Hi, LGL:

Recent data continue to point to an on-going economic recovery: Housing starts surged 1.5% in July from June. Retail sales rose 1.4% in July from June. The Conference Board's Consumer Confidence Index rose 4.3 points in August to 81.3 from 77 in July. Durable goods orders were up 1% after rising 2.6% in June. Second quarter GDP grew 3.1%.

 

With the Dow trading above 9300, Wall Street is optimistic. The stock market is a forward-looking discounting machine. Believing the recovery is for real, investors put their money in stocks. If you're sure such optimism is irrelevant, you can put your money where your mouth is by selling stocks short.

 

Money is not a joking matter. If verbal optimism is cheap, betting one's money on something is a serious decision. It is relevenat and for real, because it has an impact on one's financial well-being. If investors buy stocks, it is because they're confident that the Bush tax cuts and the Fed's interest rate cuts are working.

 

Why should I believe your pessimism is relevant if you keep saying the economy is going down the tube but refuse to sell stocks short? If you're sure the Bush administration's economic policy is killing the economy, why not grasp this chance of a lifetime, sell short and get rich quick?

 

As mentioned before, I lack the training to verify your numberous "estimates" such as "demand deposits have been growing by an annual rate of more than 4%"; "actual inflation has exceeded 12% over the past three years and will increase 6% in the last year of Bush's term of office".

 

At the last Federal Open Market Committee meeting, the Federal Reserve Board concluded that "risks are weighted toward inflation falling too low". Excessive disinflation remains the Fed's top concern. Its preferred measure for inflation is the Consumer Price Index (the CPI) excluding food and energy.

 

As to energy prices, there is a supply problem. Either oil drilling in the U.S. is expanded to increase oil supplies, or energy prices rise to force people to conserve energy. This issue is not directly related to money supply.

 

I lived under left-wing Socialism for decades when I was in Shanghai, China. I watched the Chinese economy fall off the cliff during the left-wing class-warfare era dubbed "the Cultural Revolution". Hence, I know what havoc leftism can do to an economy.

 

Actually, I got into serious trouble during the Cultural Revolution, which later became the subject matter of my novel "Shanghai Escapist". It is my life story, and I worked a lot of realism into it. Anyone who reads my novel understands why I refuse to look at the world from the left-wing's perspective.

 

My conclusion: Leftism is the enemy of liberty and freedom. It robs hard-working people, taking away their hard-earned savings and other assets in the name of the collective interests of society (i.e. Socialism). In consequence, it destroys the economy by killing the goose that lays golden eggs.

 

The choice facing the public is between realism and idealism. History shows certain "ideals" can easily turn into nightmares. Communism is one example. Nazism (i.e. National Socialism) is another. Islamism is another. Whereas demagogues always urge the public to walk away from realism. 

 

Right or wrong, my impressions are:

 

You dislike John Ashcroft, because he has eliminated a certain number of terrorist sleeper cells in the U.S. According to media reports, America's crime rate fell sharply in 2002. This has certainly enhanced the political and economic freedoms of law-abiding citizens, so Ashcroft deserves credit.

 

You dislike George W. Bush, because he fights global terrorism and tries to strengthen America's position in international geopolitics as a way to ensure world peace and stability. You seem to believe a militarily weak America incapable of dominating the world would serve your left-leaning ideological interests.

 

Left-wing commentators say Saddam Hussein "had nothing to do with terrorism" despite Saddam's reward money for suicide bombers, despite the fact that one of the al-Qaeda culprits in the 1993 WTC bombing escaped to Iraq.

 

They focus on U.S. casualties in Iraq, hoping public support for Bush will wane. But if casualties are the reason for not fighting terrorism in Iraq, wild forest fires, which often cause casualties among firemen, shouldn't be fought, either. 

 

Like wild forest fires, terrorism spreads quickly, if left alone. But, apparently, many in the left-wing camp are not concerned about the spread of terrorism. They want America to leave it alone. 

 

You dislike the Bush administration, because it has successfully enhanced U.S. dominance in the Middle Eastern region, severely shrinking the living space and financial resources that terrorist organizations must have in order to grow. 

 

You deliberately put an equation between the Bush administration and Nazi Germany, because you want to demonize your ideological enemy. But you have yet to prove this equation. If there were any "totalitarianism" in the U.S., how could it be that you are here calling names on a daily basis?

 

I lived under totalitarianism for decades, during which, I developed a number of survival skills. One of them was to keep my mouth shut. The point is: where there is totalitarianism, there is silence. As long as you remain strident, you keep providing evidence of the absence, not the existence, of totalitarianism in the U.S.

 

So, keep shouting to prove we are in the Free World.

 

Sincerely,

 

Robert M. Liu