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Aim Beyond the Target

April 13, 2012 1 comment

There is a subtle game being played with our constitution.  Recall when President Obama said he wished we had a charter of positive rights, which said what the government must do for us (see the second bill of rights) but unfortunately we only have this charter of negative rights saying what the government can’t do to us (see the first bill of rights Note: I don’t trust some of the details in this article).  The natural response of a conservative is to be alarmed by his desire for a different constitution but at least a little placated by his recognition that the actual document does in fact not conform to his ideal.  However, the real problem with this is that it still mischaracterizes the nature of the constitution in an important way. Read more…

Everything that Someone Should Be Saying About Sandra Fluke, Rush Limbaugh, and Contraception

March 6, 2012 6 comments

When the Obama administration first announced its policy that all employers, including religiously affiliated employers, would be forced to provide health “insurance” to their employees which includes birth control coverage, most commentators seemed baffled by the move.  After all, it seems to make no sense to alienate Catholics, who are a very large bloc of swing voters that broke for Obama in 2008, during an election year.  But now I think we can see the logic behind this move.  As usual, there are several issues converging here, so this will be kind of a long one.  I will break it down into its key components.

The left’s war on reality

As you probably know, last week Sandra Fluke, a law student at Georgetown University, testified in front of congress on behalf of the President’s policy of forcing universities and employers to cover contraception.  It is commonly said that you can boil a frog alive, you just have to do it slowly.  If you turn up the heat to fast, the frog will jump out of the pot, but if you do it slowly enough, he won’t notice he is being cooked.  America, we are being boiled!  We don’t notice it because it’s been going on for a hundred years.  But there are certain moments when we have the opportunity to look around us and realize that it’s getting hot in here.  When I first saw this testimony, I thought this would be one of those moments.

This woman thinks it is an outrage that she doesn’t get free birth control.  She is 31 and attending a prestigious law school.  She lays out a number of horrifying scenarios that her friends have or could have experienced.  For instance, her friend didn’t go to the doctor after being raped because she assumed that her insurance wouldn’t cover it even though it does.  Another friend was humiliated when she didn’t check what was covered by her insurance before going to the store to buy her birth control.  Also, some hypothetical students at other unnamed universities might not get birth control that they need for reasons other than birth control, even though they do at Georgetown.

America, meet my generation.  We make decisions without thinking about the consequences.  Then if there are consequences we didn’t foresee because we didn’t really think about them, we become outraged and expect someone else to fix them for us.  In short: we don’t think it is fair to expect us to take care of ourselves. Read more…

“Recess” Appointments

January 5, 2012 Leave a comment

Obama escalated the war on congress today.  He’s basically doing whatever he wants now and claiming an “obligation to act on behalf of the American people.”  This is very troubling.

Why You Really Shouldn’t Like The Fed

September 28, 2011 8 comments

I want to try to say very simply, hopefully without too much economics, why I don’t support the current financial system despite noticing the flaws in the Austrian story.  To get the context watch Peter Schiff’s video blog from last week after the Fed announced “operation twist.”  There is a part of this that is right and a part that is wrong.  The wrong part is what I have been talking about already, namely that these policies will result in inflation (and higher gold and silver prices).  The right part is that the whole thing is to get people to borrow and spend more.  In fact this is the whole point of the entire financial system.  The whole mechanism by which money is created is basically a process of creating a shortage of loanable funds and filling it with new money (debt).  This is the peice that Austrians tend to overlook but it is the real reason why it is so terrible.

The system perpetually increases the degree to which our lives are leveraged.  They promise to stimulate the economy through monetary policy.  To do this, as I said, they create money by creating a shortage in the market for loanable funds which they fill with money by lending it out.  But this is not permanent money, it has to be paid back, and it has to be paid back with interest.  So this causes price inflation and increased economic activity.  But when the money has to be paid  back the money supply starts to shrink which causes prices to fall which causes another economic crisis.  To solve the crisis they have to expand the money supply by even more to replace the money they created before, plus the interest, plus enough to make the money supply even larger to keep prices rising.  This requires an even greater shortage in the market for loanable funds.  So they have to do something to either increase borrowing or decrease saving or usually both.  The most common method is to lower interest rates.  (Of course sometimes this just goes on smoothly for quite some time with no crisis but it’s the same process of increasing the money supply by creating increasing shortages in the loanable funds market and filling them with more and more debt.)

Ok so what’s the problem?  Well have you noticed how we don’t own anything any more?  There is a comercial on TV that starts out like this: “You’re proud of the fact that you support yourself and you don’t need to borrow money.”  And then they say “But did you know that if you _________, you actually are borrowing money.”  Guess what goes in the blank.  If you said “have a mortgage” then sorry, thanks for playing.  If you said “own stock in a company that is highly leveraged” then you’re way off but nobody said that because nobody thinks about that.  The answer is “carry a balance on your credit cards.”  America! Do we not know that carrying a balance on our credit cards is borrowing money now?  Hopefully most of us are not that far gone yet.  But look at the way we treat our houses.  If you have a mortgage you don’t own your house, the bank owns it.  This doesn’t mean you shouldn’t have a mortgage but we are in a place where practically nobody owns their house because even people who have paid off their house go and get a second mortgage and use it for consumption (or worse: investment….)  And that’s not the worst of it.  We don’t own our cars any more.  We take out loans to buy boats.  We buy stocks on margin.  We count on social security and public or private pensions to provide for our retirement and these are mostly hopelessly underfunded and counting on their ponzi-game (yes I said it!) structure to keep them going.

This is not an accident.  Our solution to every economic problem since the great depression (when our solution was to keep prices from falling by passing laws making it illegal) has been to try and get people to borrow and spend more.  And if you can do it, it works… for a while.  But eventually all those loans still have to be paid back and that means to keep it going we have to find more and more ways to borrow.  The real problem with this economy is that we are running out of stuff to hock for more credit.  And the Federal Reserve is doing their best to get the last hold-outs to take out another mortgage.  They are even forcing Fannie and Freddie to lend 25% more than a home’s value.

So why am I against this system?  First, because the contractionary nature of it is inescapable.  But more importantly because when we can’t put it off any longer and it collapses we will look around and realize we don’t really own anything.  When we can’t pay our mortgages the banks will take our houses.  When we can’t pay our car loans the banks will take our cars.  When our companies can’t pay their bonds the banks will take their capital.  In short we will “wake-up homeless on the continent our fathers conquered.”

And the cure may be worse than the disease–government spending.  Sure, it’s ture if we allow the government to run ever-expanding deficits without any end, they could fill the gap with this borrowed money and spend it on whatever they want.  But this puts ever-increasing control of the economy in the hands of the federal government.  This is not a recipe for either prosperity or liberty.  And in this manner we become more-and-more collectively in debt to the monetary authorities.  Isn’t that fantastic!  So even if you figure it out and do things right individually who do you think they will come after with the taxes to pay back the government debt once everyone else is broke?

Just so that I am not misunderstood let me say that I don’t mean to point the finger at your hometown banker.  When things fall apart, they are hit as hard as anyone because all of their loans are stacked on top of an account with the Fed.  And the Fed has the power to come in and decide whether or not they are “solvent” and if they decide in the negative, to seize their assets and distribute them however they wish among the other banks.  Ever notice how Goldman Sachs and J.P. Morgan Chase always come out of these things just fine?  There is nothing wrong with banking per se.  The problem is when you create a centralized authority with special government powers (powers of coercion) to control a whole industry, set prices, and manipulate the currency.

When precious metals took a dive last week I couldn’t help but wonder how many vehement supporters of individual liberty have bought gold on the advice of Peter Schiff and the Austrians while meanwhile they have a mortgage on their home and a balance on their credit cards…

Gimme Back My Bullets

July 26, 2011 4 comments

For full effect open this in another window while reading (if you’re a lefty open this instead).  The mayor of Baltimore proposed a new tax of $1 for every bullet sold.  This is absolute proof that the people supporting these things are either complete idiots or actually purposely want to tear down the last line of defense between the people and a tyrannical government.  I’ve gotta start with the basic argument for the right to bear arms.  I’ve been over this before but if you’re listening to the second song, chances are this has never occurred to you. (I’ve never heard a “liberal” say “yes an armed citizenry is important to secure liberty but I just think it’s worth sacrificing that safeguard to reduce crime a little.”  They alway say something like “well all you NRA people want everyone to have a bazooka.”  Seriously that’s the exact line they all say every time….)

On Earth, liberty is the exception!  Most people who have lived on Earth have lived under poverty and oppression.  The few examples of societies that have valued and protected individual liberty have been the result a concerted intellectual effort to determine how such a thing could be achieved and a significant physical struggle to implement it.  It requires military force to implement and protect it!  Leftists should know this, after all it was their hero Mao that said “all political power grows from the barrel of a gun.”  In order to have any kind of prosperous society you must have a government to enforce property rights and enforce contracts.  This function requires the government to have enough physical strength to overpower any individual or small group of individuals.  But when you create this apparatus, there is a constant threat that it could be used to enslave the people rather than ensure their liberty.  The only way to prevent this is for the people collectively to have enough physical strength to overpower the government should they lose control of it and to have some mechanism in place to organize them into action if the government crosses certain lines.

Obviously, in America the collective action mechanism is what is encapsulated in the constitution and the keystone that makes it possible is the 2nd amendment.

A well regulated militia being necessary to the security of a free State, the right of the People to keep and bear arms shall not be infringed

Most Americans today were born into (relative) freedom and therefore take it for granted.  I don’t think most of them have even given a though to what systems are required to protect their liberty, they just think that because it’s always (since they can remember) been there that it will always be there.  This causes them to make poor decisions.  Consider the bullet tax.  As I see it there are 3 reasons a person would support such a tax.  1.  They don’t think weapons are important for protecting our liberty, either because they haven’t even thought about it or they reject the above argument for some reason, they don’t care about guns and they think it will reduce crime.  2.  They agree with the above argument but think the expected reduction in crime is worth the risk to liberty.  3.  They agree with the above argument and they actually want this safeguard removed.  (They also may just want more money for the government but Rolley denies this so let’s take him at his word….)

If you fall into one of the first two categories (which I will lump together from now on), then banning guns sort of makes sense.  I don’t think it would reduce crime that much and obviously I don’t think it’s worth it but at least it’s possible to see why someone might believe differently.  But consider the effects of a bullet tax.  What behavior is this expected to change? According to Rolley it increases the cost of committing a crime.  This is true but let’s put our economist hats on and consider how much this increase in price is likely to reduce the quantity of crime.

How many bullets do you think the average drug dealer shoots in a year?  I have no idea but let’s be pretty liberal and imagine he shoots 100 bullets per year in the course of committing crimes.  So you increased the cost of being a drug dealer by $100/year (I’m assuming here that he doesn’t just go outside Baltimore to buy his bullets because no doubt if they get it there they will suddenly realize that it doesn’t work unless it’s done at the Federal level and call up Cass Sunstein).  Is this going to put drug dealers out of business?  I think not.

But wait, maybe it affects the number of bullets they use.  Maybe the drug dealer upon finding himself in a situation where he would otherwise be willing to take the life of another human being for whatever reason, will now stop and reconsider because of the extra dollar that this will cost him…..No you don’t think that’s very likely?  Well maybe a person who has finally decided to off their spouse will change their mind because of that dollar?  The guy robbing liquor stores will have to spend an extra $10 to fill up his clip maybe this will make him get a real job instead.  And certainly the people who shoot up schools and workplaces and then commit suicide will be deterred when they find that they will have to spend an extra $50 on bullets.  Stop me when I’ve made my point…. Just try to imagine a single crime that will be prevented by a $1 tax on bullets.  If you can think of one please post it in the comments so that I will have a comment and everyone can see the mental gymnastics that your side is willing to go through to justify this nonsense.

So what would a $1 bullet tax likely accomplish?  Two things that I can see.  First of all, people who have guns are still going to have guns.  What they probably would do is not train as much (possibly not at all).  Currently range ammo for a 9mm runs about 20-25 cents, so if you go to the range and shoot a hundred rounds it costs you $25.  A little more than going to a movie but it doesn’t break the bank.  Now add a $1 tax per bullet and it costs you $125.  Think that will have an effect on the amount of practice people have?  So that’s a great idea, let’s reduce the training of all the gun owners in the country, that will make us a lot safer.

Second, people who actually think guns are necessary for the defense of liberty tend to stockpile a lot of ammo.  Obvioulsy, the ammo is an important component to the collective defense of liberty.  Add a $1 tax per bullet and this will drastically decrease people’s willingness to stockpile ammo.  But why would you want that?  These bullets sitting in the safe’s of NRA members are not increasing crime, they are just sitting there providing a safeguard against tyranny.  So which do you think it is 1, 2, or 3?  For most people I think it’s 1 actually, those people have to wake up.  But the politicians who propose this stuff must have thought about it enough to realize that there’s no way this will reduce crime.  If not, they are stupid.  I mean really, really stupid.  Ether one should bother you.

The Power of the Printing Press

I said recently that the Fed has the ability to buy whatever they want.  I just want to explain that for people who may not have noticed this fact.  Regardless of what you think about the economic implications of monetary policy, this much is basically indisputable.  When you give some entity the power to print money you hand over control of essentially all of the real assets in the economy to that entity.  The reason for this is simple.  That entity can buy whatever they want.  There is no budget constraint for a printer of money.  If they want your house they can print money and buy it from you, just name your price.  They don’t have to create anything of equal value to trade.

Given this fact, the position of most “practical” people seems to be that for some reason we can trust them to only use this power in ways that benefit all of us, and that such a way exists.  My point is that even if such a way exists (and I don’t think it does), it’s irresponsible to just give this power to a private institution (or a public one for that matter) and hope that they don’t use it to screw us over.  That argument I think is pretty simple and it’s astonishing how reluctant people who believe, seemingly for no particular reason, that bankers acting in a free market with no special powers are evil and will surely fleece the public are to admit that giving a handful of the most powerful of these evil bankers special monopoly power to print money and buy whatever they want and to regulate all of their competition is a bad idea.

But it’s even worse than that.  The system works in a way that leaves us begging for them to print money and buy our stuff.  To keep inflation going at expected (promised) levels the money supply must continue to grow.  The normal way you grow the money supply is to expand credit by lending to banks who then lend to the public.  Unfortunately there is a limit to how much the public is willing to borrow (this is a topic of debate despite the obvious  evidence).  When this happens the government can borrow.  But what if the public gets fed up with constantly increasing government deficits?  You have to get the money out there somehow.  Well you can always just start buying things.  But don’t call it that, it might give people the wrong (read: “right”) idea.  Give it a name that most people won’t really understand like “quantitative easing….”

 

The New Public-Private Partnership

When you read this story, recall this post.  Also, if you haven’t seen John Stossel’s program on freeloaders, it is excellent.  Notice the lady saying that the free market doesn’t know anything unless we all collect our interests and tell them what is of value to us collectively.  This is complete nonsense that could only be spewed by someone who has never considered how markets actually function.  It’s also the real divide between freedom lovers and statists.