Dana Blankenhorn

Through the Looking Glass

For 75 years, since the depths of the Great Depression, American economists and policymakers have offered just one cure for economic problems.

Liquidity.

Liquidity means the injection of new money into the economy. This is done through monetary policy, cutting the cost of money directly by the Federal Reserve, or through fiscal policy, spending more than the government takes in.

Of course, there's another word for liquidity, and that word is inflation. The film above, produced in 1928, illustrates the hyper-inflation which began the rise of Hitler in Germany.

Once a nation goes through hyper-inflation its people get the message through suffering. Your life's savings disappear. You can't afford food or other necessities. The government can't really help anymore because they're using the same worthless currency you are. Pretty soon you're down to barter and the use of foreign currencies. It's happened many times, especially in Latin America, and the answer of American policymakers was to peg those currencies to the dollar. The dollar was the strong currency.

Is it?

When you're running deficits of $300 billion or more a year, you print money to make up the difference. When you cut interest rates below the rate of inflation, you're printing money. When you offer tax cuts -- to the rich, to the poor, to anyone -- or a "stimulus" package you're printing money. When you tell banks, give us your broken-down loans and we'll lend you 100 cents on the dollar on them, you're printing money.

Nearly everyone across the political spectrum, with the notable exception of Ron Paul, thinks these policies are dandy. And they offer little else in response to them. Paul, however, is a nutcase -- getting rid of the Federal Reserve and going to a Gold Standard won't solve the problem either.

The answer is to start paying down debt. The answer is to start producing more goods. The answer is to turn around our current accounts deficits, and our fiscal deficits, and start paying down our loans. This is what worked in the 1990s, and yet no one has proposed it in 2008.

Instead we get whining when lines of credit which aren't being used correctly are cut off. (Borrowing on your house to pay for pre-school is stupid.) We get nods of approval for more deficits from people like James Surowiecki, who should know better. We get predictions of doom from Nouriel Roubini, but no clear course out.

What can be done?

The Buried Lede in the McCain-Lobbyist Story

I don't care if he shtupped her. I don't care if he saw her socially. I don't care about the why concerning anything he did. (Find the lobbyist on the page where this picture came from.)

This should not be about John McCain. It should not be about The New York Times.

This should be about us, all of us. Did John McCain serve us well, or serve us poorly?

The buried lede is John McCain's record, as chair of the Senate Commerce Committee, regarding telecommunications issues and media consolidation. The fact is he endorsed monopolization, every step of the way.

Why do you see no more local programming on your TeeVee? Why are all your radio stations canned and controlled in Corpus Christi? Why do you have, at most, two choices for Internet access? Why are your bills going up instead of down?

Media consolidation. And John McCain has endorsed it, enabled it, for a decade now. The why or how is really immaterial.

End of the New Nixon

Think of this as Volume 11, Number 8 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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One of the most annoying aspects of modern political coverage is this emphasis on process, tactics, and what looks like minutiae.

TeeVee talking heads keep telling us this is inevitable, as though their habits were a force of nature, like entropy. The point is made most forcefully by Chris Matthews, whose book "Life's a Campaign" paints everything as artificial.

But this is not inevitable. This is not entropy. This had a beginning and it has an ending.

The ending is the major political story of 2008.

The beginning was The New Nixon. The idea was that Richard Nixon, twice-defeated, had become tanned, rested, ready, mature, a new man. Everyone on the press bus knew this was bull, but Nixon's handlers, especially H.R. Haldeman (right), kept pushing the line, and eventually Nixon won. Tactics and image, it seemed, had triumphed over reality.

Ever since then political coverage has become all about artifice. More and more is written about less and less. Insiders care nothing for what a candidate really is, or really believes. They care only about the tactics, about how they will be portrayed, and how this portrayal can shift based entirely on how marketing people manipulate the media. They are, in other words, covering their own eternal bamboozlement, pretending that the lies of spokespeople are the only truth, and that reality has no substance beyond the never-ending ability to spin it.

We have lived a generation now with this bedrock political assumption. It is drilled into our politics as no policy is. And it's time for it to stop, if a new era is going to actually take shape.

Here's how we start.

The Unstoppable Power of Communication

The most powerful force in the world is communication.

This medium brings more of it within reach of more people than any medium has before. (Pictured, the capital of Rwanda.)

When George W. Bush was in Africa this week reporters were astounded by the number of people there who supported Barack Obama, who seemed to know all about him.

And why not? Africa is filled with Internet cafes. Africans don't have to listen hopefully for a word from the BBC anymore. They can pick up The New York Times.

Recently I mentioned the idea that Obama should go to Kenya and try to sort out the growing crisis there. Turns out he's been there, via radio. He made a statement and took questions at the end of last month. This has not yet had an impact, as the struggle has morphed into a tribe-on-tribe war over land. But he was there, and could be again, at any time.

It's not just politics where this medium is making enormous change. It's in every facet of life. The turnaround in Rwanda is being driven as much by information as anything else. The use of sympathy to reach markets, and the opening of an online stock exchange,  is enabling capital to reach all of East Africa. Trouble in Kenya can now quickly move capital to Rwanda and vice versa. Rapid capital flows can create a gigantic incentive to make peace.

What vs. Who

Here's a simple statement of fact which the TeeVee talking heads just refuse to accept.

The 2008 election is over.

We know what we want. We've decided. This is far more important than whose name goes on the White House door next winter.

Barring assassination or a military coup the next President will either by Barack Obama or Hillary Clinton. Both are in general agreement on principles, and on policy. Each has their own strengths and weaknesses, and while most expect Obama could win bigger than Clinton, their victory is baked into the system.

This is not just a rejection of George W. Bush, which is what a lot of Republicans are trying to claim. This is a complete rejection of the Republican Party, the party of Nixon, Reagan, Bush and McCain, the party of Limbaugh and Dobson, of Larry Kudlow and Grover Norquist, the party of warrantless wiretaps, of Katrina, of tax cuts for the rich, of eternal war, of limitless deficits.

This is the message sent by every primary. This is the message being sent by fundraising. Democrats are going to the polls in higher numbers than Republicans almost everywhere. The exceptions are Arizona and the Deep South. That's Goldwater country, Strom Thurmond territory. That's as low as the Republican Party can really go and still claim to exist. If they win there they have a base. Lose there and they're Whigs.

Al Gore as a King in New York

One of the most important, least understood stories of this year has been Al Gore's reluctance to endorse anyone. (Picture from The Atlantic, originally taken by the World Resources Institute under a Creative Commons license.)

There are all sorts of theories, but only one theory makes sense.

He has better things to do.

As I wrote in November, Al Gore is focused on market solutions to the War Against Oil. He has learned, through his work on An Inconvenient Truth and all the opportunities which flowed from it that the power of money can actually be greater than the power of government. He has also learned that money follows credibility.

During 2007 Al Gore signed some very, very interesting deals. He signed deals with venture capitalists, and hedge funds. The core of those deals was that Gore, and people working with him, would go through all sorts of alternative energy proposals, not just those in the market, but those seeking market funding and those still in the labs. He would offer his considered opinion on the validity of each idea, helping to make sure that capital flowed efficiently toward ideas which made the most sense. And he would profit from that.

The Obama Charisma

While some people want to liken Barack Obama to John F. Kennedy, that's damning with faint praise.

As an historical figure JFK had more in common with the incumbent than with the current challenger. He was the wealthy son of a long-running Thesis, created under Roosevelt and validated by Truman. Other than his inaugural address there are few Kennedy speeches anyone could remember five minutes after they were made.

He's used as he is because Democrats don't have anything else to compare Obama with, because his brother and children and grandchildren are at the heart of the party today. They can't use Bill Clinton since he's in the other corner. They can't use Jimmy Carter because he was a failure. And they certainly can't use Lyndon Johnson. Truman's daughter Margaret died recently at 83 -- there is almost no memory of him. And he wasn't really a scintillating speaker anyway.

So where does Obama's speaking style come from? What is the heart of his message? What is the charisma all about? There are three main ingredients: