RUTHFULLY YOURS

On Monday, U.S. Secretary of State John Kerry and his counterparts from Britain, Canada, France, Germany and Italy went to Japan to pay homage to the victims of the Aug. 6, 1945 nuclear bombings of Hiroshima and Nagasaki in the last days of World War II.

They did this by touring the Hiroshima Peace Memorial and Museum, which displays the horrors suffered by the Japanese people who had been blitzed by the United States. It is estimated that 100,000 to 200,000 people were killed in those bombings, whose justification is being debated to this day.

“Everyone in the world should see and feel the power of this memorial,” Kerry wrote in a guest book at the museum. “It is a stark, harsh, compelling reminder not only of our obligation to end the threat of nuclear weapons, but to rededicate all our effort to avoid war itself.”

That Kerry used the death and destruction depicted in the museum to tout the nuclear deal he had just spent years begging Iran to sign is completely in character — his own and that of the Obama administration he represents. That while he was at it he threw in a good word for pacifism is also not surprising.

The trouble is that his conclusions are always based on false premises and an obfuscation of the facts. Chief among these is his lying about the Iran deal, to the point that Congress is about to launch an investigation into whether the Obama administration purposefully hid or distorted crucial information about it. Legislators on Capitol Hill were already familiar with the overt capitulation on the part of the White House and State Department to the powers in Tehran.

In any case, what is becoming clear to all who didn’t see it before is that the one thing the Joint Comprehensive Plan of Action did not accomplish was preventing Iran from acquiring nuclear weapons. It certainly did not contribute to eradicating war. On the contrary.

Which is why it takes true gall for Kerry of all people to hold up the history of Japan as a cautionary tale.

I am not an economist, but it is clear that the path we are on leads to an unhappy place. It is determined by wishes and hopes, not reality and facts. I write about debt. And I write about interest rates that are set by government, not determined in the marketplace. Price fixing, whether by consortiums, monopolies or government and whether for goods, services, wages or money, is generally not wise. Hidden behind Islamic terrorists, the interminable presidential nominating process, corruption, and the hypocrisy of political correctness looms a debt crisis that has been abetted by artificially low interest rates. Approximately eight trillion dollars has been added to our national debt since the financial crisis and the “great recession” ended almost seven years ago.

To put what has happened in perspective: In 2000, U.S. Federal debt was $5.7 trillion. The Ten-year government bond yielded 6.6 percent. That debt and those rates supported a GDP of $10.3 trillion. At the end of 2015, U.S. Federal debt was $18.2 trillion; the Ten-year yielded 2.1%, while GDP was $17.9 trillion. In other words, while GDP expanded at a compounded annual rate of 3.8%, Federal debt grew at 8%, more than double that of economic growth. Despite debt tripling in those fifteen years, federal interest expenses remained about the same – thanks to a compliant (and not so independent) Federal Reserve. Shortly after his inauguration, President Obama caustically noted: “I found this national debt doubled, wrapped in a big bow, waiting for me as I stepped into the Oval Office.” Mr. Obama has returned the favor with interest, pardoning the pun. Since 2009, GDP growth has slowed further, while Federal debt has persisted, increasing at double the rate of economic growth. The situation is untenable. If deficits are not reduced and interest rates not allowed to rise during recoveries, what happens when the next recession hits?

The problem is not limited to the Federal government. State and local municipalities, with tax receipts down, demands on resources up and interest rates low, have increased debt. Making things worse are structural problems within states: Infrastructure is crumbling. Entitlements are ballooning, with the gap between benefits promised and assets on hand nearing a trillion dollars, according to Pew Research. (The Cato Institute puts the federal government’s unfunded liabilities related to Social Security, Medicare and Medicaid at $70 trillion.) Corporate debt exceeds $29 trillion, with leverage at a 12-year high. Because of myriad government hindrances, corporate debt has not been used for investment, but for stock-buybacks, dividends and mergers. Consumer debt, at $12.12 trillion, is approaching the levels of 2008, despite mortgage debt being more than a trillion dollars below where it was at that time. Since the federal government took over student loan programs in 2009, student debt has increased from $700 billion to $1.2 trillion, with 43% of debt holders currently in arrears or in default. What will happen to local governments, businesses and individuals when interest rates rise, as is inevitable?

“I know these issues are sensitive, especially coming from an American President. Before 1959, some Americans saw Cuba as something to exploit, ignored poverty, enabled corruption.” (U.S. President Barack Obama, March 22, Havana Cuba.)

“I believe that there is no country in the world including any and all the countries under colonial domination, where economic colonization, humiliation and exploitation were worse than in Cuba, in part owing to my country’s policies during the Batista regime.” (U.S. President John F. Kennedy, Oct 24, 1963.)

It’s understandable that two U.S. Presidents should hail the resourcefulness and guile of American businessmen. But liberal Democrats aren’t exactly renown for that sort of thing. And read right, the above statements imply exactly such praise—if somewhat backhandedly. The (seemingly) apologetic statements also imply condescension for those poor, stupid, corrupt Cuban natives who were such easy marks for sharp Yankee robber barons.

You’d never guess this from the media, Hollywood or your professors (or speechwriters for Democratic presidents), but in 1953 more Cubans vacationed in the U.S. (and voluntarily returned to Cuba) than Americans in Cuba. Yes, pre-Castro Cubans found the U.S. “a nice place to visit, but they certainly wouldn’t want to live there.” All this despite the friendliness and quaint habits of the natives — and despite the ability to emigrate from Cuba virtually at will and obtain U.S. visas virtually for the asking. During the 1950s and based in Florida, Sheriff Joe Arpaio would have been lonelier than the Maytag repairman.

Obama and Kennedy were describing a nation (pre-Castro Cuba) with a higher per capita income than half of Europe, the lowest inflation rate in the Western Hemisphere, the 13th lowest infant-mortality on earth and a huge influx of immigrants. Furthermore, in 1959 U.S. investments in Cuba accounted for only 14 percent the island’s GNP, and. U.S.-owned companies employed only 7 per cent of Cuba’s workforce.

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Published by the London Center for Policy Research http://www.londoncenter.org/

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