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Apr 25, 2011

Spending restraint and the Constitution.

Since the Australian dollar was floated back in the 80s the idea of parity with the US $ has largely been the impossible dream, to the point where on occasions it has barely stood at 50c US. All this has changed recently, it now sits beyond parity at nearly US$ 1.08. Commentators are still referring to the “rising Australian dollar,” but this is greatly misleading.

The situation really is that the US$ is declining in value faster than ours. Even with the Gillard government spending like a Kennedy in a liquor store and running up massive deficits, it has not managed to screw things up to the point that the US has. Our currency is not getting any more valuable; theirs has hit the skids.

The other day I noticed a satirical post dated in the future:
Gold hits US $1,000,000 per ounce.
1 oz maintains parity with a good quality mans suit.
Kind of says it all.

The US House of Representatives has recently seen an influx of fiscally responsible new members and as result is attempting to stop the headlong rush into insolvency. Unfortunately the Dems still control the Senate and White House, so for the moment these efforts are futile. They now have leverage though, which has been provided by the profligate spending of the Administration.

To keep spending they will need the debt ceiling raised. The Republicans are demanding real cuts to spending in exchange for passing this, which seems to be sending the left into conniptions. Now the resident constitutional expert at “Firedog Lake,” is maintaining that such an action would turn the Constitution on its head.
“House and Senate Republicans apparently now hate the Constitution. The GOP feels despite winning control of only the House, but not the Senate or the White House, they should actually be given the power to unilaterally impose massive change. Since they failed to win enough elections to rightfully get this power under the Constitution, they are now claiming they will use a quirk in the system for financing our debt to destroy our entire economy, unless power is seceded to them.”
Apparently Democrats would never attempt to do something like change the system without control of all three levels. It is laughable to suggest that the elected majority in the house has no right to attempt to prevent the wasteful deficit spending that is driving the nation into bankruptcy.

Admittedly, I am not a constitutional expert and worse still, I have never played one on TV, but there doesn’t seem to be any limitation under its terms against the House attempting to enforce fiscal restraint. The weakness seems to be that there is little to prevent the Administration spending the nation into ruin.

Despite the claim that the House and Senate Republicans apparently now hate the Constitution, I am inclined to defer to Ron Paul, who seems to like the Constitution and would be aware if his party was going against it. If I see Ron moving to increase the debt ceiling to $20 trillion with no expenditure limits, and no more increases before June next year then perhaps FDL is right.

Oh Hell, with a time limit on it, the Dems would never let it past the Senate. They might consider such a move as unconstitutional.


  1. I am convinced that as long as President Obama is in office, the greatest "deficit reduction" that can get passed will be higher taxes.

  2. Unfortunately that will not do it. Further tax increases will tend to depress the economy and probably result in bigger deficits. Even it were to increase the take, there would be new wish lists to spend on.