That was a pretty good tea party

 

             The tea party movement had to explain to the Republicans as well as to the Democrats that a government  can spend and borrow too  much, and print too much money. If you do those things to excess, far from  having a more prosperous economy and a fairer society you have an economic crisis. Greece, Iceland and Ireland have shown us variants of that.

           Now of course the Washington politicians will get to work. Both sides will claim to be co-operating, but they are divided by such a fundamentally different view of what makes a successful economy. They are split over what kind of people Americans are, and what kind of society they wish to live in.

          Tea party Congressmen and women will find it difficult to turn round both major parties, or win votes for smaller government and lower taxes given the huge inertia of traditional politics. Democrats will still want to defend their cherished programmes and fight their overseas wars. Some Republicans will be in  the long tradition of bigger Republican government.  It is good to know there will at least and at last be voices in Washignton that want less spending as well as lower taxes, something that has eluded both Bush and Obama. The bail out boys have been in charge for years and have made a mess.

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20 Comments

  1. Gary
    Posted November 3, 2010 at 8:34 am | Permalink

    Mr Redwood, the borrowing and spending cannot stop, unless you want to precipitate the collapse.

    I am sure that you know, in this system all money is created as debt. A loan is made and the money is created and deposited into the lender’s account The interest on the loan cannot be repaid, because the money to pay the interest was not created. So, another load HAS to be made to pay down the interest on the last loan, and itself creating new interest demands which cannot be paid, so another loan must be made, ad infinitum. This is a geometric progression, ie a pyramid. As in all pyramid schemes, they only survive as long as new loans, contributions, fees are continually fed into the bottom. When this stops they collapse. They always collapse in any case, but cutting borrowing and spending will precipitate the collapse. Not saying it is a bad thing, since the debt has to be cleaned out sometime, but you may not get what you wish for by cutting borrowing and spending.

    • APL
      Posted November 4, 2010 at 2:55 pm | Permalink

      Gary: “the borrowing and spending cannot stop, unless you want to precipitate the collapse.”

      The borrowing and spending will have to stop, unless you want to precipitate the collapse.

      Sooner or later the people who lend, will get wind of the fact that they are better spending their own money, than lending it to the government who will promise to pay then default either thorough outright default like, Greece, Ireland, Iceland possibly Spain and Portugal, or through debasement of the currency type of default.

      Once the lenders realize that, the spending will have to stop, because no one will lend to a government on terms it can afford to pay.

      The government will either raise taxes on the productive sector of the economy by about 100% – good luck with that, or cut public expendature by 98% within a matter of days.

  2. alan jutson
    Posted November 3, 2010 at 8:43 am | Permalink

    The Tea Party action group seems to have been born out of frustration with those who have run the Republican Party looking too far to the left, with years of Big Government, higher Taxation, spending, and borrowing.

    Aware that some real Right wing groups have joined the cause which is unfortunate but:

    How long before we have a similar group over here within the Conservative Party ?.

  3. lifelogic
    Posted November 3, 2010 at 8:44 am | Permalink

    The problem as always is that politicians, when they join the system, have their main dealings with the state sector staff (central, local and EU) and mainly big businesses or business organisations each of whom have their agendas.

    One for ever bigger government and the other for more regulations to put smaller competitors at a disadvantage or better still out of business. Or finally to generate extra fee income in consultancy etc. to guide business through the maze of regulations thus created.

    Unless the politician is, like yourself, somewhat exceptional they rapidly turn native and real industry is slowly drowned by regulations, licences, red tape, inspections and taxes. Many anyway are career politicians who will go first with the consultancy fees then the party and the general flow. Fees, the party, the government “experts” come first.

    The voters and small business usually comes a very poor last.

  4. Nick
    Posted November 3, 2010 at 8:45 am | Permalink

    Meanwhile, in the UK, you advocate spend spend spend for the next 5 years.

    You’ve been bragging about increases in spending year on year for 5 years.

    Tad hypocritical to advocate medicine for others you won’t take.

    Reply: I have not bragged about spending. I have tried to provide you with analysis of what is going on, but have proposed additional reductions in spending, as in cutting the EU budget, and using natural wastage more stringently to cut employee numbers this year.

  5. Rob Hay
    Posted November 3, 2010 at 8:50 am | Permalink

    I disagree. American politicians are all the stooges of big business. There is an appearance of disagreement, lots of posturing and noise but when it comes down to it 98% vote the same way. Big business is allowed to contribute unlimited amounts to campaign funds so how could it be any other way?
    Here the system works slightly differently, more towards EU and big government, but the voters are still ignored and lied to. Most of the people do not want to be part of a European super state or be controlled by our own nanny state yet here we are.
    There are a few honest, decent individuals in politics but the majority will always look to their own self interest above the voters.

  6. FaustiesBlog
    Posted November 3, 2010 at 8:56 am | Permalink

    They are split over what kind of people Americans are, and what kind of society they wish to live in.

    No. The fiscally incontinent big-government incumbents know exactly what kind of people the Americans are – they just don’t care.

    They care nothing about the constitution, the rule of law or what’s ‘fair’. They care only about their boondoggles – having their palms greased by the corporations who buy influence.

    Washington is a racket, (words left out). Some contend that just as the Mafia morphed into lawyers, accountants and other professional types, to go legit, so they morphed from there into the political classes and financial industry maestros, most of the morass springing from Columbia and Chicago. This seems somewhat plausible.

    (General allegations removed)
    So, unless the new intake manages to introduce fixed term limits of 4 to 5 years per politico, they will themselves be (affected) by the (ways of) Washington. After all, it has worked for centuries.

  7. Brian Tomkinson
    Posted November 3, 2010 at 1:56 pm | Permalink

    Sounds as though you are saying that in the USA they will be as politically impotent as you are here. How about mobilising public opinion against the political inertia? If you are prepared to be treated as a doormat don’t be surprised if they walk all over you.

  8. Conrad Jones (Cheam)
    Posted November 3, 2010 at 1:56 pm | Permalink

    I think what you are saying is that neither Democrats or Republicans have the answers.

    “Democrats will still want to defend their cherished programmes and fight their overseas wars.”

    I think this is slightly misleading – they may want there “cherished programmes” but Iraq was inherited from the Republicans.

    Democrats: Vietnam War – with Nixon extending it by seven years. Kosovo, Somalia.

    Republicans: Granada, Gulf War I, Iraq and Afghanistan.

    As to covert operations and assasinations in various parts of the World – who knows? But both Democrats and Republicans have blood on their hands. The Tea Party do not have the confidence to Start a Third Party, therefore they are not a serious threat.

  9. TimC
    Posted November 3, 2010 at 5:38 pm | Permalink

    TEA -taxed enough already-
    Well I am so I’d come to that party!

  10. Conrad Jones (Cheam)
    Posted November 3, 2010 at 5:41 pm | Permalink

    Absolutely agree.

    “The bail out boys have been in charge for years and have made a mess.”

    The fact that the Federal Reserve and fiat currency is unconstitutional is beginning to get through as the Internet has provided an alternative news media and educational information to the normal State and Privately owned news networks.

    (Fiat Money and the FED is unconstitutional because it allows private interests to Inflate and Deflate the money supply causing massive economic instability – amongst other things)

    The American Tea Party is for abolishing the FED.
    http://www.am-tea.org/fed.html

    Although I was highly suspicious of Sarah Palin (I don’t know why) she is bravely speaking out against the Federal Reserve.
    http://the-classic-liberal.com/sarah-palin-attacks-federal-reserve/

    “Former Republican vice-presidential candidate Sarah Palin used her first trip to Asia to attack the Federal Reserve for creating asset bubbles and encouraging excessive risk-taking that hurt working-class Americans.”

    This seems key to why Sarah Palin was so popular in the U.S. but this view of hers was not reported by the News Channels like the BBC.

    How many politicians in the UK are speaking of abolishing the Bank of England? I can’t think of any.

  11. APL
    Posted November 3, 2010 at 5:49 pm | Permalink

    JR: “The tea party movement had to explain to the Republicans as well as to the Democrats that a government can spend and borrow too much, and print too much money.”

    Goodness me, no tirade about how the tea party has denied this or that party a majority? Funny how third party contenders are ok, so long as they are in another country.

    Or is it because the Republican party has co-opted and infiltrated the tea party movement and thus think they have made it safe?

    I am minded of a quotation from Adam Smith:

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. ”

    In the US, as in the UK the shabby trade in question is the political trade. I rather hope people will wise up to the contrivance and conspiracy against the public that we are being subjected to by the political class, both in America and the United Kingdom.

    Reply: The big differences between the Tea Party and UKIP is the Tea party win seats and have a place at the table. UKIP never win seats at Westminster and stop some other Eurosceptics having a place at the table.The Tea party do not run as a party in their own right, but back candidates for Republican nominations.

    • APL
      Posted November 4, 2010 at 1:53 pm | Permalink

      JR: “The Tea party do not run as a party in their own right, but back candidates for Republican nominations.”

      And that is exactly why the tea party movement will never achieve true ‘change’, not wishing to sound like Obama.

      Each party has about 50% of the voting public, inorder to achieve real change through the democratic process people need to recognise that the parties, be it Republican or Democrat, Labour or Tories stand for one interest, their own.

      In this country we have had tweedle dum and tweelde dee for the last thirty years, the difference between the two parties has been attenuated and erroded by the European Union. Just look at the climb down and pretence that your leader has made in the short time since taking office.

      People like yourself, make matters worse, you give folk the impression that you can make change happen within the Tory party BUT YOU REALLY KNOW THAT CAN NEVER HAPPEN as it is now consituted – not least because of the central approved canditate lists the party controls who stands!
      So, regretfully I have concluded you part of the problem, because you act as a lightening conductor to direct the real anger of people who have not quite ‘twigged’ what is going on, away from the Tory party.

      Your counterparts in the Labour party do the same, the result is democracy dies and as people realize they cannot influence their lives through the democratic process, they will seek other means.

      You and the sort of people like you in the two main parties are responsible for this trend.

  12. Conrad Jones (Cheam)
    Posted November 3, 2010 at 5:51 pm | Permalink

    Sarah Palin also said:
    “How can we think that setting up the Fed as monitor of systemic risk in the financial sector will result in meaningful reform,” she said. “The words ‘fox’ and ‘henhouse’ come to mind.”

    And we have the FSA being under the control of the Bank of England.

    Were the attacks and ridicule heaped on Sarah Palin by the Monopoly News Networks, masterminded by the FED perhaps?

  13. Conrad Jones (Cheam)
    Posted November 3, 2010 at 11:32 pm | Permalink

    Sarah Palin was subject to much ridicule and humour during the Presidential Election.

    At the time – many people thought it was justified. Many people – because of the News Media; didn’t like her at all.

    Sept 23, 2009, Sarah Palin made a speech in Hong Kong criticising the Federal Reserve System and it’s role in creating the Financial Crisis. She criticised President Obama and the role he is playing handing over even more power – Financial Regulation and much more; over to the very organisation that was incapable of preventing the crisis.

    For a politician – speaking against an American Central Bank is virtual suicide, with the chances of success almost zero.

    The American Tea Party – of which Sarah Palin is a part, do have very real policies – including to abolish the Federal Reserve System and the phasing out of fiat currency in favour of an asset based – non-debasable money. One that doesn’t reduce in value constantly.

    I would like to see a member of Parliament propose the removal of the Bank of England. The BoE was not created by God – afterall.

  14. Joe Broughton (Tory member, West London)
    Posted November 3, 2010 at 11:42 pm | Permalink

    Good analysis from John Redwood.

    Lifelogic hits the nail on the head.
    Politicians can go native dealing with big organisations – either in the public sector, or larger businesses which can better withstand the taxes, the regulations, the malicious legal challenges, and so on.

    The new Government in Britain does seem genuinely interested in a more balanced economy, with practical measures to do it, to remove these obstacles, and value technical education and training.

  15. The ESSEX BOYS
    Posted November 4, 2010 at 3:23 pm | Permalink

    Having watched much of the election analysis on US and UK channels we see the likelihood of a Cameron re-run of Mr Obama’s mea culpa in 2012. Thankfully for DC there are no mid-terms with which to contend but he should act as though there are.

    Obama and Cameron ran in similar styles – immediate change because things were so grim, delivered with flowing rhetoric. The consensus is that Obama didn’t discard the velvet glove once in office to reveal the iron fist which an electorate not only anticipates but many of his supporters expect and even crave.
    Electioneering may be about rhetoric and expectation but government is all about delivery and the nitty gritty of getting things done while opportunity is most on a new government’s side.
    Mr Obama it is being said has surrounded himself with too many intellectually-inclined lightweights and insufficient pragmatists from the school of hard knocks and experience. The heavyweights still outside Mr Cameron’s cabinet may well relate to that.

    At present we contend that Mr Cameron, perhaps abetted by his 2 senior deputies Messrs Clegg and Hague, is moving away from rather too many expectations on core issues and will suffer as a result. There are too many further reviews and too many distant implementation dates on the matters already earmarked for change.
    As others have said Pickles, Maude and we suspect Osborne are more ambitious and less ‘frit’ so we urge Mr Cameron – after all the analysis over the past 3 years and with 6 months government already under his belt, to take a tick from Nike’s book and JUST DO IT!

  16. Andrew
    Posted November 6, 2010 at 2:03 am | Permalink

    The Tea Party is a disparate movement with little coherent philosophy. It also derives support from Americans who dislike Obama because of what section of the community he belongs to. Polls confirm this.

    They may excite some Conservatives already fed up with coalition politics, but you have been there before.

    • Conrad Jones
      Posted November 10, 2010 at 3:00 pm | Permalink

      It was both Bush and Obama who conspired to devalue the U.S. Dollar, both gave their support to the Federal Reserve. Plenty of people who like Barack Obama do not like the continuing policies of money creation by a Privately owned Federal Reserve. Both Bush and Obama have similar views when it comes to who controls the money – the FED.

  17. Austin
    Posted November 6, 2010 at 3:45 pm | Permalink

    Sir: The origins of the Tea Party date to when a reporter for CNBC [financial TV network] went ballistic on the air after Obama proposed bailing out those who defaulted on their home mortgages. The reporter, Rick Santelli, wondered aloud if it wasn’t time for a second American Tea Party and, voila, within days there were people all over America organising in small groups and calling themselves the Tea Party. There was, and is, a general sense of outrage that the Federal government was going out of control and, in order to protect their freedom and property, ordinary citizens were going to have to do extraordinary things. The Obama led push for mandatory national health insurance and a trillion dollars in Federal “stimulus” spending served to light a fire under an already simmering movement.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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