thoughts for Christmas

On this Christmas, I want to express my prayer that next year is more peaceful than this year.

I believe this is the 3rd year in a row I have posted this video to my online record.
Click here to watch the music video for Paul McCartney's Pipes of Peace - reliving the truce between some of the common English and German soldiers on Christmas day, 1914.

Also, I enjoyed reading this article yesterday, about these soldiers and how they simply withdrew their consent to the military commanders and political leaders.

Just one award for the end of the year.

Best Actor - Newt Gingrich

Statists are getting desperate

Elizabeth Warren (D-MA) was going on about how we all need to take roads and bridges that were built by the state, we are safe because of state provided police, we got taught in public schools... and it goes on.

Not only do these statists never consider that these things could potentially be privatized or eliminated and left to the voluntary sector, but it seems like they actually worship these things. In addition, they completely ignore the fact that private wealth needed to be created FIRST, in order to raise tax revenue to build bridges and pay police. Wealth creation came first. This is not to say that goods provided by the state haven't helped more people increase their standard of living (that is a good debate). Perhaps if these goods were provided by actors in the voluntary sector instead of in the public (coercive) sector, the quality would be higher and the costs and prices to consumers would be lower!

For Elizabeth Warren to say that we (taxpayers) paid for roads and education and therefore someone who used these has a moral obligation to pay it forward in taxes misses a key idea. These business people were mostly forced to use public roads because the government has a monopoly on roads. Business people didn't have much of a choice.
And companies in many industries actually pay for private security, so even without police they have little worry about "marauding bands seizing everything."

Although she doesn't say it, she implies the assumption that without the state, we'd all be poor and at the whim of monopoly men running around with sacks of money with dollar signs on them scheming how to keep the people down. Obviously this is outrageous and not grounded in reality.

Elizabeth Warren: wrong.

Quck thoughts on the debate

After listening to the GOP debate tonight, I have a brief thought on each candidate:

Herman Cain - He's saying many words in order to sound like he knows what he's talking about, but he said nothing of substance at the debate. His only answer about whether to abolish a program or department is to see what the experts say about whether it has already worked. Well I say that if he wants to become a lawmaker, he should know how a lot of these programs have worked out in the past and he should have an opinion as to what policy to adopt.

Newt Gingrich - He might be the actor of the century. He pretends that the USA PATRIOT Act is Constitutional and he has been trying to convince people (with some success) that he's a fiscal conservative. Hopefully voters don't forget about his dreadful spending record in the 90s.

Mitt Romney - I don't have anything to say. He was wrong on substantive issues but he continues to be a smooth talker.

John Huntsman - Continues to come across as a moderate populist, and he has good points about focusing on our economy rather than foreign governments. He has been silent on the Federal Reserve and pretends that our economy will recover as long as we have his can-do attitude - very little substance on the economic policy front from him.

Rick Santorum - said "... Africa was a country on the brink" (emphasis added). Will remain at 2% in the GOP primary polls.

Rick Perry - said absolutely nothing and can't form complete sentences. He's a new George Bush.

Ron Paul - Get out of the wars, end the foreign aid, stop using force to steal from Americans to give aid to wealthy leaders in poor countries. Stop bankrupting the people. The establishment infighting is not about cutting spending -it's about reducing the CBO baseline budgeting several years down the road, which even if significant, doe not in anyway bind future Congresses nor does it help balance the budget. Cut Spending NOW!

Michelle Bachmann - was not as dolled up as she was at the CBS foreign policy debate last week.

President Obama's record on guns

Put aside campaign rhetoric and look at Obama's actual record on guns as president:

-has signed bills with pro-gun amendments attached - now firearms are permitted on AMTRAK and in National Parks in compliance with state laws I believe.

(two things for guns)
-by executive authority his administration has prevented the re-importation of almost 1 MILLION M1 Garands from South Korea.

- Operation Gunrunner

-in the ObamaCare law there are rules that deal with nationalized databases, there is a risk that doctor-patient confidentiality would not be upheld and the government could look into your history. Perhaps you had a minor psychological disorder 20 years ago but have been fine since - the state could say that you are not allowed to have a firearm with no due process and use the medical history an an excuse.


So President Obama has a mixed record on guns. And I know Hillary Clinton is pushing the UN small arms treaty . So his administration has been very negative towards guns - but let's at least be honest and say we have gained some gun freedoms.

Overall grade: D- (he hasn't done mass confiscations of firearms like Bush did after Katrina - for this I give Bush an F)

Gun hypocrites and ignorance - Dianne Feinstein

Dianne Feinstein (US-Senate, D-CA) has been an outspoken opponent of firearms freedoms we enjoy in the United States. I'm not going to bore you with a long opinion essay on this issue.

Click on these links:
Feinstein
Feinstein, Schumer, and Gore


Essentially, if they do not know how guns even function and if they don't know basic gun safety, they should immediately be disqualified from regulating them. Of course, the 2nd amendment is clear about anyone trying to regulating them, but this would be a good start.

Note:
Everyone should maintain certain basic gun safety procedures EVERY TIME handling a firearm. It is IMPOSSIBLE to have an accident if you follow a few very basic steps (regardless of what you think of the politics of the NRA, their gun safety rules list is very simple and effective):

Primary rules - When handling a firearms, ALWAYS:
1. keep the gun pointed in a safe direction
2. keep your finger OFF THE TRIGGER until ready to shoot
3 keep the gun UNLOADED until ready to shoot

Also just as important:
eye and ear protection a must, know the target and its surroundings, know how to operate the firearm before shooting, always use the proper ammunition.

On FIRE

Ron Paul at tonight's debate.

I didn't watch the debate, but I caught Paul's answers in this video .

Luckily, all of the questions he got were focused on economic and fiscal issues. This is where he outshines everybody the most.

Wait I thought the bubble burst?

The "gold bubble," that is. I mention this because gold ran up almost $60 in the past two days. It's back to $1720.

Talking heads on CNBC and elsewhere told us that gold, and commodities in general, were in a bubble all summer. Then, when oil took a hit and gold dropped in value at the end of August and the beginning of September, they patted themselves on the back. They kept asking - is this the end of the gold bubble - believing that it was in a bubble.

Of course they ignore the fact that almost every instance during which we saw a significant pull back in gold this summer was preceded by an increase in margin requirements on gold contracts by the CME.

More importantly, they ignored the fact that the Fed essentially announced a toned down QE3. The Fed is continuing to provide "stimulus" just by maintaining the extraordinary size of it's balance sheet at $2.89 TRILLION (between 3 and 4 times larger than it was for several years, before the financial crisis). In addition, the Fed will need to buy additional treasury securities over the next two years in order to keep rates low until at least mid-2013. Just because Bernanke didn't call it QE3 doesn't mean that it's not.

And of course most importantly, they ignore the massive debt accumulated by governments, consumers, and students. Either central banks around the world are going to try to inflate the real value of this debt away, or governments are just going to either buy the debt or cancel it. Either way, the market will not like debt-backed, paper assets and it will continue to turn to real assets, which will continue driving the prices of gold and silver upward.

Top 10 Led Zeppelin songs

I wanted to take a quick break from my rantings against statism. I made a top 10 Beatles songs list a couple years ago (before I started this blog). Now, here goes for Zeppelin:

1. When the Levee Breaks
2. Hey Hey What Can I do
3. Traveling Riverside Blues
4. Over the Hills and Far Away
5. Fool in the Rain
6. The Ocean
7. All My Love
8. Going to California
9. The Battle of Evermore
10. Gallows Pole

Please note that although I didn't include a single song from Led Zeppelin II, I think it is possibly their best album.

low posting for a while

I haven't made really and blog posts in a while. I made my move to Florida and am somewhat settled in now.

I will try to put together a few well assembled thoughts every week for my sanity and your entertainment.

My presentation at TEDxLAF

The presentation I gave in March about self-ownership, free trade, and peace can be found here . It already has 60 something views.

After watching it for the first time myself just a couple of weeks ago, I say it turned out better than I had originally thought.

Democrats, independents, and others

If you want a president who will promote peace instead of war, vote for Ron Paul in the Republican primary.

In some states you need to be affiliated with the Republican party on your voter registration to vote in the primary (closed primary). In other states, as long as you are registered to vote, regardless of what party affiliation you have, you may vote in party primaries (open primary). And in New Jersey (and potentially elsewhere) if your voter registration is unaffiliated, you may go to the polls on primary day and declare a party affiliation and vote in that primary. You may then un-affiliate your registration after the election if you so choose.

Don't feel like you don't want to register Republican or vote in the Republican primary because you are not a Republican. And don't feel like it's "wrong" to vote in the primary because it is unfair to the Republican party if you vote as an outsider. In most (or all) states, primary elections are funded by tax payers. As immoral as it is to use tax payer money to fund elections for parties to decide who their best candidate is, this is the system that exists. As long as your tax dollars are going toward a terrible system, and you believe in voting, then don't hesitate to vote in what ever primary and for which ever candidate you believe will have the greatest positive effect.
(Of course some don't vote at all because they believe it gives consent to the system - Fair enough argument, but not one that I currently take.)

As far as I'm concerned, all tax payer funded primary elections should be open primaries.

CPAC 2012 promotional video leaves out

Ron Paul.

Even though Ron Paul won the CPAC straw poll two years in a row, and is a solid third in the polls (and soon to be 2nd after the Perry excitement wears off) he not shown in this promotional video for CPAC 2012. It shows Perry, Cain, Bachmann, Gingrich, Romney, and even Alan West and Marco Rubio. The peace candidate will never be welcome amongst crazed neoconservatives.

The video can be viewed here .

According to a post at the Daily Paul, the comments were disabled after too many people were pointing out the blatant ignoring of Paul.

Thirst for liberty over statism

Preliminary reports show that Congressman Ron Paul raised $8 million for his presidential campaign in the 3rd quarter (July, August, September) from 100,000 unique donors! ~ apppx $80 per donor.

Governor Rick Perry, on the other hand, raised $17 million, but from only 22,000 unique donors. ~ appx. $770 per donor!

Perry's active supporters clearly have deeper pockets. But Paul's supporters aren't defecting to other camps because of Paul's consistent message of liberty and peace.

And we can expect a huge number in the fourth quarter with a November 11 Veterans Day money bomb and a December 16 Boston Tea Party money bomb. On Dec. 16, 2007, Paul supporters organized what turned out to be a $6.2 million dollar day; that remains the record for most amount of money raised in one day by a presidential candidate.

Steve Jobs's life

Steve Jobs founded what is now one of the most valuable companies in America.

His technical skill, and more importantly, his business and management skills created wealth for the world and increased our standard of living. And he did this through peaceful and voluntary contracting with his workers, vendors, and customers.

I don't know to what extent, if at all, he or Apple has lobbied the government for special privileges or for competition-killing business regulations. What I do know is I am typing this blog entry on my MacBook Pro and I listen to my iPod every night. The company he created and risked his own livelihood for has made me better off.

Thank you, Steve Jobs, for

btw - "Pirates of Silicon Valley" is an entertaining dramatized "documentary" about Steve Jobs, Steve Wozniak, Bill Gates, Paul Allen, and the founding of Apple and Microsoft. I recommend it.

Anwar Al-Awlaki assassination, brief comments

The other day, the United States government assassinated Anwar Al-Awlaki. Al-Awlaki was an American citizen, and he left the United States a little under 10 years ago and allegedly associated with terrorists and became an Al-Qaeda leader. He is accused of having planned the Fort Hood shooting and the failed underwear bomber.

In the United States Code (statutory law), terrorism is defined as a crime . Also, from what I understand, terrorism is defined as a crime by several international treaties to which the United States government is a signatory. The fifth amendment to the United States Constitution says:

"No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb, nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation."

Those responsible for the assassination (presumably President Obama and a chain of command below him) have committed impeachable offenses by violating their oath of office to uphold and defend the Constitution. Here are ways that they violated the Constitution:

1. Al-Awlaki answered for a capital crime (terrorism, attempted murder?). Yet he had not been indicted by any grand jury on a crime. Even before going to trial, all accused criminals must be indicted by a grand jury.

2. He was deprived of life without an indictment and without a conviction in a criminal court. The rule of law was not followed. The United States government went above the law to kill Al-Awlaki. The administration claims that they followed many procedures and checks when they placed Al-Awlaki on the CIA hit list back a few months ago. But following procedures outlined by either executive order or by unconstitutional legislation does not excuse, legitimize, or legalize violating the plain language of the 5th Amendment, which was never itself amended or repealed.

This article from Fox News is actually quite reasonable - it is reporting some of the dissent against the Obama administration in regards to the assassination. Here are quotes from Ron Paul and Dennis Kucinich used in the article:

"'Mr. al-Awlaki's allegedly violent rejection of America was not acceptable in any way,' Kucinich said. 'Neither is it acceptable to trample the Constitution through extrajudicial killings.'"

"'No one likes these kind of people, but I also like the rule of law and I like our Constitution, that you don't just target people, assassinate them, someone who has not been charged and you have no proof of anything,' Paul told Fox News."

for Rosh Hashanah

Shana Tova! Happy New Year!

praying that God will bring us peace and liberty in this new year.

An unintended consequence of Dodd-Frank

Obviously there is the seen versus the unseen as put by Frederic Bastiat and rehashed by Henry Hazlitt. And I'm sure the that the Dodd-Frank financial-regulatory overhaul bill passed last summer has already had several unseen unintended negative consequences.

But for the first time, I just heard on the radio today a negative effect that this law will have directly on consumers. Part of the law limits the fees that banks can charge businesses for accepting debit cards. So of course, this will reduce banks profits - unless the banks find other revenue sources - which is what they are trying to do. Bank of America announced that they will be charging BoA debit card users $5 per month, starting in early 2012!

Of course this will hurt poor and middle class people who pay for gasoline, groceries, and every day expenses with their debit cards. As far as I'm concerned, it is a VERY REGRESSIVE TAX (but I thought Democrats were AGAINST regressive taxes!)

It could also drive more people into credit cards (except there are many poorer people now who can't even get credit cards, after either Dodd-Frank or some other law/regulation capped interest credit card companies can charge). This would certainly help encourage excess, and it has the potential to entrap even more people into the misery that is consumer debt.

Now, I'm not a fan of the current banking system or of the banks which take part in it, but I will not blame the banks for charging their customers to use debit cards in order to replace revenue lost by government imposed caps on these banks.

Here's a similar, but more comprehensive article about this from the Heritage Foundation .

And Forbes reports that Sun Trust bank has already started this and that Wells Fargo has been trying it in various markets.

And yeah, this bill was passed under the guise of protecting consumers! There is evidence that it is already hurting consumers!

Congress and Copies of the Constituiton

The visit I had with Congressman Ron Paul in his congressional office in DC was great. He is an absolute gentleman and such a pleasure to talk to.

The first time I visited, I got a Constitution printed by the Campaign for Liberty organization. These Constitutions were paid for by C4L, which gets funding exclusively from NON-TAX-DEDUCTABLE donations.

This time, the Constitutions were different. And Ron Paul told me why. Apparently, there was a Congressional rule that Congresspeople could only give out the Constitution that is provided by Congress. They are prohibited from handing out Constitutions from private organizations. This is so appalling and outrageous.

Immediately, I thought that it was a dangerous rule. Down the road, they might change something, either mistakenly or purposely. But it turns out that there is a quote on the first page which is misleading: "The sacred rights of mankind are not to be rummaged for, among old parchments, or musty records. They are written, as with a sun beam in the whole volume of human nature, by the hand of the divinity itself; and can never be erased or obscured by mortal power." - Alexander Hamilton, 1775. Now, this quote sounds pretty good. I think I agree with it. But the idea that our Big Government associates the ideas in this quote with Alexander Hamilton is scary and dangerous. Hamilton was one of the biggest-government people at the drafting of the Constitution. At the drafting, he lost on some issues, such as the central bank.

Then, one of the quotes on the back from John Marshall UNBELIEVABLY reads "... a constitution, intended to endure for ages to come, and consequently, to be adapted to the various crises of human affairs." Even Alexander Hamilton disagreed with this! Hamilton assumed that only the delegated powers would be used.

I can't figure out what's worse - attributing a quote to Hamilton which didn't reflect Hamilton's actual views or writing a quote which supports unlimited government in the government-sanctioned copy of the government's limiting document.

(upon further investigation, I cannot confirm that Hamilton would have disagreed with Marshall's quote - I had been under the impression, as bad as Hamilton was, that he expressed his belief at the ConCon that only the expressly delegated powers would be used. Anyone know which Federalist paper might clarify this?)

Keynesian liquidity trap

or a just broken banking system and an economy that is in dire need of structural readjustment?

There are reasons that the economy don't have sustainable growth, and there are reasons money is stuck in the bank. Until we look at the fundamentals of the economy, such as current house and other asset prices versus prices for those assets if allowed to clear in an unfettered market, we cannot get back to sustainable growth.

Money will be stuck in the bank, and we will be in a "liquidity trap" until prices are more in line with what prices should be and until bad debt is allowed to be liquidated. We've had horrible inflation.

Social Security and Privatization

The debates this summer, amongst Congress, the media, and the GOP candidates have included sharp talk on Social Security.

It is key to recognize that Social Security actually IS a Ponzi Scheme, as Rick Perry called it. It might be the only substantive issue about which Rick Perry is right. So the two main questions are what is a better system and how to responsibly transition to that system.

Some Republicans talk about Social Security privatization. This implies that employers and employees are still mandated to pay FICA taxes, but instead of going into the social security trust fund or the general revenue, the income earner can decide how to invest the payment from him and his employer, through an government-approved private account. Some of these suggested plans would allow only a portion of withholding

But there's another option. That is to simply no longer requiring ANY participation in it. Let me keep my own money and save and invest in the way I want. I might choose to save and invest in PHYSICAL gold and silver, commodity contracts, farm land, ammunition - but "privatization" would not allow this. My money would have to go to either the government managers or the government-approved private money managers. Privatization, as opposed to being allowed to opt out, implies that private companies will get to earn trade commissions on these mandated accounts. This sounds very corporatist, or dare I say it, fascist.

Ron Paul must be winning

The other candidates are finally coming around to many of his views (at least rhetorically).

Several candidates (much to the dismay of Rick Santorum) took the stance that the American military should not be engaged in perpetual wars with countries that pose no national security threat.

Gingrich, like he has been doing for a few months now, was critical of the Fed's inflationary policies. Even Romney decided it was time to be critical of the Fed's massive monetary stimulus after staying silent on the issue for years. Four years ago, Romney and McCain, among others, actually LAUGHED at Ron Paul on the debate stage when he would discuss the Fed.

At the debate tonight, almost EVERY candidate called for the abolition of the Department of Education. Four years ago, I don't remember any candidate other than Ron Paul calling for this.

Ron Paul's overall goal has been to change minds. The politicians are likely just talking like Paul because that is what their constituents want them to say. But that is the whole thing - Paul and the liberty movement have helped shift the attitudes of the people.

Herman Cain's DANGEROUS idea

His 9-9-9 plan concedes that there should be both an income tax (9%) and a national sales tax (9%) (and that 3rd 9 is the corporate tax)!!

I don't want any of these taxes, but if we can completely eliminate the income tax, and we want to REPLACE it, I think economically the national sales tax is the least distortionary. The primary question would be to address the regressive nature of a flat sales tax (maybe they can allow for the poorest to not pay, or not tax on food and other essentials).

To support a national sales tax (or a VAT- even worse!) ON TOP of the income tax is to accept complete tyranny. What would stop the government from raising the rates? In that case, the government could raise both the income tax rates and the sales tax rates. Adding taxes without eliminating taxes is a horrible, HORRIBLE idea.

See my former post on Herman Cain and his time at/stance of the Federal Reserve System.

September 21 FOMC Statement

The Fed just finished it's FOMC meeting and has released it's press release .

In it, the Fed essentially confirms that the economy is in horrible shape and also that those at the Fed have no idea what they're doing. The release explains that growth is slow and unemployment remains high. The FOMC expects there will be some faster growth soon but that the unemployment rate will remain elevated for a long time; but the Fed leaves open the possibility that the economy does even worse, citing "SIGNIFICANT downside risks to the economic outlook" (emphasis added). This is a key phrase. It is the first time during this depression (from what I'm aware) that the Fed uses the word significant in front of downside risks.

The Fed also believes that inflation has subdued since the run-up in energy and commodity prices this summer.

I can tell you, inflation is here. Food prices in the store remain noticeably higher than they were one year ago. In addition, portions have shrunk. Cranberry sauce used to be a 16oz can, now it's a 14 oz can. Candy bars have continued to increase in price. This is not made up, this is economic reality.

So the Fed is choosing to convert $400 billion of their balance sheet from short term treasuries to long term treasuries (this is colloquially known as "Operation Twist," which was apparently tried in the 60s and failed) . They are hoping that this puts downward pressure on the long end of the yield curve which would encourage longer term investment. I think it will have very small effects in making it easier for those on the margins to invest or take out a mortgage. But in principle the whole process is making the underlying economy even worse.

It will further delay liquidation of bad debt and mal-investment - this overhang is probably the single most significant problem preventing this economy from growing sustainably.

Gold and Silver update

Gold is $120 off of it's high. After the very quick run-up in prices during the summer, culminating in a $250 run up in the first 3 weeks of August. 6 month chart

my recommendation: buy gold now

Gold has come down recently, so if you are generally bullish as I am, it's a buying opportunity. Plus, the next FOMC policy decision will be released Wednesday, Sept. 21 - the announcement will at least maintain the upward trend of gold, but if there is a signal of more easing, gold will shoot up. Bernanke has recently admitted that the recent run up in commodity prices has significantly contributed to inflation; although he has yet to admit that rise in commodity prices and inflation in general is caused by his money printing.

Silver has been stagnant generally between 38-42 USD per OZt. I am still of course long silver. If I needed a really quick gain, I don't think I'd buy silver right now. But I think it's a good time to be accumulating it for long term speculation and for a currency collapse if you believe it's coming (I do!).

Warren Buffett and BoA

Something feels weird about the whole situation . It seems like it was announced suddenly.

Plus, the economy is in the tank, and real house prices still have a ways to fall before the market clears. This is bad for housing, and BoA still holds a significant amount of mortgage debt. Of course, the Fed would just bailout Bank of America if they took severe losses to their balance sheet, so maybe Buffett is taking advantage of his government-paid call option on BoA.

Gold a bubble? and gold predictions

More and more people are saying that gold is not in a bubble - this actually makes me more nervous that it is (b/c the pundits get bubbles wrong all the time).

I don't doubt that at some point, it will become a bubble.

I agree with this analysis by Dennis Gartman on CNBC. Gold is probably not in a bubble because there is no mass-participation yet.

I was going to address my predictions a few days ago, and I had forgot to. At this moment, gold has dropped all the way to 1779.40, down almost $50 from its NYMEX open today. Over the weekend, I had stated (unfortunately not recorded online nor elsewhere) that gold will probably pull back to below 1800. I also acknowledge that it could go below $1700, and I hope it does (I'd like to buy a little more); however, I do not believe that it will. I do not see it dropping below $1600, though.

Silver is right around $40 right now. I think silver is a great buy. If it goes down to $37 or $38, it will be an even better buy.

Given the recent FOMC decision to hold the federal funds rate extraordinarily low for at least 2 years, I think both metals will continue their upward trend.

Note:Pay attention to Bernanke's speech this Friday at Jackson Hole. His address at Jackson Hole a year ago introduced the possibility of QE2. Now, the recent FOMC decision is kind of a de facto stimulus, addressed here , but there may very well be another formal asset purchase program on the horizon. I obviously don't think there should be.

A hint at another monetary stimulus will be very bullish for metals.

GOP Primary updates, Sunday, August 14

1. As per reporting at the Daily Paul, the Ames, Iowa Straw Poll Results from yesterday:

1. 28.55% (4823 votes) – Michele Bachmann
2. 27.65% (4671 votes) – Ron Paul
3. 13.58% (2293 votes) – Tim Pawlenty
4. 9.81% (1657 votes) – Rick Santorum
5. 8.62% (1456 votes) – Herman Cain
6. 4.25% (718 votes) – Rick Perry (as a write-in candidate)
7. 3.36% (567 votes) – Mitt Romney
8. 2.28% (385 votes) – Newt Gingrich
9. 0.41% (69 votes) – Jon Huntsman
10. 0.21% (35 votes) – Thaddeus McCotter

0.96% (162 votes) – "Scattering"

This is good news for the Paul campaign. Back in 2007 he got 5th place.

2. Today, Tim Pawlenty ended his campaign . I thought 3rd place at the straw poll would keep him in, but I guess getting less than half of the votes of Ron Paul and Michelle Bachmann, each, made him decide that his campaign isn't going to well.

3. Rick Perry finally made a formal announcement that he is running for president. Perry has some great rhetoric on 10th amendment and federalism issues, but I think he's totally fake. He continues to claim that he is responsible for the successes of the Texas economy. I would argue that he simply hasn't messed it up very much - he didn't introduce a state income tax, which Texas hadn't had before him. He is a big spending governor though.

Now, it really looks like there is a four way race- Romney, Bachmann, Perry, and Paul.

the government minions are trying to censor the war

so that the people don't begin rallying against it.

1. Some officers are trying to prevent the Pentagon from releasing the names of those who died a week ago in the attack on the helicopter carrying Navy SEALs in Afghanistan.

2. Reinstituting a policy of the Bush administration just recently, Obama is not allowing the media to view the bodies

3. The media, no doubt working with the government to promote the war, keeps reporting this event as a helicopter "crash." Using the word crash implies an accident. This was no accident. The helicopter crashed because it was hit by an attack by the Taliban. It should be called a rocket attack. The media should be reporting that people aren't dying only because of peaceful accidents. They should point out that it is dangerous to occupy a foreign land.

I say out of respect for those serving and the families who have lost loved ones due to the corruption of those who promote the wars, we should be allowed to see every body and the media should be all over it. It might make the war politically unpopular, and it might make potential recruits question whether they want to join up. Ending a perpetual unjust war would be compensation to those who have already died in it. We should always be told the truth.

FOMC just announced QE3 without announcing QE3

See my immediately previous entry about the FOMC statement release today.

Many news outlets and talking heads mentioned that while the Fed will be keeping rates low for two more years, there was not an announcement that the Fed will initiate 3rd round of stimulus (or "quantitative easing").

I happen to disagree with this assessment. In order to maintain credibility, the Fed needs to follow what it said in the statement (that economic conditions will likely warrant the ffr be kept at exceptionally low levels until mid 2013) and keep the federal funds rate low until 2013 - I don't think they should do this, but this is what they probably will do, and it is key to point number 1.

1. If inflation or inflation expectations start to increase, the inflation premium on treasuries will increase, which will put upward pressure on interest rates. Any other factors that decrease the desire to hold treasuries (such as if China continues to reduce its holdings, or the other ratings agencies reduce US debt ratings) will also put upward pressure on rates for treasuries. For the Fed to maintain the federal funds rate under these circumstances, it will be FORCED to purchase treasury bonds on the open market and increase the size of its balance sheet. Economists might have complicated jargon, but QE1 and QE2 were essentially increasing the Fed's balance sheet and printing money. That is exactly what the Fed would do under these situations.

2. Just this announcement itself is a stimulus - the expectation that the Fed will hold rates so low for so long will strengthen expected earnings for corporations (via the "interest rate effect"), which will increase stock prices (as the "classical theory of asset value" suggests).
Although this wasn't itself announcing QE3, it was probably meant as a stimulus, and it worked, at least temporarily on the stock market - the Dow closed up $429 points today.

Not to mention that if the stock market tanks and credit seizes up (like in 08), which might very well do, again, the Fed theoretically can use it's Section 13.3 "unusual and exigent circumstances" authority to buy what ever asset they want - even stocks!

Fed statement, a couple of changes - ! or :(

the Federal Open Market Committee released a statement from today's every-6-week meeting.

The biggest surprise was the the Fed is starting to admit that the economy is weaker than they had previously thought (it is not surprise, though, that the economy is weak).

The Fed changed something else in their statement from the last several:
for at least a year, probably close to two, the language in their policy statements were that they would likely keep the federal funds rate "exceptionally low" for an "extended period."

Kansas City Federal Reserve Bank President and former FOMC member Thomas Hoenig was a lone dissenter against this language. He was the only one to vote against the FOMC policy decisions, citing that the Fed should tighten sooner than after some time of an extended period, and therefore should change the language to reflect this.

The new language is that they will likely keep the FFR "exceptionally low" "through mid-2013." Well, that certainly increases clarity. But two more years

Interesting that the only previous dissenter was somewhat of an inflation hawk - he wanted rates up and feared keeping them low too long would increase inflation too much. According to the statement, the three who dissented this time seem to prefer a completely open ended policy without a pretty rigid commitment as the "through mid-2013" suggests. Now, it doesn't mean that they want low rates for even longer than through mid-2013, but they aren't complaining about low rates for a long time into the future.

These changes seem to be for the worse :(

John Kerry and Lindsey Graham

Flipping around the channels I saw back-to-back clips on CNN showing Senators Kerry and Graham.

I think for the first time ever, I agreed with something that Graham said in a substantive way. He claimed that had the Congress cut spending significantly, like the TEA Party had called for, treasury debt might not have been downgraded.

Kerry, on the other hand, actually blamed the TEA Party for the downgrade!!! I don't understand how a group of people calling for spending cuts and not getting them can be responsible for this!

The only excuse Kerry could have for this is that S&P cited the fact that there were no tax increases as one of several reasons that they downgraded treasuries. S&P is wrong on this point, and the fact is the out of control spending is a far bigger problem.

A prediction

I think it is likely that the government will start going after the ratings agencies. They might try to prosecute the ratings agencies for the some sort of fraud or negligence on their ratings on mortgage paper before 2008; this will surely be an excuse to punish them for starting to call out their profligacy.

All though Fitch gave stern warnings about not missing payments, they are the only big-3 ratings firm to not join the party.

what the heck is going on??

In addition to my recent post about how chaotic the recent events have been (debt-ceiling raised, stock market sell-off, gold surge, and a treasuries-outlook downgrade by Moody's), we have had even more bad news.

31 American military personnel were killed early this morning.

Standard & Poors officially downgraded US Treasury debt from AAA to AA+. This is the first time in US history that a major ratings agency has lowered it's ratings on Treasury debt.

The DJIA ended down four out of five days this past week.

All the while, there are countless reports of copper thieves stealing everything from wire to AC units, even from churches .

My predictions for this week are that the stock market is going to tank even further on Monday because of the debt-downgrading on Friday. We might see gold go down on Monday for various reasons, but I predict it will close the week higher than it opens.

Milton Friedman, with us or against us?

Well, I call Milton Friedman "the master" for his explanations in favor of individual liberty and free trade.

Many economists and writers who I read and respect are critical of Friedman. In the past week, several bloggers at Lew Rockwell's website (a place I can enjoy reading great articles daily) have been criticizing Friedman.
I am critical of Friedman on one issue - that is of money and banking. Although Friedman didn't like the Fed, he did believe in central control of the money supply. But I think it is a shame that the ONLY thing that so many economists talk about and support Friedman for his one (in our opinion) incorrect view. And this results in many forgetting about his great clarity and defense of liberty. Yes, the money issue is an inconsistency, but I think instead of focusing on deriding his views on money, we should promote the rest of his views. I think Free to Choose is just as good a defense of freedom as is Hazlitt's Economics in One Lesson . I do support Austrian economics and my understanding of praxeology. That doesn't mean there's anything wrong with arriving at a pro-liberty view in a different way. In fact, in addition to his clarity, I believe having a different view but coming to the same solution can only broaden the appeal for liberty.

And even on the "negative income tax" scheme which he supported - he supported this to replace all other forms of welfare. Although neither him nor I agree that aggression should be used to take anyone's money for redistribution, I think it is an interesting idea for the government to simply hand them money instead of coupons for certain things - coupons or stamps could distort the market in favor of things that all people, rich and poor, might not otherwise want as much of.

(I don't endorse the negative income tax. But I acknowledge that it is a reasonable thing to debate if it includes ending all other welfare programs.)

Rachel Maddow and Glenn Beck

I think the two are quite similar.

They will both say very reasonable things - such as when Maddow called out President Obama for both criticizing Bush for starting indefinite detention and Obama for announcing his new regime for "prolonged detention." Rachel Maddow obviously has an understanding of the importance of the rule of law, the 4th Amendment, and limiting government power.
- and when Glenn Beck talks about how the explosive increase in government spending can be linked to abandoning the gold standard. Glenn Beck obviously has an understanding of how sound money restrains the government.

But then, they will discredit themselves in their entirety. The following examples are an insult to my intelligence. Unfortunately, many unread authoritarians on the left would actually agree with Maddow and many history-deprived crazed warmongers on the right will agree with Beck:
-Rachel Maddow accuses pro-nullification groups as being pro-slavery
-Glenn Beck fears a Muslim caliphate forming around the Mediterranean simply because those countries' have riots in the streets and social unrest.

I hate that just because the hateful Rachel Maddow talks about upholding the rule of law- that conservatives will automatically reject "rule of law" as a communist idea. - and the converse applies to the moronic Glenn Beck giving reasonable insight into sound money.

Debt-ceiling raised - markets chaotic!

President Obama signed the "bipartisan compromise" that passed the House and Senate yesterday.

Well, some thought that if the parties and houses of Congress came together to a compromise to borrow more, that markets would react favorably. I obviously objected to this - and I predicted the exact opposite in a previous blog post - that the ceiling would be increased but that this would be bad for the economy.

chaotic events:
-Today the DJIA was down 250 points today.
-Gold increased 40 dollars today to an all time high at $1660 (yes, this is not a typo, one thousand six hundred sixty dollars per troy ounce).
-Moodys maintained a AAA rating on Treasury debt, but downgraded their outlook. All of the ratings agencies have put the US gov't on watch - cut spending or face a downgraded rating.

Honest default or inflationary collapse? Our choice

A default will come - either we don't pay the interest on the debt, or we will have substantial inflation which will reduce the real value of the debt - not only is the ladder more insidious and morally wrong for the sake of our bond holders, but it hurts the people in a huge way.

A straight default by not paying the interest payment on the debt (or reworking the debt to reduce it in an honest way with bondholders who want to get something) would probably send interest rates soaring (which we need to happen, but yes, it would put a major strain on our fake bubble economy). But defaulting by reducing the real value of the debt will result in high and maybe runaway inflation. We will have much higher prices AND higher interest rates.

I don't know about you, but I'd prefer higher interest rates and lower prices to higher interest rates and higher prices.

lies about the national debt being dumped on our children

I'm sick of the politicians (Democrats during Bush's tenure, Republicans now) complaining that the national debt is placing an enormous burden on our children. I have news for all of these pols, the DEBT IS PLACING AN ENORMOUS BURDEN ON US, RIGHT NOW. And when the debt crisis really hits, we will ALL see our standards of living fall. If we don't do the right things (free up the economy, cut spending by a bare minimum or 43%), yes, our children and grandchildren will suffer. But if we do the right things, we will have some adjustments for our way of life, but we will leave the children and grandchildren a free and prosperous place.

Libertarians - socially liberal?

Conservatives will deride libertarians for what they call their "socially liberal" stances; sometimes they even go as far as saying that libertarians are libertines or that they support "liberal" behavior. I interpret "socially liberal" to describe a set of views that support state force in protecting certain behavior - an example might be the view that employers should not be allowed to discriminate in hiring practices against smokers. Libertarians might not approve of an employers decision to do this, but they more so oppose the state prohibiting employers from this action.

Libertarians merely don't believe that the state has legitimate authority to prevent people from engaging in non-coercive, voluntary behavior (such as labor contracts, in which both the employer and the employee have to agree). There is behavior that I find irrational and destructive to individuals, such as gambling or abusing drugs.

I think "socially tolerant" is a much better word. Tolerant, at least to the extent that we don't want the government interfering with non-coercive, non-fraudulent behavior. Some libertarians are tolerant, accepting, or embracing of different behavior; and other libertarians disdain different behavior - they might consider themselves "socially conservative on the individual level". But all libertarians oppose the use of state coercion to prohibit peaceful activity.

The Constitution gives mandates?

I was reading comments to an article about proposed phony cuts to the military (these weren't actual cuts, they were merely propositions to cut from expected increases in future military expenditures).

Someone commented that it is a constitutional MANDATE to provide for the common defense. Well, last I read article 1 section 8, I understood that "The Congress shall have the power to..." do several distinct things. It does not mandate that Congress do anything!

And yes, we need to repeal Obamacare. But why are these people so hung up on Obamacare. Do they forget about how George Bush signed into law the Medicare Part D program, which was the largest expansion of entitlements since Lyndon Johnson?

We need to repeal a multitude of legislation passed over the past 100 years. It's not going to happen is long as Republicans call those who want to cut military spending communists, nor will it happen as long as Democrats call those who want to cut welfare spending racists or fascists.

Jews for the Preservation of Firearms Ownership

Just saw an advertisement for JPFO. I've visited the website before - I believe it is a very legit pro-gun group, like GOA, and maybe NAGR. Certainly better than the NRA in terms of their uncompromising attitude.

And the ad made me think of a quote I've heard but I cannot attribute : "For every Jew a .22" - In terms of a handgun I'd prefer a .45, but a .223 rifle wouldn't be all that bad.

Rachel Maddow - puppet, ignorant, or malevolent?

Now, I actually support the right to secede, but nullification is a way to avoid secession.

The Tenth Amendment Center, which was started by Michael Boldin, is covered extensively in Maddow's lie-report . She claims that it is a "conservative" group. The Tenth Amendment Center is not a conservative group. Maddow points out that the TAC has supported nullification of Obamacare and of gun laws; of course she fails to point out their stances on hemp and sending the national guard overseas.

She criticizes Georgia's food freedom act, but many progressives I know understand that small, organic farms are under attack from the USDA and FDA because they were captured by big Agra.

By including John C Calhoun and slavery in this report, she tries to link the Tenth Amendment Center to hate. Maddow and a professor she has on the show try to link the rise of the ideas of nullification to racists' response to a black president. Of course, the Tenth Amendment Center was founded in 2006 (I believe I've read that the REAL ID Act was a significant reason for starting it up, but I can't find anything at the moment) - by the way, Bush (he's white) was still president in 2006 and Obama was not even on the radar for presidential aspirations (at least not in a significant way).

This blog post was specifically about Maddow's attack on the Tenth Amendment Center, but one more point - forget about the fact that northern states were trying to nullify fugitive slave laws, and that some southern states cited this as a reason they seceded. So northern nullification led to some southern secession- but nullification (where history has shown is used AGAINST slavery) and secession are hateful, racist, and dangerous ideas.

Regardless of the facts, people who oppose the Federal prohibition of drugs and who want their governor to refuse to allow the feds to take national guard troops to fight in overseas wars are certainly bigots!

The Constitution and the Bible

Some founders were Christian, others were deist, pantheist, and a slew of sort-of-God believing creeds (and probably some atheists, I really don't know). But I wonder if the founders were thinking about 1 Samuel 8 when they wrote Article 1 Section 8 of the Constitution. God warns Samuel about letting the people choose a king to rule them because the king would send their children to war and tax 1/10th of their agricultural yield. The powers to tax and to go to war, amongst other things, are granted to the Congress in article 1 section 8, not to the executive branch. Is the "chapter 1, section 8" numeration a coincidence? There's a research topic for those interested in law and religion.

Ron Paul running mate and abortion

Since Ron Paul signed the Susan B Anthony pledge a few weeks ago, Paul supporters have claimed that this makes it clear that Gary Johnson absolutely cannot be chosen as his running mate.

This is the pledge. Note that the second part reads "select pro-life appointees for RELEVANT Cabinet and Executive Branch positions, in particular the head of NIH, HHS, and DOJ" (emphasis added). I don't quite see how the Vice President is relevant to regulation or federalism when it comes to abortion.

Now, maybe due to Paul's staunch pro-life views he won't chose Gary Johnson as a running mate, but I don't see this evidence from this particular pledge.

Libertarianism and The Big Lebowski

No, Jeffery Lebowsky (the dude) is NOT a libertarian in the movie, as a friend accused me of having claimed; the dude was evidently a member of an organization tied with radical leftist Students for a Democratic Society (SDS), as suggested by his participation in the Seattle 7 .

However, there are many libertarian themes throughout the movie:

- non-aggression principle
The Dude: "This aggression will not stand, man."

-Property rights:
The Dude: "Hey, hey, this is a private residence."
The Dude: "All the dude ever wanted was his rug back."

-Property rights and self-defense:
Walter: "What's mine is mine."

-Civil rights
The Dude's only form of ID is a supermarket discount card. He knows his rights - that he is not required to carry a government ID.

-Demonstration of how inept the state is
The police officer when the Dude is recovering his stolen car: "Leeds!" - here, the officer was laughing at the Dude's question whether they will find the person who stole his car.

-Prior Restraint and the right to free speech
Walter claims that the "the supreme court has roundly rejected prior restraint" in free speech cases when the cafe waitress asks him to quiet down, but the Dude argues that since the cafe is private property, it is not a first amendment issue.

-The Dude is anti war

-Drug prohibition
Given the dude's marijuana consumption, I have to imagine that he supports ending cannabis prohibition.

If you haven't seen the movie, NB: contains course language and brief nudity

If anyone has any other ideas as to libertarian themes from the movie, just comment below.

reflection on 2 years of learning

I have a better understanding of economics since my article about Ben Bernanke's first 60 Minutes interview, back in the Spring of 2009. I understood the basics of "fractional reserve banking," but now I have a much better understanding of it (I forget if I simply wasn't paying close attention while writing the article, or really didn't know what it was called- as I referred to it as "fractional banking", leaving out the "reserve").

I no longer take the opinion that fractional reserve banking, in itself, is fraud. Fractional reserve banking, combined with government-subsidized insurance for depositors (the FDIC) and a central bank which serves as a lender of last resort to the banks, fractional reserve banking is very dangerous and evil. Fractional reserve banking as a tool used by private banks in a free-banking system, though, has in fact been successful in the past. Professor Lawrence White discusses free banking and its successes. Some Austrian economists, as I understand, talk about how any fractional reserve banking creates distortions in economic production. It's possible that this is the case, but Professor White addresses this question toward the end of the linked video, around 1h 22m. I'm not gonna go into a whole rant on our economic system in this blog post, I just wanted to clarify my current ideas on banking from my former, unclearer ideas.

And for other ideas in and behind the article:

Although the Community Reinvestment Act was bad and unconstitutional legislation, I no longer take the view that it was significant in the housing and financial crises. Of course it didn't help, and it probably hurt on the margins, but there are many other much larger contributors and underlying causes. Chances are there are more people who have been foreclosed upon now in communities which otherwise would have been red-lined (people instead of just not having homes now don't have homes and have poorer credit).

I still agree with my basic premise that helicopter Ben was either completely clueless or lying his way through the entire interview. It's possible that it's a combination of both, that he is merely lying about his confidence in what the Fed can do.

TSA - security or domestication?

We have the TSA giving a 6 year old girl an invasive pat-down and forcing a 95 year old woman to remove her adult diaper; of course they first denied this at first. How can we trust a government agency that lies? Talking about lies, the day the TSA announced they will not give young children these invasive pat-downs, they do it to another 6 year old boy - twice .

Oh yeah, 2003 Miss USA feels that she was violated by the TSA .

I've heard so many people interviewed who say that it is good we have these intrusions because it makes them feel safe! That's right- people actually say that it's good because they FEEL safe- I guess feeling safe is better than no one flying, right?

In spite of these patdowns and the naked body scanners, a stun-gun was found on a plane Friday, July 8th. This is kind of a bizarre story though. It was found in a seat back pocket when flight attendants were cleaning the plane. As a flyer interviewed on Fox 5 NY talked about, it's scary because anything could have happened. However, the potential terrorist forgot the stun gun on the plane. So, was he a criminal trying to transport a stun-gun to another location at which to commit a crime, or was he going to hijack a plane but forgot to? Or, may I venture that it was planted by the government? It doesn't make any sense that if was a criminal who brought it on, he forgot to bring it with him or to actually commit the crime. Perhaps this is exactly the kind of false-flag event to use as a reason not only for TSA groping and naked-body scanners, but for even more unforeseen security measures and more broad civil liberties violations. But, the US Government would NEVER commit a flase flag attack, remember, the second ALLEGED attack happened. Don't listen to the admission (at the end of the video, around 3:20) by Robert McNamara Secretary of Defense in 1964.

Of course, it is possible that the groping the most innocent and neglecting real security could be a result of government incompetence, which is completely believable. But this is getting to be too much. Patting down 6 year olds who obviously pose no threat could be a way to get them accustomed to accepting in-your-face security for the rest of their lives. Perhaps the government periodically allows threats or plants fake threats so that people continue to fear for their safety and demand more government security measures. I'm not saying that I definitely believe this, but I'm allowed to take evidence and examine several possible conclusions. No one can take away my freedom of thought.

Getting back to the stun-gun case, when Fox 5 NY contacted Jet Blue, Jet Blue referred them to the TSA, and the TSA has no comment because it is an ongoing investigation (run around and stonewalling, brilliant). Jet Blue certainly doesn't want to take responsibility, but they weren't in charge of security so they don't have to. This brings me to my next point.

I don't want the TSA itself to be privatized. That would infer that a single private company would be operating airport security on behalf of the federal government. Although this might prove a slight improvement, there would still be no competition. The private TSA would still have essentially no profit motive, and therefore could either abuse their power or neglect doing real security (actually, the TSA fits both of those now).

Instead, we need true privatization. This would be a situation in which the airlines would be in charge of their own security. Airlines would either employ workers themselves for security, or they would hire an outside company. There are plenty of private security companies that would make our airways more secure than the does TSA, and without the sexual assault. Of course, airlines won't like this, because not only will they have to charge more for their tickets to pay for the security, but they will have to answer to security breaches themselves instead of blaming the government.
-----
The TSA has had a blog the last few months as a PR response to people actually realizing that these occurrences are acts of sexual assault and privacy violations, things we should never have to put up with to be kept (or feel) safe. Should we be paying for a government institution to defend itself from violating our rights?

Ayn Rand on Money

In Atlas Shrugged, Ayn Rand's character Fransisco d'Anconia gives quite a long speech on the root of money. He addresses the idea that money is the root of all evil, and concludes that money is in fact the root of all good.

I disagree with both assertions, but certainly the ladder is closer. I would argue that money (market money, not paper money) is one out of many things that is derived from the root of all good, in which case the root of all good would be something like individual initiative to create goods and services and to sell them honestly. The gist of the speech is completely right though, that money only exists because of people willing and able to produce goods and services. Money facilitates trading these goods and services, represents the work someone did for it, and serves as a promise that the holder will be able to get just as much value as he produced.

Debt-ceiling lies

Lies, lies, and more lies.

If we don't raise the debt ceiling
- we will default
- we will endanger the full faith and credit of the United States ("for the first time" - Barack Obama, July 11, 2011)
- global financial markets will go into chaos
- we need to borrow more to pay our obligations
- "if not now, when?" - the lie is about continuing profligacy, not what a few fiscally responsible people talk about- how if not now, when do we get this debt under control?
- We just need a balanced budget amendment

1.
This is a great article about why there is no chance of a default.
In short, because monthly federal revenues are about 10 times greater than interest payments, there is no reason that the Treasury needs to default. There will even be plenty of revenue to pay back principal, should bond holders chose not to reinvest. In that case, the national debt would go down and the Treasury could issue new bonds up to the debt-ceiling.

2. How exactly does making a statement and holding the line that we will NOT borrow any more endanger our credit rating. Some point out that not passing an increase in the debt ceiling would demonstrate how chaotic and dysfunctional Washington, DC is, and therefore would endanger the credit rating of the US Government. To me, this argument seems as media-manufactured as Tim Pawlenty's Presidential candidacy. Don't get me wrong, Washington, DC is incredibly dysfunctional, and I don't believe that they will come to their senses about cutting military and entitlement spending (the two largest expenditures)- but it is the inability to do this, Not the inability to raise the debt ceiling, that creditors will worry about. Combining the will to maintain a hard cap on the debt and the ability to make timely payments on interest and principal, how can any rational actor conclude that it will be RISKIER to invest in government debt? (I think it is increasingly risky, but for other reasons. These particular reasons above actually put downward pressure on the risk.) The past several Presidents and Congresses have endangered the full faith and credit of the United States government, but not raising the debt ceiling should help to mitigate at least a little bit of the damage that the politicians have caused to the reputation of the national debt.

3. The only way global financial markets can be effected if Congress doesn't raise the debt ceiling is if financial market actors had the expectation that the debt ceiling would be raised. And by shattering this expectation, while maintaining point 1. above, this should actually put DOWNWARD pressure on the interest rate of Treasuries (see point 2. above). I don't see how downward pressure on Treasury returns would put financial markets into a panic. Most mainstream economists would say that this is a positive development because the government could then sell new Treasuries at lower rates (better if we want to shrink the deficit!).

4. We need to borrow to pay our obligations. First, see the article in number 1. There will be more than sufficient funds to pay the interest on the debt, which for better or worse, is obligation number one. Second, there will be plenty of funds left to prioritize. There is a social security trust fund (okay, it's mostly fake, but it's fake because it holds government debt instead of cash- but guess what, that debt is part of the national debt- the very debt that the Treasury can afford to pay "10 times over" according to the article cited in 1. above.

5. There is talk that something must be done about the deficit, from both sides of the isle, from President Obama, and even from Fed Chairman Bernanke. But many claim that we can't do this yet due to the fragile recovery. I'm not getting into an economic rant here, but as evidenced by short-lived but deep depression of 1920-1921, the Great Depression, and the current depression (yes, we are in a depression, contrary to NBER's claim that the "recession" ended in '09), government spending does not help the economy. It might mitigate certain effects on some regular people during a downturn for a while , but it actually increases the duration of the downturn and prevents the recovery (like anti-poverty programs help families cope with poverty, but they don't help them get out of it and can actually perpetuate poverty).

6. Politicians like Senator Rand Paul (who has been surprisingly good on going against the GOP establishment on issues such as foreign aid to all countries and the USA PATRIOT Act) are misguided by agreeing to raise the debt ceiling if the senate agrees to a Balanced Budget Amendment to the US Constitution. First, there is no guarantee that both Houses include it in the bill to raise the debt ceiling. Second, even if they do, there is no guarantee that the powers that be wouldn't remove it during conference committee after the bill to raise the debt ceiling is passed by both Houses. Third, it can take many years for 3/4ths of the states to ratify a Constitutional amendment. In short, Paul and other politicians who cave on raising the debt ceiling will probably get shafted along with the American taxpayer. The debt will go up, tax loopholes will be closed, tax rates might go up, spending will not decrease.

I agree with his father's idea that any "deal" to raise the debt ceiling that promises future spending cuts is a total fraud.
-----
More of a longer term, worst case scenario (expect some of this to happen, the question is how out of control will this get):
WHEN (not if, but when, yes I believe it will happen) the debt-ceiling is raised, there will be the expectation that the government will borrow more. This should increase increase the risk premium and therefore interest rates on government debt. In turn, the Fed will need to buy up bonds order to hold the federal funds rate between 0 and 25 basis points. This might trigger a substantial growth of the Fed's balance sheet without a formal "stimulus" program (QE3). As inflation expectations increase, so will interest rates, which will trigger more stimulus from the Fed. A perpetual cycle of this would lead to a collapse of the dollar. I don't think that the bankers who have stake in the Federal Reserve System would allow a total collapse as this scenario envisions, but again, this is the worst case scenario.

Herman Cain, true Tea Partier?

The modern day TEA Party movement has people with many different views on foreign policy and social issues, however TEA Partiers are generally united in basic principles of fiscal responsibility and government accountability.

Herman Cain is perceived by many members of the TEA Party to support the basic principles of the movement. The movement started as a pro-liberty, ANTI-BAILOUT campaign. Here, I will attempt to provide two strong reasons why all TEA Partiers, both conservatives and libertarians, should be unified in opposing Herman Cain's candidacy for the presidency.

1. Herman Cain's support (past AND present) for the Troubled Asset Relief Program (TARP)

TARP was the bank bailout bill passed in October 2008. Cain says to this day that he supports the original intention of the bill. The bill gave $850B to the Treasury to buy up bad (illiquid (worthless)) assets from banks. This is an atrocious idea in itself- instead of allowing markets on this paper to clear, Congress decided to try to prop up the banks which held this garbage. Instead of making banks take heavy losses on mortgages with which they had profited greatly over the previous 4 years, the taxpayers were forced to take the losses. In the interest of supposed macroeconomic stability, Herman Cain supported exactly this.

Cain's current stance is that TARP was mismanaged. Yes, it is true, that Treasury Secretary Paulson actually used the funds in a different way than was required by the bill passed by President Bush, and in this sense, is statutorily a criminal. Instead of buying up bad assets, Paulson injected liquidity into these banks by buying preferred stock in them. He also forced some banks to take the money, even healthy banks. The stated reason for this was if the government was buying up assets from certain banks, this would put these housing assets and banks into question by the public. By infusing healthy and unhealthy banks with liquidity, Paulson hoped to prevent the public from knowing which banks actually needed it.

However, let's pretend for a moment that the TARP funds were used as called for by the bill passed by Congress and signed by Bush. Every member of Congress who voted for it, and President Bush who signed it, would be criminals as per the Constitution. The Constitution does not give positive grant to Congress to bailout banks or to stabalize the macroeconomy by what ever means necessary. But Herman Cain supported TARP, and he still does.

And while doing brief research for this article, I found out that Cain actually DID support the change that Paulson made to the administration of TARP, at least at the time.

Summary of Cain's position of TARP:
a. Herman Cain supported TARP.
b. Herman Cain supported Paulson's deviation in spending TARP funds from what was statutorily directed by Congress
c. Herman Cain now supports the original intention of TARP, but opposes the way Paulson administered it.

There is no TEA Partier I've ever spoken to who supported the bank bailouts in any form. Again, the modern day movement started as a response to the bank bailouts.

2. Herman Cain's opposition and flip-flopping on the issue of auditing the Federal Reserve

Cain served as the chairman of the board for the Federal Reserve Bank of Kansas City (one of the 12 regional Federal Reserve banks). It's one thing to work for the Fed. I'm sure there are many fine people who work there. I'm even beginning to think that Bernanke isn't corrupt, but that he's just utterly incompetent. And to his credit, Cain has spoken out against QE2 and the Fed's current management. However, Cain claims that based on his time at the Fed, he has no reason to suspect that there's anything bad going on in secret. He also claims that there are "so many internal audits, it's ridiculous" (like that's ever stopped agencies that had the force of government before). He goes on to say that he suspects that people are calling for an audit of the Fed because they don't know how it works. I can tell you, I know how it works, between the 12 regional banks, the FOMC, the NY fed trading desk, the discount window. It's because I DO understand the basics that I want to know the particulars of every single secret transaction.

He completely ignores what the congressional "Audit the Fed" bill actually does. This bill removes previously enacted restrictions on the authority to audit the Federal Reserve Board of Governors and the Federal Open Market Committee. The bill removes the following restrictions of an audit from subsection b of section 714 of title 31 of the US code, and calls for audits of these four areas:

1. transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization
2. deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations
3. transactions made under the direction of the Federal Open Market Committee; or
4. a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)–(3) of this subsection.

I would argue that transactions with foreign central banks and governments, discount window loans and FOMC transactions are all extremely important for the American people to know.

I think I have heard audio, since, of Cain changing his mind, that he does support an audit. I could not find it, however, as I was writing this. If I remember correctly, he supports it, but does not suspect that it will turn up anything strange. Right... just like how the information turned up in the FOIA requests by Bloomberg and Fox News for bailout details was all just peachy.

By the way, Freedom Works and Americans for Prosperity (right of center groups, heavily identified with the TEA Party) and Democrats.com and the Green Party (progressive groups) all support the Audit the Fed bill.

Any Tea Partier who knows these two things about Cain should absolutely NOT support him. These issues are huge to TEA Partiers. And given that Cain actually worked at the Federal Reserve, it is hard to believe that his response to auditing the Fed is based on ignorance instead of some sort of deceit or cover (either way it is inexcusable).

Bin Laden Is Dead

I had started this blog post with a couple of notes on that Sunday night when we learned of the news that Osama bin Laden had been killed. I couldn't write about it extensively because I was writing a term paper and because the story and the events of the day were not finished.

I initially thought of how technology and social networking had such an amazing impact on the events, at least here at Lafayette College. When I was in the library that night, around 10:30, I got several text messages and probably about 12 people come up to me to tell me the news. It seems as though the entire campus population learned of the news within minutes. My Facebook news feed was clogged. A little after 11:30, probably half of the computers in the library were tuned to President Obama's address.

And then there was the spontaneous mob of around 300 students, as The Lafayette reported they were told by Public Safety - no doubt largely due to instant communication.

But more important than the technology is the nature of the actual death of bin Laden and subsequent events.
I have many opinions on the matter - which can be succinctly and somewhat comprehensively described by the quote that The Lafayette took from me and used in the May 6 issue: "I wish we were getting this excited over opposing what our government has done, first to incite the hatred from these terrorists, and second, to destroy our economy."

Before I am scorned for these comments by "patriots," whether left, right, up, down, or apolitical, I will say that Osama bin Laden, from my understanding, was a criminal and a thug, who should have been brought to justice. Additionally, I don't pretend that there would be no terrorism if it weren't for American aggression overseas; I just claim that there would be far less ability for the bin Ladens of the world to recruit potential terrorists if the US didn't commit preemptive aggression.

There are many forms of justice (perhaps), and maybe being killed is one of them. Although I would have preferred a capture and a civilian trial for several thousand counts of murder, I am not criticizing the killing of him. It might be an important topic, but not one for this post. For sake of argument in the following points, lets say that justice was done in this case. I have a couple of criticisms of the subsequent events.

1. Celebrating death is barbaric and creepy. Most people at school, and seemingly in America, were celebrating.

2. I believe that for Americans to celebrate and become so unified over this event is misplaced patriotism. Again, criminals deserve justice.

i. But I ask- how is $850 billion tax dollars (and trillions of dollars in Federal Reserve loans and injections) to Wall Street banks justice? And how is (as estimates suggest) 1 MILLION DEAD IRAQIS from 2003-2011 justice (bear in mind Iraq had NOTHING to do with 9/11).

ii. The authority given to President Bush in 2001 to go into Afghanistan after the terrorist attacks was very specific - to get the terrorists. The authority was not granted for Bush to send the military there, pursue the terrorists temporarily, then to nation-build and try to change Afghanistan politically.

iii. President Obama bombed Libya a few weeks ago without any Congressional approval whatsoever. He took orders from the United Nations and got permission from the Arab League.

Instead of celebrating this death, why aren't those who call themselves patriots using their energies to oppose these unpatriotic things and injustices? Americans should be unified in wanting to prosecute politicians in both parties for (at the very least) violating their oaths of office.

3. Yes, with the economy in the gutters, people needed something to celebrate. But did bin Laden's death make us safer? I would not argue that the American people are safer.
I think the following quotes sum up these points.

A friend quoting Radley Balko
"There was something unsettling about watching giddy crowds bounce around beach balls and climb telephone polls last night, as if they were in the lawn seats at a rock festival. Solemn and somber appreciation that an evil man is gone seemed like the more appropriate reaction."

In response, Chris Kelly, a thoughtful friend who just finished his second year at Lafayette, wrote:
"Couldn't agree more man. I would have much more readily celebrated the withdraw of American troops and the end of the interminable wars. Bin Laden's death comes at a great cost to us- in American lives, tax dollars, world credibility, etc. But don't get me wrong- it is still welcomed. I just don't get the jubilation. My reaction was more a long, collective sigh of relief"

The Fed's assault on retired people, personal anecdote

My grandfather, 95 years of age, has a sharp mind and beats all of the 70 year youngsters in his apartment complex in pool and billiards. He rode his bike to the clubhouse and back up until last year.

He's lived through so much, and was able to overcome so many obstacles, but the monetary policy set by the Federal Reserve has been making it harder and harder for him. He is on a fixed income from social security, dividend payments, and interest on savings.

However, he has expressed great frustration with his savings earning only 1/2 of 1 percent in interest. He expressed a desire to take more of his savings and put it into stocks. He believe that the economy might recover, but he is confident the stocks will do well.

Of course, at 95 years of age, to increase the risk of your portfolio goes against any conventional financial advice I've ever heard. Typically, when we're young we should take higher risk and as we grow older we should take fewer risks financially. In a sense, we have a "call option" on life when we're young - at 22 years of age, one can take their meager savings and invest in a risky asset or in a new company, which gives the potential for high payoffs and has very little downside (that is if he or she can move back with the parents!). If this fails, the individual hasn't lost much, and still has most of his or her working life to recover financially. But if a retired person takes a large financial risk and loses, there is a huge downside- this models more of holding an equity than a call option.

Now, surely, the brilliant, benevolent minds at the Federal Reserve only want what's best for us and might write off my grandfather's particular case as acceptable collateral damage in their attempts to help the overall economy recover. Of course in this case, if we are trying to have a society in which the government treats all equally and fairly, the Fed's policy would be wrong on those grounds.

But there is something more insidious. One of the ways that monetary policy affects the real economy is what is referred to as the asset price effect, or the wealth effect. This was one of several ways the Fed hoped to help the economic recovery. The idea is that by keeping interest rates down and increasing inflation expectations, people would save fewer dollars in the bank and go into riskier assets instead- specifically stocks. And if this is successful, it would be an increase in demand for stocks, which would drive up their prices. With these higher stock prices, small businesses and households would have more valuable assets against which to borrow, plus they would feel wealthier - this could encourage both consumers and entrepreneurs to resume borrowing, investing, and consuming.

So what my grandfather is being forced into doing just to try to keep up with cost of living increases - inflation (being caused by this very program of "quantitative easing" (read: printing money)) is exactly what the Fed intended.

Is this form of statism fair or right if we are striving for a fair and free society?

Keynes v. Hayek - Round 2

Econ Stories came out with their second Keynes v. Hayek rap.

In case you haven't seen the first, here it is.

The creators - video producer John Papola and economics Professor Russ Roberts have done an excellent job in both videos contrasting Hayek's and Keynes' respective views on business cycle theory.

In subsequent posts, I will describe both videos and attempt to relate the specific terms each economist uses to their specific writings.

----
As always, peace.

Ron Paul is in!

As my introductory blog post, I have extraordinary news.

Congressman Ron Paul has announced that he is forming an exploratory committee for the 2012 presidential race. For those who love individual liberty, this is great news!

The website Daily Paul has a list many of the news stories from the time the story broke.

Former Governor Gary Johnson, another liberty-oriented Republican, announced just last week.

I actually believe it is good that both are in the debates. While I agree with Ron Paul's stances a bit more than those of Gary Johnson, Governor Johnson has a proven record as a governor of promoting and implementing liberty-freindly reforms. He speaks out against our foreign policy and against the drug war and the abuse of our civil liberties. Congressman Paul lengthily discusses foreign policy, but emphasizes the issue of money and banking the most. I think having both of them in the debates will allow for an even wider range of topics with which to be dealt, plus it can provide an even wider opening for libertarian ideas into the mainstream. I think Ron Paul will have the grassroots support, and I do believe that Governor Johnson might only last a few primaries in, if he even stays in that long. But having him out there increases the public's exposure to his strict fiscal-conservatism and his libertarian ideas.

I'm not an expert in "politics," I try to deal with economics and the relation between the economy and public policy. However, if we do believe that either one has a serious chance of victory in an electoral sense, the little I understand about politics suggests that a Ron Paul/Gary Johnson Pres/VP ticket would be ideal. Although Ron Paul's age shouldn't be an issue if he is as healthy as some claim him to be, his age will nonetheless be used by opponents against him. Gary Johnson takes away that argument- he's far younger, and he's climbed Mount Everest, and he is a triathlete.

And with both of them, they could each focus on different issues. Perhaps Paul could focus on money and banking, economic, and rule of law issues. Maybe Johnson could focus on foreign policy and entitlement reform.

Just some ideas from an observer...

Campaign websites:
Ron Paul
Gary Johnson