I Believe in Capitalism

Milton Friedman's quote of the day

noreply@blogger.com (american spirit) — Tue, 20 Apr 2010 13:48:00 +0000

If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand.
Milton Friedman

Listen and Learn!

Milton Friedman - A Man Who Gets IT!

noreply@blogger.com (american spirit) — Mon, 15 Mar 2010 17:17:00 +0000

If you want to know who Milton Friedman is watch this "freedom of Choice" video. Capitalism works! His understanding of the American Capitalistic System is worth posting. Here is a overview...I will be posting interesting videos of interviews with this brilliant man as I find them.

http://www.youtube.com/watch?v=MBB7l-SfoK4&feature=related

Milton Freidman teaches Donahue in 1979

noreply@blogger.com (american spirit) — Thu, 25 Feb 2010 16:42:00 +0000

Milton Friedman explains the capitalistic system so clearly. This U-tube from 1979 is so relevant today! We will be posting interesting u-tubes of this wise capitalist when we see find them.

http://www.youtube.com/watch?v=E1lWk4TCe4U

Five Myths About the Great Depression - Wall Street Journal, November 4, 2008

noreply@blogger.com (american spirit) — Tue, 08 Dec 2009 01:23:00 +0000

By ANDREW B. WILSON

The current financial crisis has revived powerful misconceptions about the Great Depression. Those who misinterpret the past are all too likely to repeat the exact same mistakes that made the Great Depression so deep and devastating.

Here are five interrelated and durable myths about the 1929-39 Depression:

- Herbert Hoover, elected president in 1928, was a doctrinaire, laissez-faire, look-the-other way Republican who clung to the idea that markets were basically self-correcting. The truth is more illuminating. Far from a free-market idealist, Hoover was an ardent believer in government intervention to support incomes and employment. This is critical to understanding the origins of the Great Depression. Franklin Roosevelt didn't reverse course upon moving into the White House in 1933; he went further down the path that Hoover had blazed over the previous four years. That was the path to disaster.

Hoover, a one-time business whiz and a would-be all-purpose social problem-solver in the Lee Iacocca mold, was a bowling ball looking for pins to scatter. He was a government activist fixated on the idea of running the country as an energetic CEO might run a giant corporation. It was Hoover, not Roosevelt, who initiated the practice of piling up big deficits to support huge public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932 -- increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime.

Public projects undertaken by Hoover included the San Francisco Bay Bridge, the Los Angeles Aqueduct, and Hoover Dam. The Republican president won plaudits from the American Federation of Labor for his industrial policy, which included jawboning business leaders to refrain from cutting wages as the economy fell. Referring to counteracting the business cycle and propping up wages, Hoover said: "No president before has ever believed that there was a government responsibility in such cases . . . we had to pioneer a new field." Though he did not coin the phrase, Hoover championed many of the basic ideas -- such as central planning and control of the economy -- that came to be known as the New Deal.

- The stock market crash in October 1929 precipitated the Great Depression. What the crash mainly precipitated was a raft of wrongheaded policies that did major damage to the economy -- beginning with the disastrous retreat into protectionism marked by the passage of the Smoot-Hawley tariff, which passed the House in May 1929 and the Senate in March 1930, and was signed into law by Hoover in June 1930. As prices fell, Smoot-Hawley doubled the effective tariff duties on a wide range of manufactures and agricultural products. It triggered the beggar-thy-neighbor policies of countervailing tariffs that caused the international economy to collapse. Some have argued that the increasing likelihood that the Smoot-Hawley tariff would pass was a major contributing factor to the stock-market collapse in the fall of 1929.

- Where the market had failed, the government stepped in to protect ordinary people. Hoover's disastrous agricultural policies involved the know-it-all Hoover acting as his own agriculture secretary and in fact writing the original Agricultural Marketing Act that evolved into Smoot-Hawley. While exports accounted for 7% of U.S. GDP in 1929, trade accounted for about one-third of U.S. farm income. The loss of export markets caused by Smoot-Hawley devastated the agricultural sector. Following in Hoover's footsteps, FDR concentrated on trying to raise farm income by such tactics as setting quotas on production and paying farmers to remove acreage from production -- even though this meant higher prices for hard-pressed consumers and had the effect of both lowering productivity and driving farmers off their land.

- Greed caused the stock market to overshoot and then crash. The real culprit here -- as in the housing bubble in our own time -- is the one identified by the economic historian Charles Kindleberger in the classic book "Manias, Panics, and Crashes": a speculative fever induced by excessively easy credit and broken by the inevitable return to more realistic valuations.

In the late 1920s, cheap and easy money fueled a tremendous increase in margin trading and a proliferation of "investment trusts" that offered little in the way of dividends or demonstrable earnings per share, but still promised phenomenal capital gains. "Speculation," as Kindleberger neatly defined it, "involves buying for resale rather than use in the case of commodities, and for resale rather than income in the case of financial assets."

The last thing Hoover wanted to do upon coming to office was to rein in the stock market boom by allowing interest rates to rise to a more normal level. The key to prosperity, in his view, lay not in sound money and rising productivity, but in letting the good times roll -- through government action aimed at maintaining high wages and high stock market valuations.

Spending didn't work in the 30s. This is a quote from the treasury secretary of FDR's administration

noreply@blogger.com (american spirit) — Wed, 02 Dec 2009 04:26:00 +0000

No less an authority than FDR's Treasury secretary and close friend, Henry Morganthau, conceded this fact to Congressional Democrats in May 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"*

Socialism helps the connected not the individual. Prime example of what happens with too much govt

noreply@blogger.com (american spirit) — Wed, 18 Nov 2009 01:31:00 +0000

from NYtimes 11.15.2009

Home Builders (You Heard That Right) Get a Gift

GRETCHEN MORGENSON

Published: November 14, 2009

ON Nov. 6, President Obama signed the Worker, Homeownership and Business Assistance Act of 2009 into law, extending unemployment benefits by 20 weeks and renewing the first-time homebuyer tax credit until next April.

But tucked inside the law was another prize: a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004. The tax cuts will generate corporate refunds or relief worth about $33 billion, according to an administration estimate.

Before the bill became law, the so-called look-back on losses was limited to small businesses and could be used to counterbalance just two years of profits. Now the profit offset goes back five years, and the law allows big companies to take advantage of it, too. The only companies that can’t participate are Fannie Mae and Freddie Mac and any institution that took money under the Troubled Asset Relief Program.

Among the biggest beneficiaries are home builders, analysts say. Once again, at the front of the government assistance line, stand some of the very companies that contributed mightily to the credit crisis by building and financing too many homes.

This is getting to be a habit: companies that participated on the upside and are now reaping rewards from the taxpayers on the downside. The banks that underwrote so many dubious loans, for example, received government aid to get them lending again. Unfortunately, that hasn’t been the result.

One can make an argument that throwing money at the banking system is necessary if we are to jump-start the economy. And banks need a bigger capital cushion to protect against future losses.

But dropping helicopter money on the home builders — the folks who massively overbuilt in community after community — seems decidedly less urgent (unless you are one of these companies, of course). Given that the supply of housing far outstrips demand, it is unlikely that these companies will use these tax breaks to hire workers (unless they go into a completely new line of business).

“I AM surprised that home builders are getting hundreds of millions of dollars given that many have very strong balance sheets,” said Ivy Zelman, chief executive at Zelman & Associates, a research firm. “We question the public policy decision to gift home builders with capital that many will not use to create jobs, since they admit that job growth will be dependent not on capital, but on improving demand.”

When Mr. Obama signed the law, his administration said the tax break would help “struggling businesses.” But as Ms. Zelman pointed out, many large home builders are sitting atop mountains of cash. Pulte Homes, which will receive refunds exceeding $450 million under the new law, has $1.5 billion in cash and cash equivalents on its balance sheet, according to its most recent financial statement.

Hovnanian Enterprises is another big beneficiary of the tax break. It anticipates a refund of $250 million to $275 million next year. It had $550 million in cash in its most recent quarter.

Smaller recipients include Standard Pacific, which is poised to reap cash refunds of $80 million under the new tax break. According to its most recent financial filing, Standard Pacific held $523 million in cash and cash equivalents.

Finally, Beazer Homes told investors that it expects to receive a refund of $50 million. The company reported cash and equivalents of $557 million at the end of September.

Some of the home builders poised to receive tax refunds have even more cash today than they did last year. D. R. Horton, for example, has $1.966 billion in cash, up 45 percent from September 2008 levels. And some are healthy enough to have retired significant amounts of debt from their balance sheets this year. Pulte has bought back $1.93 billion in debt in 2009.

So what do these companies plan to do with their refunds?

Ken Campbell, the chief executive of Standard Pacific, said the money would allow his company to continue buying land. “Will we build more houses or will there be more people employed in the first quarter? Probably not,” he said. “Will employment accelerate when the market starts to grow? It will.”

Caryn Klebba, a spokeswoman for Pulte Homes, said in a statement that the company planned to use the funds it receives “to support its current operations and, when market conditions improve, fund future growth and expansion.”

In other words, job creation does not seem imminent, notwithstanding the claims of the administration or those in Congress who supported the giveaway.

Representative Lloyd Doggett, a Texas Democrat, has conducted a lonely fight against the tax break all year.

“Some have said this is like a bridge loan to these companies,” Mr. Doggett said in an interview. “Well if it’s a loan, it is like a no-doc loan, because the recipients provide no indication that they will create jobs or do anything other than keep the money. I just feel it is a total windfall.”

Unfortunately, this seems to be another example of an age-old phenomenon: Good Things Come to Those With Lobbying Power.

Securing this tax break was a top priority for home builders, lobbying records show. The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. Last year, the industry spent $8.2 million lobbying.

Much of this year’s lobbying expenditures were focused on arguing for the tax loss carry-forward, documents show.

Among individual companies, Lennar spent $240,000 lobbying while companies affiliated with Hovnanian Enterprises spent $222,000. Pulte Homes spent $210,000 this year.

That’s some return on investment. After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.

Meanwhile, the bag that we taxpayers are left holding gets bigger and bigger.

THE problem here is that this public policy decision was made with little to no input from the public. Sure, tax rebates like these give a lifeline to companies that were about to sink beneath the waves, but would it be so terrible if some builders that lost their heads during the housing mania ceased to exist? It is not as if a housing shortage will result or that more jobs will be lost if these companies don’t receive these tax breaks.

Pretending to promote job creation, the government is dispensing cash to companies that either do not need it or need it precisely because they didn’t run their businesses prudently. Isn’t there something wrong with that picture?

wise saying - capitalism at its best

noreply@blogger.com (american spirit) — Thu, 05 Nov 2009 17:07:00 +0000

Give a man a fish he eats for a day...
teach him HOW to fish- he eats for a lifetime!

Another great capitalistic example by John Stossel

noreply@blogger.com (american spirit) — Thu, 17 Sep 2009 19:51:00 +0000

This 6 part series is very interesting! Just click the links.

Part 1: http://www.youtube.com/watch?v=Tda0-cDyD0U&feature=related

Part 2: http://www.youtube.com/watch?v=dtwdVInR1Gw&feature=related

Part 3: http://www.youtube.com/watch?v=m0vpzxWU9io&NR=1

Part 4: http://www.youtube.com/watch?v=-K93hZbWB_I&NR=1

Part 5: http://www.youtube.com/watch?v=JmpDbM1YDWg&feature=related

Part 6: http://www.youtube.com/watch?v=hYE4gO0b3K4&feature=related

Quality Examples of Capitalism in a 6 part Series by John Stossel

noreply@blogger.com (american spirit) — Fri, 04 Sep 2009 18:58:00 +0000

http://www.youtube.com/watch?v=F0VHiONkot8

http://www.youtube.com/watch?v=EGkEziYbcJo&feature=related

http://www.youtube.com/watch?v=PxklFh6-D9s&feature=related

http://www.youtube.com/watch?v=l-bflQuRLbU&feature=related

http://www.youtube.com/watch?v=ZySCPstmxyc&feature=related

http://www.youtube.com/watch?v=HzvAt9n-08U&feature=related

let me know what you think.

From Freemarket.com: The Real Meaning of the "Free Market"

noreply@blogger.com (american spirit) — Mon, 17 Aug 2009 14:12:00 +0000

Thought you might find this article from freemarket.com interesting.

The current state of our economy is well beyond bad. It's slowly drifting down a spiral of degradation, and while measures are being taken to revive it, that'll take time. But it brings about an important question - what exactly is the great benefit of the free market?

Actually, the exact meaning of the term "free market" is largely unknown to the people today. It sounds like something to be afraid of - unrestricted freedom is always bad, right? In reality, it refers to the market being free of unnecessary government regulation.

The people who actually invented the name of the free market were those who were affected by the regulations imposed on them - the reason for that being that those regulations prevented them from making their own decisions and spending their own money as they saw fit.

In the US, the elite exploited the masses; thinking, luring them into voting for more and more control and regulations. The way to do this turned out to be by making people believe those rules would directly affect them in positive ways. Using this method, the two political parties have been successfully subjecting the market and the people to more more regulations during the past half a century.

So, is a completely free market beneficial to the end user? Maybe we should try it one of these days and we'll find out.

SOCIALISM DOESN’T WORK – EVEN IN CHINA

noreply@blogger.com (american spirit) — Fri, 31 Jul 2009 18:18:00 +0000

SOCIALISM DOESN’T WORK – EVEN IN CHINA
By Dick Morris And Eileen McGann
07.27.2009
Buried amid its astonishing annual growth rate, even in the recession, is the sad story of China’s socialist sector, a huge and perennial drag on its economy. The failure of government control amid the success of private initiative is a story that President Obama would do well to study as he brings government control and management to the automobile and banking industries in the United States.

In China, 80 percent of all investment activity comes from bank loans largely controlled by the government — a harbinger of what Obama will bring to the United States as TARP-funded banks increasingly have to bow to federal regulation and pressure. And, as is to be expected when the state runs the banks, the lending goes disproportionately to state-owned enterprises (read: General Motors). These companies get 70 percent of the nation’s investment capital (and the figure is rising) but only produce between one-quarter and one-third of all output in the country.

Follow link to complete article: http://www.dickmorris.com/blog/2009/07/27/socialism-doesn%e2%80%99t-work-%e2%80%93-even-in-china/#more-615

The Death of Democratic Capitalism? by Larry Kudlow

noreply@blogger.com (american spirit) — Thu, 09 Jul 2009 01:04:00 +0000

Interesting article by Larry Kudlow:

The Death of Democratic Capitalism?
Will a state-directed economy really produce strong growth? By Larry Kudlow

How far will the Obama administration move to assert regulatory control over key sectors of the economy? Are we moving away from democratic capitalism, and toward some sort of corporatist state-directed economy? That could be the biggest stock-market and economic-growth issue facing us today.Stocks plunged almost 300 points on Monday over new fears of bank nationalization. On Tuesday, shares recovered about 100 points after Treasury man Tim Geithner testified that repayment of TARP loans would be okay in some cases. But Geithner added that the decision to let banks repay the federal government will largely depend on the credit needs of the broader economy.So while some investors believe Tim Geithner backed away from the prospect of government-controlled banks, it’s really not clear that he did so.

keep reading this article go to: http://article.nationalreview.com/?q=ZWMwOGU1NGNhOTU3MDUyZGJmZTczOTM5YzUwOTVhZWU=#more

Life's Journey-

noreply@blogger.com (american spirit) — Wed, 08 Jul 2009 03:36:00 +0000

thanks tamarazza for sending the following...

"Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming, 'Wow! What a Ride!'"-HST

cap and trade fiasco

noreply@blogger.com (american spirit) — Sat, 27 Jun 2009 22:11:00 +0000

Cap and trade or better yet cap and tax passed without the bill being read or publicly discussed. And you don't think this is a pork bill that destroys an economy? Great article in wall street journal about global warming and how the debate is forcing the hand of environmentalist to force passage today because debate could change view point. Here is the article. http://www.online.wsj.com/article/SB124597505076157449.html
Thoughts?

Why are policies being implemented so quickly?

noreply@blogger.com (american spirit) — Sat, 27 Jun 2009 22:04:00 +0000

Is it just me or are the policies being implemented too quick without truely understanding the implications.
Three months to change the entire financial system that has evolved for over 100 years? Capitalism always works itself out. Regulation so that capitalism continues smoothly is not completely a bad idea but you need to think things thru because the odds are saying you will create more destruction than help. Besides why rush such a potential major issue when it has already occurred. Doing it one month or one year from now makes no difference because the capital system has moved past what you are currently trying to control. Thoughts?

AIG

noreply@blogger.com (american spirit) — Thu, 18 Jun 2009 19:23:00 +0000

I am hearing that AIG employees were forced to give back their bonus' or they would be black listed from being hired by any financial firm that accepted TARP funds. What is worse is that they were expected to pay back the gross amount and not the tax adjusted amount. ie. they had to upfront the tax money for a year. Anyone have color on this?

Want Socialism? read the following

noreply@blogger.com (american spirit) — Mon, 18 May 2009 20:57:00 +0000

A top college economics professor said he had never failed a single student before but had, once, failed an entire class.

That class had insisted that socialism worked and that no one would be poor and no onewould be rich, a great equalizer. The professor said ok, we will have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test the grades were averaged and everyone got a B. The students who studied hard were upset, and the students who studied little were happy. But, as the second test rolled around, the students who studied little decided to study even less and the ones who studied hard decided that they wanted a free ride too; so they studied only a little.

The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.

The scores never increased as bickering, blame, name calling all resulted in hard feelings, and no one would study for the benefit of anyone else. All failed, to their great surprise.

The professor told them that socialism would also ultimately fail because when the rewardis great, the effort to succeed is great; but when government takes allthe reward away; no one will try or want to succeed.

Could not be any simpler than that!

How do we save Capitalism?

noreply@blogger.com (american spirit) — Tue, 12 May 2009 13:49:00 +0000

Businesses are being demonized for making too much money. Yet those businesses employ people who support families and put their kids through school. Hurt the hand that feeds you and you get unemployment. Business will cut back to lesson their overhead so that they can pay their "taxes." Give businesses the incentive to hire (tax break) and employment happens! It is basic mathematics.
On the other side you have the government spends with no accountability...they are trying to buy their votes with money they do not have. So they tax the businesses that hire you...and in order to pay the tax they fire you.

I cannot figure out why the manufacturers are not given breaks to bring manufacturing back to America. President Obama says that Americans do not want those jobs...ask an American who is out of work!