Benjamin Montgomery

Here is a sample catch the rest here.

Q: Who in Congress would you consider to be your closest peer(s)?

A: There are a lot of members who I work with on a variety of different issues. Walter Jones is a good friend and works with me on foreign policy. Often on spending, if there is a 432-3 vote, the other two congressmen voting with me are Jeff Flake and Paul Broun. A lot of times, I work with Democrats on civil liberties issues.

I guess my point is that people from all over the political spectrum can side with liberty and the Constitution. The goal is to get a majority to vote that way most of the time.

Q: It was mentioned you were in favor of getting rid of the Department of Education. Is this true, and if so, how do you feel this would benefit the country?

A: I do believe in eliminating the Department of Education.

First, the Constitution does not authorize the Department of Education, and the founders never envisioned the federal government dictating those education policies.

Second, it is a huge bureaucracy that squanders our money. We send billions of dollars to Washington and get back less than we sent. The money would be much better off left in states and local communities rather than being squandered in Washington.

Finally, I think that the smallest level of government possible best performs education. Teachers, parents, and local community leaders should be making decisions about exactly how our children should be taught, not Washington bureaucrats. The Department of Education has given us No Child Left Behind, massive unfunded mandates, indoctrination, and in come cases, forced medication of our children with psychotropic drugs. We should get rid of all of that and get those choices back in the hands of the people.

Since the politicians and pundits feel that the interest rate is the key to the entire economy what does the interest rate really tell us?

I am going to argue that in a free (not manipulated) market the average interest rate actually should relate directly to the projected GDP growth.  Not inversely as many politicians assume.

Basically the interest rate is telling us that if you give me X amount of capital today one year from now I will be able to produce at least X+”interest rate” of capital to pay you back the principle plus the interest.   On average people only would lend and borrow what they could pay back through added production.  Thus, the interest rate is directly proportional to the GDP growth.

This means that higher interest rates in a free market actually mean that GDP growth should be greater.

Well, that was in a free market and we all know that interest rates operate in anything but a free market.  The Federal Reserve gets to set the interest rates and print the money to enforce them, so they can raise and lower it on a whim.

The dogma for many years has been that you need to lower interest rates to stimulate GDP.  However, if the above is true and interest rates are directly proportional to GDP wouldn’t lower interest rates lead to lower GDP growth?

When thinking about broad economic policy it is always best to take it to the smallest scale possible, the individual, to see if it makes sense.

If some one gave you $100 dollars and said in a year you only have to pay me $101 dollars how much would you produce?  Personally, I would produce $1 because that is all that I needed to pay back what I owe.   Now if some one loaned me $100 and in a year I had to pay back $115 dollars I would now have to produce $14 more dollars then before.

In which case was there more production?

Seems to me that higher interest rates are not something to be scared of.  It just means that we are producing more and growing the GDP.

Please let me know your thoughts.  But before a knee jerk reaction consider the possibility that interest rates are in fact directly proportional to GDP growth.

The relentless misconceptions about economic truth propagated by the media makes me sick.

It’s not clear if everyone (except a few) that get regular time on TV are economically illiterate or so scared they have sacrificed common sense for wishful thinking.

Let’s take a discussion about mark-to-market accounting that I heard.  The argument goes…if companies could change the value of assets on their books so that they are worth more would it save the economy.

WHAT????

Is that a real question?  Let me frame it in a less complicated way.  If you had a car that does not run and you could not sell it would changing the price in Quicken change what it is?  Would it all of a sudden become a functioning car that brought you to and from work each day?

NO

No amount of accounting trickery or monetary management is going to change the physical assets of our economy.  Adding dollars does not change the amount of things.

The only actions that can add more things to the US economy are the people that producing more.  However, people are not going to know that they need to produce more if truth is distorted by bad economic policy.  The real solution to the economic failures in our country is market reality.  If the media would kindly present the truth instead of propagating nonsense we might actually get out of this thing with our dignity.

FACT: Economic production is the result of action not monetary manipulation.  Economic prosperity is the result of fair system that rewards the producer not those with political clout.

This guy puts it in perspective.  As I haved stated before Trust is what drives our financial system.

To put it in terms of Sunday football.  Would you watch the NFL and have faith that it is fair if the referees were paid by the teams and favored the teams that paid them the most?

If the world loses faith in the fairness of the American economic system we will see a collapse that makes the Great Depression laughable.  It is essential that we fairly reward winners and losers and allow or economy (not politicians) the freedom to pick them.

Is the root cause of the financial crisis house values falling or over valued houses?

It is essential to understand this distinction to know how to properly solve the problem.  Depending on which disease is diagnosed the country should prescribe 2 very different medicines.

If the problem is that house prices are falling then the solution is to make them more expensive.  The government would do this by inflating house prices and forcing people to buy them. This would be accomplished by injecting cash into the economy that can only be used to purchase houses. (the bailout)

If the problem is that houses were overvalued then the solution is to get them properly valued as quickly as possible.  The solution to this would be to do nothing.  Allow the market to correct itself and possibly remove the programs that allowed houses to get over valued in the first place. (no bailout)

In the first case the ones that would benefit are the people that own houses and mortgages that are overvalued.  In the second case the prudent investor that did not jump on the easy money train will be rewarded.

It is important to remember that every dollar spent on housing is a dollar that can not be spent on infrastructure, health care, education and defense.  It is not possible to have our cake and eat it too.

The questions are what sort of behavior should be rewarded?  And where is the most productive place for the dwindling capital that exists in our country?

Senator McCain has suspended his campaign to return to Washington and save the country.

“I am calling on the president to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself,” McCain told reporters in New York. “It is time for both parties to come together to solve this problem.” McCain via CNN.com

Solve the problem?  We know what happens when the Federal Government solves problems.  We end up with levees made of Play-Doh (sorry I live in New Orleans).

The only way that the government could save us is if they all of a sudden produced an amount of goods that is equal to the national debt.   Then sell those goods at market rates and pay back all of the people they owe money to. However, this is not going to happen because it is far easier for them to take on more debt and pass that chore on to future generations.

The problem with the economy is that we are not producing the products that are needed in the world.  The reason this happened is because the government has artificially increased the price of goods like houses.  When the price gets high more people want to sell a given product and we end up with excess supply (think bubble).  This leaves less people out there producing what we actually need.

So if McCain really wants to save the day he would let the people that made bad investments swallow the medicine.  People would lose money and people would go broke.  The news would find plenty of devastating stories, but in the end this country would get back to producing.   We would produce like we never have before.

So Senator McCain don’t pull that “Straight Talk Express” into Washington.

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