Even though the government is running massive deficits, interest rates and inflation are low. So, what's the problem? The following discussion will clarify the problem.

The United States is now in a situation in which the government is taking a very large share (40 percent) of the nation's savings to finance its deficit spending, leaving a diminished pool of capital to meet the needs of both families and businesses.

You might be thinking, if there are not enough savings available for investment needs, why are interest rates so low? The answer is that the Federal Reserve (Fed) has been creating money by loaning the banks nearly free money and buying mortgages from Fannie Mae and Freddie Mac.

Soon, as even the Fed acknowledges, it will have to start selling the mortgages it owns to private parties and increase short-term interest rates to avoid saddling the country with high inflation. In sum, inflation cannot be avoided without a big increase in both long- and short-term interest rates.

What are we to make of the fact that no one has taken credit for Wednesday’s (3/23) Central Bus Station bombing in Jerusalem?

Wednesday’s bombing was not a stand-alone event. It was part and parcel of the new Palestinian terror war that is just coming into view. As Israel considers how to contend with the emerging onslaught, it is important to notice how it differs from its predecessors.

For both Fatah and Hamas, the most important target audience is Europe.  Fatah, for example, is in the midst of a global campaign to build international support for a unilateral Palestinian declaration of independence in September.

The fact that Fatah and Hamas have neither waited until after September to attack nor sought to differentiate themselves from one another as the attacks coalesce into a new terror campaign indicates strongly that the Palestinians no longer feel they need to pretend to oppose terror to maintain European support for their war against Israel.

The long-term outlook for the stock market is not good, and here is why.

For the past 100 years, there has been an inverse relationship between changes in the size of government and the growth or decline in the stock market.  The accompanying chart clearly shows the inverse relationship between the direction of the size of government and stock market performance.

Gaza Strip -- Newly installed in her Gaza City office, National Public Radio’s Vice News Chief (Oppression and Victimization Department) Consuela “Muffy” Leer-Geist looks right at home. Generously granting her first on-site interview to FSM, Ms. Leer-Geist wore a tasteful chador, set off with a stunning Sweetbriar-logo headscarf (black is always correct). Her half-veil, designed by bad-boy fashionista John Galliano, completed an outfit that can only be described as a cutting-edge fashion statement that also displays cultural empathy.

Picking at her chickpea salad (and careful to use only her right hand), NPR’s reigning regional news-doyenne put down the script over which she’d been chuckling and opened our conversation:

Las Vegas.  It's good to be here at Bally's in Vegas among several thousand pro-freedom folks at Mark Skousen's Freedom Fest.  It's also creepy that right across the Strip from Bally's, Zero is at  Caesar's as I am writing this. 

He gave a fund-raising speech for Lost Harry Reid last night (7/08).  Believe it or not, his very first words of the speech were "Si, si, puede" - the chant in Spanish of illegal aliens, meaning "Yes, yes we can violate America's laws and live off the American taxpayer with impunity" (then become citizens and vote to keep Dems in office in perpetuity).

The Las Vegas Review Journal eviscerated Zero's speech this morning in an editorial entitled, Mr. President, Your Economic Policies Suck.  Nevada has the highest unemployment of any state in the US, while Zero's "main economic goals," the LVRJ says, "seem to be the punishment and prevention of capital formation and business growth."  You should read the entire editorial.

One fear you'll hear expressed here - as well as on the TTP Forum - is the Dems planning an orgy of fascist legislation during a "lame duck" post-election session, as described in the Wall Street Journal today (7/09).  This fear is way overblown.  Here are four reasons why. 

Assume you are a scientist and have been given a major financial grant to prove that the mythical unicorn really did exist.

You know that as long as you can demonstrate some progress in showing the unicorn might have existed, your financial grant will be renewed each year, provided some other scientist does not come out with substantial evidence that the unicorn could not have existed.

Under such conditions, you would have a very strong incentive to disregard much of the evidence that the unicorn could not have existed and each year provide only the data that could demonstrate that the unicorn might have existed. You also would have a very strong incentive to attack any scientist who raised serious questions or provided evidence that the unicorn could not have existed.

You even might go so far as to refer to them with the disparaging term "unicorn deniers."

Islamist Bigots Lose One - And They're Outraged

The Council on American-Islamic Relations (CAIR) is furious. For the first time since the birth of Mohammed, it isn’t getting its way in Washington. In the past, whenever our government raised the possibility of doing the least little thing of which CAIR might not wholeheartedly approve, the soft-core jihadis shrieked, “Bigotry!” And presidents, cabinet secretaries, senators, representatives and bureaucrats—even intelligence analysts and military officers--ran for cover (while, no doubt, suggesting that their spouses don head-scarves for a probationary period).

In the face of Islamist terrorism, we’ve been foolish. In the face of Islamist bullying of our government, we’ve been cowards.

Now, just this once, CAIR isn’t being allowed to dictate its sharia-flavored will to our nation’s capital.

The underground or "black" economy is rapidly rising, and the fault is mainly due to government policies.

Here is the evidence. The Federal Deposit Insurance Corp. (FDIC) released a report last week concluding that 7.7 percent of U.S. households, containing at least 17 million adults, are unbanked (i.e., those who do not have bank accounts), and an "estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked" (i.e., those who rely heavily on nonbank institutions, such as check cashing and money transmitting services).

As an economy becomes richer and incomes rise, the normal expectation is that the proportion of the unbanked population falls and does not rise as is now happening in the United States.

Tax revenues are falling far more rapidly at the federal, state and local level than would be expected by the small drop in real gross domestic product (GDP) and changes in tax law that have occurred since the recession began.

A new Middle East is upon us and its primary beneficiary couldn't be happier.

For generations, the stability of global oil supplies has been guaranteed by Saudi Arabia's reserve capacity that could be relied on to make up for any shocks to those supplies due to political unrest or other factors. When Libya's teetering dictator Muammar Ghaddafi decided to shut down Libya's oil exports last month, the oil markets reacted with a sharp increase in prices. The very next day the Saudis announced they would make up the shortfall from Libya's withdrawal from the export market.
 
In the old Middle East, the Saudi statement would never have been questioned. Oil suppliers and purchasers alike accepted the arrangement whereby Saudi Arabian reserves - defended by the US military -- served as the guarantor of the oil economy. But in the New Middle East, Iran feels comfortable questioning the Saudi role.
 
With each passing day, the Iranian regime is actively destabilizing Saudi Arabia's neighbors and increasing its influence over Saudi Arabia's Shiite minority in the kingdom's Eastern Province where most of its oil is located.

The Obama administration has failed completely to understand what is happening.