Hayek Rapping with Keynes

This rap parody, courtesy of Mises.Org, is funny and prophetic. Funny because it is something perhaps only dedicated followers of economic debates would find interesting, limiting its popular appeal. Prophetic in light of what we are seeing now in Europe, specifically Greece, with Spain, Portugal and possibly Ireland soon to follow. Unrest in the streets as governments hit the bottom of the taxpayer well and state employees' benefits are necessarily snipped. If you get through the entire video, the highlights of the competing economic schools emerge. Keynes; aggregate demand by whoever can write the check can sustain an economy, regardless of what the check is being written for; smash a window and pay someone to fix it. Hayek; investment in productivity and work provides individuals with longterm material gains and improved quality of life. Hayek versus Keynes, the ongoing divide.

According to Paul Krugman who is astonishingly wrong on economics 100% of the time, this debate is OVER. The government must sustain aggregate consumption at all times, regardless of available revenue streams. Strains on the budgets of various governments must be offset by additional taxes or additions to the money supply, a remedy available only to the Federal government. Deficits are irrelevant in the world of Keynes and his devotees. Krugman and Obama advocate this school of thought, assuming Obama is qualified to be an advocate of any economic school given his sharp lack of economic literacy. Peter Orzag, Obama's director of the Office of Budget and Management, probably explains to Obama that his administration is sort of like Robin Hood, a role I imagine Obama relishes. Taxes are not about the money, Obama smugly asserted on the campaign trail, they are about what is fair. He is clearly not the smartest man in the room.

I am a follower of the Austrian school and Hayek's words ring true; hard work and investment will grow the economy. Curbed consumption funds savings, savings fund investment, investment funds efficiency gains. Improved productivity and free markets singularly account for improved standards of living throughout history. Exploding levels of government spending financed by fiat money are a prescription for financial ruin. There is no free lunch, not now, not ever. In this vein I support auditing the Fed and the US Treasuries reserves of gold.

Krugman denounces those of us who want to audit the Fed as members of the radical, fringe right, ruthlessly taking over the Republican Party. One can only dream. What is the appropriate label for those opposed to auditing the Fed? I can think of a few ..... Unfortunately, auditing the Fed is an academic's fantasy because the Keynesians have thrown a big, big party at precisely the wrong moment in history. If we did have a peek at the Fed's books some of us may take to this streets, the blow back could be severe. In the meantime, we are all going to have a terrible hangover in the days to come. The full effects of the American Recovery and Reinvestment Act 2009 are no where close to being realized. Affordable Health Care for America, signed into law on March 23, 2010 is already $150 billion dollars off the mark. Viewed singularly or as a package it is like painting by numbers; you don't require a PhD in economics to understand where the United States is heading. Tune in to the riots in Greece; the images suffice as a crystal ball.

"Uneasy Lies the Head that Wears the Crown" Henry IV

Henry IV, King of England during the civil war with Wales in the early 1400s is the literary avatar of leaders burdened with serious responsibilities in difficult times. Americans now live in difficult times, not civil war but civil strife, as we continue to clash over the simultaneous federal intrusion into areas decidedly not its concern and federal impotence in areas which are solely its concern; national defense. The duty of Commander in Chief, apparently distasteful to Obama,has seemingly been assumed by his hapless sidekick Janet Napolitano who aides and abets Obama in shirking this responsibility. Her job is to be front and center after each and every attack, and she is getting better with practice, downplaying everything from the significance to the target.

For example, Times Square and Faisal Shahzad, astoundingly apprehended on a plane bound for Dubai within 53 hours of detection of the smoking car. A passenger despite being on a "no fly list". During that 53 hours Napolitano, Mayor Bloomberg and the infamous Contessa Brewer of MSNBC offered insight about the bombers identity. Speculation was made easy by the videos of the "person of interest" seen near the area removing his coat in exchange for a red shirt. Turns out this guy was just hot, which is not yet a crime in NYC. Nonetheless the theories poured forth "a one off isolated incident", offered Napolitano, echoing her best guess about the underwear bomber. Wrong twice. "Someone unhappy with Obama's health care, homegrown" (translation a "teapartier"). Bloomberg bet 25 cents on that guess. "Hopefully not someone with ties to Islam," said Contessa Brewer of MSNBC. Why hopefully, was all the money on teapartiers?

Shahzad, a naturalized American citizen, has ties to radical Isalm as did Farouk Abdulmutallab and Army Major Nidal Malik Hassan. Each of these men attacked Americans in the first 14 months of the Obama presidency and each attack represents a singular failure by this administration to get in the game; the war on terror. Islamic-fascism, radical Islam, two words Obama cannot bring himself to say, is apparently thriving here in the United States and he cannot bring himself to throw the weight of the executive branch into this war, here or there.

Question, Independents who hoped that Obama reaching out to radical Muslims would facilitate an "unclenching of fists" - are you disappointed yet? His personal appeal that so many banked on to part the waters is irrelevant to the men running the terror training camps in Pakistan. The Pakistani radicals are probably relieved that Obama is busy fixing his real enemies in his presidential cross hairs; Goldman Sachs, British Petroleum, Anthem Healthcare, and the General Motors bond holders. To Obama these organizations and free markets represent the clear and present danger to Americans and he behaves accordingly. His fondness for "incentives", punishing taxes and penalties to bend Americans to his vision of the world, will not work in the war on terror. At this point we must hope that he will turn to Ken Salazar, quick with the crushing boot for British Petroleum's neck, for some advice on how to deal with these homegrown enemies. Until then it really is time for Napolitano to fall on her sword and "confused lies the head that wears the crown."