Tuesday
LET THE MARKETS CLEAR!
French businessman and economist Jean-Baptiste Say is credited with identifying the fundamental economic principle that aggregate demand for goods in an economy will equal the aggregate supply of goods when markets are permitted to operate. Or in Say’s words, “products are paid for with products.”
English classical economist David Ricardo, among others, more fully developed this principle into what has become known as “Say’s Law.” Say’s Law, according to Ricardo, leads us to understand that market equilibrium for goods is constant. This simply means that markets, when left alone by government planners or other fraudulent actors, inexorably tend toward an “equilibrium price” which eventually balances supply and demand for any particular good. Thus markets will clear themselves of any surpluses or shortages in the form of excess supply and demand.
This important corollary of Say’s Law – that markets clear – is critical to understanding the moribund US housing market. In housing, perhaps more than any other good, we see the terrible consequences of government and central bank interference with market forces.
First, the Federal Reserve Bank relentlessly increased the money supply over the last few decades. Much of this newly created money and credit flowed from Fed member banks into the residential and commercial real estate markets, causing prices to rise dramatically prior to the housing bust of 2007.
At the same time, the Fed systematically suppressed interest rates for decades. This led to tremendous malinvestment both by homebuilders and individuals, and encouraged a seedy subprime mortgage industry to make nonviable loans that would not make economic sense under market interest rates.
Congressional meddling in the mortgage market also added tremendously to the problem. Inane legislation like The Community Reinvestment Act literally forced banks to make thousands of loans to bad credit risks. Similarly, Fannie Mae and Freddie Mac put taxpayers on the hook for millions of mortgages that never would meet market underwriting criteria. And of course the real estate and homebuilder lobbies made sure mortgage interest debt (unlike most personal debt) remains tax-deductible.
The ultimate result of these interventions by our caring friends in Congress and the Fed has been the biggest housing bubble and crash in US history, leaving millions of Americans underwater on their mortgages if they have not already lost their houses altogether. Congress and the Fed are directly responsible for millions of shattered lives, and almost unknowable economic damage in the form of trillions of dollars in mortgage backed securities.
The only solution to this mess is to allow the US housing market to clear. All of the bad mortgage debt must be liquidated, whether via foreclosure or bankruptcy. Banks holding substantial mortgages or mortgage backed assets must face the music and adjust their balance sheets to reflect today’s reality. Undoubtedly this will force many banks into immediate insolvency, but such banks must be allowed to fail without receiving another nickel of taxpayer money. Banks took the risks and made money during the bubble years; those who exercised bad judgment must now accept the consequences of their actions.
Never in American history have we needed to adopt a policy of laissez faire more desperately; never has government seemed more determined to artificially prop up an industry. But only by allowing the housing market to clear can we hope to rebuild our shattered economy from a stable foundation. Clearly there will be pain in the short term, but we owe it to younger Americans and future generations to allow the reemergence of a rational housing market.
English classical economist David Ricardo, among others, more fully developed this principle into what has become known as “Say’s Law.” Say’s Law, according to Ricardo, leads us to understand that market equilibrium for goods is constant. This simply means that markets, when left alone by government planners or other fraudulent actors, inexorably tend toward an “equilibrium price” which eventually balances supply and demand for any particular good. Thus markets will clear themselves of any surpluses or shortages in the form of excess supply and demand.
This important corollary of Say’s Law – that markets clear – is critical to understanding the moribund US housing market. In housing, perhaps more than any other good, we see the terrible consequences of government and central bank interference with market forces.
First, the Federal Reserve Bank relentlessly increased the money supply over the last few decades. Much of this newly created money and credit flowed from Fed member banks into the residential and commercial real estate markets, causing prices to rise dramatically prior to the housing bust of 2007.
At the same time, the Fed systematically suppressed interest rates for decades. This led to tremendous malinvestment both by homebuilders and individuals, and encouraged a seedy subprime mortgage industry to make nonviable loans that would not make economic sense under market interest rates.
Congressional meddling in the mortgage market also added tremendously to the problem. Inane legislation like The Community Reinvestment Act literally forced banks to make thousands of loans to bad credit risks. Similarly, Fannie Mae and Freddie Mac put taxpayers on the hook for millions of mortgages that never would meet market underwriting criteria. And of course the real estate and homebuilder lobbies made sure mortgage interest debt (unlike most personal debt) remains tax-deductible.
The ultimate result of these interventions by our caring friends in Congress and the Fed has been the biggest housing bubble and crash in US history, leaving millions of Americans underwater on their mortgages if they have not already lost their houses altogether. Congress and the Fed are directly responsible for millions of shattered lives, and almost unknowable economic damage in the form of trillions of dollars in mortgage backed securities.
The only solution to this mess is to allow the US housing market to clear. All of the bad mortgage debt must be liquidated, whether via foreclosure or bankruptcy. Banks holding substantial mortgages or mortgage backed assets must face the music and adjust their balance sheets to reflect today’s reality. Undoubtedly this will force many banks into immediate insolvency, but such banks must be allowed to fail without receiving another nickel of taxpayer money. Banks took the risks and made money during the bubble years; those who exercised bad judgment must now accept the consequences of their actions.
Never in American history have we needed to adopt a policy of laissez faire more desperately; never has government seemed more determined to artificially prop up an industry. But only by allowing the housing market to clear can we hope to rebuild our shattered economy from a stable foundation. Clearly there will be pain in the short term, but we owe it to younger Americans and future generations to allow the reemergence of a rational housing market.
Thursday
INTERNET REVOLUTION IS A LIBERTY REVOLUTION
Until the late 1990s, individuals interested in Austrian economics, U.S. constitutional history, and libertarian philosophy had few sources of information. They had to spend hours scouring used book stores or the back pages of obscure libertarian periodicals to find the great works of Mises, Rothbard, Hayek, and other giants of liberty. Local library and university collections ignored libertarian politics and economics.
Today, however, the greatest classics of libertarian thought, libertarian philosophy, and libertarian economics are available instantly to anyone with internet access. Thanks to the internet, it is easier than ever before for liberty activists to spread news and other information regarding the evils of government power and the benefits of freedom. For the first time in human history, supporters of liberty around the world can share information across borders quickly and cheaply. Without the filter of government censors, this information emboldens millions to question governments and promote liberty.
This is why liberty-minded Americans must do everything possible to oppose-- and stop-- government attempts to censor or limit the free flow of information online.
One such attempt is known as “CISPA”, or the Cyber Intelligence Sharing and Protection Act. This bill will create a monstrous coalition of big business and big government to rob Americans of their protections under the 4th Amendment of the Constitution.
CISPA permits both the federal government and private companies to view your private online communications with no judicial oversight, provided they merely do so in the name of “cybersecurity.” But America is a constitutional republic, not a surveillance state-- and the wildly overhyped need for security does not trump the Constitution.
“Cybersecurity” is the responsibility of companies that operate and make money in cyberspace, not taxpayers. Those companies should develop market-based private solutions to secure their networks, servers, cloud data centers, and user/customer information. The role of the US intelligence community is to protect the United States from military threats, not to provide corporate welfare to the private sector. Much like the TSA at the airport, CISPA would socialize security costs and remove market incentives for private firms to protect their own investments.
Imagine security-cleared agents embedded at private companies to serve as conduits for intelligence information about their customers back to the US intelligence community-- while enjoying immunity from any existing civil or criminal laws. Imagine Google or Facebook reporting directly to the National Security Agency about the online activity of US citizens. Imagine US government resources being wasted on a grand scale to “assist” private companies in the global market. All of this would become reality under CISPA.
As of this writing, it appears that the House and Senate will not agree on a final version of CISPA this year. However, the Obama administration seems ready to impose provisions of this bill by executive order if Congress does not act soon.
The past five years have seen an explosion in the liberty movement, fueled in large part by the internet. Preserving that freedom is crucial if the liberty movement is to continue its progress. Therefore, all activists in the liberty movement have a stake in the battle for internet freedom. We must be ready to come together to fight any attempt to increase government’s power over the internet, regardless of the supposed justifications. We must resist voices from both the political right and left which alternatively seek to legislate morality or enforce political correctness with force. Copyright protection, pornography, cyberterrorism, gambling, and “hate speech” are merely excuses for doing what all governments have done throughout human history: increase their size, scope, and power.
Once we understand this, we understand the critical link between internet freedom and human freedom.
Today, however, the greatest classics of libertarian thought, libertarian philosophy, and libertarian economics are available instantly to anyone with internet access. Thanks to the internet, it is easier than ever before for liberty activists to spread news and other information regarding the evils of government power and the benefits of freedom. For the first time in human history, supporters of liberty around the world can share information across borders quickly and cheaply. Without the filter of government censors, this information emboldens millions to question governments and promote liberty.
This is why liberty-minded Americans must do everything possible to oppose-- and stop-- government attempts to censor or limit the free flow of information online.
One such attempt is known as “CISPA”, or the Cyber Intelligence Sharing and Protection Act. This bill will create a monstrous coalition of big business and big government to rob Americans of their protections under the 4th Amendment of the Constitution.
CISPA permits both the federal government and private companies to view your private online communications with no judicial oversight, provided they merely do so in the name of “cybersecurity.” But America is a constitutional republic, not a surveillance state-- and the wildly overhyped need for security does not trump the Constitution.
“Cybersecurity” is the responsibility of companies that operate and make money in cyberspace, not taxpayers. Those companies should develop market-based private solutions to secure their networks, servers, cloud data centers, and user/customer information. The role of the US intelligence community is to protect the United States from military threats, not to provide corporate welfare to the private sector. Much like the TSA at the airport, CISPA would socialize security costs and remove market incentives for private firms to protect their own investments.
Imagine security-cleared agents embedded at private companies to serve as conduits for intelligence information about their customers back to the US intelligence community-- while enjoying immunity from any existing civil or criminal laws. Imagine Google or Facebook reporting directly to the National Security Agency about the online activity of US citizens. Imagine US government resources being wasted on a grand scale to “assist” private companies in the global market. All of this would become reality under CISPA.
As of this writing, it appears that the House and Senate will not agree on a final version of CISPA this year. However, the Obama administration seems ready to impose provisions of this bill by executive order if Congress does not act soon.
The past five years have seen an explosion in the liberty movement, fueled in large part by the internet. Preserving that freedom is crucial if the liberty movement is to continue its progress. Therefore, all activists in the liberty movement have a stake in the battle for internet freedom. We must be ready to come together to fight any attempt to increase government’s power over the internet, regardless of the supposed justifications. We must resist voices from both the political right and left which alternatively seek to legislate morality or enforce political correctness with force. Copyright protection, pornography, cyberterrorism, gambling, and “hate speech” are merely excuses for doing what all governments have done throughout human history: increase their size, scope, and power.
Once we understand this, we understand the critical link between internet freedom and human freedom.
STATISTICS
Last week, supporters of the current administration rejoiced over job numbers released by the Bureau of Labor and Statistics (BLS). For the first time since the administration came to power, the official unemployment number fell below 8%. Keynesian cheerleaders all claimed the numbers meant we are surely on the road to economic recovery, just in time for Christmas, and also, the election. Others saw through this ruse.
The situation on the ground looks nothing like a recovery. 23 million people are still out of work or chronically underemployed. This number is expected to rise dramatically next year. The situation in Washington should not give anyone cause for optimism. Politicians refuse to look honestly and intelligently at the cause of our economic malaise, and so real solutions are not taken seriously or acted upon. It is much easier and less painful to simply recalculate the numbers and redefine the terms until a rosier picture is presented. There is only blind hope that at some point, for some reason, things might change. But nothing will change for the better if we only stay the course.
The truth is the long term solutions to our economic quagmire involve some short term pain. Re-evaluating the economic role of an institution as insidious and behemoth as the Federal Reserve will inconvenience some people, and those people happen to have a lot of power. Similarly, the idea of ending government programs and closing down superfluous departments will always upset someone because it means someone will stop getting a government check.
No one wants to upset the apple cart, even if all the apples are rotten.
Not all of the unemployed are counted in the BLS unemployment numbers. This is no secret. In 1994 government statisticians came up with the term "discouraged worker" to remove entire swaths of people from the unemployment statistic. Now all the government has to do to improve the unemployment numbers is discourage people from looking for a job.
Far more unintended consequences are created in Washington than jobs.
Ideally, the business sector should be able to depend on sound numbers from the BLS, but smart business leaders know that trust in these numbers leads to bad decisions and failure. In regards to the recent jobs numbers, investor Jim Rogers recently stated “I have learned not to take advice from the government, especially the US government, which frequently misleads its citizens." He also noted the election just around the corner, suggesting timing as an extra incentive to keep fudging the statistics.
The real drivers of the productive economy can't afford to take risks based on false numbers. This is why economist John Williams created Shadow Government Statistics, utilizing more traditional methodologies and definitions to show business decision makers the real economic picture, warts and all. He shows the real unemployment rate to be a staggering 22.8%.
This is a difficult figure to accept as the actual truth. Perhaps if the politicians did, the people would finally demand real change and real solutions. Perhaps they would consider that all of the so-called stimulus spending, quantitative easing and mountains of regulation from Washington has only crippled the economy. Perhaps people would come to understand that fewer checks handed out from the public sector would mean more checks available in the private sector, and a return to real prosperity instead of just the appearance of it.
The situation on the ground looks nothing like a recovery. 23 million people are still out of work or chronically underemployed. This number is expected to rise dramatically next year. The situation in Washington should not give anyone cause for optimism. Politicians refuse to look honestly and intelligently at the cause of our economic malaise, and so real solutions are not taken seriously or acted upon. It is much easier and less painful to simply recalculate the numbers and redefine the terms until a rosier picture is presented. There is only blind hope that at some point, for some reason, things might change. But nothing will change for the better if we only stay the course.
The truth is the long term solutions to our economic quagmire involve some short term pain. Re-evaluating the economic role of an institution as insidious and behemoth as the Federal Reserve will inconvenience some people, and those people happen to have a lot of power. Similarly, the idea of ending government programs and closing down superfluous departments will always upset someone because it means someone will stop getting a government check.
No one wants to upset the apple cart, even if all the apples are rotten.
Not all of the unemployed are counted in the BLS unemployment numbers. This is no secret. In 1994 government statisticians came up with the term "discouraged worker" to remove entire swaths of people from the unemployment statistic. Now all the government has to do to improve the unemployment numbers is discourage people from looking for a job.
Far more unintended consequences are created in Washington than jobs.
Ideally, the business sector should be able to depend on sound numbers from the BLS, but smart business leaders know that trust in these numbers leads to bad decisions and failure. In regards to the recent jobs numbers, investor Jim Rogers recently stated “I have learned not to take advice from the government, especially the US government, which frequently misleads its citizens." He also noted the election just around the corner, suggesting timing as an extra incentive to keep fudging the statistics.
The real drivers of the productive economy can't afford to take risks based on false numbers. This is why economist John Williams created Shadow Government Statistics, utilizing more traditional methodologies and definitions to show business decision makers the real economic picture, warts and all. He shows the real unemployment rate to be a staggering 22.8%.
This is a difficult figure to accept as the actual truth. Perhaps if the politicians did, the people would finally demand real change and real solutions. Perhaps they would consider that all of the so-called stimulus spending, quantitative easing and mountains of regulation from Washington has only crippled the economy. Perhaps people would come to understand that fewer checks handed out from the public sector would mean more checks available in the private sector, and a return to real prosperity instead of just the appearance of it.
Wednesday
WHAT I THINK........ANDREAS KELLY
So 47% of the vote will go to the Democrat? Ron Paul can get more, by leading non-voting Americans to stand up and be counted. 42.63% of Americans didn’t vote in the 2008 presidential election. He can easily add his supporters to that figure, for more than 50% of all eligible voters, and take the next step in peaceful revolution.
As many Americans, I became a devoted Ron Paul supporter during his bid in the 2008 presidential campaign. Although my disillusionment with American politics and economics pre-dated my contact with Ron Paul, it came from a different perspective. Probably, it was rooted in an inherited fundamental distrust of the "establishment," which I learned to perceive as being increasingly tyrannical. Through Dr. Paul, I have been able to connect a lot of dots, involving things like economic policy, foreign policy, and civil liberties. As many, I was disappointed, to say the least, that the Republican Party didn’t nominate him, and even blocked his delegates in various states and at the convention. It seems the mainstream media has succeeded in silencing him, at least for this presidential election.
The media, educational institutions and every governmental institution suggest we have a duty to vote, and try to inspire us to vote, regardless of who we vote for. Should I really vote for the "lesser of two evils" in this bipartisan election? Many argue that the Republican candidate, for example, would save a few unborn babies by changing a policy regarding planned parenthood or international funding for abortions. However, the Republican party has proven that it will never take any serious action to stop abortion. Democrats claim their candidate will help the poor, but that help will be short-lived, and, in the long term, harmful to the poor. The ridiculous war on drugs is supported by both candidates, as are the wars against so-called terrorists and dictators on foreign soil, and American foreign military presence all over the world. Neither party will do anything to protect Americans from the continuing debasement of the dollar, or the catastrophic fiscal practices enacted by the Federal Reserve. As for our civil liberties, they will continue to be eradicated up by either candidate, to "protect national security." Thus, "voting the bum out" doesn’t have any effect in modern presidential elections. There just aren’t any substantive differences between the coke and pepsi presidential candidates. Obama may drive the train at full throttle over the cliff; Romney claims he’ll pull back the throttle, but only a tad, and he certainly won’t change direction. Our only real hope is to stop the train, dismantle it, and imprison those who designed, installed and managed it from its inception. Neither party really acknowledges the pending disaster.
What then, are we to do? How do we continue to support Ron Paul? Do we look to Rand? Will Ron run in 2016 at 80, and if so, will he do so as a Republican?
We can’t wait for 2016, Rand won’t or can’t take Ron’s torch, and the relationship between Ron and the Republican party seems meaningless at this point. But, like many Americans with some political awareness and will, I’d follow Ron Paul anywhere. Not because of his ideology, though I agree with most of it, but because he is one of few honest politicians in history, and certainly in my memory. Since the good doctor seems to have abandoned his presidential bid, and is retiring from the Congress, how can he lead us now? In his "retirement," I expect that he will write, speak and lecture, and continue to educate Americans. But what can he do politically?
Ron Paul has captured the attention of millions, who are waiting for his next move. Voter turnout for the presidential election was at 57.37% in 2008, according to Wikipedia; it has been under 65% since 1908. Not voting may reflect apathy, but to paraphrase George Carlin, it also gives us the right to say, "don’t blame me; I didn’t vote for him!"
Refusing to vote speaks volumes, though its easy to ignore non-voters. No one has ever harnessed the power of that refusal. Ron Paul can do it, by refusing to endorse the Republican, or the Libertarian, or any other candidate, because their policies will continue to harm America, because no candidate is willing to do what this country needs. Ron can rally his supporters to join the non-voting bloc, and lead us into the next phase of peaceful revolution. He might even pick up a lot of moderates and undecideds. He can speak on a national stage, and encourage us to refuse to vote in the presidential election. Ron, I implore you: Unite us! Unite the disillusioned and the rejected, vocalize our silent voices, and keep leading us in peaceful revolution!
As many Americans, I became a devoted Ron Paul supporter during his bid in the 2008 presidential campaign. Although my disillusionment with American politics and economics pre-dated my contact with Ron Paul, it came from a different perspective. Probably, it was rooted in an inherited fundamental distrust of the "establishment," which I learned to perceive as being increasingly tyrannical. Through Dr. Paul, I have been able to connect a lot of dots, involving things like economic policy, foreign policy, and civil liberties. As many, I was disappointed, to say the least, that the Republican Party didn’t nominate him, and even blocked his delegates in various states and at the convention. It seems the mainstream media has succeeded in silencing him, at least for this presidential election.
The media, educational institutions and every governmental institution suggest we have a duty to vote, and try to inspire us to vote, regardless of who we vote for. Should I really vote for the "lesser of two evils" in this bipartisan election? Many argue that the Republican candidate, for example, would save a few unborn babies by changing a policy regarding planned parenthood or international funding for abortions. However, the Republican party has proven that it will never take any serious action to stop abortion. Democrats claim their candidate will help the poor, but that help will be short-lived, and, in the long term, harmful to the poor. The ridiculous war on drugs is supported by both candidates, as are the wars against so-called terrorists and dictators on foreign soil, and American foreign military presence all over the world. Neither party will do anything to protect Americans from the continuing debasement of the dollar, or the catastrophic fiscal practices enacted by the Federal Reserve. As for our civil liberties, they will continue to be eradicated up by either candidate, to "protect national security." Thus, "voting the bum out" doesn’t have any effect in modern presidential elections. There just aren’t any substantive differences between the coke and pepsi presidential candidates. Obama may drive the train at full throttle over the cliff; Romney claims he’ll pull back the throttle, but only a tad, and he certainly won’t change direction. Our only real hope is to stop the train, dismantle it, and imprison those who designed, installed and managed it from its inception. Neither party really acknowledges the pending disaster.
What then, are we to do? How do we continue to support Ron Paul? Do we look to Rand? Will Ron run in 2016 at 80, and if so, will he do so as a Republican?
We can’t wait for 2016, Rand won’t or can’t take Ron’s torch, and the relationship between Ron and the Republican party seems meaningless at this point. But, like many Americans with some political awareness and will, I’d follow Ron Paul anywhere. Not because of his ideology, though I agree with most of it, but because he is one of few honest politicians in history, and certainly in my memory. Since the good doctor seems to have abandoned his presidential bid, and is retiring from the Congress, how can he lead us now? In his "retirement," I expect that he will write, speak and lecture, and continue to educate Americans. But what can he do politically?
Ron Paul has captured the attention of millions, who are waiting for his next move. Voter turnout for the presidential election was at 57.37% in 2008, according to Wikipedia; it has been under 65% since 1908. Not voting may reflect apathy, but to paraphrase George Carlin, it also gives us the right to say, "don’t blame me; I didn’t vote for him!"
Refusing to vote speaks volumes, though its easy to ignore non-voters. No one has ever harnessed the power of that refusal. Ron Paul can do it, by refusing to endorse the Republican, or the Libertarian, or any other candidate, because their policies will continue to harm America, because no candidate is willing to do what this country needs. Ron can rally his supporters to join the non-voting bloc, and lead us into the next phase of peaceful revolution. He might even pick up a lot of moderates and undecideds. He can speak on a national stage, and encourage us to refuse to vote in the presidential election. Ron, I implore you: Unite us! Unite the disillusioned and the rejected, vocalize our silent voices, and keep leading us in peaceful revolution!
GOVERNMENT DEPENDENCY WILL END IN CHAOS
The media insists on characterizing statements about dependency on government handouts as controversial, but in truth such statements are absolutely correct. It's not that nearly half of Americans are dependent on government; it's actually more than half. If one includes not just people on food stamps and welfare, but also seniors on Medicare, Social Security and people employed by the government directly, the number is more like 165 million out of 308 million, which is 53%.
Some argue that Social Security and Medicare benefits are a right because people pay into these programs their whole lives, or that we need a government safety net in place for people who fall on hard times. However, this all becomes a moot point when the funds people depend on become worthless due to government default or rampant inflation.
This is less an issue of dignity or dependence on government, and more about the deceitfulness of government promises.
The Fed recently announced that it plans to keep interest rates near zero and keep buying near worthless assets from banks indefinitely. This enables Congress to spend without having to take deficits or the debt seriously and there is every indication they intend to spend with impunity until the system collapses. There are no brakes on the runaway train. The federal debt ceiling law does nothing to limit spending. The ceiling will have to be raised yet again perhaps before the year is out. What is happening in Greece with austerity measures and riots in the street
will happen here within a decade according to some realistic estimates if we do not find some way to fiscally restrain our government.
There is little point in a debate about being entitled to healthcare or food or shelter from fellow taxpayers if the whole system has collapsed. And, with the way our politicians have taken over and
mismanaged vast amounts of resources, collapse seems almost unavoidable. Yet the number of Americans who have significant dependency on government is dangerously high, and I honestly fear for them.
Worse,
corporate welfare is also at an all-time high with no signs of diminishing. Though it is hard to quantify, Tad Dehaven at Cato has estimated that the government spends nearly twice as much on corporate welfare than on social welfare. Both parties are equally guilty. More and more, the business sector is learning to rely on taxpayer largesse in one form or another. They used to be solely concerned with providing a better product to the consumer at a better price. Now, success on Wall Street depends entirely too much on having the best lobbyists on K Street. If one includes the employees of "private" businesses who depend on government contracts, grants or bailouts, there are even more people dependent on government in some way.
Government does not create resources when it taxes people and prints money; it merely redistributes the wealth, while supporting a massive, wasteful bureaucracy along the way. Government is a giant, blood-sucking parasite on our otherwise healthy economy. For too long we have entrusted too much economic power and influence to irresponsible politicians in Washington. It's the chaos that ensues after they run the system into the ground that will be so painful for so many people. But realigning our economy with the free market and away from government mandates and handouts must happen in order for it to thrive again.
The answer is not to keep asking government to do more. The answer is to
extricate our economy and ourselves from the grasp of Washington DC as much as possible now, before our dependency becomes our downfall.
Some argue that Social Security and Medicare benefits are a right because people pay into these programs their whole lives, or that we need a government safety net in place for people who fall on hard times. However, this all becomes a moot point when the funds people depend on become worthless due to government default or rampant inflation.
This is less an issue of dignity or dependence on government, and more about the deceitfulness of government promises.
The Fed recently announced that it plans to keep interest rates near zero and keep buying near worthless assets from banks indefinitely. This enables Congress to spend without having to take deficits or the debt seriously and there is every indication they intend to spend with impunity until the system collapses. There are no brakes on the runaway train. The federal debt ceiling law does nothing to limit spending. The ceiling will have to be raised yet again perhaps before the year is out. What is happening in Greece with austerity measures and riots in the street
will happen here within a decade according to some realistic estimates if we do not find some way to fiscally restrain our government.
There is little point in a debate about being entitled to healthcare or food or shelter from fellow taxpayers if the whole system has collapsed. And, with the way our politicians have taken over and
mismanaged vast amounts of resources, collapse seems almost unavoidable. Yet the number of Americans who have significant dependency on government is dangerously high, and I honestly fear for them.
Worse,
corporate welfare is also at an all-time high with no signs of diminishing. Though it is hard to quantify, Tad Dehaven at Cato has estimated that the government spends nearly twice as much on corporate welfare than on social welfare. Both parties are equally guilty. More and more, the business sector is learning to rely on taxpayer largesse in one form or another. They used to be solely concerned with providing a better product to the consumer at a better price. Now, success on Wall Street depends entirely too much on having the best lobbyists on K Street. If one includes the employees of "private" businesses who depend on government contracts, grants or bailouts, there are even more people dependent on government in some way.
Government does not create resources when it taxes people and prints money; it merely redistributes the wealth, while supporting a massive, wasteful bureaucracy along the way. Government is a giant, blood-sucking parasite on our otherwise healthy economy. For too long we have entrusted too much economic power and influence to irresponsible politicians in Washington. It's the chaos that ensues after they run the system into the ground that will be so painful for so many people. But realigning our economy with the free market and away from government mandates and handouts must happen in order for it to thrive again.
The answer is not to keep asking government to do more. The answer is to
extricate our economy and ourselves from the grasp of Washington DC as much as possible now, before our dependency becomes our downfall.
Monday
GOLD IS GOOD MONEY
Last year the Chairman of the Federal Reserve told me that gold is not money, a position which central banks, governments, and mainstream economists have claimed is the consensus for decades. But lately there have been some high-profile defections from that consensus. As Forbes recently reported, the president of the Bundesbank (Germany's central bank) and two highly-respected analysts at Deutsche Bank have praised gold as good money.
Why is gold good money? Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce - making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history. Gold rose to nearly
$1800 an ounce after the Fed's most recent round of quantitative easing because the people know that gold is money when fiat money fails.
Central bankers recognize this too, even if they officially deny it. Some
analysts have speculated that the International Monetary Fund's real clout is due to its large holdings of gold. And central banks around the world have increased their gold holdings over the last year, especially in emerging market economies trying to protect themselves from the collapse of Western fiat currencies.
Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value. A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits
those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow.
This is why it is so important to allow people the freedom to choose stable money. Earlier this Congress I introduced the Free Competition in Currency Act (H.R. 1098) to permit people to use gold as money again. By eliminating taxes on gold and other precious metals and repealing legal tender laws, people are given the option between using good money or fiat money. If the government persists in debasing the dollar – as
money monopolists have always done – then the people would be able to protect themselves by using alternatives such as gold that are both sound and stable.
As the fiat money pyramid crumbles, gold retains its luster. Rather than being the barbarous relic Keynesians have tried to lead us to believe it is, gold is, as the Bundesbank president put it, "a timeless classic." The defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government. Governments hate gold because the people cannot be fooled by it.
Why is gold good money? Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce - making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history. Gold rose to nearly
$1800 an ounce after the Fed's most recent round of quantitative easing because the people know that gold is money when fiat money fails.
Central bankers recognize this too, even if they officially deny it. Some
analysts have speculated that the International Monetary Fund's real clout is due to its large holdings of gold. And central banks around the world have increased their gold holdings over the last year, especially in emerging market economies trying to protect themselves from the collapse of Western fiat currencies.
Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value. A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits
those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow.
This is why it is so important to allow people the freedom to choose stable money. Earlier this Congress I introduced the Free Competition in Currency Act (H.R. 1098) to permit people to use gold as money again. By eliminating taxes on gold and other precious metals and repealing legal tender laws, people are given the option between using good money or fiat money. If the government persists in debasing the dollar – as
money monopolists have always done – then the people would be able to protect themselves by using alternatives such as gold that are both sound and stable.
As the fiat money pyramid crumbles, gold retains its luster. Rather than being the barbarous relic Keynesians have tried to lead us to believe it is, gold is, as the Bundesbank president put it, "a timeless classic." The defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government. Governments hate gold because the people cannot be fooled by it.
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