December 20, 2010

Obama Serenity Prayer

My favorite Disneyland thrill when I was a kid was Mr. Toad's Wild Ride, which was a little scary, not too much so, with no nausea-producing, vertiginous changes in altitude or anything, just a ride through a kind of Gothic landscape of dark and vaguely spooky scenes. We should have a real life version of such a diversion beginning with the swearing in of the 212th Congress in about a month when the Republicans, with their huge majority in the House, man their battle stations. The Republicans already control the Senate, somehow, even if they only had, during the 211th, slightly more than 40 Senators, depending on which side of the bed Joe Lieberman got up on in the morning. They could have had 12 or 13 and they would have completely outmaneuvered Harry Reid. The Senate, as we all know, is the graveyard of good intentions. It does seem like a minor miracle that something so obviously right as repealing DADT could make it through that creaking, obsolete chamber, but thank goodness for such moments of grace.

Après ça, le deluge. Are you aware that among the new House of Representatives, only 35% can be counted as reliable votes for what us here liberals like to call a woman's freedom of choice? That's ri-i-i-I-ight. 53 of the new Reps are what the conservatives like to call pro-life.
Sobering, eh? Does this help put some of the Obama-pouting in perspective? Felt good, though, for a minute, didn't it? The lesser of two evils...think there will ever come a day when it's safe to move beyond such dreary calculations? I don't either.

Anyway, the chart above is from a recent New York Times article on the federal budget, which will loom large, early and often, in the Obama versus the Volcano 212th. For one thing, we'll have a debt ceiling "crisis" along about April. Mr. Mumbles & The Diva were not able to lift that sucker much above $14.3 trillion when they were "in control," and since we're currently at $13.9 tril, and we're adding to the national debt at about $2 trillion per year (never mind the "official deficit," that's the actual number), we are rapidly approaching a moment of truth, as General Buck Turgidson told the President in "Dr. Strangelove." You will recall, back in the glory days of Bill Clinton, that Newt (The Salamander) Gingrich had the creative idea of shutting the government down over a debt ceiling raise as a way of implementing his Contract On America over Clinton's objections. Only Clinton wouldn't blink, so the legend we have this group of Young Republican Turks suddenly in the ascendant, and the same opportunity presents itself, and instead of Clinton...see, this is where The Obama Serenity Prayer comes in. Lord grant me the Serenity to accept the things I cannot change...

No O-Bashing, remember. That's done. Looking at that Kansas-shaped schematic up above, where do you suppose these New Republicans will want to slash and burn? Do you think they'll want to take a big chunk out of Defense and Homeland Security spending? Tee-hee. I sort of doubt that. Now, the problem for the rest of us is that it's not as if the Republicans don't have cogent arguments for fiscal responsibility. Take, for example, the commonly accepted definition of "insolvency" for purposes of bankruptcy law: a general inability to pay one's debts as they come due. Elegant, isn't it? Does that apply to the United States? Well, I suppose you could answer no with a straight face. We have about $2.2 trillion in income yearly, and about $3.7 trillion in expenses, but we're able to borrow the difference at rates kept fairly low by the simple expedient of buying more than half the debt ourselves (huh?).

This is by far the most creative Ponzi Scheme ever devised. We borrow money to pay our enormous debts, we borrow money to pay the interest on the money we borrow, we borrow money to do everything, and we mostly borrow it from ourselves. The Federal Reserve is now the single largest holder of American debt in the world, with over $1 trillion of our own paper.
More than China. Guess we have to change that old saw about borrowing "from China" to do this and that, huh?

We don't need China. You think I'm making this up, but I'm not. This is the great innovation of the Bernanke Federal Reserve. Well, actually he's responsible for two changes, both ingenious. The first of his ideas was to turn the Federal Reserve into the Ultimate Bad Bank. This is confounding his critics; he's driving them nuts with it. You see, when The Bernank launched QE One, where he bought up all that securitized mortgage crap from the Wall Street banks and others, everyone predicted disaster. All of that sludge would go bad, about $1.3 trillion worth of it. But what Bernanke knew, and no one else seemed to appreciate, is that it doesn't make any difference. The Federal Reserve cannot have a solvency problem because it makes up for bad assets on its books by simply hallucinating more "money." So once Bernanke had that insight, there was no stopping him, and certainly Obama does not know enough about such arcane finance to even try. Thus, Bernanke's Next Big Thing, his true Flash of Genius, was to extend this idea and allow the Federal Reserve to be the principal buyer of U.S. debt! Don't you see how brilliant that is?

So why would the Republicans want to cry wolf about the national debt? There is no national debt, not anymore. Why are we even paying taxes, that's what I don't understand. It's quite possible that The Bernank will think of that next, you know. The Dude is Santa Claus. He's got the beard and everything. He's got all bases covered. The national banking system is moving toward solvency because Ben has taken all of their bad debt off their books and put it on the Federal Reserve's, where it doesn't matter. He's solved our problem of insufficient income by declaring the existence of additional trillions with which to buy our own debt. He's done it all!

His critics, including his foreign critics, cannot figure out why he's wrong. It's like watching David Copperfield make an elephant disappear from a theater stage. That cannot have just happened, and yet it did. Since countries like China, Japan, the Middle East petro-states have so much invested in the dollar, they can't do much except go along with the gag.

Well, prophets are not much appreciated in their own time. Ben Bernanke is a stone genius, pure and simple. It's magic, what he's done. And if these rambunctious idiots soon to infest the House will just stay out of his way, everything will be fine forever. They need a Serenity Prayer of their own. There are no debts. There are no deficits. Lord, help us to realize that The Good Bernank has saved us, rising in the East (Princeton), and come to Earth to deliver us all. A true Judeo-Christian Christmas Story.

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