Schiff -> shoutcast. Without Schiff I would have been lost.

It is hard to believe I use to be a fan of this idiot. This guy is one of the most dangerous people in America, because he comes across as he is out to help you, but his policies caused all the problems: wealth to the top, high unemployment, low wages compared to inflation, jobs overseas. I will write a long series on this book chapter by chapter, to show what a evil clown this moron is. Now I only read the 1st 2 chapters, so my review hopefully will turn more positive.

Chapter 1 - Eccle's Insight.

First he talks about Eccles like he is some sort of capitalist hero. He is not he is a banker. He used the bank deposits to finance his own businesses. This is another reason why never to put significant money into banks, the bankers will steal it for their moral hazard businesses and the government will steal it via inflation. According to Jeremy Seigel, my favorite stock analyst, the current economic crisis was caused by banks holding a ton of the junk thinking they were good investments, instead of selling it off like they did in the tech bubble. Loans bring economic health to those who have access to them, and hurts everyone that pays for them.

The two things, Reich, wants the reader to come across is this expert and all economic historians have come to the conclusion government deficit spending, loose money, and cheap credit saved the great depression. They promoted unemployment insurance, public's works spending, government refinancing of mortgages, federal minimum wage, federally supported old-age pensions, and promoted loose money and low rates. It is these very ideas that destroyed the middle class in America. The middle class saw their savings destroyed via inflation and banks. They saw their work opportunities destroyed by minimum wage and unions. The deflation and savings that would help them in bad times, were looted by government types, lawyers, and banks. Even Reich, benefits by teaching at a public school in California and living his whole life off government. Thus, when poor citizen goes to Taco Bell to buy a taco, he has to pay a portion to fund a 6 figure salary to Reich to teach bad policies at school. Actually 1000000s of 6 figure salaries are funded buying tacos. And it is not just the sales tax of 8.75%, it is the business taxes, the income taxes, capital gains, the permits and fees, the rules and regulations, in essence when you buy a taco, well over 75% goes to government.

His conclusion of the chapter, he claims the economy (and the great depression) is like a poker game where as money concentrates to fewer players as the other players can't borrow anymore and go broke, the game stops. His solution is to rob chips off the big stacks and give them to the other players to let the game go on. The reality is the game is over, the other players need to quit the game and find another line of employment. The chips or money they have at home, is needed to rebuild so they can get back into the game or play lower stakes.

"When there are no more poker chips to be loaned on credit, debtors were forced to curtail their consumption. This naturally reduces demand of goods of all kinds and brought on higher unemployment. Unemployment further reduced decreased the consumption of goods, which further increased unemployment."

The problem was the poker chips were loaned. If instead government got out of the mortgage business the problem would be far less. Yes, as the housing market collapsed, it would further increase unemployment. But the solution is to allow unemployment to remain and end the minimum wage and unions. Those unemployment would go into areas where jobs still exist, like painting houses. By doing so they they increase everyone's worth by lowering the price of getting your house painted, and making your money more valuable.

In summary, Clinton, Obama, Reich, Bush II did not get degrees in the sciences. They got B.A.s. who wants a B.A. someone who does not want to get their hands dirty. Why do they not want to get their hands dirty? The answer is they don't want to work. The only way they can get away with not working is to get into government.

Reich is one of the reasons the economy degenerated to this point...

Parallels

He starts out with the idea that having a wide distribution of income, that somehow it hurts the middle class with high unemployment and low wages. High unemployment is caused by government. People don't want to paint houses if the government is just going to either tax their money and give it to rich government employees, or inflate their money away. Instead they would rather collect welfare, and who would blame them work is not fun.

Suppose you have 2 companies that sell shoes. Each has $1 billion in revenues and both sell shoes for $20. The only difference about these two companies is at one of the companies the wages are $20 per hour and at the other the wages are $40 per hour. As a worker, don't you think it would be wise to quit the job where you make $20 per hour and work for the company that pays $40 per hour. The reason people don't move are because of hidden wages like business health care deduction that prevent people from assessing the value of the job.

But, the point of this paragraph is the rich, do not have control over the poor. If stockholders or CEOs pay themselves too much money the employee can leave for greener pastures. Accumulated wealth, is just that, accumulated wealth. Yes, some of that may prevent you access to the hunting grounds, but generally the hunting grounds are limited by government not the rich. Boeing would move to Compton, if the minimum wage, unions, and discrimination lawsuits were ended!

He talks about Muncie a town priors to the 1980s to the 1800s was a town of manufacturers, however beginning in the 1980s Walmart, Hospital, Universities, and Schools, Sallie Mae, and the City of Muncie became its largest employers. No wonder the wages of America have not gone up, government stole all the money from corporations. This is a chapter on parallels to the great depression, why didn't these manufacturers go away in the great depression?

He makes the claim mortgage credit caused the great depression and the great recession. That is true, but the problem was people did not pay the money back. A loan becomes a deposit at another bank. The daisy chain broke, instead of fixing the problem of full reserve banking, ending the fed, and a gold standard, he wants more of your money.

He makes another poker reference to how the game was stopped. The game was stopped by government. UIGEA was passed in the house and senate, it was attached to the ports bill giving congressment 2 reasons not to vote for it. They government voted for ending the game, with further rape by having the DOJ freezing players funds in the poker bank accounts.

Who are they going to sell off the junk loans too?

Some people just don't want to move. Not sure I understand what you are try to say above.

You need to explain hunting grounds. Why would Boeing move to Compton?

The USA has moved away from manufacturing. During the Great Depression, how many people owned a product made outside the USA. In 2011 most of the items I own were made outside the USA (TV Computer Phone Modem Car )

I've never heard the great depression was caused by mortgage credit.

1. When they were still valuable, Seigel claims they should have been sold to individuals and investors, like tech stocks. They got involved in risky loans.

2. It is not the persons choice to what the salary and work conditions of a business owned by stockholders is. The only option is to quit and pick a better opportunity.

3. I view the economy as someone living as a tribe on the savannah. If you live on the savannah and someone puts up a large fence around it and claims it is theirs, you are denying the natural right of man to the land.

Boeing would move to Compton to hire workers at less cost. To avoid the unions that so disrupt the workers gaining jobs. Compton was chosen since it generally viewed as a black community. The black community has been in the news recently where 30% of the men under under 30 are unemployed. Boeing has been in the news recently moving to a state that wants to end the union. In the meantime Russia is building commercial jets for 25% less than Boeing.

4. That is true, but a lot of the reason is costs are lower elsewhere.

5. It was Reich's quote in chapter Parallels, trying to show the parallels of the great depression with this one. A quote, "Between 1918 and 1928, the ratio of private credit to the national economy nearly doubled. Total mortgage debt was almost three times higher in 1929 than 1920. Eventually, in 1929, as in 2008, there were 'no more poker chips to be loaned on credit,' in Eccles's words. and "when ... credit ran out, the game stopped.' "

Part I - 3 The Basic Bargain

He starts out by writing the high wages of Ford ($5 per day) to make model Ts was some sort of plot to pay workers a wage so they can buy the cars they produce. That workers are consumers. This is further from the truth the horse age ended and Ford wanted to get many and the best workers from all over the country. From wikipedia he stated, due to high turnover, he raised wages to $5 per day and a 40 hour workweek. He offered the wage because he want to sell 500,000 cars a year based on calculations based on the hourly average wage of the average U.S. citizen. It was stockholders that built the factories. It was savers, those capable of saving without it being lost to inflation that made Ford motor company. This was possible because we were on a strong money standard gold where even the poor were capable of saving.

Now, Reich takes a strange tangent. He claims allowing wages and prices to fall as a bad thing. Why? If you have $1000 in the bank you can now buy more. If you are a worker, if your wages didn't go down, you can now buy more. If you are unemployed there are more opportunities to seek the highest paid areas where employment occurs.

Consumer demand is determined by what people want. Do they want a car a house? If they want a car how many man-hours do i have to work to get that car. So I have to work 1000 hours to get that car. That seems unreasonable, maybe I will start my own car company and build my own car in 500 hours.

The very thing Reich preaches, easy credit, goldsmiths cheating on the gold receipts, free government money and deficit spending are the very things that create the booms and busts. Every one! When someone saves money shoveling **** in Mississippi, they save that money to be use to buy something in the future, maybe a castle of gold. But the reality is it is their money, their man-hours.

The robbery of the elderly's savings accounts today via inflation tax (which was earned a $1 per hour) so some government NPR worker can make $100k a year and buy a car to create aggregate demand is no more than theft by government. At least the bank robber acknowledges they are stealing your money. He doesn't.

Part I - 4 How Concentrated Money at the Top Hurts the Economy.

This is a very strange section. He is complaining that if Warren Buffet owns $50 billion and does not spend it, he is hurting the economy. The economy would be better off if we take $10 billion of his money and spread it by say giving $10,000 of it to 1 million people. What Reich does not understand is eventually that $10 billion is going to be spent, most likely saving people in the Gates foundation. In the meantime, Buffett, might buy a hospital a school, or and even hire a bunch of nurses. However, in the section he specifcally says government should take his money and do that.

Then he talks about some other rich people. Most of those who got rich off government. But, even so the big problem is they didn't spend what they earned. What Reich does not understand the money will be eventually spent, maybe not even in his lifetime or his grandchildrens lifetime.

In summary, money at the top helps the economy. The money gets thrown in M3 to be eaten away by inflation. This is not to say the top should not pay more taxes, why not they can afford it. This further helps the economy. Also someone with a lot of money can do something really big with it, someone that knows what to do with it, in one chunk by themselves, without relying on government or a bank.

There are few people at the top. You can tax the top 100% and you still would not have that much money compared to the deficit.

Part I -5 Why Policymakers Obsess About the Financial Economy Instead of About the the Real One.

He seems to focus that government seemed to focus on the bank bailouts, aig bailouts, and most importantly wall street. the reality is he and his buddies all voted for these bailout bills, Obama, Biden, Kerry, and Clinton for example and he uses a banker as his keynote. But, the reality Wall Street paid for most of the bailouts, when the government spends money it does not have is hurts cash holders. Who has the most cash, companies like Apple. mostof Wall Street would prefer the bailouts did not occur and many of the speakers on CNBC even agreed during this period.

The problem seems to be the bankers. They are basically running a mutual fund that pays the depositors a 75% annual fee on profits. Then if they make bad bets, the government is liable to pay off the rest.

Part I - 6 The Great Prosperity: 1947-1975

This is a dangerous section, because he tries to make the case government is responsible for all economic growth. Without government we will be living in a great depression type situation. He fails to mention prior to 1970, the deficit in relation to the debt was very low. Some years like 1947 had massive surpluses. If the typical family income rose from $25,000 to $55,000, and you pay 50% in taxes, have you gained anything? He talks about social security and unions. Social security was much smaller then and public-sector unions were small during most of the period.

I think history will show, the era prospered is spite of government damage to it, not because of it. Yes, in the early days of government they spent money on roads, space programs, dams, electrical grids, schools, and water systems. But as time goes on lobbyists will take an increasing share for unnecessary spending.

In the end he talks about United Airlines offered comfortable slippers and a steak dinner. I think if you look back airline tickets and phone calls were more expensive back then than today, due to unions. In equivalent terms a phone call would cost you $10 per minute and a plane ticket across country $3000.

In summary, he takes credit that government solves all the problems. it does not. The plane was built by a corporation, the steak was provided by a businessman, the gas for the plane by a corporation, and the slippers were made by a corporation.

Part 1 - 7 How We Got Ourselves in the Same Mess Again

This section pertains how we got ourselves in the same mess as the great depression again after the period of prosperity of 1947 to 1976. This section is about how the real wages have remained the same since 1976. He blames globalization and automation as problems that cost jobs, but not the real problem. He blames the loss, on drop in union membership, cutting of taxes on the rich, government research and jobs programs, deregulation and privatization, over pay of CEOs, and deregulation of wall street banks. His solution, government intervention and taxing the rich.

The only problem with his story, is the government now is bigger than it was in the 1940s and 1950s. China only 10% of the people work in the public sector and it is booming. You can watch reruns of the Andy Griffith show, and the government worker is perceived as the lowly paid servant to the people. You take out the top 10,000 leaders of U.S. corporations and the rest are paid less than government workers.

The reason we are in the same spot as in 1929 is, rule by leader, centralized planning. Banks ran up their credit card, people failed to pay them back, and it collapsed again like all recessions. Bush and especially Obama sent us on a path of high inflation with bailouts and deficit spending.

Part I - 8 How Americans Kept Buying Anyway: 3 Coping Mechanisms.

Here Reich claims, All Americans coped with this by putting women in the workforce, working longer hours, and drawing down savings and taking on massive debt. He claims we, however millions didn't.

Part I - 9 Future Coping Mechanisms

He says they are exhausted.

Part I - 10 China Won't Save US - no comment.

Part I - 11 No Return to Normal

The fundamental problem is U.S. no longer has the purchasing power capable to buy what the U.S. economy is capable of producing.

So I am going to stop here read the rest of the book and offer a solution. In summary, Robert Reich is a clueless idiot! This guy pulls in 6 figs off the government why so many people are homeless. The sad part is I could have wrote this book, 3 years ago.

I have to summarize one thing quick, he talks about this mythical Independence Party. He tries to mock the tea type party, but in fact almost all the negative consequences have already occurred under Barack Obama. He and Barack are the problem not the solution! The platform of the independence party would far outperform his. Barack has easily stolen $8 trillion, and I would make him pay it back with interest if I were president!

Part III. 1. What Should Be Done: A New Deal for the Middle Class

A. A Reverse Income Tax. All in 2009 dollars (even he has to clarify that). Full-time workers with income less than $20,000 would get a $15,000 wage supplement. Someone earning $30,000 would get a $10,000 supplement, and someone earning $40,000 would get a $5,000 supplement. Someone earning $50,000 full-time would pay zero tax. Then he states income up to $90,000 would pay 10%. Income up to $160,000 would pay 20%. Income up to $260,000 pay 40%, those up to $410,000 pay 50%, and all income over that 55%. Capital gains are taxed as ordinary income.

Response: At least he attempted to pay for the the changes here and below. Why should it matter so much if someone is working full time. If you tax capital gains as ordinary income that means foreigners pay less tax than U.S. citizens on U.S. stocks. In my opinion it would be much more fair to figure out how big you want government, say 15%. Then all money after that combined and given out as a check to everyone. So why give a check out to everyone, even bums? You deny the right of people access to the land to hunt and gather, thus to compensate you pay a tax to use their lands.

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B. A carbon tax of $35 per metric ton.

Response: Agreed. It also conserves fossil fuels that might be needed 5000 years from now.

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C. A Re-employment System. Where if you lose a job, you get to take any job and get 90% of the old job pay guaranteed for 2 years. 90% if you go to school for 1 year. He claims the present unemployment system only costs $2.35 billion, if true that is nothing in the scope of things. To pay he wants to puts a tax on employers that layoff workers up to 75% of the workers salary.

Response: He actually thinks employers lay people off for the fun of it, they lay people off generally to survive or eliminate a burden division on the company. You should plan your own unemployment, by saving something Reich does not believe in. But, generally, one day you are making $150K a year and the next day you are making nothing does not seem right. Seems unemployment should be much higher.

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D. School vouchers of $14,000 for a child of a poor family and $2000 vouchers for a wealthy family. This is from a state that normally spends $8,000 per student in a public-school system.

Response: Why double the cost of a public education in a voucher? Here is where he is clueless, a voucher will save the states so much money. A $4,000 voucher will provide a better education than a $8,000 public school.

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E. College Loans based on paying back 10% of income for 10 years instead of fixed rates. After that they would be fully paid.

Response: I came up with a similar idea independently. I think alumni should pay for the new students education as a choice where a lifelong tax is placed on the alumni to pay for new students. The government is out of the college loan business.

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F. Medicare for ALL

Response: Medicare is a wasteful program. A $2,000 voucher would provide better care. Seniors should be allowed to keep the cash of their medicare, I think many would rather have an extra $10,000 a year and buy private insurance for $5,000 that provides better care. We should end the business health care deduction and the proceeds pay for a $2000 voucher for all. The government is out of the health care business.

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G. Public goods spending.

Response: I once worked at a theme park. They repaired an intersection of the off ramp and the freeway. There was nothing wrong with this off ramp. I looked into it. A republican congressperson Buck McKeon paid for it with an earmark. The government should get out of the public works sector, it is a local issue! When I was in engineering school a professor did inspections during the summer of bridges. He said most needed repairs. The problem was this was 1992. The reality is this is the excuse used to get more transportation money every year. If the bridge is unfit for use, put a barricade up to prevent use! Barrack Obama just spent $8 trillion on repairs, our streets should be line with gold, we should be using 100% solar energy, and we should have bullet trains crisscrossing the country. Instead the money was stolen. The federal government should be out of the building business.

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H. Money out of politics. Dollar for dollar matching with money going through blind trusts to prevent politicans from finding out who gave what.

Response: More pipe dreams. Individual and corporate contributions should be unlimited! Blind trusts are o.k. except they will probably be robbed. Why not just send the money directly into the candidates bank account to be used however he or she chooses? If the donations are taxed like income it would generate more money.

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Not mentioned. The two most important things to help the economy is ending the fed and for the government to get out of the housing business. They should also end the home mortgage deduction. This will lower the price of homes and make them more affordable.

The reason for ending the fed, to to get rid of the federal reserve chairman that ruined the country. The fed and banking caused the great depression, the great recession (bank lending, federal reserve easing), the early 2000s recession (bank allow stock bubble and fraud), early 1990s (bank lending, fraud), ... All the recessions of the 20th and 19th century, I count about 35 of them were all caused by banking and the fed. Lather rinse repeat every 10 years!

The solution to remedy it is very easy. END THE FED and end fractional reserve banking. All deposits of banks will become 100% reserves. There will be no bank lending! Individuals would have the choice to lend via mutual funds and stocks and reits. Doing so will end all bank failures. Let individuals reap the benefits of investing their own money and take risks of their failures. Eccles is not someone to be admired, the question to ask is why someone can make so much money by doing nothing? The answer is simple he had the moral hazard of spending everyone's money via a bank. his investments worked out, other banks investments did not!

Milton Friedman determined the great depression was caused by the federal reserve. Bernanke agreed to this at his birthday party. But, Friedmans solution was very inadequate. Watch the youtube videos, he says that 1/3 of the money disappeared and thus 1/3 of the banks disappeared and 1/3 of the peoples money disappeared. He made a mistake saying the solution was for the fed and government to pump money into the system to stop the deflation.

But, Friedman being a free market promoter should see the obvious problem to this! Which banks get the money? How is centralized bank planning different than government planning? Why have a system like government where you trust centralized planning.

But, the fallacy is is you trust leaders to make your decisions they will sometimes make the wrong ones. Decentralized planning is the key.

Thus the solution become obvious, end the fed and end fractional reserve banking. Let the workers keep their labor.

Now, the question is if you have full reserve banking banks are going to have to charge a fee to store the money there, maybe $1000 a year since they are not earning any money from loans. I think the trick here is for the government to pay banks 1/2 of 1% for all the reserves stored at the banks. Thus your banking account would have no fees, and the bank would not loan the money out to themselves and to other deadbeats to be a deposit at another bank. The daisy chain never has a chance to break. Thus, the government and workers would be never left holding the bag, as there would be no bag.


I find it hilarious Reich's keynote resource Eccle's is the problem to the whole system, taking depositors money to build himself an empire with no risk to himself. The disturbing part later, in his mythical Independence Party, that a balanced budget and ending the fed will lead to an immediate drop in the value of the dollar, the DOW will drop 50%, banks will close, and wall street will be in a panic. He offers no proof to this.

The problem is him, not the independence party. Yes, his taxes are insane in the mythical exercise, but they are more close to his tax rates than the present ones. The solution that the tea party proposes and Phil Mickelson proposed the other day, is to cut government employment down to about 10% of the workforce, like in China.

In summary, it is a good book to read as it clarified my position to end the fed and go to full reserve banking. Some of the later chapters were pretty accurate, interesting, and offered insights.

holy christ i'm not reading all of that, especially since the massive walls of text were written by STEEEEEEELLHOOOOOUSSSSEEEE.

but in the name of helping people like me who prefer video and only have 13 free minutes, here is Robert Reich on: The Truth About the Economy (3 min)

and here is austrian Thomas Woods thoroughly destroying Reich: The Truth About Robert Reich (10 min)

first paragraph was ignorant enough to skip over rest

Bob Murphy Review by chart:

1. to deny that income tax receipts are down because of the large tax cuts by Bush and Obama (payroll, and other tax cuts) along with the bad economy is foolish. You cut taxes you cut receipts. The solution is to cut government.

2. Tax revenue doubled under Reagan, however the Debt quadrupled. All the additional revenue Reagan created was the result of inflation and it did not keep up with it. The goal is not to maximize receipts, the goal is to keep government as small as possible.

3. As for people shifting brackets and percentiles he makes a good point. But, I think there would be massive switches up if poor people were allow to keep their money. Reich and government types just want your money to buy their SUVs. I remember Reich proud to buy his american made Jeep Cherokee guzzler off the government dole.

Some more comments just to show how dangerous of a man Reich is. He wants the rick person to get a $2000 voucher and the poor person a $12,000 voucher. What if the rich parents decide to keep the kid in a poor $2000 voucher school? Reich hates the rich he can't even come to the conclusion they all should get the same voucher. The more I think about it we should let the kids off going to a school altogether and allow the kid the choice to self-teach and keep the $150,000 on graduation. That way the money won't be wasted on deadbeat teachers.

Then he wants a college system , where the students only pay back 10% of their income for the 10 years after they graduate. This clearly shows how Reich does not even care if the money is paid back. Should not the government try to earn a profit? Why not 10% a year for life? Maybe 10% after the poverty level? Maybe 10% in income above 450K after the age of 50, plus 25% death tax? The point being he NEVER attempts to pay for the education, and he cares less that it is paid for. Thus the poor blind grandma that earned a $100,000 savings account working for $1 per hour busting tables, will have to pay $20,000 a year in inflation to the government, to pay a college kid $50K a year to a college where the kid will take the money and go to Europe for the summer and buy hookers in Amsterdam.

Then he comes up with a plan where you get more unemployment if you decide to go to school. No facts that determine if the money will be paid back, or if it would be better just to give the 2 years of unemployment. Maybe no unemployment would be better or a lump sum?

Many have hostility for me in this thread because I insulted their great fuhrer Robert Reich. I have read 3 of his books and watched dozens of his videos. In every book, most videos, anyone that disagrees with him is evil, neocon, Palin, greedy, selfish, or idiot. He should look in a mirror!