more programs and projects, all the while declaring that this is the most certain path to full recovery and “sustainable job growth,” etc., etc… It is all utter nonsense.

To be fair to Mr. Obama, those who blame him in full or in part for creating the “Obama Recession” are as foolhardy as their counterparts who blame Mr. Bush. One must also understand that had Mr. McCain been the current occupant of the White House, the situation would be very much the same because of the prevailing mentality among the political elite that only government is big enough to solve such dire economic problems. And, while the actions taken by both Mr. Bush and Mr. Obama have certainly contributed the worsening of the situation over the long term, neither one bears full blame for its cause. They do, however, deserve blame for failing to clearly see the best path toward a solution, which is letting the natural laws of economics and human nature work instead of propping up a bubble with fiat money and regulations aimed at benefiting the politically well-connected to the detriment of everyone else. Bad regulations and monetary policy brought us to this place, and more of the same is quite obviously not going to help. Whether the entities favored by the proposed new regulations and legislation are big Democrat donors or big Republican donors is immaterial. Those with money and access to power will benefit to the detriment of the rest of us, no matter how flowery the language of “hope” and “change.”

According to the AFP, Mr. Obama “stressed that the actions taken by his government had ‘helped to stem what could have been a disastrous situation for the economy,’ adding that ‘we are starting to see stabilization and indeed some improvement.’” Accordingly, one might be inclined to argue that ballooning the national debt to $12 trillion, and attempting to force passage of a national healthcare bill along with a Cap-and Trade tax bill piled atop of unfounded – and unfundable - government obligations already at $106 trillion is the actual disaster. Indeed, the vast majority of the blame for that unfundable debt of $106 trillion does not belong with Mr. Obama but, rather, with his predecessors going back to President Johnson. Regardless of who gets the blame, however, is the sad reality that the figure of $106 trillion is proof that these government obligations are inconceivable to the rational mind, and adding the current U.S. national debt of $12 trillion to this figure simply makes the further point that the government itself is insolvent, because even if every man, woman and child in this country were taxed at 100% for a decade, that amount could never be paid off. Hence, Mr. Obama defers to Mr. Bernanke’s strategy of monetizing the debt and massively inflating our currency in doing so – the epitome of Keynesian theory. Sure, the Treasury will be able to pay off the numerical figure of its’ trillions in debt bonds with “dollars” created out of thin air, but those dollars won’t be worth anything by the time that happens. Massive inflation only benefits the party who has to pay the debt. Everyone else suffers.  (Continued...)

The favorite U.S. financial cocktail of fiat currency, inflationary monetary policy, and massive deficit spending that has been the staple of U.S. economic policy for decades could soon result in a hangover that the dollar might not survive. Already new concerns are being raised as to what might happen is China and Japan refuse to continue buying U.S. debt. Tiger Management founder and chairman Julian Robertson told CNBC: “It's almost Armageddon... (more here...)

What is the true cost of the proposed government bailout?  While most of America was enjoying the last weekend of summer and watching football, our unelected and unaccountable bureaucrats at the Treasury Department and the Federal Reserve were busy working on how to “solve” the financial crisis that seems to grow bigger and worse by the day. The “initial” solution that they came up with will cost between $700 billion and $1 trillion. That is the initial estimate of the cost. You can bet it will go much higher.

Wall Street has essentially collapsed and its geography has been forever change due to the deadly combination of greed, ineptitude of oversight, and government interference in the form of too much bad regulation. All this coupled with the Fed eternally manipulating interest rates and printing money in a vain attempt to affect a positive outcome and stave off the looming crisis as it simmered only served to compound the problem, and we are seeing the results. The result is an economic collapse or meltdown.  It is primarily due to government manipulation and meddling in something it has neither the authority nor the tools nor the competence to be meddling with. It is the result of “command economics” and central planning. Central planning is always bad for an economy, and in this case really, really bad planning results in a really, really bad problem

Admittedly, there was a certain degree of satisfaction watching the likes of Nancy Pelosi, Chris Dodd, Harry Reid, Barney Frank and the rest of the criminals on Capitol Hill standing there like deer in the headlights, with the shock and awe clearly displayed on their faces after their conference with Treasury Secretary Paulson and Fed Chairman Bernanke. One has to wonder, though, if the looks of grave concern were precipitated by the fact that they had just been told that the economy would imminently collapse if AIG were allowed to fail, or if it was because they understand that they are complicit in this financial catastrophe and are terrified that they will be found out. 

Sadly they have no real cause for concern, though, because the only pseudo-mainstream publications that actually report the truth of this mater and name who is complicit in creating the conditions and ignoring the signs that allowed this financial meltdown to occur are your usual “right-wing conspiracy” theorists like the editors and reporters at the Wall Street Journal, Portfolio, National Review, Weekly Standard, Investors Business Daily and the like. Guaranteed you won’t hear Katie Couric and Charlie Gibson bringing up names like Donna Shalala, Jamie Gorelick, James Johnson or, heaven help us, William Jefferson Clinton.

A remarkable thing is occurring before our very eyes in Washington, though – Republicans and Democrats seem to be genuinely working together to implement a solution as quickly as possible to calm fears and the markets. Certainly there are many differences being voiced, but in general they are all in agreement and the final product will be a matter of hammering out the minutia, so to speak. This is actually more frightening than the actual financial crisis. Why? Because these are the folks that got us into this mess in the first place due to their own narrow self-serving interests, incompetence and corruption, and purposeful lack of oversight of the Leviathan wherein this meltdown began – Freddie Mac and Fannie Mae.

The solution as it stands would give at present would give Treasury Secretary Henry Paulson extraordinary, unprecedented and essentially dictatorial authority to essentially do what he pleases with $ 1 trillion in taxpayer money. The Wall Street Journal called it for what it is: “Lots of money. Lots of power. Naked, ugly dictatorial power.”

The actual language in the proposed bailout Act as written by Treasury lawyers doesn’t inspire comfort either: “Decisions by the Treasury pursuant to the Authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” This language is self-explanatory. And it is frightening.

And this is most likely only the beginning, the tip of the proverbial iceberg. On Monday former President Bill Clinton called for a bailout for all those homeowners who can’t afford to make their mortgage payments. The auto industry in Detroit is lining up for handouts to the tune of $50 billion minimum, a deal that has all but been cut between Detroit lobbyists and Speaker Pelosi. One can be sure that credit card debt will mushroom sooner rather than later and all those banks holding that debt will be demanding their share of the taxpayer-funded pie. The airlines won’t be far behind as they are being crushed by unprecedented fuel prices. And on it goes with no end in sight, and that is precisely the problem with government bailouts on such a massive scale; once they begin they do not end.

Right now it is difficult to assess whether we are still at the crossroads or if we have turned a corner toward authoritarian socialism, but is the language in the proposed plan is any indication suffice it to say that things to not look good for the future of a free market or for liberty in the US. And this is unconscionable.

In undertaking to engage in the extraordinary practice of massive government bailouts and nationalization of the most fundamental sector of the economy the US government has stepped into territory unknown since before the Revolutionary War. In fact, it was this exact type of arbitrary government authority that was the reason for fighting the Revolutionary War. While the talking heads on TV and radio speak of entering into “uncharted territory,” the brutal fact of the matter is that this is far from uncharted territory for this same unchecked and arbitrary government power was seen, understood and resisted the Founding Fathers of our republic as they were not afraid to call it for what it is. It is called tyranny.  

It is no secret to anyone who has read the Constitution of the United States with even a modicum of understanding that al three branches of the Federal Government have been violating their Constitutional authority for quite some time now. However, the actions taken by the government over the course of the last week are truly unprecedented. No branch of the government has any Constitutional authority whatsoever to takeover operations of a private business. No government authority is granted by the Constitution to appropriate public fund for such purposes. And certainly no Constitutional authority exists to allow for granting dictatorial powers to a cabinet secretary to run and attempt to manipulate the economy as he sees fit. It is unprecedented and entirely unconstitutional.

And yet knowing it is unconstitutional, out of fear this Congress will overwhelmingly approve this illegal action. And they will hope and pray that it works. And if it doesn’t? It this plan doesn’t work – and keep in mind that there is no Plan B because this is Plan B – amid all the uncertainly that would follow such events, the one thing you can be assured of is even more invasive and strict government intervention. But to what end? Government issued and approved credit becoming mandatory and the sole acceptable manner of conducting commerce? Government seizure and control of all banks and credit issuing agencies? Where does it end?

And what if it does work? What if those administering the government later decide that the government should remain in total control of the financial sector and through still more illegal Acts of Congress continue to "renew" the contrived authority to seize and maintain private companies in conservatorship? What then? 

Perhaps most frightening is that no one in government is listening to anyone who is raising these concerns because that is what happens when fear rules the day, and more alarming still is the known fact people will accept anything that promises even temporary security when real fear is being held over their heads. Hitler, Stalin and Mao did not rise to power because people were happy and comfortable and felt secure politically and economically. Fear is a dangerous weapon and history has shown time and again how fear, when employed and exploited by government, always proves fatal to liberty. And when government moves quickly to address a problem, even a well-intentioned solution will result in some very foreseeable repercussions that no one in Washington wants to acknowledge, much less address.

When a people willingly sacrifice their liberty – as is about to occur here – they are no longer sovereign, but subjects, for a republic exists only when a free people willingly submit to a governmental authority de jure, that is an established and mutually agreed upon system of government that by law may operate only with clearly defined limitations, purpose and intent. Should said government exceed any or all of those limitations, thereby exceeding its constitutional authority, it is the responsibility of a free people to take what power with which it is vested – that is all real power – and bring an abrupt end to government abuses of authority. 

In a republic, government exists and operates at the pleasure and by the authority of the people. That is what is meant by government de jure – government by and of legitimate law. When government abuses its power and acts outside of its legally defined authority it acts arbitrarily and becomes a government de facto, that is government by decree or imposition. In such a case citizens are no longer sovereign, but subjects; and, so it almost goes without saying that given the purpose of government being control, thus it’s natural tendency to encroach on liberty and thereby necessitating a clear legal definition of its valid scope of authority, once government exceeds said limitations of authority with impunity it will continue to do so. And in doing so it will continue to encroach upon and usurp individual rights and liberty unless the people fulfill their own obligations as a free people and stop it. 

In a republic such as ours, all true, valid and legitimate power and authority is vested in the people, not in the government. That is unless or until the people relinquish that power either by action or inaction to the government. Such is our present predicament.

As stated above, we all know that all three branches of our government have been exceeding their legitimate authority for many, many years now, encroaching on liberty and violating the Constitution. With this latest government incursion and illegitimate execution of authority it does not have the stakes have become frighteningly high and all too real in a vey short span of time. Now is the time for the people to decide: subject or sovereign, courage or cowardice. This action now being undertaken by the US Government takes the idea of sanctioning the violating of the Constitution to an unprecedented and very dangerous level. This time the politicians and bureaucrats have not only arrogantly wiped their hind-sides with the Constitution, but once they are finished wiping they intend to rub it in our collective faces – but only if we let them. 

If we rise up and let our voices be heard, they will respond, for nothing motivates career politicians like fear, especially in an election year and with the elections a little over a month away. We have a choice: we can make our collective voices heard now, loud and clear and force them to respond, or we can wait and see what happens. The problem with the latter choice is that the next time the people decide to rise up in the face of tyranny they may have to do it with torches and pitchforks and rifles.

So what is a trillion dollar government bailout really worth? What does it really cost? The true cost of the thing is liberty and a free market economy. The price we will eventually pay is subjection to tyranny.

Bad things happen. It screws up everything – even the correct understanding of what, exactly, government is supposed to do and, more importantly, what it ought not to do. For those within the government, especially you “progressive” and faux-conservative politicians out there, here’s a little clue: the government has no business messing with the economy. Our government has become so monstrous that the confused masses of America now overwhelmingly look to this Leviathan to cure all that ails our nation. Why? Because they’ve been taught to. They don’t know that government has no such Constitutional authority as helping citizens and funding businesses and fixing the economy. Perhaps they (especially politicians) ought to actually read the document some time – it is very enlightening indeed.

Here’s how bad it is: when most people are asked who is to blame for the economy being screwed up, they tend to answer that the government is responsible. This answer is not at all incorrect. But, here’s the problem: when asked how the woes of the economy ought to be healed, most believe that the government needs to “do something about it.” Then they demand that Congress and the President act now! Seriously – isn’t the government the entity that is responsible for screwing things up in the first place? Now we are demanding that this screwed up government “fix” things? We want to entrust an impotent and self-serving Congress with a 9% approval rating and an Administration with little understanding of Constitutional restraint to “fix” things? The government has no business messing with the economy in the first place because in doing so it just messes things up even more and ends up costing the taxpayers (don’t even get me started).

On Sunday Treasury Secretary Henry Paulson announced that Freddie Mac and Fannie Mae were being placed in a “government conservatorship.” The plan to take control over the companies was approved by Fed Chairman Ben Bernanke. Paulson also affirmed that the Treasury would do “whatever it takes” to keep these two bastions of government excess from failing. Initially the Treasury would receive $1 billion in preferred shares, and then is initially prepared to provide up to $200 billion to help the companies heal from their financial hemorrhaging over excessive risky home loans. Remember that word: initially… you’ll see why in a minute.

The CEOs of both companies were fired – sort of. Freddie Mac’s Richard Syron and Fannie Mae's, Daniel Mudd, were respectively replaced by David Moffett, a former top official at US Bancorp and Herb Allison, formerly with Merrill Lynch. But, Syron and Mudd won’t be leaving immediately – they’ll be sticking around for the transition. If that weren’t enough, The Treasury's plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency.   FHFA was created recently by Congress specifically to oversee Freddie and Fannie. Are you beginning to see the pattern here?   Try Googling FHFA.gov to find its website and you’ll see that there is none. Either the agency is too new, or the government has become so big there’s no more room left in cyberspace for any more.gov websites. I am inclined to believe the latter.

According to the Wall Street Journal, with the government seizure of Freddie and Fanny, “the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling American taxpayers with billions of dollars in losses from home loans made by the private sector. Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.” Potentially? Are they kidding? The bill is already in the mail.

But, the best is yet to come. Secretary Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide.

Do you know what that means? Think back to where the Treasury pledged to initially provide up to $200 billion and how Secretary Paulson stressed that the Treasury will do “whatever it takes” to save Freddie and Fanny. Factor that in with the $5 trillion of debt that is owned by foreign central banks and investors and then put Congress into the mix, and guess what you have? A Congressional authorization for our comrades at the Federal Reserve to do “whatever it takes” even to the tune of, oh, say, $5 trillion. After all, it won’t really be “debt,” because said “debt” will just go back to the Treasury to be auctioned off to more foreign central banks and investors. And eventually, our taxes will go up and we’ll pay for foreign bankers to get filthy rich. 

Keep in mind that the whole reason Freddie and Fanny were created by Congress is summed up in the following signature mission statement: “Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world's capital markets to finance mortgages for families across America.” Translated from Congress-speak this means: all investments through Freddie and Fanny are safe because Uncle Sam guarantees them. 

There is no risk at all to the investor. And that is exactly the problem. That is exactly why government should never, ever be involved in messing around with the economy.

From the Wall Street Journal: “The intervention also marks the failure of the public-private experiment that was created to boost home ownership among Americans. Fannie and Freddie were created by Congress to help prop up the housing market, and investors have long believed the government would bail the companies out in a crisis. But the companies have long been owned by private shareholders seeking to maximize profits.”   And they will. And the people will be angry, but Congress won’t care. You can bet on a new-and-improved “public-private scam that will certainly fleece the taxpayers of even more money. 

One economist from the University of Pennsylvania's Wharton School said, “Without government support for the mortgage market, home prices would fall much further, exposing the country as a whole to greater economic strain.” Any reasonable person who has ever read the Constitution with even a modicum of understanding and who gets the basic principles of supply and demand as the basis of a free market capitalist system of economics would argue the exact opposite. Why? Because of the difference between a supply system vis-à-vis a command system: once the government enters into the business of supporting various sectors of the economy the entire economy becomes de facto an artificial bubble, ever more removed from the reality of the market and prompting more and more government intervention until the government has to take control of or nationalize most of the economy in order to regulate prosperity and production and keep the whole thing from imploding. The problem here is obvious: Freddie and Fanny are the most startling examples of who our Founding Fathers never intended the government to be involved in such things.

Today President Bush had this to say: “Putting these companies on sound financial footing, and reforming their business practices, is critical to the health of our financial system and to making further progress with the housing correction that today is weighing heavily on our economy. Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing." He went on to stress that this is not a government bailout. 

Well, if a pledge of $200 billion for starters with a real possibility of running into the trillions is not a government bailout, I don’t know what it is. Wait a minute - maybe I do. It’s called nationalization. It’s called command economics. It is a deadly endeavor for a free republic. It is the inevitable result in a series of mortal errors that began with the creation of a central bank, the Federal Reserve System, by the Federal Reserve Act enacted December 23, 1913. That Act alone was a treasonous violation of the Constitution that has effectively sealed the ultimate fate of this republic – unless it can someday be repealed. It was shortly followed by another treasonous abomination, the 16^th Amendment ratified 03 February 1913 resulting in the Federal Income Tax Act of 03 October 1913. All must be repealed because all are deadly to a free republic because they by their nature usurp Liberty and encroach upon the rights of the individual. Not surprisingly a progressive income tax and a strong central bank are number 2 and 5, respectively, of Karl Marx’s list of 10 essential measures that must be enacted in order “to centralize all instruments of production in the hands of the State, i.e., of the proletariat organized as the ruling class; and to increase the total productive forces as rapidly as possible.” For those who are interested, this list is located toward the end of Chapter II of the Communist Manifesto. 

Every American should read the Communist Manifesto. They should read it so that they all understand what happens when government gets too big. They should read it all be frightened and angered. They should read it so that they can better understand why our Founding Fathers gave us the Constitution of the United States of America, and why that document was crafted so as to never to be tampered with or reinterpreted, lest we lose our Liberty to government hegemony, for such hegemony against individual Liberty is the only possible result when government grows too big to be stopped. It feeds on Liberty and snuffs out freedom. And this is only the beginning – unless it can be stopped.