Monday

INTEREST RATES ARE PRICES

One of the most enduring myths in the United States is that this country has a free market, when in reality, the market is merely the structural shell of formerly free institutions. Government pulls the strings behind the scenes. No better illustration of this can be found than in the Federal Reserve's manipulation of interest rates.
The Fed has interfered with the proper function of interest rates for decades, but perhaps never as boldly as it has in the past few years through its policies of quantitative easing. In Chairman Bernanke's most recent press conference he stated that the Fed wishes not only to drive down rates on Treasury debt, but also rates on mortgages, corporate bonds, and other important interest rates. Markets greeted this statement enthusiastically, as this means trillions more newly-created dollars flowing directly to Wall Street.

Because the interest rate is the price of money, manipulation of interest rates has the same effect in the market for loanable funds as price controls have in markets for goods and services. Since demand for funds has increased, but the supply is not being increased, the only way to match the shortfall is to continue to create new credit. But this process cannot continue indefinitely. At some point the capital projects funded by the new credit are completed. Houses must be sold, mines must begin to produce ore, factories must begin to operate and produce consumer goods.

But because consumption patterns have either remained unchanged or have become more present-oriented, by the time these new capital projects are finished and begin to produce, the producers find no market for their goods. Because the coordination between savings and consumption was severed through the artificial lowering of the interest rate, both savers and borrowers have been signaled into unsustainable patterns of economic activity. Resources that would have been used in productive endeavors under a regime of market-determined interest rates are instead shuttled into endeavors that only after the fact are determined to be unprofitable. In order to return to a functioning economy, those resources which have been malinvested need to be liquidated and shifted into sectors in which they can be put to productive use.

Another effect of the injections of credit into the system is that prices rise. More money chasing the same amount of goods results in a rise in prices. Wall Street and the banking system gain the use of the new credit before prices rise. Main Street, however, sees the prices rise before they are able to take advantage of the newly-created credit. The purchasing power of the dollar is eroded and the standard of living of the American people drops.

We live today not in a free market economic system but in a "mixed economy", marked by an uneasy mixture of corporatism; vestiges of free market capitalism; and outright central planning in some sectors. Each infusion of credit by the Fed distorts the structure of the economy, damages the important role that interest rates play in the market, and erodes the purchasing power of the dollar. Fed policymakers view themselves as wise gurus managing the economy, yet every action they take results in economic distortion and devastation.

Unless Congress gets serious about reining in the Federal Reserve and putting an end to its manipulation, the economic distortions the Fed has caused will not be liquidated; they will become more entrenched, keeping true economic recovery out of our grasp and sowing the seeds for future crisis.

Friday

WHAT I THINK.......TOM DiLORENZO

Unlike Romney and Obama, Ron Paul is neither a repeater of Republican Party platitudes about "America’s greatness" nor a mumbler of silly socialist platitudes that sound like they were paraphrased directly from The Communist Manifesto ("From each according to his ability, to each according to his needs"). Ron Paul is a seriously learned man when it comes to economics and political philosophy. He is very familiar with the writings of all the classical liberals, especially Austrian School economists such as Ludwig von Mises, Henry Hazlitt, F.A. Hayek, and Murray Rothbard. As such, he must know that Rothbard considered John C. Calhoun, the nineteenth-century U.S. Senator, Secretary of War, and Vice President of the United States to have been one of America’s greatest political philosophers as well.

Because of his educational background, Ron Paul would have articulated Romney’s truthful comment about how the moochers and parasites of American society ("the 47%") are on the verge of overwhelming the producers politically. He would not have gotten involved in the mindless media "debate" over whether it is 47 percent or 49 percent of American adults who pay no income taxes but receive benefits from government. He likely would have quoted or paraphrased Rothbard’s favorite American political philosopher, Calhoun, from his magisterial 1850
Disquisition on Government instead.
When once formed," Calhoun wrote, a political community "will be divided into two great parties – a major and minor – between which there will be incessant struggles on the one side to retain, and on the other to obtain the majority . . . . " Consequently, "some portion of the community must pay in taxes more than it receives back in disbursements; while another receives in disbursements more than it pays in taxes."
The community is thus divided into "two great classes – one consisting of those who . . . pay the taxes . . . and the other, of those who are the recipients of their proceeds." This will in turn lead to "one class or portion of the community [being] elevated to wealth and power, and the other depressed to abject poverty and dependence, simply by the fiscal action of the government."
 
This has certainly come true. The real "One Percenters" that should have been the object of the "Occupy Wall Street" protesters are not American capitalists per se, but the politically-connected, subsidized and bailed out ones, combined with the political class itself, including all politicians, bureaucrats, and their ideological minions in the media and academe. Even the lowliest "city manager" of a small California town can retire on a pension in the range of $800,000/year, the media sensationally reported a year or so ago.
Calhoun further warned that the power to tax will inevitably be used "for the purpose of aggrandizing and building up one portion of the community at the expense of another," which will "give rise to . . . violent conflicts and struggles between the two competing parties." Stay tuned, Americans, and pay attention to what has happened in places like Greece.

 
Calhoun also understood that the totalitarian-minded enemies of a free society (i.e., most politicians of all parties) would say and do anything to destroy all roadblocks to their totalitarian dreams. Thus, "it is a great mistake," Calhoun wrote, to suppose that a written Constitution would be sufficient to protect individual liberty because the party in power "will always have no need of [constitutional] restrictions." As Andrew Napolitano pointed out in his book,
The Constitution in Exile, the U.S. Supreme Court failed to strike down a single piece of federal legislation as unconstitutional from 1937 to 1995, and precious little since then. The government’s "Supreme Court" long ago became what Alexander Hamilton wanted it to become: a rubber stamp operation for anything and everything the state ever wants to do.
Such men as Hamilton and his political descendants would use "cunning, falsehood, deception, slander, fraud, and gross appeals to the appetites of the lowest and most worthless portions of the community," Calhoun predicted, until "the restrictions [of the Constitution] would be ultimately annulled, and the government be converted into one of unlimited powers." Calhoun wrote this in 1850; the succeeding 162 years proved him to be prescient.

Representative government and a written constitution were good things in Calhoun’s eyes, but would never be sufficient to thwart tyranny and economic collapse unless some mechanisms could be adopted that would allow the people themselves to interpose their will directly on government. That’s why he proposed nullification, a "concurrent majority" of citizens that could veto unconstitutional federal legislation, and secession, the principle idea of the American revolution.

Monday

CONSEQUENCES OF AN INTERVENTIONIST FOREIGN POLICY

The attack on the US consulate in Libya and the killing of the US Ambassador and several aides is another tragic example of how our interventionist foreign policy undermines our national security. The more the US tries to control the rest of the world, either by democracy promotion, aid to foreign governments, or by bombs, the more events spin out of control into chaos, unintended consequences, and blowback.

Unfortunately, what we saw in Libya last week is nothing new.

In 1980s Afghanistan, the US supported Islamic radicals in their efforts to expel the invading Soviet military. These radicals became what is known to be al-Qaeda, and our one-times allies turned on us most spectacularly on September 11, 2001.

Iraq did not have a significant al Qaeda presence before the 2003 US invasion, but our occupation of that country and attempt to remake it in our image caused a massive reaction that opened the door to al Qaeda, leading to thousands of US soldiers dead, a country destroyed, and instability that shows no sign of diminishing.

In Libya we worked with, among others, the rebel Libyan Fighting Group (LIFG) which included foreign elements of al-Qaeda. It has been pointed out that the al-Qaeda affiliated radicals we fought in Iraq were some of the same groups we worked with to overthrow Gaddafi in Libya. Last year in a television interview I predicted that the result of NATO’s bombing of Libya would likely be an increased al-Qaeda presence in the country. I said at the time that we may be delivering al-Qaeda another prize.

Not long after NATO overthrew Gaddafi, the al Qaeda flag was flown over the courthouse in Benghazi. Should we be surprised, then, that less than a year later there would be an attack on our consulate in Benghazi? We have been told for at least the past eleven years that these people are the enemy who seeks to do us harm.

There is danger in the belief we can remake the world by bribing some countries and bombing others. But that is precisely what the interventionists – be they liberal or conservative – seem to believe. When the world does not conform to their image, they seem genuinely shocked. The secretary of state’s reaction to the attack on the US consulate in Benghazi was one of confusion. “How could this happen in a country we helped liberate, in a city we helped save from destruction,” she asked.

The problem is that we do not know and we cannot know enough about these societies we are seeking to remake. We never try to see through the eyes of those we seek to liberate. Libya is in utter chaos, the infrastructure has been bombed to rubble, the economy has ceased to exist, gangs and militias rule by brutal force, the government is seen as a completely illegitimate and powerless US puppet.  How could anyone be shocked that the Libyans do not see our bombing their country as saving it from destruction?

Currently, the US is actively supporting rebels in Syria that even our CIA tells us are affiliated with al Qaeda. Many of these radical Islamist fighters in Syria were not long ago fighting in Libya.  We must learn from these mistakes and immediately cease all support for the Syrian rebels, lest history once again repeat itself. We are literally backing the same people in Syria that we are fighting in Afghanistan and that have just killed our ambassador in Libya! We must finally abandon the interventionist impulse before it is too late.

Tuesday

A REPUBLIC, NOT A DEMOCRACY

Last week marked the conclusion of the grand taxpayer funded spectacles known as the national party conventions.  It is perhaps very telling that while $18 million in tax dollars  was granted to each party for these lavish ordeals, an additional $50 million each was needed for security in anticipation of the inevitable protests at each event.  This amounts to a total of $136 million in taxpayer funds for strictly partisan activities - a drop in the bucket relative to our disastrous fiscal situation, but disgraceful nonetheless.  Parties should fund their own parties, not the taxpayer.

At these conventions, leaders determined, or pretended to determine, who they wished to govern the nation for the next four years amidst inevitable, endless exaltations of democracy.  Yet we are not a democracy.  In fact, the founding fathers found the concept of democracy very dangerous.

Democracy is majority rule at the expense of the minority.  Our system has certain democratic elements, but the founders never mentioned democracy in the Constitution, the Bill of Rights, or the Declaration of Independence.  In fact, our most important protections are decidedly undemocratic.  For example, the First Amendment protects free speech.  It doesn't - or shouldn't - matter if that speech is abhorrent to 51% or even 99% of the people.  Speech is not subject to majority approval.  Under our republican form of government, the individual, the smallest of minorities, is protected from the mob.

Sadly, the constitution and its protections are respected less and less as we have quietly allowed our constitutional republic to devolve into a militarist, corporatist social democracy.  Laws are broken, quietly changed and ignored when inconvenient to those in power, while others in positions to check and balance do nothing.  The protections the founders put in place are more and more just an illusion.

This is why increasing importance is placed on the beliefs and views of the president.  The very narrow limitations on government power are clearly laid out in Article 1 Section 8 of the Constitution.  Nowhere is there any reference to being able to force Americans to buy health insurance or face a tax/penalty, for example.  Yet this power has been claimed by the executive and astonishingly affirmed by Congress and the Supreme Court.  Because we are a constitutional republic, the mere popularity of a policy should not matter.  If it is in clear violation of the limits of government and the people still want it, a Constitutional amendment is the only appropriate way to proceed.  However, rather than going through this arduous process, the Constitution was in effect, ignored and the insurance mandate was allowed anyway.

This demonstrates how there is now a great deal of unhindered flexibility in the Oval Office to impose personal views and preferences on the country, so long as 51% of the people can be convinced to vote a certain way.  The other 49% on the other hand have much to be angry about and protest under this system.

We should not tolerate the fact that we have become a nation ruled by men, their whims and the mood of the day, and not laws.  It cannot be emphasized enough that we are a republic, not a democracy and, as such, we should insist that the framework of the Constitution be respected and boundaries set by law are not crossed by our leaders.  These legal limitations on government assure that other men do not impose their will over the individual, rather, the individual is able to govern himself.   When government is restrained, liberty thrives.

Friday

WHAT I THINK........JO ANN CAVALLO

Ron Paul for President in 2012. Yes to Ron Paul and Liberty gathers together articles, email correspondence, blogs, interviews, short parodies, and open letters written by Walter Block during Ron Paul’s 2008 and 2012 presidential campaigns (up to April 2012), along with a forward by Rafi Farber (Jews for Ron Paul) and a postscript by economics professor Joseph Salerno (Pace University). Supporters of Ron Paul will undoubtedly enjoy the passion, verve, logic, wit, and sheer mirth with which Walter Block makes the case for a Paul presidency and, when the need arises, fearlessly demolishes the Congressman’s detractors. Those who have been wondering what is all the fuss about Ron Paul may find this book to be the proverbial eye-opener. Those already dead set against Ron Paul or libertarianism will of course probably not bother to open the book in the first place, which will be not only their loss, but our collective loss as well.

The opening section deals with three areas of crucial importance to Ron Paul and freedom: economics, foreign policy, and personal liberties. In each of these areas, Walter Block makes a case for his "man" by taking the less traveled road, focusing his attention not on the issues in which he could expect wider agreement from Americans across the political spectrum, but on positions that have been most criticized and misconstrued by the mainstream media. For example, after pointing out that Ron Paul "has done yeoman work in opposing NDAA, SOPA, Guantanamo, the Patriot Act and each and every other government violation of our civil and personal liberties" (95), he turns his attention specifically to Dr. Paul’s opposition to our drug prohibition laws.

This overall strategy may be partly Walter Block’s modus operandi (as he says, "If we cannot answer the difficult objections, we must rethink our libertarian positions" [35]), but it also stems from the fact that many of the articles were originally written in response to hit pieces by mudslingers of various persuasions – including, surprisingly, a few from within the libertarian movement itself. With implacable reasoning and irrepressible humor, Block submits "vicious screed" to a line-by-line critique, intentionally emulating Hazlitt’s refutation of Keynes (272). As the self-proclaimed Jewish Mother of the Freedom Movement, Block also offers several pieces dedicated to the Jewish question and Israel, lucidly defending the Congressman from "outrageous charges" of anti-Semitism and demonstrating that Ron Paul’s principled position is the only chance for the United States to help rather than hinder prospects for peace in the Middle East. In this context he supports Paul’s assertion that foreign "aid" (i.e., "government-to-government transfers of funds") "harms recipients, amounts to a theft from Americans, and has no Constitutional warrant" (234).

In his aim to defend Ron Paul from attack on all fronts, Block even addresses objections to the Congressman that are "silly, or vicious, or irresponsible or all of the above," beginning with the whopper that "Ron isn’t cool" (220). Honestly, though, anyone who could claim that Ron Paul "isn’t in sync with younger, more ‘modern’ libertarians" has evidently not witnessed his rallies on college campuses to cheering football-stadium-size crowds. When joining thousands of supporters in the pouring rain at his Philadelphia Phreedom rally this April, I overheard my 20-year-old daughter say to my 17-year-old son: "And to think, you liked Ron Paul before he was cool." "Are you kidding?" was his reply, "Ron Paul was cool way before I liked him."

In one section Walter Block shares his open letters and encourages Ron Paul supporters to write their own open letters explaining how Paul’s policies coincide with the core interests and aspirations of their particular religious, occupational, or otherwise special-interest group. Suggested examples such as "farmers against farm subsidies" might at first glance sound counter-intuitive – that is, until one recalls that Joel Salatin (whose Polyface Farm was featured in Food, Inc.) is an outspoken libertarian and Ron Paul supporter. In acknowledging that not every pursuit would apply, Block remarks that, for example, "there is nothing Ron says that is narrowly pertinent to waitresses" (212), yet that is not quite the case. Given that Congressman Paul has fought to end all taxes on tips through the Tax Free Tips Act, a 2012 New York Post article accordingly refers to him as the "unlikely hero among bar and restaurant workers."

While acknowledging the uphill battle to the Republican nomination, Block nevertheless boldly envisions the first events to follow the inauguration of President Paul: "The U.S. soldiers will immediately start coming home, protecting us here, where they belong. The bombs will stop dropping on innocent people in Libya, Iraq, Afghanistan, and, who knows, some half dozen other countries Obomba has decided to invade, all on his own" (131). Alas, although the volume’s most recent pieces make passing reference to election fraud in the early states (331), Block may not have anticipated such widespread cheating by the GOP across the board leading up to and including the Republican National Convention in Tampa.

In the end, as we now know, Mitt Romney became the Republican nominee, but in one sense, according to Blue Republican founder Robin Koerner, Ron Paul actually won the nomination: "In all fields of human endeavor, winning by cheating is losing. In a competition, when someone cheats, he gets disqualified. The disqualification does not make the runner-up the winner. Rather, it reveals that the man who appeared to be the runner-up had in fact been the winner all along." As one Daily Paul commenter sums up the situation: "We managed, in spite of a corrupt media, corrupt national GOP, corrupt state GOP organizations, voter ignorance, voter apathy, a massive disinfo campaign, an ongoing psy-ops campaign, and physical violence, to get Ron Paul the GOP nomination, based on the rules of four days ago. The GOP and Democrat-controlled media had to lie, cheat, steal, and break bones to stop us."

Most books written in the context of a political campaign lose their relevance once the votes are cast, yet that is clearly not the case here. Indeed, if the preliminary title addresses the immediate context of Congressman Paul’s bid for the presidency, the accompanying title, Yes to Ron Paul and Liberty, hints that the arguments are important well beyond 2012. Block contends that Ron Paul’s message has awakened not only millions of Americans, but "a significant percentage of the entire world" (112).
Although evidence of international support for Paul won’t be found on mainstream media, a quick look at Facebook (my personal favorite is Italy for Ron Paul 2012) and the Daily Paul reveals grassroots support everywhere from Australia to Poland, and Spain to Zimbabwe. Incidentally, at the time of writing Prof. Block was trying to verify reports of Paulians on Mars (112n) – he will be glad to know that confirmation has since arrived.

Almost all the chapters treat topics and issues that go beyond the context of Ron Paul’s presidential campaign, such as free market environmentalism, property rights, the Federal Reserve system, Keynesianism, the Austrian Business Cycle theory, and the libertarian non-aggression principle. The chapter entitled "Ron Paul: Far Right or Far Left?" starts off by citing those who have placed the Congressman on opposite extremes of the Left-Right spectrum, but then moves on to expose the falsity of this dichotomy in the first place (300-309). His response to a "pro war libertarian" lays out the parallels between "preemptive war" abroad and "preventive detention" at home (74). An interview from Taiwan distinguishes laissez-faire capitalism from "state monopoly corporate capitalism, or crony capitalism, or economic fascism" as well as voluntary socialism from the coercive type (320). Also not to be missed are two blogs about the jaw-dropping incompetence of FEMA following Katrina ("Ron Paul Is Right to Dis FEMA" and "A FEMA story," 344-50). Detailing the ineptitude and abuses on the part of Homeland Security, which concurrently blocked voluntary individual and group efforts, Block presents readers with a contemporary parable of private initiative vs. central planning.

Thursday

WHAT I THINK........JOHN WALSH

With the conclusion of the Republican National Convention, the pundits instruct us that election 2012 is in full swing at last. The truth is precisely the opposite – the two events that might bestow some historic heft on election 2012 are now decisively behind us. In matters of substance Brunnhilde has sung her last.

The Failure of the Progressives

The first of those events was the abject failure of progressives to field a primary challenge to Obama. Compare this to the election of 1968 and the action of "liberals," the forebears of the "progressives," and it is evident how much rot has set in on what used to be the left in the U.S. ("Progressive" is a rebrand of "liberal," and progressives are still labeled "liberals" on the Right.) In 1968, with the Vietnam war raging, the liberals within the Democratic Party found in Senator Eugene McCarthy a candidate to challenge Lyndon Baynes Johnson and the war bequeathed him by JFK. McCarthy did not eke out a victory, but he came damned close. LBJ saw the game was up and quit the field. The initiation of the McCarthy candidacy came from within the Democratic Party among activists who were fed up with the war. And the foot troops of the effort came from the ranks of the young who abandoned their counter-culture accouterments and went "clean for Gene" door to door in New Hampshire.

The story did not end there. The liberals and the emerging radical Left were not stampeded into lesser evilism to embrace the hawkish Hubert Horatio Humphrey, Johnson’s chosen successor. Instead they took to the streets of Chicago protesting at the Democratic National Convention, changing the spirit of the times and scuttling the hapless Humphrey’s candidacy. It was a glorious moment for the Left.

Today it is quite the opposite. The hawkish Obama was the candidate of the "progressives" in 2008, even as the hawkish Kerry was in 2004; and said progressives were unable to break free of Obama in 2012. Typical of the lot is Tom Hayden, a leader in the events of ’68, albeit an unreliable one even then, but now a confirmed Democrat of the Progressive Democrats of America (PDA) stripe, a gang with the lucrative aim of co-opting progressives who might be disposed to a genuine Left. Many of these people in their political dotage have turned into the very species that they regarded as the enemy in their youth. Perhaps the greying of the liberal left has been a major factor in its sclerosis, but it seems more likely that the lesser evilists all along lacked the core convictions and analyses needed to sustain a Left wing movement.

In itself this failure is quite startling and betokens an ever more precipitous decline of present day "progressives." Consider Obama’s massive betrayal of said "pwogwessives," a coinage of the late Alex Cockburn, on every major issue from war to civil liberties to single-payer health care and the failure of the pwogs to rebel in any significant way. That is why the shrewd Glen Ford of Black Agenda Report labels Obama the "more effective evil" for his ability to pursue W’s policies while stifling dissent among the pliant pwogs.

Perhaps the reason for the failure of the pwogwessive Left is that there is little genuine Left or Left Radicalism remaining to drive the pwogs in a principled direction – but that is a more complex story.
The Emergence of the Anti-war Libertarians

Now for the second major event, the Ron Paul candidacy, an historic event if ever there was one. The curtain rang down decisively on that effort with the nomination of Romney and the closure of the Republican Convention. But here for the first time since Robert Taft in 1952, there was an antiwar candidacy and more importantly a movement against interventionism. Ron Paul drew thousands of young followers on campuses all over the country with his libertarian message of civil liberties and opposition to war and Empire. And Paul’s message went beyond that of earlier anti-interventionists in the Democratic Party, like Eugene McCarthy and George McGovern. For Ron Paul and his followers opposed not only one war or several but the entire idea of intervention and Empire. Paul took up Martin Luther King’s slogan, "Come Home America," with a vengeance. By August of this year even Grover Norquist, the politically savvy conservative skinflint, was speaking openly about taking the ax to the military budget. And conservative talk show hosts, many neocons at heart, were behaving politely to Ron Paul, although it irked them, because there are many Paul supporters in their audience and among those whom their advertisers and paymasters want to reach. That is surely a sign of libertarian clout. Ron Paul and libertarianism have become household words.
In New Hampshire in 2012 as in 1968 there were scores of young volunteers for Paul even as there were for McCarthy in 1968. Just a few years ago who would’ve thunk? In fact New Hampshire was a lost opportunity, for had Paul been able to win rather than come in second, his candidacy might have turned into a widespread grassroots insurgency within the Republican Party. But the mass media ignored or attacked Paul as did the neocons within the Republican Party. The last straw was the decredentialing of the Paul delegates at the Convention, or earlier as in Massachusetts, and the last minute ad hoc rules change to prevent Paul’s name from being put in nomination.

Ron Paul, much to his credit, has not endorsed Mitt Romney, thus putting principle over Party. And this was clearly no flash in the pan – Paul ran for president in 1988 on the Libertarian ticket as an antiwar candidate, before the Cold War had ended decisively. 2012 represents a return after nearly a quarter century, still opposed to Empire, but with the Cold War over and a perception that the GOP might return to its anti-interventionist roots. His on-line campaign publication, The Daily Paul, has transmogrified into The Liberty Crier, no longer controlled by Paul, but a vehicle for the anti-interventionist libertarian movement that Paul continues to build.

But the great significance of the Ron Paul effort is that he and his movement bring an antiwar message to the American people in terms of a philosophy and vocabulary that is as American as apple pie. Unlike the progressives, Paul is not asking for Americans to change their worldview but simply to see within that view an antiwar, anti-interventionist policy. That is a much easier task.

When we consider the Paul candidacy and the failure of the progessives to field an antiwar candidate within the Democratic Party, it is not hard to understand the ebullience of a libertarian friend of mine when he says of the antiwar movement, "We own it."

The Future

The reaction of the progressive antiwar movement to the Ron Paul and libertarian efforts is striking. The progressives of the "Peace and Justice" movement overwhelmingly rejected the Paul candidacy and chose to keep the libertarians at arms length and definitely off the speakers’ platform at any event they controlled. How can they justify this to the victims of U.S. military adventures around the globe, which have caused the slaughter of millions of innocents in the last 20 years alone? Prominent exceptions did appear but only on the radical Left, for example in the person of the ever perceptive Alexander Cockburn, who wrote as he was battling a terminal cancer, that he would vote for Paul "given the chance." "One has to draw the line somewhere, even though I don’t feel in the least Austrian" Cockburn declared.

2012 may or may not herald a seismic shift in American sentiment on war and Empire. But tremors there were, whether one chooses to ignore them or not.

Monday

HOW LONG WILL THE DOLLAR REMAIN THE WORLD'S RESERVE CURRENCY?

How Long Will the Dollar Remain the World's Reserve Currency?
      
We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy.  But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency.  This means the dollar became an article of faith in the continued stability and might of the U.S. government
In essence, we declared our insolvency in 1971.   Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility! Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC in the 1970s to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence backed the dollar with oil.

In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite radical Islamic movements among those who resented our influence in the region. The arrangement also gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as the dollar flourished.

In 2003, however, Iran began pricing its oil exports in Euro for Asian and European buyers.  The Iranian government also opened an oil bourse in 2008 on the island of Kish in the Persian Gulf for the express purpose of trading oil in Euro and other currencies. In 2009 Iran completely ceased any oil transactions in U.S. dollars.  These actions by the second largest OPEC oil producer pose a direct threat to the continued status of our dollar as the world’s reserve currency, a threat which partially explains our ongoing hostility toward Tehran.

While the erosion of our petrodollar agreement with OPEC certainly threatens the dollar’s status in the Middle East, an even larger threat resides in the Far East.  Our greatest benefactors for the last twenty years-- Asian central banks-- have lost their appetite for holding U.S. dollars.  China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever.  Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency.

If we act now to replace the fiat system with a stable dollar backed by precious metals or commodities, the dollar can regain its status as the safest store of value among all government currencies.  If not, the rest of the world will abandon the dollar as the global reserve currency.

Both Congress and American consumers will then find borrowing a dramatically more expensive proposition. Remember, our entire consumption economy is based on the willingness of foreigners to hold U.S. debt.  We face a reordering of the entire world economy if the federal government cannot print, borrow, and spend money at a rate that satisfies its endless appetite for deficit spending.

WHAT I THINK........ALLEN STEVO

At 5:15 p.m. Tuesday, Mitt Romney became the GOP nominee for President.

At about the same time, 5:15 p.m., I watched a man involved with Ron Paul’s Louisiana victory box up phones at an outpost of the Ron Paul Revolution – a place from which some of the dispersed grassroots campaigns were run. Boxing up those phones marked the end of the 2012 phone-banking effort in that remote location. A room that I had seen abuzz with volunteer activity for months from early morning until whatever hour it is that Hawaiians start to no longer accept political phone calls was now being packed into a few small boxes and being shipped away. A few small boxes of equipment, a few hundred dollars to keep the lights on, and a dream for freer times ahead filled rooms like that across the country night-after-night. Tuesday that was all packed up.

The next night Ron Paul’s son would show support for Mitt Romney at the RNC. There would be a video played about Ron Paul there, a similar video about the grandeur of George W. and H.W. Bush was also played. Just like the RNC would love to mothball the embarrassing details of the Bushes’ time in DC, they would like to see the same done for Ron Paul and the idealism of his time in DC. The campaign had come to an end and in just a short time his career in DC would come to an end as well.
All at once, it felt like a death knell for the Ron Paul Revolution.

Luckily, the RNC, can’t fit Ron Paul’s career neatly into a little box to be shipped away.
Earlier that day, a man who’d never spoken about politics with me Googled me. He commented later "I bet you were really disappointed with how that whole Ron Paul thing turned out – how the Republicans treated him – weren’t you?"

No.

"No," was my answer. Ron Paul pushed forward the liberty movement in a way that it otherwise would not have been pushed forward. He inspired talented people from around the country; he inspired them to interact, to collaborate, to train together, and work together; he inspired some of them to travel great distances; he created a framework for greater interaction to happen among liberty-minded folks.

A Discussion

As a result, a discussion took place and continues to take place. It is not the same great debate I had hoped for 10 months ago; it’s still a discussion in the right direction. Ron Paul 2012 has solidified a movement that Ron Paul 2008 could not have solidified in the same way.
That discussion among Ron Paul supporters starts with a sentence like this "How can you and I collaborate to make ourselves more effective together than we are separately?" That discussion was repeated ad infinitum over the past year of Ron Paul’s campaign.

Saying Goodbye to the Movement?

Tuesday was a day of saying goodbye to Ron Paul 2012 as I knew it, Wednesday felt like the same – Rand Paul, George W., H.W. Barbara, and Laura Bush, Mike Huckabee, Tim Pawlenty, Condoleeza Rice, John McCain, and Paul Ryan all spoke in a single broadcast to a national audience about electing Mitt Romney.

Is the Ron Paul Revolution over? Far from it. It’s ready for the next chapter.

I am eager to see what will happen next, yet I realize that good things may take time. Persistence is needed to fell a mighty oak. That the stubborn Ron Paulers persist in the absence of the motivational Ron Paul candidacy will be the true test. With that persistence, Ron Paul’s movement will be an engine for growth; it will be a virtual Silicon Valley for political and for the more important non-political activity.

As we move forward with Ron Paul’s Revolution, I focus on the themes of books like The Market for Liberty and The Sovereign Individual – books that put politics into perspective. Politics is one way to effect change. The number of non-political opportunities to effect change are uncountable.

Is the Ron Paul Revolution over? I have a phone book full of people who believe in the same ideas as I do about freedom, just as intensely as I do, and who are so very talented and resourceful. Why would I suddenly stop collaborating with those people just because a few suits in Tampa and some loser newspaper reporters who never understood it to begin with now claim that the Ron Paul Revolution has come to an end? If I were the only person with a phonebook full of people like that, amazing things would still come out of Ron Paul’s movement simply because of the work that I will bring people together to do. More importantly, there are 10,000 other people similar to me – young in spirit, battle-tested, eager to see greater freedom, with a phone book full of contacts who will eagerly work alongside each other.

Precisely because of that, precisely because Ron Paul brought likeminded people together, his effect on the world will be immeasurable large. Most of that will have little to do with politics. Even the day Ron Paul’s revolution marches into DC it’ll be clear how insignificant politics will be to pursuits of greater freedom. Politics is just one option out of a limitless number of ways to bring change.
Ron Paul 2016

2016 will be a benchmark for the movement – a time to reflect on how far we’ll have come in four years. How far we’ll have come when we get together again for a reunion then and refocus some of our efforts on politics – that national distraction that pulls us away from the realities of our own lives every four years. Maybe it will be a Ron Paul candidacy in four years. Maybe it will be another worthwhile candidate. Something tells me that Washington DC has not heard the last from the Ron Paul Revolution.