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Obama shows his economic ignorance on 60 Minutes
By Ben Cerruti on December 14, 2011

On last night’s edition of 60 Minutes, President Obama showed his complete ignorance of basic economics. Evidently he has not been exposed to the following simple economics equations that apply to both businesses and government.

For Business: Capital X Turnover = Gross Income

For Government: Money Supply X Velocity (turnover) = Gross Domestic Product (GDP)

Obama ignorantly intimated that the overall income tax revenue collected was static so that for those Americans with lower incomes to benefit from tax cuts, more taxes had to be collected from those with higher incomes. Hence, he completely ignored the fact that the increased turnover (velocity) of capital can increase income with accordingly increased collected tax revenue. Thus by not raising higher marginal income tax rates the capital allowed to remain in the private sector can be utilized to expand businesses that will create additional income and attendant increased tax revenue.

Relative to Government, the following charts vividly show that GDP has only been able to show growth because the Federal Reserve Bank pumped up the money supply. This was done in order to try to offset the decline of velocity which is at its lowest level in decades. Common sense should tell us that it is necessary to increase the turnover (velocity) of capital in the private sector to create desired prosperity. The only way this can be done is to provide certainty to the business community that marginal tax rates will at least stay where they are for the present and foreseeable future. (charts follow)

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Why Medicare and Medicaid are going broke
By Ben Cerruit on May 30, 2011

A recent government report estimated that Medicare will run out of money in 2024. It should be obvious that Medicare and Medicaid are going broke simply because the prices for medical services are set artificially. It is an established fact of economics that the only way to establish the real price of any product or service is in the competitive market place where consumers pay directly to a supplier. Please note the following excerpt from Wikipedia (http://en.wikipedia.org/wiki/Health_care_prices) which describes the present pricing method used.

“Medicare and Medicaid are managed at the Federal level by the Centers for Medicare and Medicaid Services (CMS). CMS sets fee schedules for medical services through Prospective Payment Systems (PPS) for inpatient care, outpatient care, and other services. [19] As the largest single purchaser of medical services in the US, Medicare's fixed pricing schedules have a significant impact on the market. These prices are set based on CMS' analysis of labor and resource input costs for different medical services.

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How Socialism Works
By Ben Cerruti

There are those in the USA that are attracted to the idea that government should be utilized to equalize the wealth and income of a society. In their eyes the governing class could altruistically act in determining that which should be taken from those determined to be the haves and distributed to those determined to be the have-nots. The governing class is evidently presumed to have morals and ethics beyond reproach and not influenced by their own parochial interests. Of course, such an Utopia would only be possible if human beings were perfect and so similar as to be robotic.

In actuality, we find when those human beings in government are given the authority to redistribute wealth and income they never neglect to serve their own parochial interests in the process. They insure themselves a comfortable income and other benefits including generous pensions, health care along with the perks that go with their elected or appointed office. Given the power to allocate tax revenue for purpose of redistribution they routinely use it in a manner to gain from recipients something in return.

For those who are considered the haves by virtue of their wealth and income, depending on the degree, they look for ways to protect the wealth that they hold and to limit the taxation on their income. Income can be derived from invested wealth so minimizing the tax levied on it would be a major consideration. Using wealth to invest in businesses that create income that will be confiscated by way of taxation deters from that utilization. Accordingly, without that incentive wealth is left to derive income from investments elsewhere such as from securities or from areas provided by the imperfect utopian desired government to serve its members interests and perpetual existence.

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Winston Churchill's opinion of the Islamic Religion in 1899!

The speech below was written in 1899! (check Wikipedia - The River War) Winston Churchill delivered it in 1899 when he was a young soldier and journalist. It probably sets out the current views of many but expressed in the wonderful Churchillian turn of phrase and use of the English language, of which he was a past master. Sir Winston Churchill was, without doubt, one of the greatest men of the late 19th and 20th centuries.He was a brave young soldier, a brilliant journalist, an extraordinary politician and statesman, a great war leader and Prime Minister, to whom the Western world must be forever in his debt. He was a prophet in his own time; He died on 24 January 1965, at the grand old age of 90 and, after a lifetime of service to his country, was accorded a State funeral.

Here is the speech.

"How dreadful are the curses which Mohammedanism lays on its votaries! Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia in a dog, there is this fearful fatalistic apathy. The effects are apparent in many countries, improvident habits, slovenly systems of agriculture, sluggish methods of commerce, and insecurity of property exist wherever the followers of the Prophet rule or live.

A degraded sensualism deprives this life of its grace and refinement, the next of its dignity and sanctity. The fact that in Mohammedan law every woman must belong to some man as his absolute property, either as a child, a wife, or a concubine, must delay the final extinction of slavery until the faith of Islam has ceased to be a great power among men.Individual Muslims may show splendid qualities, but the influence of the religion paralyses the social development of those who follow it.

No stronger retrograde force exists in the world. Far from being moribund, Mohammedanism is a militant and proselytizing faith. It has already spread throughout Central Africa, raising fearless warriors at every step; and were it not that Christianity is sheltered in the strong arms of science, the science against which it had vainly struggled, the civilization of modern Europe might fall, as fell the civilization of ancient Rome."


It was the only reasonable thing for the President to do
By Ben Cerruti

V.P. Joe Biden in introducing President Obama, using obvious political rhetoric, told service members at Fort Campbell, Ky. that the decision made by Obama to raid the Bin Laden compound in Pakistan was a "gutsy" one. This, of course, provided Obama the opportunity to bask in that adulation in his following remarks. The fact that his decision was the only reasonable decision to make seems to have been completely ignored.

From what we know, the only other choices he had was to monitor the compound and wait for more intelligence essentially doing nothing - or - to bomb the compound which would was not likely to provide proof Bin Laden was killed. In addition, bombing would likely have caused collateral death of civilians. It should be apparent that the only reasonable choice was the one he selected.

Perhaps one might consider from what we know about the long Marxist trail in Obama’s past, and his far left policies which include appointments to match, the importance to base any evaluation on the actions that he takes as following the Marxist credo "the end justifies the means". It follows that his objective is to transform our country into that which is Marxist like. This means he must do everything possible to stay in office another term. Hence this opportunity allowed him the opportunity to be viewed as a competent ‘commander in chief’ providing impetus towards his reelection. This accomplishment would allow him to continue the implementation of his ideology through whatever means possible, including the bypassing of Congress by way of executive orders and regulations, created out of agencies and imposed as if they were enacted laws.

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Wealth and State Capitalism
By Ben Cerruti

Just preceding his recent visit with wealthy west coast executives of several high tech firms and a venture capitalist, President Obama had elevated Jeffrey Immelt, President of GE to Chairman of the President’s Council on Jobs and Competitiveness. Subsequently, he appointed AFL-CIO President Richard Trumka to the Council. These actions are not a coincidence. Trumka has ties with Communist Party USA and Immelt, prior to his previous appointment to be a member of the Federal Reserve Bank of New York, wrote a letter to his shareholders that provides us with an insight as to what is occurring.

In this letter Immelt states "We are in a recession and, at times like these, it is difficult to predict how bad and for how long. We are running GE to 'weather the cycle'. However, I believe we are going through more than a cycle. The global economy, and capitalism, will be reset in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner."

The last sentence of this statement succinctly tells it all. Government as a regulator, creator of industrial policy, financier and key partner smells to high heaven of ‘State Capitalism’ or as less fashionably said, a form of Socialism.

As has been pointed out previously, being wealthy and having a high annual income is not necessarily the same. Most executives of high tech and venture capital firms hold much of their wealth in ownership of the firms with which they are affiliated. It may be that their annual income is relatively high but it generally is a small fraction of their overall wealth. It stands to reason that they would have great interest in protecting the wealth they have accumulated. It is exactly that motivation in which those wishing to impose Socialism on our society use to achieve their ends.

What affect will this movement towards State Capitalism have on the individual in our society? If the government finances, creates and regulates industry it is more than a partner, it becomes the de-facto owner of it. It does this by controlling the banking system, regulating industry and awarding government controlled business to favored Corporations if not, in essence, owning them. The path of least resistance for private industry is to succumb to the temptation of a secured favored future. The incentive for entrepreneurs of new ventures to bootstrap their enterprises to wealth becomes continuously diminished and high productivity and efficiency cannot survive for long in this environment.

It should be apparent that when Government exerts its power in controlling any aspect of our society it diminishes individual freedom. Encroachment on freedom by the movement towards State Capitalism is already on its way. Look at the Ethanol subsidy to corn grower and regulations restricting drilling for oil and construction of new Nuclear power plants that has caused an increase in food and energy costs. In addition the subsidy for a supposedly environmental friendly electric powered automobiles to create an artificial market for them is a non-productive indirect tax. The power to charge the batteries is derived mainly from coal and oil fired power plants.

By its nature State Capitalism creates a two-class system. One class being the government and its employees partnered with those who control large corporations and people of great wealth. While the other class being those in the private sector. In our traditional economic system the private sector has been the source of funding for the public sector. One must consider that increasing the size of the governing public sector that will include large corporations will accordingly shrink the size of the private sector and its ability to contribute to that funding.

The revenue derived from the inordinate taxation of the income of the highest income earners over time has been shown to be unreliable. Hence it becomes counter productive to business growth and maintenance of high employment. Inevitably it will be taxes on whatever income is left in the entire private sector that will be required, further exacerbating a downturn in the economy.

It is unfortunate to see an apparent public misconception that members of the Federal Government are at odds with large corporations including banks and Wall Street securities firms. The obvious truth is that they are not unwilling bedfellow when their respective interests are complementary.

So what must happen to stop and reverse this movement to take away the freedom our forefathers provided to us in our Constitution? Perhaps we should look at the basic cause of that which we are now experiencing.

In enacting the 16th Amendment in 1913, the federal government abrogated the provisions of the 10th Amendment in usurping powers that should have been "reserved to the States respectively, or to the people. This was done by essentially removing these words in Section 9 of the original Constitution "no Capitation, or other direct, tax shall be laid, unless in proportion to the Census or Enumeration" meaning taxes could not be taken from taxpayers of one State to be distributed to other States. Happening concurrently was the passage of the Federal Reserve Act that allowed the artificial creation of money to supposedly deal with the vagaries of recessions but led to disastrous effects with which we are now living.

Establishing a plan to gradually shut down the Federal Reserve System along with the repeal of the 16th Amendment would be in order. This would take away the means which Congresses and Presidents have used wantonly to serve their own and special interests. Later on, the repeal of the 17th Amendment would allow the appointment of Senators by the respective State legislators providing for complete return of State’s rights as originally intended by our nation’s founders. Hopefully, there still exist in our land and in Congress those patriots who have the wherewithal to initiate the process to effect this happening.


Abortion, Euthanasia and the Hippocratic Oath
By Ben Cerruti

A few years ago a U.S. District Judge's ruled constitutional a Oregon voter-approved law allowing doctors to assist in the death of terminally ill patients. I wonder if this Judge is aware of the contents of the Hippocratic Oath. The Hippocratic Oath is what historically was taken by those entering the medical profession upon graduation from medical school. At one time all reputable medical men considered themselves bound by this oath yet its use seems to have disappeared. In further thought I realized that there could be a reason and it might be in the oath itself. I believe I was right and it is in the following explicit excerpt from that oath.

"I will give no deadly drug to any, though it be asked of me, nor will I counsel such, and especially I will not aid a woman to procure abortion."

This leads me to the following thoughts.

There is a commonality in the view of advocates for both euthanasia and abortion. That is that it should be legal to have either act be aided, abetted or performed by a Doctor. Both pro and con arguments that have been broadly expressed have seemed to disregard the fact that, in both cases, another person is involved in an act that ends a life.


A New World Order Guide
By Ben Cerruti

Suppose that there might exist on our planet elements that wanted to establish a single world government. Such a single centralized entity would obviously require individual countries to relinquish their individual sovereignties. Americans would have to accept a world constitution whose provisions would supercede those existing in the constitution on which the country was founded. The provisions of the world constitution would make the freedoms provided in the Bill of Rights moot.

What better way to condition people to accept diminution of their freedoms than to create a potential world calamity that gives license for government to impose freedom limiting regulations. Such has been done by the United Nations’s Intergovernmental Panel On Climate Change (IPCC). Its 2001 report stated "human activities have altered the Earth system" and predicted potential catastrophic changes on our planet in years to come.

The very fact that it was found necessary to study ‘climate change’ by the United Nations and attendant funding was provided for the necessary research should make one suspect. It smells to high heaven of an international conspiracy to create dominance of the activities of the world’s people by a single governing power.Thankfully the IPCC report was found to have scientific data that was rigged. See http://assassinationscience.com/climategate/


Redistribution of Income
By Ben Cerruti

We have been witnesses to a continuing use of class warfare by those in government, abetted by the media and an assortment of special interest groups and individuals. In this essay we will consider the methods they use to establish the terms relating to redistribution of income.

Utilizing effective divisive tactics they initially obfuscate their intentions by using the term "wealth" in place of "income" when proposing material changes in the income tax code. Taxing income derived from accumulated wealth does not alter that wealth. They next establish three main category of classes; rich, middle class and poor. If one were to pay close attention, he or she would find that they rather conveniently alter the dividing lines to suit the subject for which they are advocates.
 
It should be apparent that attempting to establish classes by simplistic definition is ludicrous.  Is a person earning $1,000,000 a year in his twenties as rich as one earning the same amount in his or her sixties?  The person in their sixties may have had to spend many years working up from under six figure annual income to reach this income level and the person in their twenties may find that in later years his or her income may fall to sub six figure level.  A poor person at a young age may become affluent with time and an affluent person may suffer financial reverses that will throw him or her into what is presently considered the poor class. 

Deficit Spending and the Fed are to blame
By Ben Cerruti

Unfortunately that which has actually caused our present economic crisis is not even being given lip service by anyone. It is hoped that which is contained herein will help fill that void for the reader.

 

As every family knows, when it spends more than it earns it can only make up the difference by borrowing or increasing income. It is the same for the government except they also have the power to essentially print money. Let's look at how government appears to get away with running continuing deficits while any of us who did the same thing would eventually be forced into bankruptcy.

Hard for Conservatives to be nominated under the present system
By Ben Cerruti

Rationality makes it difficult to believe that the decisions made by the voters in just a few smaller States can be justified in determining a nominee for President. Yet since the evolution from political conventions we have seen this blatantly unfair practice prevail.

It happens to be a fact that the northeast coast of New England has been the center of Progressive political persuasion for many decades. This has existed with both political parties and is represented in the Republican party by Senators Susan Collins, Olympia Snow, and Scott Brown who are generally typed as moderates. In regard to Presidential candidates we have had GHW Bush, GW Bush and John McCain who are not conservatives although they claim to be. Why then must New Hampshire be such a determining factor in the fate of a candidate?

It must be recognized that the total number of delegates constituted by Iowa and New Hampshire are only 40 out of 2286 nationally. Yet every four years we find the media and pollsters insidiously using the results of the Iowa and New Hampshire primaries to catapult the winner to be the national party candidate. How can the views of conservative voters throughout the country be represented in such an obviously flawed system of determining a candidate for the most important position of President?

Unfortunately the Republican establishment, although not as prone to centralized government as their counter party, is still generally politically progressive in nature. This position is not in line with the Conservative movement which ultimately desires to dismantle the centralized power structure and return it to the individual States by eviscerating the federal income tax and diminishing the power of the Federal Reserve System to essentially print money. Conservatives are now hampered in their desire to nominate a suitable candidate representing this position and this must be addressed.

There have been proposals made to change the primary system to allow for a broader number of voters to be involved in the determination of a candidate. One such proposal is a rotating regional primary system . It is time for a serious movement to rid ourselves of an outdated and unfair system of nominee selection. If a change is not made it is unlikely a true conservative will ever be nominated. Unless this occurs it appears that our country will continue down the road to become a socialistic one with dire consequences.


Why European countries are going bankrupt
By Ben Cerruti

Whether it be countries or individuals, the same economic principles apply.

When expenditures are expected to exceed income, credit is sought to cover the difference. Creditors expect that principal and interest payments on loans will be made in a manner that will insure the ability to pay them off at an agreed upon time.

With governments of countries, this credit is provided by the issuance of bonds that are secured by the full faith and credit of the country’s taxpayers. These bonds are usually sold auction style to investors that are predominantly banks, at a predetermined interest bearing rate based on expected market demand. Thus, the actual auctioned price may differ from the face amount of the bond based on the actual demand. After being auctioned the bonds are usually traded on bond markets where the traded price becomes dependent on general market rates and the considered ability of the country to pay off the bond when it matures.


Shared sacrifice doesn't create jobs
By Ben Cerruti

Warren Buffet recently stated that the 'mega' rich should pay higher taxes. He suggests raising progressive tax rates for those earning annual incomes of over $1 Million and $10 Million respectively. That this would show the shared sacrifice of the mega rich. Evidently Buffet doesn't recognize the fact that such additional tax revinue have never been applied to decrease the budget deficit. It simply allows the government to spend more. Hence, why should we believe that the extra tax revinue collected would be applied to the deficit rather than to maintain the ever increasing level of spending we have experienced in the past?

In addition, presently the top 1% of taxpayers pay 38% and the top 5% pay 58% of federal income taxes. Reasonable people could determine that there is already shared sacrifice and how has that helped our economy? Taking revinue from the private sector simply removes capital that can be utilized to create jobs through both investment and consumption.


Tax high income wage earners and increase unemployment

Our President is promoting the taxing of high income wage earners as a necessary part of any plan to address the need to increase the federal debt limit. A review of the facts make it difficult to support any such approach. The following table from the IRS shows that confiscating all the income from the top 5% taxpayers would realize an amount less than the multi trillion dollars being sought. Obviously, taking all the income would eliminate any incentive for these people to continue to earn income and result in no income to tax whatsoever. When profitability is taken away from those who create businesses, the funds available to employ people disappears. The ‘shared sacrifice’ socialism Obama promotes negatively affects the lives of those he purportedly wants to help.

fedtaxdata (1037K)


Why do Billionaires support Obama?
By Ben Cerruti

Barack Obama has kicked off his campaign for re-election in 2012 looking to raise close to an estimated one billion dollars towards that end. Now ask yourself, why would extremely wealthy people want to contribute funds to someone who wants to take more of their income by increasing taxes on it?

One could reasonably visualize the possibility that these billionaires would consider their contributions, including the increase in their taxes on income as an investment. The return on this investment being what they would derive in an increase in their overall wealth along with the benefits that would accrue with being in a de-facto relationship with the government.

It must be understood that income and wealth are not the same. Wealth can be created by accumulated income over time or by increased value of assets such as security holdings and real estate. Income, of course, can also be derived from wealth by way of its investments. But Obama disingenuously says he desires to redistribute wealth when he really means income.

The Case Against Public Employee Unions
By Ben Cerruti

In Wisconsin the government has reacted to the adverse effect on the finances of government by flagrant public employee benefits derived from one-sided collective bargaining. Private sector unions have two adversarial parties at the bargaining table to negotiate a bipartisan agreement. Public sector unions are essentially bargaining with their own ilk. The parties on the other side of the table are derivatives of the political system. The taxpayer is left out of the process.

In addition, agreements that include forced union membership fly against the freedoms provided by the Constitution. It follows that allowing employee union dues to be used for political purposes is a blatant abuse of the system. Taxpayers do not have similar organization funding representing their interests.

Despite the fact that their own pension benefits are far less than most public sector employees they are left with the burden of funding the public sector. Does that sound fair or even viable when State budgets are growing and threatening the possibility of insolvency?

Life expectancy has risen dramatically in our lifetime and pensions based on a ‘defined benefit’ rather than ‘defined contribution’ have resulted in huge unfunded benefits. Certainly public sector employees who are retired or nearing retirement are fearful of losing their benefits if and when reforms occur. It also stands to reason that if they fairly look at the financial predicament that exists in the State and a major effect that the ‘defined benefit’ pension plans have had in its making, they must conclude that reform is necessary. It would seem that any reform should include the elimination of ‘defined benefit’ leaving ‘defined contribution’ as the means for funding. One would assume that the benefits of the present and soon to be retirees would not be affected in such a reform. However, it surely would need to happen for younger employees.

Public sector employees generally enjoy comprehensive peripheral benefits, with little or no cost to them.  Such benefits including coverage in the areas of health care, disability, sick leave, life insurance and the like, that few private sector employees enjoy. They are also not confronted with the type of competition for their respective jobs that exist in the private sector.

Further, they can exert inordinate pressure, including the threat of a strike, with little chance of being penalized or replaced. When thrust on the electorate, the threat of closing down public schools, ceasing to provide government services including garbage disposal and the like, government officials have the tendency to cave in to demands. After all the least path of resistance for them is to dip into the public coffers to satisfy the claims and calm potential public discontent with the results of a strike. Fairness alone dictates that public sector workers should not have such an advantage over private sector workers. 

It should be apparent that the taxes from the private sector provide the funding for the public sector. Any taxes that the public sector pays are just recirculation of the taxes paid by the private sector. Too long have taxpayers been unfairly saddled with the payment for ‘defined benefit’ public sector employee pensions that should have been funded over the years by means of ‘defined contributions’. Allowing the pension plans to exist in their present form will continue to perpetuate that which cannot financially survive. The need for these unions is in question. Perhaps the responsibility for the benefits of public sector employees should return to solely the legislative and executive branches.

Wisconsin’s electorate evidently has provided its Governor and Legislature with the mandate to effect beneficial changes in the conditions of public employment. They should be supported by all freedom loving Americans.


Why Socialism is Evil
By Ben Cerruti

In order for socialism to function in a society its tenets require the forcible redistribution of income and wealth. In practice this has never been able to be accomplished since much of wealth is the accumulation of income over time. Once established its owners have always found ways to retain that wealth by way of the power it wields. However, since income is derived in a current time frame, governments have been able to succeed in taxing higher income owners more than those earning lower incomes. This is not the same as the taxing of wealth.

The fact that it takes the inordinate force of government to effect the tenets of socialism is evidently not readily apparent to those who seek fairness in the redistribution of income and wealth. They seem to be unaware that the government bureaucracy does not really redistribute the income taxes it collects but utilizes them to further its own individual and collective interests.

Tax income is not redistributed but rather allocated. Special interests and government employees hold special importance in this allocation. Those that provide for the re-election of legislators are well taken care of as are those that execute for them as employees in the various branches and departments of government.

This is also absolutely necessary for a socialistic government to do in order to insure that any chance for insurrection by the people is minimized. Guaranteed lifetime employment for public sector employees that provides for a high wage, health and retirement benefits insures that the government over time will become an ever-larger dominating force.

What is not understood by many is that the private sector financially supports the public sector (government). Even though public employees pay taxes, the money they use to pay them comes from the private sector wage earners.

 In essence, the private sector is also paying their income taxes. The more that the government sector collects from the private sector the less the private sector has to grow the economy.

The very nature of socialism is based on government sector growth in order to implement its tenets and that is in direct contradiction to the growth of an economy that requires private capital and investment better left in the hands of the private sector than that of the government.

Those with great wealth always fare well in a socialistic system for a very obvious reason. Those in government must have financial support to attain their socialistic ends. Therefore, rather than a truly sharing of wealth and income the country becomes a two class system. One class being the government and those with established wealth, while the other is the working class.

When the incentive for entrepreneurial endeavors begins to vanish because of confiscatory taxation the government and established wealth take over in an attempt to provide for the working class. Lacking the private sector entrepreneurial ventures that create jobs and new wealth, economic growth declines and eventually the country loses its prosperity and economic position in the world

Socialism is evil because it gives government power to regulate virtually every facet of the lives of people. It compounds its evil because it uses force to achieve its objective and usurps from the people the divine guidance endowed to them by their creator. The inspiration to accomplish one’s purpose in life. Divine guidance unshackles each person to follow their own free will and utilize their unique talents towards their own desired ends without infringing on the rights of others to do the same. Doesn’t this follow a better path to the ultimate purpose of life than the government determining what is uniformly best for a collective mass of people?


Letter to a Student
By Ben Cerruti
 
Dear xxxxx: Relating to your recent comments concerning the effect of government directed tax cuts vs. spending on the economy. I have material to present to you in this regard but I would like to preface that with the following.
 
As I mentioned yesterday my daughter has gone through her first year pursuing her MBA. She just finished a course in Macroeconomics and passed on to me her textbook by N. Gregory Mankiw, a Professor of Economics at Harvard. I told her that this textbook would never have been written if the Federal Reserve Act of 1913 had never been passed since there would have been no basis or need for it. My point being that government itself has created most of the economic problems that it subsequently has attempted to correct. In fact, most of the economists of the 20th Century would have had to turn to other professions in order to survive.
 
I also believe that people are too ready to believe those academic & government elitists just because they carry advanced degrees and aura's of importance. In fact, economics in its essence is a simple subject and can easily be related to ones own income and expenditures. However, the reality is that the Federal Reserve System and what has evolved from it is presently alive and kicking albeit to its possible own demise. The following quotations from noted economists clearly provide factual evidence that lower taxes are more likely to promote increased GDP than increased government spending.
 
Milron Friedman - Along with Anna Schwartz, extensive empirical research was done covering many decades and presented in their book "Theory of the Consumption Function". "The central theme of the book is embarrassingly obvious. People do not decide how much to spend on consumption each day or week or year by how much they receive in income on that day or week or year but on some longer term expectation of the amount that they will have available to spend. Similarly, the flow of consumption services that people enjoy during any day or week or year does not depend on how much they spend that day or week or year but on the accumulated stock of goods providing services (such as owned home, car, refrigerators, etc)." Hence, the assumption is that for income received, whatever form it takes, it cannot be effective unless it is on a considered relatively permanent basis. This stands to reason for businesses who are more likely to plan for growth of their company by purchases of goods and hiring of people when they know that they will be able to retain funds that they would otherwise have to pay in taxes.
 
John Maynard Keynes - "Nor shall the argument seem strange, that taxation would be so high as to defeat its object and that given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. To take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price. And when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more. And who, when at last his account is balanced when naught on both sides is still found righteously declares that it would have been the act of a gamble to reduce the price when you were already making a loss."
 
Professor Mankiw - "When John F. Kennedy became President.....in 1961, he brought to Washington some....bright young economists...to work on his Council of Economic Advisors........One of the council's first proposals to expand national income by reducing taxes. This eventually led to a substantial cut in personal and corporate income taxes in 1964....When a reporter asked Kennedy why he advocated a tax cut, Kennedy replied, 'To stimulate the economy. Don't you remember your Economics 101?' As...was predicted, the passage of the tax cut was followed by an economic boom. Growth in real GDP was 5.3% in 1964 and 6.0% in 1965. The unemployment rate fell from 5.7% in 1964 to 4.5% in 1965."
 
I am certain that at your stage of education the foregoing will simply act to stimulate your interest in learning more about the subject matter. At my stage in life I feel that I have been stimulated to learn so much that I find those who have provided me the material from which to learn are not that much smarter than I am - and - in some respects may be considered to have been employed in a profession that has possibly created more harm than good. 


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How to Cure Health Care
By Milton Friedman
The United States spends a mind-boggling percentage of its GDP on a health care system that virtually everyone agrees is a disaster. Is there any way out of this mess? There is-and Milton Friedman has found it.

Since the end of World War II, the provision of medical care in the United States and other advanced countries has displayed three major features: first, rapid advances in the science of medicine; second, large increases in spending, both in terms of inflation-adjusted dollars per person and the fraction of national income spent on medical care; and third, rising dissatisfaction with the delivery of medical care, on the part of both consumers of medical care and physicians and other suppliers of medical care.

Rapid technological advances have occurred repeatedly since the Industrial Revolution-in agriculture, steam engines, railroads, telephones, electricity, automobiles, radio, television, and, most recently, computers and telecommunication. The other two features seem unique to medicine. It is true that spending initially increased after nonmedical technical advances, but the fraction of national income spent did not increase dramatically after the initial phase of widespread acceptance. On the contrary, technological development lowered cost, so that the fraction of national income spent on food, transportation, communication, and much more has gone down, releasing resources to produce new products or services. Similarly, there seems no counterpart in these other areas to the rising dissatisfaction with the delivery of medical care.

These developments in medicine have been worldwide. By their very nature, scientific advances know no geographic boundaries. Data on spending are readily available for 29 Organization for Economic Cooperation and Development (OECD) countries. In every one, medical spending has gone up significantly both in inflation-adjusted dollars per person and as a fraction of national income. In 1997, the United States spent 14 percent of gross domestic product on medical care, the highest of any OECD country. Germany was a distant second at 11 percent; Turkey was the lowest at 4 percent.

A key difference between medical care and the other technological revolutions is the role of government. In other technological revolutions, the initiative, financing, production, and distribution were primarily private, though government sometimes played a supporting or regulatory role. In medical care, government has come to play a leading role in financing, producing, and delivering medical service. Direct government spending on health care exceeds 75 percent of total health spending for 15 OECD countries. The United States is next to the lowest of the 29 countries, at 46 percent. In addition, some governments indirectly subsidize medical care through favorable tax treatment. For the United States, such subsidization raises the fraction of health spending financed directly or indirectly by government to more than 50 percent.

What are countries getting for the money they are spending on medical care? What is the relation between input and output? Spending on medical care provides a reasonably good measure of input, but, unfortunately, there is no remotely satisfactory objective measure of output.

Ultimately, the purpose of this article is to examine the situation in the United States. I have mentioned the data on the OECD countries primarily to document the two (related?) respects in which the United States is exceptional: we spend a higher percentage of national income on medical care (and more per capita) than any other OECD country, and our government finances a smaller fraction of that spending than all countries except Korea.
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Universal Health Care
By Thomas Sowell  (TownHall.com)
Those of us who are getting on in years can remember a time when most people had no health insurance, when we simply paid the doctors or the pharmacies and went on our way, without giving it a second thought. I have especially painful memories of having a hospital bill of $50 for the treatment of a baseball injury back in 1949. You have no idea how big $50 was for me at that time. It was the most money that I had ever paid for anything. But the bill got paid off, a few dollars at a time, over a period of months. When and why did health insurance, paid by third parties, become widespread in the American economy? Like so many things that the government does, third-party health insurance grew out of problems created by previous government policies.....
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Talk by Israeli scientist, Haim Harari (honoraria and bio), at a meeting of the International Advisory Board of a large  multinational corporation, April, 2004.
 
As you know, I usually provide the scientific and technological "entertainment" in our meetings, but, on this occasion, our Chairman suggested that I present my own personal view on events in the part of the world from which I come. I have never been and I will never be a Government official and I have no privileged information. My perspective is entirely based on what I see, on what I read and on the fact that my family has lived in this region for almost 200 years. You may regard my views as those of the proverbial taxi driver, which you are supposed to question, when you visit a country....

 
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WORLD ISSUES
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One would assume that the greater majority of Americans, regardless of political persuasion, want as clean and environment as is economically possible. There are those who sincerely believe what has emanated from the Intergovernmental Panel On Climate Change, http://www.ipcc.ch/organization/organization.htm , established by the United Nations and there are those who sincerely believe that the IPCC has purposely falsified the information provided in their report and have evidence to prove it, see http://assassinationscience.com/climategate/ . It stands to reason that those on either side of the issue of validity base their positions on what they understand the facts to be in that regard.

This then poses the question, ‘why would the IPCC falsify their report’? There are those who believe the motivation for this falsification is much larger than the issue itself. It does relate to verbiage in the Kyoto Protocol and Copenhagen Accord. Written into both of them is the subjugation of sovereign governments to "global governance", see http://cei.org/op-eds-and-articles/chirac-kyoto-first-step-toward-global-governance and http://www.prisonplanet.com/copenhagen-accord-establishes-global-government-framework.html . This would put us on the road to a single world government. This would mean that our Constitution would be superceded by a World Government Constitution. The cherished individual freedoms we have had would become collective freedoms and no longer be guaranteed under a socialistic form of government.

Why are our leaders ‘Islamic’ ignorant?
By Ben Cerruti

The present brouhaha over the proposed construction of a Mosque near ground zero provides reason to view many of our leaders as ignorant, especially those in New York and Washington. They obviously are not knowledgeable with the tenets of the Quran that comprise more of an ideology such as Marxism, Fascism or Capitalism, than a religion. Cloaked in the cover of a religion, Islamism is being treated as just another spiritual entity. In fact it is a socio-political movement whose purpose is to convert society to its conformed totalitarian way of life.


This website has had posted a poll question relating to Islamic beliefs and recently also posted an essay by 'A Rational Advocate' whose content was related to that subject matter. The following is an email dialog that developed from the initial comments made by a visitor whom shall be called Ms X.  The commentary provides an interesting insight to the rationale of some non-Muslims relating to the subject matter....

Madrassas, Islamic Schools, and American Public Schools do have a similarity.  This similarity lies in the fact that they both graduate students that have been indocrinated with a unilateral social ideology.  Some may argue that Madrassas deal with religion but, in fact, the tenets of the Koran that are taught include much involving the manner in which the society must function....

Evidently there are some in the Western World that think the answer to this question is yes.  In the U.S.A. we find among them many candidates vying to be the Democratic candidate for President, acting as if we should have continued passively after 9/11 and our military activity in Afghanistan, waiting for the next attack by the terrorists on some target within our 50 states.  In Britain, where our President has visited recently, they attack the actions of Tony Blair and the Coalition of the Willing in their effort to bring democracy to Iraq.  Their actions convey the feeling that they seem to be on the side of the terrorists and thus to support the longevity of terrorism.....

This is a World War
By Ben Cerruti
Many pundits, politicians, members of the press, and others in our society, maintain the view that the armed conflicts existing around the globe are not necessarily connected. However, this view does not hold up when the obvious facts emerge to show that there is a common thread that exists to tie them together. This thread is terrorism.....

WIN THE BATTLE - LOSE THE WAR
By Ben Cerruti
It is apparent that there is confusion in the mind of many people. It lies in the view that they think we have engaged in a war in Iraq that is winding up with the U.S. as winners. The events that have transpired involving mid-east terrorists over the last 20 plus years, culminating with the events on 9/11/2001, can only lead any rational person to the conclusion that our war is against terrorism and we are far from winners of that war yet......

TRUMAN WAS WRONG
By Ben Cerruti
What with all the hoopla over the North Koreans recent nuclear saber rattling one would think that some mention would be made of what got us here. We hear nothing about the Presidential decision that led to the permanent separation of Korea into two states. Fifty two years ago a confrontation between President Truman and General Douglas MacArthur, over far east policy leading to this decision, dominated the news. It resulted in the removal of MacArthur from his position as Commander of the U.N. armed forces then fighting the North Koreans.....

A view appears to exist that America is more dependent on the receipt of mideast oil than the supplier is dependent on the revenue from its sale. As a result we find contentious argument both inside and outside of government as to the need and methods for making our economy less dependent on foreign oil....

The following burning question, I would think, should rationally enter the minds of the greater majority of civilized people in this country and world. Why would educated young Muslims take the lives of innocent victims along with their own in the conduct of suicidal missions in support of a cause? It would appear contrary to any religious belief, including that of Islam.....

This morning I posed myself the following questions. (1) Why can’t the causes behind the acts of terrorism on our country dating back a decade be determined by a rational analysis? (2) Why can’t we wean ourselves away from dependence on the resources of the region of the world that threatens us?......


POLITICAL ISSUES
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It would appear to be that the rational reason to seek high public office is the desire for one to have a degree of influence in enabling changes they desire in government? In order to gain this position a person must do that which is necessary to gain the attention of those who would make it possible. This may be accomplished through obtaining favor from enablers by way of voluntary personal contribution and support to them, or taking employment offered from these entities, that implies quid pro quo from them – or – by appealing to voters in running for lower level public office along the way.

What may start out to be an idealistic endeavor usually results in one where moral and ideological beliefs become compromised. Those who help one to achieve higher public office usually are looking for something in return. Whether it is an elected office holder or one seeking office, they both require funds to support their respective campaigns. The position on issues that the office seeker actually takes in order to gain the approval of a majority of the voters may not always conform to that which is personally desired or even that desired by the financial supporter. Thus the pressures involved cause the office seeker to often compromise the true positions initially held.


Why isn’t there anyone in politics or the media that questions the use of the term ‘middle class’ as it is being applied relating to the expiration of the ‘Bush tax cuts"? It appears that the ‘middle class’ is being defined by the income people earn in any given year. This doesn’t make sense.

Is a person earning $1,000,000 a year in his twenties as rich as one earning the same amount in his/her sixties? The person in his sixties may have had to spend many years working up from under six figure annual income to reach this income level and the person in his twenties may find that in later years income has fallen to a considerably lower level. A poor person at a young age may become affluent with time and an affluent one may suffer financial reverses with age. There are many factors, such as age, education, marital status, number of dependents, physical capability, race, national prosperity, war or national emergency, that affects the financial status of any person at any given time during a lifetime.

It should be apparent that because of these factors any fair and effective redistribution of income is impossible. The common practice by those in government to use class to define who receives favors or penalties is divisive and counter productive. It pits citizen against citizen and serves to only benefit those in government utilizing these tactics for political advantage.


Why do so many seemingly good people with a liberal bent become pent up with rage when they read or hear the word "Christian" in a conservative context.  In their diatribe they invariably relate the word to their villainous foe "the religious right", or as it is sometimes called, "the Christian right".  Regardless of the possible merits to be found in the presented material, they lose rationality when they see the word "Christian" even though it may only be referencing the most positive moral virtues and perspective.....

The creator’s of our Constitution were so concerned that the Federal Government would usurp the powers of State Government that they included provisions to lessen that possibility.  However, time has taken its toll on these provisions and the politics they had hoped to minimize has reared its ugly head in the Supreme Court to further erode the powers of State Government.....

VOTING ON PRINCIPLE
By Ben Cerruti
In general elections should a person vote for a candidate or his party affiliation? There are various reasonable arguments that can be proposed to justify voting in either manner. Perhaps it would be well to look at the motivation for voting.......

President Bush had threatened a veto if the Homeland Security Act did not include provisions that would allow the new department flexibility in dealing with employees.  Such provisions to include the right to waive collective bargaining rules and to eliminate the lengthy and difficult procedures to move or terminate federal employees now existing in federal law.  With difficulty, and some compromise with members of Congress, the Act was finally enacted with provisions that somewhat minimzed the ability for public employee unions to adversely affect homeland security........

A visitor to this web site recently had comments to make about the essay “Are You Conservative or Liberal?” written by “A Rational Advocate“. As a result, an interesting dialog developed that should be of possible interest to other visitors and it follows.....

The answer to this question, as used in political connotation, requires an understanding of the respective terms. This process involves the semantics of their use in discourse. It stands to reason that a mutual understanding of the words and terms when utilized in discussions is required for communication between the parties involved to convey true meaning to the discourse.......

We have been witness to a continuing use of class warfare by those in government, abetted by the media and an assortment of special interest groups and individuals.  In this essay we will consider the methods they use to establish definitions as it relates to the redistribution of income......

What are the reasons for contributors to provide money to candidates for public office? Common sense tells us that they are as follows:
1. Ideological, meaning to promote the ideals in which the contributor believes.
2. Self-seeking, meaning to gain from the candidate commitment to actions that will be economically beneficial to the contributor.....

There are those that claim that elections are the most effective method of holding legislators accountable for their actions.  In a truly democratic system this might be possible but unfortunately ours is not such a system as experience tells us....

There is a great misuse of meanings of certain words and phrases by many in our society, with the greatest abusers being many media and political persona and social opportunists (self-serving individuals and groups).  It is especially disingenuous when this practice takes place in the categorization of people for the purpose of pitting one category against the other....


SOCIAL ISSUES
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Secularism is a belief and thus a form of religion
By Ben Cerruti
 
In terms of objective consideration it surely can be agreed that secular belief and religious belief are both beliefs. If this is the case it would rationally follow that religious belief should be given an accordant status as secular belief in the application of government laws.
 
Relating this to our public educations system, this would mean that educators have no right to treat religious any different than non-religious expression. As an example, in the recitation of the pledge of allegiance students have the right to have the opportunity to speak the words "under God" should they wish to do so. Of course, other students not wishing to speak those wordsl have that right as well. This of course also would apply to graduation ceremonies where both secular and religious related presentations should be allowed.
 
Rather than divide our citizenry by pitting secular vs religious, why not bring them together by allowing all to participate in Government related activities regardless of their personal beliefs. There is nothing in ou nation's Constitution that prohibits this from happening. Let's get on with it.

BO's speech at Notre Dame completely ignored the role of the Doctor in abortions, as did Notre Dame's administration

BO's speech to the 2009 Notre Dame graduating class amplified the sounds of those on both the pro-life and pro-choice sides of the abortion issue. No one seems to view this issue as having what can be viewed as another position based on who are those who are committing the abortions. The Doctor performing the act is getting away with what some would call murder. If reason was used it could be held that the expectant mother is asking someone to commit this act and the very acceptance of a Doctor to do so could be considered an illegal act under the Constitution. Hence if it is the Doctor who is committing an illegal act that should be prosecutable.
 
The following article I wrote a few years ago addresses the personal responsibility issue and the fact that the expectant mother does have a choice but that it does not include a third person to commit the act. It would not mean that a Doctor should not be able to administer to her after she has opted to find a way to induce the abortion herself, including possibly taking a pill prescribed by a Doctor. The point being morally and ethically shouldn't she be responsible for performing  the physical action of inducing the abortion? Having to make such a decision in which she is physically initiating the act makes it more likely that she would more seriously examine her options. Those being to keep  the child or to offer it up for adoption. Being more personally responsible could cause those thinking of practicing unprotected sex to think twice about it and possibly consider a degree of abstinence. Of greater possible importance would be that a third person, the  Doctor, would not be taking a life and violating moral and ethical tenets..
 
In regard to BO's position on stem cell research, he has authorized use of our tax dollars similar to those provided for foreign abortion clinics, to fund embryonic stem cell research. The government should not be in the business of funding these programs on which our society is divided. However, the private sector is free to spend their research dollars as they wish. In fact, positive results of adult stem cell research has recently shown that that embryo's need not be used and thus destroyed.

* Abortion, Euthanasia and the Hippocratic Oath
By Ben Cerruti
A few years ago a U.S. District Judge's ruled constitutional a Oregon voter-approvedlaw allowing doctors to assist in the death of terminally ill patients. I wonder if this Judge was aware of the Hippocratic Oath. The Hippocratic Oath, of course, is what historically was taken by those entering the medical profession upon graduation from medical school........

A visitor to this web site recently had comments to make about the essay "Homosexuality Is Not Normal" written by “A Rational Advocate“. As a result, an interesting dialog developed that should be of possible interest to other visitors and it follows...

Why do homosexual couples who wish to establish a union between themselves insist on having the government allow them to be endowed with the same marriage title provided to heterosexual couples? Why are they not satisfied with being provided the same legal provisions in the form of a title called "civil union"? A single answer to both questions is obvious. They want society to consider their relationship normal. The reason the government should not concede to their demands is also obvious. Their relationship is not normal because man and woman were put on this earth with complementary sex organs meant to procreate the species....

Another visitor to this website recently had comments to make about the essay  "Homosexuality Is Not Normal"  written by “A Rational Advocate“. As a result, the following dialog developed between the visitor, who is given the name Mr. H, and A Rational Advocate (ARA)....

WHY GO TO MARS
By Ben Cerruti
The Space program had become another humdrum government program to the average American before the tragic loss of Columbia. It took that event to awaken us to think about this program and the reason for its existence at this point in time......

The 4th Constitutional Amendment states:
"The right of the people to be secure in their persons, houses, papers, and effects,against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized" - Recently Representative Howard Berman, Democrat from California, introduced HR5211,a bill to indemnify holders of copyrights on files who use technological means to enter one's Computer and disable the use of such files.......

Altruism is defined as regard for and concern for the welfare of others. An Altruist is defined as one who adheres to the practice of Altruism. A problem exists in our society in the interpretation of actions versus intentions. The  premise I take here is that a person cannot perform an altruistic act that does not fulfill a personal intent to commit it. Thus the definition of Altruism contradicts itself.

DO WE WANT THIS BRAVE NEW WORLD?
By Ben Cerruti
Published in 1932, a novel by Aldous Huxley, entitled “A Brave New World”, described a fantasized society of the far future which has, as time progresses, becomes less a fantasy and more a possibility. This society controlled by an authoritarian centralized government practices mass breeding of humans in laboratories, called hatcheries, replacing normal maternal reproduction......

LOVE AND SEX
By Ben Cerruti
Love is a most misused word.  Saying things like “I Love Cookies” or  “I Love It” or “I Love to Ski”, when the word that should be used is “like”, is innocent enough....However, the word love also has another common misuse, with which we are also all familiar, but this misuse sometimes gives the user of the term a lot of grief....

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