My Two Cents - "Open Letter to Congress"

2/16/2007

Members of the United States Congress;

I watched with utter dismay this week as Congress went through the periodic exercise of questioning the Chairman of the Federal Reserve on the state of the economy and related matters. Instead of hearing some of the questions that need asking, what I heard was another round of powder-puff, softball questions, which a second grader could hit out of the park.

Questions that should have been asked of Mr. Bernanke:

1) Why is the money supply growing near a 10-11% annual rate when the GDP is only growing at 2% (if we're lucky) ?
2) With regards to Question 1, where is all this extra money going? (Hint: Think stock market)
3) Given the clearly demonstrable information in Question 1, how much has the core CPI been tweaked to keep it low?
4) What really happened in China?
5) Given the massive disconnect between SS and Medicare inflows and outflows, how is the Fed/Treasury planning on replacing the money that has been misappropriated by Congress?

Against this backdrop, another round of layoffs by a major US auto manufacturer was announced. Inexplicably, these layoffs were cheered by Wall Street, and coupled with Mr. Bernanke's goldilocks testimony, sent the markets to new highs. Today I realized once again, that we have entered another 'new paradigm'. Twenty years ago, the loss of 13,000 high quality manufacturing jobs would have been (and was) met with concern and angst. Unfortunately, today, we lose around 13,000 or so manufacturing jobs each month, yet neither yourselves, nor the financial markets even seem to take notice. I will tell you who does notice though. The families who are forced to rely on credit cards to pay bills notice. The growing number of families whose homes have entered foreclosure notice. And anyone who has to pay for medicine, food, energy and other necessities of living notices as well. The mainstream press can try to ignore the fact that this America exists by focusing on yachts purchased by $40 million bonuses and other such extemporania, but there is another side. You will not be able to ignore them forever. The standard of living lost by the victims of these job cuts is equally real.

The government's unemployment statistics count these same folks as employed when they are able to secure a job at Wal-Mart or forget about them completely if they are unable to find work for 39 weeks and simply give up. Then the ridiculous inflation gauges tell them that what they see everyday at the checkout line isn't true and that they have more money than ever. Fewer and fewer are believing it though.

Is there not one among you that would challenge these ridiculous notions, even while the dollar melts into obscurity as a store of wealth? Even as we become a nation of seven dollar an hour service workers? Even as the fruits of our labor are stolen by an invisible thief via a process that so few of us understand? Does it not bother any of you that our economy relies on a steady stream of foreign capital to keep it going? Do any of you realize that without this capital that our dollar would collapse? I think that more than a few of you do, yet you remain silent. Why? Certainly, there is nothing so grand that it is worth selling out your country for.

I would strongly urge each of you to think about your actions going forward. We are at a critical point in our country's history. There is still time to turn this around, but action needs to be taken NOW. You cannot worry about the political fallout. Fixing this problem will require unpopular actions. You may be voted out of office for doing the right thing. You may pay the price for the inaction of those who have gone before you. You must be willing to accept that. You may not be able to take a lucrative lobbying position when you leave office. But you will be able to look yourself in the mirror and say that you served your country and constituents in good conscience, and you will be able to look in the mirror without shame. Nothing you ever do will be more important. Our children and grandchildren are relying on you to make the right decision.

Andy Sutton holds a MBA with Honors in Economics from Moravian College and is a member of Omicron Delta Epsilon International Honor Society in Economics. This article and other information is located at http://www.my2centsonline.com Please feel free to distribute, copy or otherwise disseminate this information.