Monthly Archives: July 2008



By Dr. Gary North 
for Gary North’s Q&A forums:

The bailout of IndyMac’s depositors will probably deplete
10% of the FDIC’s reserves.

Congress will back up the FDIC if the FDIC ever (1) runs out of T-bills to sell (2) to raise money (3) to pay off depositors of insolvent banks. But where will Congress get this money?

From the Federal Reserve System, if lenders will not fork over the money.

The Federal Reserve System backs up Congress. This is the heart of the threat to the solvency of the dollar.

The $4 billion that the FDIC will pay to a handful of depositors at IndyMac is hush money. It is paid to them to silence every other depositor in the country. “Don’t spread rumors about any insolvent bank.” Why not? “Because, in a fractionally reserved system, all of them are technically insolvent.” They are all borrowed short and lent long.


The failure of IndyMac this month was unique. We have not seen a bank failure this large since 1984. In one sense, this reminded the general public that individual banks can go bankrupt.

The most common reason for bankruptcy is that the bank has lent money to purchasers of real estate, which is a long-term debt, yet depositors have the right to withdraw money at any time. The bank is lent long and borrowed short. Yet this is true of every bank. The ones that get caught, which is a rare event, have merely indulged in long-term lending more than the average bank.

The failure of an individual bank does not produce mass panic any longer. It has been so long since Americans have seen a bank run that they pay no attention to an rare bank failure.

Because the FDIC presently does have sufficient reserves in Treasury debt to sell and compensate depositors, depositors around the country are not tempted to go to their bank and demand currency.

The fact that the FDIC could cover the deposits of no more than a dozen banks the size of IndyMac does not disturb them.

They know nothing about the FDIC, other than the crucial fact: the United States government stands behind it. The government will re-capitalize the FDIC.

The experts who really do understand the nature of the bank deposit insurance program, as incarnated by the FDIC, know that the Federal Reserve System in turn stands behind the Federal government. So, there is no question that individual depositors in individual banks will be bailed out by the FDIC directly, or by the United States government through the FDIC if the FDIC runs out of T-bills to sell.

What will happen when the Federal Reserve System runs out of Treasury debt to sell or swap? It has unloaded almost 40% of its holdings since last December.

When that day comes, a lot of geese will get cooked.


There is an enormous difference — a literally life-and- death difference — between individual bank failures and a systemic banking failure. I do not believe we are facing a systemic banking failure. But we are facing more individual bank failures.

Americans have seen very few bank failures ever since the establishment of the FDIC in 1934. Depositors trust the FDIC to intervene and protect the money in their bank accounts. They do not withdraw currency from their accounts in a banking crisis because they believe that the FDIC will intervene to protect them. This confidence has kept almost all American banks from experiencing bank runs since 1934.

This is the most important of all “moral hazards.” A moral hazard is the expected subsidy from the government to protect investors from a major collapse that their own stupidity and greed has caused. All the talk by Ben Bernanke or anyone else about trying to avoid moral hazard is propaganda for the rubes.

Moral hazard is at the bottom of the banking system, beginning with the Federal Reserve Act of 1913.

The entire banking system rests on this premise: the banking system must be saved from bad investment decisions of reckless bankers whose banks go bankrupt, thereby causing doubts about the solvency of an entire system that is borrowed short and lent long, a system built on a lie: “We will pay you interest by lending out your deposit, but everyone can get his money back at any time.” This lie is more widely believed than even this one: “Of course I will still respect you in the morning.”

The FDIC was set up to use government money, if required, to protect bankers against two groups: (1) depositors, (2) foolhardy rival bankers who go bust. Bankers fear depositors’ decisions to withdraw currency, thereby imploding the fractionally reserved banking system. They fear busted banks because of the potential domino effect: “all fall down.”


When an individual withdraws currency from his bank account, he reverses the expansion process of fractional reserve banking.

For every paper dollar that an individual deposits, the banking system as a whole multiplies the quantity of money by nine to one. It may multiply it even more if this deposit is not in an urban bank. Similarly, when a person withdraws currency from his bank, and does not redeposit it, the banking system contracts the deposits by nine to one.

Who withdraws currency from a bank? You and I withdraw currency from ATMs, but we intend to spend this currency.
Whenever we spend it, it winds up in the cash drawer of a retail company. The company at the end of the day deposits this currency into its bank. So, the banking system as a whole does not experience contraction. The money supply therefore does not contract.

The only contraction that is permanent is the contraction of currency withdrawn from a local bank and then sent to relatives outside the United States. When this is done, there is a permanent contraction of digital money in the banking system.

But this rate of withdrawal is fairly constant, and so the banking system does not contract unexpectedly. This process actually reduces the rate of monetary inflation and the rate of price inflation in the United States. Immigrants send money to their relatives, and American consumers find that imported goods are paid for in effect by pieces of paper with Presidents’ pictures on them. Foreigners do not use the money to buy American goods, leaving prices lower in the United States than they otherwise would have been.

The banking system as a whole is not threatened by individual bank failures. The money that a failed bank has lent out does not disappear when the lending bank fails. It remains in circulation. The money that depositors might otherwise have lost is returned to them by the FDIC. So, individual bank failures do not alter the total money supply.

Those few individuals who deposited more than $100,000 in accounts at a local bank that fails will lose most of their money above $100,000. They have learned their lesson through IndyMac.

It is likely that wealthy depositors have already taken steps by now to defend themselves against further bank failures. They have spread the money around. If not, they are slow learners.


The problem with individual bank failures is not the threat of a collapsing banking system. The problem is that bank failures send a message to depositors: the economy is being managed by people who do not have good economic judgment.
Depositors begin to distrust the economy as a whole. It is not that they distrust the banking system as a whole. There is nothing they can do individually to pull the plug on the banking system as a whole, other than withdrawing all of their money from the bank and sending it abroad to people they barely know. This is not going to happen.

The threat to the banking system is that failed banks are a yellow flag to consumers. It warns them that the economy as a whole is at risk. Bank failures testify to the incompetence of supposed experts who manage the public’s money. When the average investor begins to lose confidence in the money managers, they may decide that discretion is the better part of valor. At some point, he will call his pension fund or stock mutual fund and tell the person at the other end of the line to sell the stocks.
He will have to buy something, and what he will buy will be short-term money market instruments. He may also buy U.S.
Treasury bonds.

The problem with this is that long-term money, meaning long-term capital to be used in long-term projects, will become less available. The government will spend any money that the public invests in Treasury debt. Businesses will find that it is more difficult to gain access to long-term capital. This will slow the rate of economic growth in the United States. This will remove the engine of economic growth. By moving their money out of the private sector, and especially out of equities, investors will contract the overall economy.

It is not that individual bank failures threaten the banking system as a whole. The banking system as a whole is a gigantic cartel, and this cartel has as its protector the Federal Reserve System. The Federal Reserve System is legally allowed to monetize anything it wants to monetize. It can buy any asset, and it can create the money to buy this asset.

The Federal Reserve can intervene to save individual banks, or large financial institutions. Not only can it do this, it is doing it on a constant basis. At some point, it will not be able to do this without monetizing assets that it cannot offset by the sale of existing Treasury debt in its possession. Beginning in December 2007, the Federal Reserve System has sold Treasury debt whenever it has increased its purchase of questionable assets that it has bought from banks and large financial institutions.
It has unloaded about 40% of its holdings of liquid Treasury debt. This has kept it from inflating the money supply at a dramatic rate.

At some point, it will run out of Treasury debt to sell to the general public in order to offset the increase of its purchase of questionable assets held by the financial system. At that point, the great inflation will begin.

This could be a year away. This could be a month away. All we know is this: when the Federal Reserve system runs out of Treasury debt to sell, its purchase of all assets will be inflationary. The banking system as a whole is protected. What is not protected is the purchasing power of the dollar.

In order to guarantee the survival of the banking system as a whole, the existing legal structure has created an enormous risk factor: the destruction of the dollar. Legal solvency can be maintained by the banking system as a whole, but this legal solvency comes at a price: the threat of the insolvency of the dollar itself.

This is always been true. The public has never thought this through. It is beyond the voters’ comprehension. Congress, which has authorized the legislation that has led to this system ever since passing the Federal Reserve Act in late December, 1913, has also not thought about the implications of this system of guaranteed legal solvency for the banking system. But the insolvency of the dollar is the ultimate implication of the legal structure of today’s fractionally reserved banking cartel.

The major threat to the banking system is from outside the banking system. The major threat is the insolvency of a major company that has guaranteed the bonds of private corporations and agency bonds of the United States government, such as Fannie Mae and Freddie Mac. These supposed guarantees has made possible the system of bond portfolios that can be broken up into 125 levels of risk, with appropriate rates of return on each of the slices.
The system is so complex that no one understands it.

Hedge funds have invested in these assets, called collateralized mortgage obligations. They have borrowed from banks to buy them. The leverage of the hedge fund system is enormous. It is probably a hundred to one. The guarantees against loss that undergird the financial system are guarantees made by organizations that cannot possibly fulfill their contracts during an anomalous event, such as an attack on Iran by the Israeli air force. When the promises cannot be fulfilled, interest rates will rise for all American bonds except those of the United States Treasury. This will trigger additional demands placed on the guarantors of these contracts, which will threaten the solvency of the bond system.

At that point, bank capital will collapse as a result of the losses that the banks have sustained because they lent hedge funds money to invest in the bonds. The collapse of the Carlyle Capital Corp. earlier this year took less than a week. It was borrowed at least 32 to one by ten major banks of the United States. Those banks lost 100% of these their investment in one week.

When banks lose capital, they must either find a new investors, or else they must reduce their loans. When they reduce their loans, they refuse to roll over existing lines of credit to American corporations. This is the major threat to the system. It is not a threat of the bankruptcy of the banks; it is the threat of the reduction of lines of credit to American corporations — corporations that are dependent on these lines of credit.

In a financial panic, American investors will move from corporate bonds and stocks and put their money in Treasury debt.

This threatens the solvency, not simply of individual banks, but of individual corporations that are dependent upon lines of credit issued by specific banks. American corporations are not dependent on the banking system as a whole. They are dependent on continuing lines of credit from specific banks. They do not have time to renegotiate loans with other banks. They have to meet their payrolls. This will become increasingly difficult to do in the environment created by constant reports of individual failures of specific banks.

This is the famous and widely denied crowding-out effect.
The Federal government’s debt certificates are trusted; the private capital markets are less trusted. In order for the private capital markets to continue to operate in such an hostile environment, they will have to offer greater economic returns than Treasury debt. It will become more expensive for private companies to attract long-term investment, precisely because individual banks are failing.

Obviously, the companies would all fail if the banking system as a whole collapsed. The entire society’s existence would be at risk if the entire banking system collapsed. There is no a safe hedge against such a scenario. The division of labor would collapse. Cities would not be resupplied with goods.

It would be like all the disaster movies combined. It would take only a matter of weeks for the death rate to jump. So, anyone who talks about the collapse of the banking system who has not retreated to a small farm located 100 miles from a major city does not take seriously his own scenario.

The problem is not the collapse of the banking system as a whole. The problem is the crowding out by government, especially the Federal government, of capital that would otherwise have gone into the private sector. The threat is the long-term erosion of confidence in the private capital markets.

This is not a minor threat. This is a major threat. It threatens the long-term growth of the American economy. It threatens the long-term growth of an economy which is heavily indebted to foreign investors. When foreign investors perceive that growth has stopped, they are going to cease lending money to Americans to sustain their present patterns of consumption. The dollar will fall. The price of imported goods will increase.

The public will have to readjust its household budgets. When the public must readjust spending patterns, the result is recession.

In a major readjustment of their budgets, the result is a deep depression. We have not seen this since the 1930s.

When we read of more bank failures, we will grow more nervous. It is not that tens of millions of depositors will go to go down to their banks and take out currency. A few million people may do this to a limited extent, but most people will not.

This is because they do not have sufficient reserves in their bank accounts to enable them to take out $1000 in currency and not use that money to spend on household bills. So, they won’t do this. (You probably should.)

The long-run effectiveness of withdrawing currency to protect yourself from a complete collapse is essentially useless.

You cannot buy much in a complete collapse. Most things are produced and delivered based on bank credit. We are hooked.

The likelihood of the complete collapse of banks is extremely low. It could happen, but it is highly unlikely. What is likely in a scenario of failing banks is the increasing loss of public confidence in the private capital markets. When that happens, the rush to buy Treasury debt, which means the rush to hand over our economic future is to the United States Congress, will lead to the de-capitalization of the private companies that increase our standard of living.


The public has encouraged the United States government to protect voters from unexpected bank failures. Congress has complied. The banking cartel has welcomed this cooperation. The Federal Reserve System has inflated. The dollar has depreciated by 95% since 1914. This is a result of the creation of the Federal Reserve System, which was created in the name of stable money. In other words, it is one more example of Ludwig von Mises’ rule: whenever the government interferes with the market, the result will be the opposite of what the legislators said they intended to achieve.

The greater the threat to the individual banks’ solvency, the louder the public will demand additional government intervention. Congress will respond. The result will be the creation of a set of conditions in which the Federal Reserve System will have to monetize the overleveraged hedge fund system which has grown up over the last decade. It will find that it must monetize so much, so fast, on all sides, that it will not be able to offset the creation of new money by the sale of existing Treasury debt.

Bernanke has done his best to keep the helicopter full of fiat money from having to take off and do its work. But he cannot resist the demands of Congress once it is clear the public that a series of bank bankruptcies is threatening the public’s confidence in the economy as a whole. The banks are protected.

The purchasing power of the United States dollar is not.

Eventually, Bernanke’s hush money helicopter will fly.

So, we face a recession. We also face bankruptcies of overleveraged small banks like IndyMac. But the large banks are far more leveraged than the public understands. They have lent huge chunks of their capital to hedge funds that are leveraged 100 to one. A 1% move opposite to what a hedge fund has expected can wipe out 100% of a 100-to-one fund’s equity. It can be insolvent faster than you can say Carlyle Capital Corporation.

Warren Buffett says that the stages of the investment cycle is managed by three successive groups: first, the innovators; second, the imitators; third, the idiots. We are well into stage three.


In 1998, a weekend intervention by the President of the New York Federal Reserve Bank got a dozen banks to pony up $3.6 billion of new loans to keep the insolvent Long Term Capital Management hedge fund. The fund was leveraged 30 to one and would have to sell off $125 billion in assets at a loss. Since much of the portfolio was in assets that had fallen to zero — defaulted Russian bonds — this would be painful. Sales of the liquid assets would have tanked the international bond market.

The bailout gave the banks time to sell the still-marketable assets over the next two years.

Now the hedge funds are international. The obligations are in the trillions.

Who can bail out a large busted fund now? The banks are in hock to all of them, and one of them can bring down the system.

Bernanke will need a lot of hush money.

Gary North’s Economic Edge™

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In Sharpton case, ‘old shakedown theory’ resurfaces

The Philadelphia Inquirer

By Deneen Borelli
July 2008

Al Sharpton is making headlines again, but it’s not for one of his crusades. Instead, Sharpton, his National Action Network (NAN), and several major corporations that have donated to NAN have been subpoenaed in recent months by federal investigators.
While Sharpton’s attorneys reported Tuesday that the criminal probe over millions allegedly owed in taxes by Sharpton and NAN has been dropped in lieu of civil action by the IRS, federal authorities remain tight-lipped over the status of any investigations.


Critics have long accused Sharpton of obtaining corporate contributions by threatening racial boycotts.


Sharpton denies this, saying “That’s the old shakedown theory that the anti-civil-rights forces have used against us forever.”


But there’s plenty to wonder about. In November 2003, according to the New York Post, Sharpton picketed a DaimlerChrysler air show, threatening a boycott. After the company began sponsoring NAN’s annual conference in 2004, however, Sharpton bestowed an award on it for corporate excellence. General Motors and American Honda also began giving to the group after similar threats.


Sharpton’s not alone. Critics of Jesse Jackson claim he has perfected the art of the shakedown. Suspicions persist, for instance, about motives behind repeated generous contributions from mortgage giant Freddie Mac to Jackson’s Rainbow/PUSH Coalition. As the National Legal and Policy Center has reported, “Jesse Jackson’s relationship with Freddie Mac began in 1998 when Jackson accused Freddie Mac of racial discrimination and encouraged major shareholders to sell their stock. Freddie Mac began financial support for Jackson’s organizations and his criticism of Freddie Mac stopped.”


Freddie Mac donated $150,000 to a Rainbow/PUSH conference earlier this month, even as Congress was debating a bailout of the struggling firm and Fannie Mae, a bailout that the Congressional Budget Office says might cost taxpayers as much as $100 billion.

A 16-year crusade against Anheuser-Busch for not having enough minority beer distributors ended with Jackson’s sons being awarded a lucrative Chicago distributorship. Businesses that Jackson has criticized, including Toyota and NASCAR, have become sponsors of his annual Wall Street Conference.


At this year’s annual shareholder meeting of the JPMorgan Chase & Company financial services firm, I observed Jackson in action. During the meeting’s question-and-answer session, Jackson pressed JPMorgan CEO Jamie Dimon about the company’s commitment to diversity. Jackson asked Dimon how much of the $750 million spent on a recent merger went to minority contractors. As Jackson bluntly put it: “How much of that was done by black and brown lawyers?”


While Dimon could not specify a dollar amount, he emphasized that JPMorgan’s support of minority contractors has increased, as has the percentage of minorities in senior management positions.


Dimon could have not been surprised to see Jackson. This February, Jackson called Dimon about JPMorgan’s role in the then-upcoming initial public offering (IPO) of credit card giant Visa Inc.


In a follow-up letter to Dimon, Jackson wrote, “It is our understanding that just four minority firms are involved in the IPO syndicate at the third tier level, none as co-managers or even junior co-managers. . . . This is a major step backward for Wall Street and its commitment to inclusion. . . . There must be some sense of ‘equanomics’ [a Jackson term marrying “racial justice” to “economic equality”] in the IPO deal – which the representation of minority investment banking firms compares favorably to our consumer use of credit cards.”

Frustrated by what appears to me to be a long history of Jackson and Sharpton using semi-subtle campaigns to pressure corporations to donate, I spoke up at the JPMorgan shareholder meeting.


After Jackson spoke, I took his place at the microphone and asked Dimon and his board: “Will there ever be a day where you will stand up and say ‘No’ to Mr. Jackson and to his demands and messages of victimization and divisiveness? This is the United States of America, and this is not the 1960s. People should be hired based on their talents and they should be retained based on their results. There should not be color-coded hiring in the United States.”


Shareholders clapped. But, unlike Jackson’s, my question went unanswered.


The Impact of Scientific Information on Theological Thoughts

office16By Rev. Dr. Tommy Davis


Perhaps the most challenging field of study for the Christian is in the area of science.  The prevailing outlooks in the scientific arena pose a risk to those who are not grounded in the Word of God.  Many contemporary secular scientists who do not regard the biblical account as truth often contend that the truly educated scientist will not accept the biblical report of creation.  They also decree that science and the Scriptures are in conflict.


Over the years as scientific disciplines began to move from observation to assumptions, the theological impact was revealing itself in the church when ministers began to teach in a manner in an attempt to appease the intellectual establishment.  The naturalists endeavor to explain our present universe with all its intricacies without divine intervention may lead some to cast doubt on the written revelation —the Bible—and usually precede suspicion regarding the Person of Christ.


The effort to exclude God from His cosmic phenomenon have caused a serious error in the visible church.  However, some Bible-believing scientists remained as trailblazers to those believers who depend on the Word of God.


Robert Boyle (1627-1691), the father of modern chemistry, was a Bible-believing scientist as was Lord Kelvin (1824-1907) who penned the laws of thermodynamics.  These men understood that true science and the Scriptures are compatible, while assumptions may conflict with the biblical testimony.


The incorrect knowledge of science has led some professed Christians to base their racist ideas on these assumptions.  Evolutionary influence upheld racism within the churches.


Thomas Huxley (1825-1895), a British biologist, was a devoted evolutionist and well respected scholar of his time.  Perhaps no other “collection of dust” have mushroomed the evolutionary theory.  Shortly after slavery was abolished in America, Huxley wrote:


“No rational man, cognizant of the facts, believes that the average Negro is the equal, still less the superior, of the white man.  And if this be true, it is simply incredible that, when all his disabilities are removed, and our prognathous relative has a fair field and no favour, as well as no oppressor, he will be able to compete successfully with his bigger-brained and smaller-jawed rival, in a contest which is to be carried out by thoughts and not by bites.”1


Nominal Christians who put more trust in the creature (man) rather than the Creator believed Huxley’s cosmology.  Before Huxley’s outlook was published, a European missionary named Henry Townsend who went to Africa opposed the ordination of a black Bishop.  Mr. Townsend said, “The superiority of the white over the black man, the Negro has been forward to acknowledge.  The correctness of this belief no white man can deny.” 2


When the Church of England appointed Samuel Crowther as the first West African bishop on June 29, 1864, the missionary further stated:  “There is one other view that we must not lose sight of, viz., that as the Negro feels a great respect for a white man, that God kindly gives a great talent to the white man in trust to be used for the Negro’s good.  Shall we shift the responsibility?  Can we do it without sin?”. 2


Having his theology saturated with evolutionary dogma (believing in the ‘lower races’), was the sponsorship of a position not supported by Scripture.  This viewpoint served as a launch for the liberal Democratic Party who believes that African-Americans cannot survive without government programs sponsored by white liberals in positions of authority.  A true scientific journey always arrives at a loyal biblical position.


When science is incorporated in an effort to decrease the misery of man with the use of medicines, one may find encouragement; and when knowledge is applied to make life easier through the use of technology, this is confirmation that we have dominion over the lower order of God’s creation —-namely, the earth, plants and animals.  Science, rightly applied, finds comfort in the Word of God.


Blaise Pascal (b.1623-1662) a French mathematician, physicist and theologian, expressed that the Christian’s God does not consist merely of a God who is author of the order of elements and mathematical truths.  Pascal understood that he was serving a God of love and consolation.  Pascal paved the way for the modern computer by conceiving the calculating machine.


Civilization has benefited from the scientific achievements, but we must be aware of the leaven that often permeates controlled conclusions.  If we are not careful, the student of the Word of God may imbibe a worldview totally in contrast with Scripture.


The skillsman, whose mind has been shaped by the presence of the Holy Spirit, will make use of true scientific conclusions. Such hermeneutical ability will harmonize the sacred text and shed light on contemporary trends that sustains the reality of the Lordship of Christ.


Biologists tell us that Oysters produce pearls because of being wounded.  The Oyster’s internal reaction by utilizing inherent chemicals to repair the damage produces a pearl.  Theologically, through trials, the Christian grows into a more mature relationship with Christ.  Christ was even “wounded for our transgressions, bruised for our iniquities” (Isaiah 53:5).


The Oyster confirms that when external events in our lives offend us in some physical or spiritual way, there is a repair process already present.  All we have to do is utilize it.  The end result will be a life that glorifies God — a pearl of great price.




Scientists also tell us that the water molecule is polar as opposed to linear.  Such molecule is made up of two hydrogen atoms and one oxygen atom.  Since the water molecule is shaped like a “V”, it has a positive end made up of two hydrogen atoms, and a negative end (oxygen atom). 


This composition causes each end to be attracted to one another resulting in a weak bond.  The tightly compacted molecules make water dense in its liquid form.  Compacting would not occur if this molecule were not polar.


Dissimilar to other matter, when water drops to freezing, the bond changes to hexagonal which causes a volume increase so that the solid form of water is less dense.  This will cause ice to float rather than sink.  Theologically, we must consider the water molecule as an act of mercy.  If ice were to sink, all our lakes, rivers and seas would freeze—thus eliminating all marine life.


After the flood, God declared: “While the earth remained, seedtime and harvest, and cold and heat, and summer and winter, and day and night shall not cease” (Genesis 8:22). 


When the Ice Age began after the Great Flood (repeat winters), life could not have continued long after if ice did not float since water is the central ingredient that sustains natural life.  Without it, plants cannot grow, and humans along with the animal kingdom would starve.  Therefore, God made ice to float, thereby allowing nature to replenish through the use of water.


Lastly, everything reflects the acumen of an Intelligent Designer namely, all three members of the Trinity that make up One God.  All intellectuals in this field should agree with the Psalmist: “When I consider thy heavens, the work of thy fingers, the moon and stars, which thou has ordained; what is man, that thou art mindful of him? And the son of man, that thou visiteth him” (Psalm 8:3-4).


1. Huxley, Thomas: Lay Sermons, Addresses and Reviews (New York, Appleton, 1871)  p.20

2. Olson, Ted. “Bishop Before His Time.”  Christian History 2003 p. 13-15


Posted by on July 28, 2008 in Uncategorized


Transferring Intellectual Capital

Why It’s So Hard to Teach Students These Days

Professor Mark Bauerlein looks at “The Dumbest Generation.”

By George Leef

July  2008

Several years ago, Tom Brokaw wrote a best-seller, The Greatest Generation, a tribute to the Americans of the World War II era. After reading Mark Bauerlein’s new book The Dumbest Generation, you have to wonder if history wouldn’t have turned out much worse if the “Millennial Generation” – today’s youth and young adults – had been in charge during the 1940s. We might be taking orders from Berlin.

Bauerlein, a professor of English at Emory University, has dealt with young people for years and is dismayed at what he sees: “While the world has provided them with extraordinary chances to gain knowledge and improve their reading/writing skills, not to mention offering financial incentives to do so, young Americans today are no more learned or skillful than their predecessors, no more knowledgeable, fluent, up-to-date, or inquisitive, except in materials of youth culture….”

He continues: “They read less on their own, both books and newspapers, and you would have to canvass a lot of college English instructors and employers before you would find one who said they compose better paragraphs.”

A strong indictment, but Bauerlein backs it up.

Whereas we have been progressing technologically, he believes, we’ve been retrogressing intellectually – young Americans especially. That makes life difficult for teachers and professors, but more importantly, it bodes ill for the nation’s civic health.

In fact, the technology that has revolutionized communications is a key component of the problem. The Internet and its various offspring have largely supplanted books and other traditional sources of information. Among other changes it has brought about is that for the first time in history, it’s possible for adolescents to spend nearly all of their time if they choose (and many do) in the company of other adolescents. In our wired world, kids can come home from school but remain in almost constant touch with their friends via cell phones, instant messaging and so forth. That means the ability to tune out their parents and other adults who not only have different –i.e., mature – perspectives, but who also might discourage the sloppy linguistic and mental patterns of adolescence. Sadly, many young Americans live almost entirely in a world revolving around their friends, clothes, pop music, TV, and Facebook.

Ah, but what about all the good educational material available on the Internet? Mostly, the young ignore it, Bauerlein observes. Furthermore, what good content exists is being influenced by the sorry reading habits of young people. Those habits are marked by short attention spans, a very limited vocabulary and unwillingness to look up new words, an aversion to lengthy passages, and a preference for “scanning” rather than close reading. Internet material is generally written with those habits in mind.

School textbooks have been trending toward ever-increasing simplicity for many years (lots of pictures and bullet points, less and less prose) and the Internet has thrown that trend into high gear. Consequently, when young people confront the writing in assigned books in college courses, serious magazine articles, and even newspaper editorials, they mostly shy away.

Bauerlein isn’t blaming the technology or the young people. It’s the adult world that is responsible, starting with those who have glorified “youth culture” going back to the 1960s. Many writers in effect said that it’s America’s adults who need to learn from the nation’s youth and not the other way around. That line was a political tactic in the 60s and 70s since the “youth movement” was overwhelmingly leftist.

The glorification of youth was strongly reinforced by “progressive” educational theories emanating from our leading schools of education – theories insisting that the proper role for teachers is to act simply as “facilitators” who guide students in “constructing their own knowledge.” Supposedly, active young minds would do that if they were free to follow their own natural inclinations.

That theory took hold first in the lower K-12 grades and rapidly spread upward. Many college professors resisted it and continued to assign challenging reading material, only to discover that students either wouldn’t read it or if they tried, just couldn’t grasp it. As a result, professors have widely lowered their standards to accommodate the a-literacy of their students. In turn, that means that our supposedly highly educated populace actually contains a small and declining number of people capable of functioning at a high intellectual level.

Why is it that so many young Americans now have trouble reading? Bauerlein argues that the main culprit is poor vocabulary. To be able to understand serious written material (such as true college texts), it’s necessary to have a command of English well beyond the simple vocabulary found on Internet screens and the dumbed-down school readings students are used to. He explains, “Years of consumption of low rare-word media, then, have a dire intellectual effect. A low-reading, high-viewing childhood and adolescence prevent a person from handling relatively complicated texts, not just professional discourses, but civic and cultural media such as the New York Times Review of Books and the National Review.”

To sum up, even though Americans now have more formal education than ever – more classroom time, more degrees – the young generation is quite poorly educated. It isn’t just that they don’t know much, but that they’re not much interested in acquiring knowledge and ill-equipped to comprehend anything that isn’t written in the simplest of modes. Hence the unflattering title of the book.

One implication is that college professors who want to teach the way they were taught encounter indifference and even hostility. Another Emory professor, Patrick Allitt, has written a book on the difficulty he has in getting students to engage with his subject, American history. I reviewed his I’m the Teacher, You’re the Student here.

Another, more serious implication is that we’ll have fewer people in the future who will be able to defend our culture against the inevitable attacks upon it. Bauerlein writes,

Two generations on, we see the effects of the sovereignty of youth, and one of them bears upon culture wars to come. Put bluntly, few members of the rising cohort are ready to enlist in them properly outfitted with liberal learning and good archetypes. An able culture warrior passes long hours in libraries and public debate. He knows the great arguments, and he applies them smoothly to the day’s issues….It is the rare under-30-year-old who comes close to qualifying, even as a novice. They don’t read enough books and study enough artworks or care enough to do so. They don’t ponder enough ideas or have the vocabulary to discuss them.”

Some might brush this book off as mere grumbling by a disaffected professor, but it isn’t that. Bauerlein’s point is much deeper than the common complaint about lazy students. We’ve had a national educational melt-down and are apt to suffer grievously for it.

What to do? Bauerlein doesn’t conclude with an optimistic chapter on how we can turn things around. He does suggest that colleges should stop treating students like customers to be coddled. Those who can handle serious academic work should be required to do so and those who can’t but are willing to try should be helped as much as possible. If colleges were to start raising their fallen standards, we would expand the cohort of people who are capable of serious thinking, of defending the culture, and of countering demagogues.

Perhaps because it’s so obvious, Bauerlein doesn’t also say that it would help matters greatly if parents of young children would do all they can to avoid letting them become hooked on the online, a-literate lifestyle that does so much to create mental weaklings.

The Dumbest Generation is a badly needed diagnosis of what may be America’s most serious long-run problem.



Civil religion on steroids



In this election cycle, religion is showing up in novel and surprising ways. We have seen religion playing a prominent role since Evangelicals broke their isolation in the late 1970s. Since then, we have seen the Moral Majority, the Christian Coalition, Preacher Pat for President and, on the Democratic side, Reverends Jackson and Sharpton. In the campaign for 2008, we have a Baptist minister advertising his “Christian leadership” as he surges ahead in Iowa, and even Hillary Clinton (amazing grace!) has found religion.

Barak Obama is employing religion in an especially interesting way. Rather than invoking the Savior or pointing to Him, the junior Senator from Illinois is claiming to be the Savior…or at least supporters who are intimately close to him are doing so.

It seems that Obama may be transforming from a man of faith into an object of faith. In his column, “Obama the Messianic,” (The New York Post is more aptly titled “Oprah the Apostle”), Rich Lowry observes Oprah’s anointing of Sen. Obama as what she called “the one” who was to come. You can view the video here, or at

In a her long introduction to the candidate before a packed South Carolina stadium, Oprah Winfrey said, “We need politicians who know how to tell the truth. But more important, we need politicians who know how to be the truth.” (The emphasis was hers.) Barak Obama, a professing Christian (though his Evangelical orthodoxy is at least open to question, such that even David Brooks can see it), is surely familiar with Jesus’ messianic claim to divinity, “I am the way, the truth and the life. No one comes to the Father except through me” (John 14:6).

Michelle Obama seems to be following this Messianic theme (I have not been able to locate the source): “We need a leader who is going to touch our souls, who’s going to make us feel differently about one another.” Of course, Jesus does that. It’s called spiritual regeneration — being born again. To Michelle, Obama is the Life. To Oprah, he is the Truth.

What does the prophet Barak say? In a South Carolina church a few weeks ago, he said that, through the new politics that he will bring, we will “create a kingdom right here on earth.” Did the congregation gasp as they should have? I doubt it.

The American Revolution was, as Martin Diamond put it, one of “sober expectations.” It recognized the sinful depravity of man and designed a constitution that could bring out the best in us and manage the worst in us. It was the French Revolution that promised “Liberté, Égalité, Fraternité,” a Republic of Virtue. Obama’s rhetoric, and that which he is condoning, places him in the radical French tradition which led of course to the Terror and to Napoleon’s tyranny. Excessive expectations for what is possible to achieve through politics always do. Hillary Clinton is more practically political, less inspiring, and even more selfish, and in those respects — believe it or not — she is a safer candidate. (A previous reflection on the longings of the soul and immoderate politics, “Community and the Longing Soul,” is relevant here.)

Oprah then suggests that Obama is perhaps not a god or a person within the Godhead, but rather a more highly evolved form of our species. “We are here to evolve to a higher plane. And the reason I love Barak Obama is because he is an evolved leader who can bring evolved leadership to this country.”

In the immediately preceding statement, Oprah claimed that Obama would not only love our country, but also love our enemies: “All human hearts are the same. Every mother losing her son in every country feels the same.” This simply repeats the peacenik arguments from the 1980s that, because “the Russians love their children too,” there is actually no threat of war coming from the Soviet Union. They skipped over the fact that even that argument depended upon maintaining credible nuclear and conventional threats. Oprah’s own argument does not, of course, account for the women who have supported their children in their suicide bombings. Nor does it account for the little influence that tender hearted women have in our enemy nations. But not to dwell too long on an entertainer’s silly remark.

She then adds that, “We need a president who cares about our friends and also cares about our enemies.” Does Senator Obama stand behind this statement? Does he propose that, when he is President, he will be above politics, above the America-world distinction, the friends-enemies distinction? Would he see himself as representing not just American interests, but in some way the worldwide common good? Does he understand that there are irreconcilable conflicts between national interests or between various local aspirations? He is so unseasoned, and he presents himself as being so idealistic, that I would take nothing for granted.


Obama: wolf in sheep’s clothing

Felicia Benamon

Felicia Benamon
July 26, 2008

“Watch out for false prophets. They come to you in sheep’s clothing, but inwardly they are ferocious wolves. By their fruit you will recognize them.”Matthew 7: 15, 16 (NIV)

Barack Obama bellowed before a crowd in Germany, “The walls between the countries with the most and those with the least cannot stand. The walls between races and tribes, natives and immigrants, Christians and Muslims and Jews cannot stand.”

Obama’s words do not speak of freedom. A coming together under one banner, the banner of “working together,” Mr. Obama believes that the world has a responsibility to unite.

Newsflash, no country will want to drop their way of life to unite under one cause (or rather it is hype). That is what Barack Obama is advocating…to drastically change the way we are used to living.

Each country is entitled to have a defining border to defend its land. Each country has a right to say that a person who has violated its laws and is not officially a citizen, should be deported. Each country has a right to separately deal with problems as they come.

Every country is vastly different in traditions, the way in which they govern, etc.

No one should be pushed to forge a bond between religions, or rather, to water down their faiths to merge in one mind set. Christianity, Islam, and Judaism…the ideology of these religions vary from each other and an effort to break down the walls will be futile.

True, every human being is a child of God and one should embark on friendships with someone of a different faith, but that doesn’t mean that one should forget about the tenets of their faith. Faith largely guides one’s steps in life.

If you do not believe such an effort is being made to erode the differences in the major faiths, pay close attention to the “interfaith” movement that is making its way throughout America and the world. That said, all faiths are not equal and a joining at the hip of world religions to achieve world peace is not the answer.

Free will. That’s what Jesus Christ offers mankind. Mankind must not be suckered into committing to more and more when much has already been given and squandered.

As long as there are corrupt dictators and corrupt regimes making life miserable for their citizens, this world will be in turmoil. Unless corruption and evil is eliminated, then committing more money, resources, energy, and human sacrifice will not make a difference.

Barack Obama must respect the right of the individual to make decisions as to religious pursuits. He must respect the right of a country to make decisions as to how it will handle its welfare and its way of life. So long as governments don’t oppress their people, Obama shouldn’t ignore the traits that make us different and unique.

Considering the wreck the world is in these days and what is transpiring on the horizon, Barack Obama’s words are ominous. It may seem that he is playing “uniter of the world” but Obama’s actions should he become president would further divide and then weaken and disable America.

Barack Obama’s Global Poverty Act, S. 2433, is scheduled to be hashed out in the Senate in the near future. During a weak economy, Obama is proposing through this bill that the US give more money to help poverty stricken nations. America has given enough in terms of humanitarianism. If anything, we need to put the focus back on America, and help our own people. And should this bill pass, who knows how much leverage the UN will have in American affairs.

Unemployment is at 5% and we have a presidential candidate that is more concerned with other nations’ problems. Again, unless mass corruption abates, then the problem of starvation, ethnic cleansing (mass murder), and poverty will continue. No amount of money will make the problem disappear. After all, shouldn’t this quote mean something?:

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

There is a sizeable amount of Americans who are dissatisfied with both nominees for president. No matter what the media would have us all to believe (that Americans are largely set on Obama), people are not happy with either parties or the fact that the media is one-sided in that Obama is getting an extreme amount of coverage.

The reason Barack Obama is able to make such remarks in Germany is because voters are largely ignorant to what changes may occur if Obama were to be voted in as president of the United States.

We must be educated as to what changes are being put into place that will cause us to lose the very nation we have enjoyed for 232 years. We are on the brink of collapsing and there are those who are working to speed up our demise.

It’s time to make some noise; we have 4 months left until the general election. One way Americans can get their power back is to be INFORMED and then use the information to fight back…fight we must.

Related Reading

Obama’s $845 billion U.N. plan forwarded to U.S. Senate floor

Global Poverty Act: S. 2433

Tell your Senator to oppose Barack Obama’s Global Poverty Act: S. 2433

Felicia Benamon is a conservative columnist who writes from a political perspective, but occasionally deviates to write about other concerns facing her country. A patriotic American, Felicia hopes to motivate others to be more conscious of the current state of affairs in America, and to hold true to the wonderful traditions that make America great.

Felicia comes from a military background and is proud to support the men and women who put their lives on the line daily to protect American citizens and who reach out to help those in need across the globe.

Write to Felicia at:

© Copyright 2008 by Felicia Benamon


Posted by on July 27, 2008 in Uncategorized


Where is the BIGGER candidate?

Felicia Benamon

Felicia Benamon
July 24, 2008

“America needs someone who’s bigger than their speeches.” — Kevin Costner, Swing Vote

As I viewed the coming attractions to the upcoming movie Swing Vote, the above quote couldn’t ring more true. Barack Obama has made the spotlight as he is known for his snazzy speeches and eloquent words. John McCain is giving lip service to the specific crowd he happens to be speaking before at the moment.

To try to build on his eloquence of speech, Barack Obama wants to convey that he can handle international matters and maintain a strong US foreign policy by embarking on a whirlwind Mid-East trip. But all it really is behind the scenes is a political stunt as Obama is trying to appear presidential.

To add to the quote, America also needs a presidential candidate who will put Americans first. However many flaws John McCain exudes as the Republican nominee, he continues to campaign in America. Meanwhile, Barack Obama decides to take his presidential campaign to the Mid-East and now to Germany as he is to give a speech before adoring crowds.

Obama has wowed Americans and is now trying to incur favor on an international scale. The problem is, other countries do not have a say in American elections. What a slap in the face to Americans for Barack Obama to deviate from the campaign trail to make nice with world leaders.

It is a testimony to a man’s priorities and character when he truly reaches out and keeps his attention on the people who will be deciding his fate in an election. I will give props to John McCain for at least keeping the focus on America and remaining humble by not pretending he already has the job.

The Obama overseas love-fest is being fed by the mainstream media. Several mentions have been made of Obama “stealing McCain’s thunder.” Those comments shouldn’t be brought up. If American elections are to be fair, both candidates should be given equal airtime and equal consideration.

There is an immediate attachment to Barack Obama by the mainstream media of course, but a bias in an election (or anytime for that matter) shouldn’t exist. No biased comments should be broadcast.

The arrogance of Barack Obama falls in line with the media’s persona and so, they are covering his every move with glee. Sadly, that speaks to the lack of integrity in media these days.

Where does the American voter fit in all of this? Well it is our responsibility not to feed on the hype. So Barack Obama is taking a Mid-East trip? Let him go and find himself. Then maybe he can come back and be truthful before Americans and REALLY tell them what he plans to do if he wins the presidency. Because all we are seeing is flash and glamour with Obama.

So yes, America DOES need someone who is bigger than what the American public is getting right now. Americans don’t need inflated egos in the White House. America doesn’t need someone who feels he has to sell himself overseas to get ahead in the polls. If the candidates feel they have the adequate skills to perform well in office in terms of foreign policy, they wouldn’t need to do a world tour to get a feel for the presidency.

America …I urge you to see beyond the scheming of the media to place Obama as some “kumbaya” type of leader who will bring everyone together.

During these times of war, we need leader who will stand and say that violence and evil towards one’s fellow man will not be tolerated. At some point, the time of snoozing with various leaders (whether they be rogue or not) has to end.

America needs a leader who will stand and say, “Enough is enough. This is what I expect and what I’m about and if you don’t like it, oh well.”

Americans have been led by President Bush for 8 years, but again, arrogance has caused the president to falter and waver on many issues that are of concern to many Americans.

Where is the leader who will not operate out of arrogance, but out of strength born from humility? That’s the type of person Americans should consider giving the presidency to for 4 years or more. So in keeping with the quote that started this article, I say I agree…that we need a much BIGGER person running for president.

Felicia Benamon is a conservative columnist who writes from a political perspective, but occasionally deviates to write about other concerns facing her country. A patriotic American, Felicia hopes to motivate others to be more conscious of the current state of affairs in America, and to hold true to the wonderful traditions that make America great.

Felicia comes from a military background and is proud to support the men and women who put their lives on the line daily to protect American citizens and who reach out to help those in need across the globe.

Write to Felicia at:

© Copyright 2008 by Felicia Benamon