January 15, 2011
By Steve McCann
The Democrats and the left have once again succeeded in their most well-worn, time-tested, and effective tactic: diversion. For the past six days, the country has been watching the spectacle of the Republicans and those on the right defending themselves from absurd and trumped up accusations.
This strategy has been so successful over the years that the left and their allies in the media are now greatly emboldened. They will literally create any accusation out of whole cloth in the assumption that the Republicans in Congress and on the national stage, as they have in the past, will cower in a corner and pledge their undying fealty to "civility." Once the Republicans have done so, the Democrats and their allies have the upper hand.
This strategy has been so successful over the years that the left and their allies in the media are now greatly emboldened. They will literally create any accusation out of whole cloth in the assumption that the Republicans in Congress and on the national stage, as they have in the past, will cower in a corner and pledge their undying fealty to "civility." Once the Republicans have done so, the Democrats and their allies have the upper hand.
While this circus has been on the front pages, the need for this diversion is self-evident. The news and future prospects for the country and the world economy continue to worsen.
Global food prices have reached a nominal all-time high, surpassing the previous peak seen in 2007-08, when food riots rocked the poorer countries of the world. The consensus is that due to weather, demand, and smaller inventories, the prices of the basic food commodities will surge even further. The cost of a barrel of Brent crude oil is approaching $100.00, and some estimates indicate that it may hit as much as $120.00. All the future prices of metals and other commodities vital to manufacturing are also nearing or exceeding all-time highs.
The inflation rate in China is approaching double-digit levels (annualized basis). In Europe, the rate is rapidly exceeding the targets set by the central banks, and in the United States, the Federal Reserve continues to effectively print money while the government goes about its trillion-dollar annual deficit spending spree. Since 2008, the U.S. monetary base (basic measure of money circulating in the economy) has increased over 200% from $800 billion to $2.1 trillion. This is unprecedented and is one of the underlying causes of inflation, but more importantly, as the unavoidable inflation picks up in the United States, it could well be a catalyst for hyper-inflation reminiscent of the 1970s.
The Fed is relying on its unproven ability to quickly undo its own monetary policy and a continued high unemployment rate (which stifles demand by restraining consumer spending) to dampen inflation fears in the U.S. In essence, the Fed's policy is one of hope and a prayer as to its ability to contract the money supply and permanent joblessness for many unfortunate Americans.
On the 13th of January, Standard and Poor's and Moody's announced that U.S. debts are piling up so fast that the AAA bond rating is in serious jeopardy. What does that mean? The U.S. now has $14 trillion in public debt. At the current average interest rate of 3.24% (ten-year Treasury) over the past two years, that debt will cost $450 billion to service. If the rates should rise to their twenty-year average of 5.5%, the cost of carrying that same debt will be $750 billion. The loss of the AAA rating would cause the rate to exceed that historical level, forcing the interest bill to be even higher and making it the single largest budget item, approaching $1.0 trillion.
The Labor Department just announced that jobless claims increased an unexpected figure of 35,000 last week. Home foreclosures exceeded 1,000,000 in 2010 and will surpass that level in 2011. The EPA just announced that it, for the first time ever, has withdrawn a mining permit for a mountaintop coal operation in West Virginia. This action also threatens dozens of other coal mining projects in the Appalachian region, further killing jobs and, together with the oil drilling moratoriums and new regulations, increasing dependence and spending on foreign sources of energy.
While so much attention has been focused on the accusations of the left regarding the Tucson murders, the world has marched on, and the news is not good. The Democrats will use these diversionary tactics again, but we and the country cannot allow them to succeed. We must not take our eyes off the precipitous course the nation is on. Instead, we must make certain that the Republicans in Congress and on the national stage focus on solutions and not defensive strategies.
