On Jan 6, 8:43*pm, "Ed Huntress" wrote:
"F. George McDuffee" wrote in messagenews:d6u7m4pigr28td896lrnj8hdh6r3bdgrrb@4ax .com...





On Tue, 06 Jan 2009 17:39:41 -0600, RB
wrote:
snip
Is Gunner going to have to give you another civics lesson, about how
Congress approves expenditures?
snip
And herein lies the rub. *Namely that increasing amounts of the
Federal budget are not discretionary, short of an Argentinean
style default, and/or triggering massive civil unrest.

The interest and principal *MUST* be paid on the Federal bonds
and other securities as due, and the entitlement programs such as
Social Security, Medicare, military retirement, etc. must be
funded. *Indeed, it would appear that where there is significant
foreign or pension fund ownership of state and municipal debt
obligations, the Federal government may well be forced to
guarantee these also to prevent massive financial
dislocations/cascades in the event of defaults, e.g. California
state and municipalities.

Thus ever increasing amounts, now a sizable majority both in
absolute dollars and as percentages of the Federal budget, are
beyond Congressional control, and in many cases even
Congressional oversight, e.g. the refusal of the FRB to disclose
even the names of the firms and amounts received of the several
trillion dollars of taxpayer guaranteed funds that have
disbursed, let alone how these funds are being used, and the
conditions [if any] attached to these funds.

Unka' George [George McDuffee]

You may find in this interesting article ("The Unwisdom of Crowds") the
answer to why that is, George:

http://weeklystandard.com/Content/Pu...00/015/921taek...

Picking up an idea from Bagehot, the author says that central banks and
national treasuries often must use "strategic ambiguity," and other
Machiavellian tricks:

"A final problem is that there are limits to how accountable a central bank
can be. Everyone is always hollering for clear rules and transparency. But a
dirty secret of regulation is that it frequently influences conduct most
effectively when it is capricious and opaque. Any regulatory system will
reveal its vulnerabilities over long use. If it addresses economic problems
in a predictable way, savvy investors will find a way to "game" that
predictability."

An intriguing idea. Anti-democratic, but intriguing.

--
Ed Huntress- Hide quoted text -

- Show quoted text -

And practiced everyday.

Greenspan took great pride in saying much about nothing.

TMT