Submitted by Mitchell Langbet, Dec 29, 2007 04:08

While I do not gainsay that Republicans tend to support reduced taxes while Democrats tend to favor increasing them, and I agree that this is a mark in the Republicans' favor, I would add that neither party has been responsible about balancing the budget, reining in spending, or maintaining a steady money supply. In particular, the Republicans have been on a spending spree that has included a considerable taint of corruption. As well, the Republican administrations since 1980, as well as the Clinton administration, have aggressively expanded the money supply at a rate far faster than productivity and population growth warrant. The result has been a 3.7% inflation rate since 1979, and it has only been that low if you (as does the Department of Labor) exclude house prices. Including house prices the Republicans have given us an inflation rate of over 4% annually over the past 29 years. This dismal performance should be an especially sore topic for New Yorkers, many of whom have been forced to leave the City because of escalating housing prices boosted by ever-escalating Wall Street salaries. In turn, Wall Street's salaries are entirely subsidized not by Wall Street's market performance, which has been dismal, nor by Wall Street's production of value which is non-existent, but rather by the effects of unrealistically low interest rates (which are the chief reason for stock market returns); low interest loans to big business; incompetently executed mortgage programs and the like. The inflated salaries and exit payoffs to Wall Street executives and hedge fund managers come from the Fed's artificial expansion of the money supply. The past 29 years' orgy of liquidity is probably the largest welfare transfer in history. It has been due to the Greenspan Fed's inflation and has involved a welfare transfer from the average American to Wall Street executives and hedge fund managers. As well, and more ominously, the Fed's monetary expansion has largely been absorbed by foreign governments, who now hold many times the total number of dollars in circulation in the US. Although the argument is made that there is no reason to think that foreign dollar holders will act against their economic interest, multiple large dollar holders (Saudis, Europe, Japan, China, etc.) each with nearly or more than a trillion dollars who stand to lose significantly in case of a run is a desperately unstable situation. It is a fools' strategy, and the Republicans have led us to it, with the Democrats' complicity.

Although the Republicans might favor a few percent lower taxes than the Democrats, we live in a dream world where both parties have ignored responsible household management. We can expect the coming years to be dire ones because of our unwillingness to demand competence and fairness from our government, and our willingness to believe that counterfeiting dollars can make us wealthy beyond transfering wealth from the general public to debtors.

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