An Overdue Round-Up and Where the Future is Going

Hello, folks!  I know I’ve been on hiatus for what?  About two weeks now?  My grandpa always told me that excuses and alibis ring up “no sale” every time, and he’s right.  I’m still giving you my excuse, but I think it’s a good one: I recently found out that my husband and I are expecting our first child. Great news, to be sure, but I haven’t exactly been feeling like myself.  Okay, I’ve had my head in the toilet most evenings (morning sickness is a serious misnomer), and I haven’t been writing much for either of my blogs.  I’ve mostly been avoiding getting sick and going to bed early, and unfortunately, I’ve been missing out on the action!  Would you believe that I just read today that Rick Santorum dropped out of the race?  (I’m delighted.)

I’m trying to stop being a wuss and get myself back into the swing of things, and I’m going to start tonight by looking at an article I found on Lew Rockwell titled “The Great Collapse of the US Empire” by Jeff Berwick.  Some of the article seems to be thinly veiled advertising for his firm’s services, but he makes some legitimate points about the way the United States is going.  I think many Americans have a keen sense that something is very, very wrong at home, but they haven’t a clear of idea of why or how, just that everything is going to hell in a hand basket.

Having lived  and worked outside the US for about three and a half non-consecutive years, and I can certainly say that there are places where freedom still has a real face and hunting for a job doesn’t make you feel like a blind sow rooting for an acorn.  For about the past two years, I’ve become firmly convinced that East Asia is where it’s at now.  The so-called Asian tiger economies are manufacturing powerhouses, and the standard of living here is rising quickly to rival that of any country in the West.

Let’s take a look at a “snapshot” of the average Korean family with a child or children attending my school.  Almost without exception, their fathers work for a bank, a company like Samsung or Hyundai, in a law firm, as a small business owner, a factory owner, a doctor, or educator.  Most of their mothers stay home, although I have several whose mothers work in government, in banks, or in other prestigious jobs.  The students all wear North Face jackets, carry smartphones, and attend minimally two or three after-school academies.  They are all learning English, and all of the kids above a certain can speak with some degree of competence about world affairs.  In short, most of these kids are like the “smart” kids you knew in school.  Except that they are the majority.  And they are competitive.

The way that one is able to live in Korea further highlights some of the serious problems that we have in the US today.  Koreans do not fear the police.  The police are here to help, and they generally have a “hands off” policy.  Forget being harassed in the street.  More often than not, the police are young boys doing their two-year civil service, move in herds, and will smile and say “Hello” in English when you pass.  Small businesses are alive and thriving here.  Walk up and down any Korean street, and there are innumerable merchants plying their trade, and most of these businesses are family-owned.  It is incredibly common to go into a restaurant here and be waited on by the wife or children while the father prepares your meat in the back room.

Does that mean I think that everything is perfect in Asia?  Obviously not.  However, what I see here is much closer to how I envision a free, functioning society.  The people are not afraid of the police or the government.  Education is good and considered to be a worthwhile endeavor.  Manufacturing is still alive, and competition is encouraged.  In fact, the hard truth in Korea is that you have to compete and compete hard or fail.

The simple truth is that East Asia has a large population and is becoming more and more relevant on the world stage.  The people here are intelligent and economically successful, and they are enjoying their new prestige.  They travel, they spend money, they work hard, and they know what they want.  But one thing that I’ve never noted is that they expect anyone to give it to them.  Does this mean that everything is always bright and shiny and wonderful?  No.  The suicide rate here is the highest in the world, thanks to work-related stress.  There is a lot of pollution, and students spend more time at school than with their families or unwinding a bit.

I suppose what I’m really trying to convey is that capitalism is alive here more than it is in the West.  Freedom is alive here in a way that it is not alive in the US today.  I pay 3.5% in income taxes.  My health care, though not specifically to my philosophical tastes, is more accessible and just as good as anything I would get back home.  The Korean system is not perfect, but it does better by me than the imperfect system at home, which is frankly the worst of both worlds.  My life is good here.  My husband and I save approximately $3000 per month.  We are debt-free, and we have enough money to do pretty much whatever we want, when we want.  The sad fact is that this would not be the case in either of our home countries, England or the US.

It is high time that the US government remove its blinders and get with the program.  The US is being grossly out-performed by the East, and that doesn’t have to be the case.  I still stand firmly behind the belief that Americans are the smartest workers on the planet, and I think just about anyone who has worked both in the US and overseas will tell you that’s true.  We have unbeatable innovative skills, drive, and grit, but American business is stymied by the insurmountable burden of taxes, regulations, and labor laws that the government has laid upon it.  And I don’t just mean big businesses; this affects all businesses, from big manufacturing companies to the family-owned local business, a breed which I fear is approaching extinction now.

Unfortunately, I don’t see the government making any serious efforts to alleviate the situation at home.  Their answer is always the same: MORE.  More taxes.  More laws.  More regulations.  More committees.  More money to the banks.  More money to the mega-corporations.  More debt so that we can spend ourselves back to prosperity.  It’s time to reconsider the old notion that sometimes less is more.  Less regulation.  No war.  Fewer taxes.  Smaller government.  For God’s sake, stop taking money away from those who need it most.  Quit giving our money to failing businesses with too much influence.  Stop peddling influence for money overseas.  Let America get back to work.  Let us compete.  We have done it before, and we can do it again, but first, the government has got to get the hell out of the way.

My pessimistic view is that it is going to take a serious collapse to realize this goal.  I really hate to be that way, because it harkens me back to my grandfather again, though not in the best way: all doom and gloom and “I told you so.”  Part of me, however, is starting to think that maybe we need to get back to basics.  Let it all fall down, come what may.  Maybe, as Berwick suggested, a collapse would take the TSA, the Federal Reserve, and all the shady elements of the government with it.  Maybe it would allow us to get back to first principles, with a new era of liberty and prosperity rising like a phoenix from the proverbial ashes.

I hope that it doesn’t come to this.  Santorum is out and Gingrich is bouncing checks for $500.  They’re out.  Ron Paul is still in, and with a rally at UCLA last week that counted over 10,000 in attendance, I can’t say that the message of liberty is falling on deaf ears, because I truly believe that more and more people are hearing that message and responding to it in incredibly positive ways.  This is so uplifting, as I truly believe, as do most of us in the movement, that there is nothing that brings people together so much as freedom.  This gives me hope that the spirit of ’76 is not dead yet, and that the fight has only just begun.

LED Bulbs: The Wave of the Future?

Have you ever noticed how some movies use different color filters to achieve various cinematic effects?  An example of this that always stands out in my mind is the movie Traffic, which used blue and yellow filters to great effect, if my memory serves.  Of course, this is hardly the only movie that does this, but it sticks out most clearly in my mind, for whatever reason.  Have you ever viewed things through a blue filter in real life?  If you’ve ever used an LED bulb, the answer to that question is probably yes.

I hate LED bulbs.  Yes, I know that they save energy.  Yes, I know that incandescent bulbs are single-handedly responsible for the downfall of mankind.  You know what?  I don’t give a toss.  I hate the unnatural, dim glow of LED bulbs.  It reminds me of being surrounded by the glow of a computer screen.  It makes me feel like a nerd in a Tron-like movie where I’m about to be sucked into an alternate universe and then chased by guys on really cool motorcycles, probably also lit by LED.  While this description may sound somewhat cool, it really isn’t.  Brushing my teeth in a blue-filtered, white-washed reality isn’t pleasing or nice; it makes me feel like I’m going insane.

Incandescent bulbs?  Totally different story.  We have an incandescent bulb in our hall that literally lights our entire apartment.  We have an LED in the bathroom and the incandescent in the hall.  The LED barely manages to illuminate our tiny bathroom, which is approximately 7’x2 1/2′, including the bathtub.  Believe me, it’s hardly asking the moon to light this closet-like space up, but that light bulb fails miserably at the task.  The incandescent bulb illuminates the majority of our living area and kitchen in a warm, yellow, inviting glow that makes me think of summer and/or 1975.  In other words, it makes me feel happy and at peace.  LED blueness makes me feel like I’m stuck in Alaska (Land of Winter and 18+ Hours of Night) on a permanent basis.

Why is this even mildly relevant?  Well, fortunately for you US readers, it really isn’t.  There was a move last year to ban incandescent light bulbs, but it failed to pass the Congress.  However, the area several other countries that are now facing bans on our yellow friends, including the whole of the EU, Australia, Canada, Taiwan, Japan, China, and South Korea.  Since I’m currently a SoKo expat, that would include me.

I had passingly followed the debate in the US, quickly decided that I was in favor of whatever the free market would do by itself, and didn’t think much more of it.  It seemed like there were bigger fish to fry, although the government telling you what bulbs you can and can’t use is about as close to telling you when to wipe your butt as you can get.  Unfortunately, if there was any debate in South Korea about the bulb wars, the incandescent bulb lost.  By 2013, incandescents will be totally phased out in Korea.

I went on a light bulb run about four months ago.  At that time, there were a few, though not many, incandescent bulbs available at our local discount store.  I picked up a bunch and a fluorescent for our overhead and went on my merry way.  Because we use the incandescent bulb a lot, they go quickly. We don’t turn on the LED or fluorescent lights, if we can avoid it, since we prefer the glow of the incandescent and don’t need a lot of lights on at night.  When I returned to buy another big ol’ box last weekend, they had mysteriously disappeared.  My husband and I were perplexed, until I thought of the proposed ban in the US.  I figured if the US was attempting to do it, there was a good chance it had already happened in other places.  Sure enough…

A lot of people have made the argument that we shouldn’t be using incandescents because they are so inefficient.  We should all be doing our part to save the environment.  Others make the argument that nobody should be forcing our choices on things like this.  The free market should decide.  Guess where I fall?

Here’s the thing.  I like the idea of saving money on lighting.  The thing is, I don’t use tons of lights, anyway.  At any given time, we have a maximum of three lights on in our apartment.  According to a nifty little calculator I found on the Internet, we could stand to save about $321 per year if we could switch to an LED bulb.  And another thing! In order to the get the same amount of light from one incandescent bulb, I need about three LED lights.  Seriously, they suck.  I read constantly at night, and they are terrible for reading.  Part of this is due to the fact that they tend to emit light in a direct beam, rather than radiating outward like incandescents.  Not brilliant for someone who spends a good 2-3 hours in any given night reading.

Before you jump all over me, no, I don’t think it’s a good idea to pollute the Earth.  I’m as big on trees and critters as the next person.  However, I also value a well-lit house, particularly in my reading nook.  I understand that people think we need to get away from incandescents, but are LED lights really the future of lighting technology?  Am I really going to have to view myself in blue for the rest of my life?

At the end of the day, I think the market should be making these decisions, not the government.  I don’t like LED lights.  I would prefer to buy incandescent bulbs, especially give that I am in a somewhat transient position now.  Korea is not my “forever” home; this is just a temporary stop.  Paying about $40 for a light bulb, at this point, means that I’m paying $40 for another year of use on the bulb.  I might need to replace the incandescent three or four times in that year-long period, but they only cost like, $3.  At most, I’d be paying $12.  So somewhere in there, my energy savings would have to amount to about $28 over a year on one light bulb for me to be able to break even.  Whether or not it would do that, I’m not sure.  Current estimates seem to suggest that it takes about two years to see a return on an initial LED bulb investment, which would indicate to me that I probably wouldn’t see a return on my investment.  Couple that with the facts that I really need three of the little buggers to sufficiently illuminate the same amount of space and I hate the blue glow and what it comes down to is this: I’d really rather just leave the LED on the shelf, at least for now.

I think LED technology is perhaps a transitional technology.  I know I’m not the only person who doesn’t feel 100% love for the Smurfs of the lighting world.  At this point, they’re quite expensive, which may make them somewhat inaccessible for folks in certain income brackets who don’t have the luxury of waiting to see returns on an investment.  Many people right now could not afford to be spending this sort of money on a light bulb.  Thankfully, the US government mandate failed.  This might be the one instance when government has worked in the favor of our pocketbooks recently.

In any case, I hope that the cost of these things comes down and quality improves over time.  I feel that eventually the mandate will be revived and will pass, which is usually what happens to this sort of thing.  I also wish that, at least here in Korea, we were being given the option of choice.  Let the two bulbs duke it out on the market.  If the LED bulb is not a worthy competitor, perhaps it should be replaced with something else that is – something cheap that lasts a long time and doesn’t make my house look like a scene from Tron.  Allowing a competitive market to force innovation: what a novel idea.  It’s working wonders in the tablet industry.  Why can’t it work in the lighting industry?

Read more about the blue wonders below.

“LED bulbs: The end of the lightbulb as we know it?” – BBC World News

“Congress overturns incandescent bulb ban” – The Washington Times

Gibson Guitar Raid Update

Back in August of last year, the US government raided the Gibson guitar factory, claiming that the guitar makers were in violation of the Lacey Act, which is a conservation code originally enacted to protect wildlife.  It has since been extended to protect plant life, as well.

The Feds stormed into the Gibson plant and confiscated over $500,000 worth of materials.  Why did this happen?  Was Gibson purchasing illegally-gotten rosewood from Madagascar or India?  Shockingly, the answer is no.  The wood in question was obtained from India, where it was gotten legally.  The government got irked over a measurement issue that had to do with how the wood was sanded down before it was shipped over here.  Translation: it was a labor problem and had nothing to do with conservation.

The Indian government has provided affidavits to Gibson saying that Gibson has done nothing wrong and satisfied all laws on their side.  No workers were mistreated or done over in the obtaining of this wood.  The US government (I would assume perhaps the customs office) has also given an affidavit stating something similar.  Simply put, Gibson has done nothing wrong.

The government still has not returned the confiscated materials and refuses to let Gibson fight the charges, which were never officially filed, in court.  To anyone who says that government is not force, I hold up this incident as a shining example of why government is force – and frequently not a benevolent one.

Check out the video summary, including statements from Gibson CEO Henry Juszkiewicz.

Gibson Guitar Raid Update from Reason TV

Chinese Housing Bubble Looming on the Horizon?

I thought I would forego a long-winded post tonight and post a video instead. I got this one off of Twitter via Raw Milk Colorado, and it is about the Chinese housing bubble, a fascinating subject, indeed.

Of course, China is still a state-controlled economy, and the Chinese government has been relentlessly driving large infrastructure projects, including big housing developments. The problem is that these big apartment blocks and shopping malls are, in some cases, largely sitting empty. In one city, only 25% of all the apartments are occupied, and this has been true for over half a decade with no signs of change showing themselves. Meanwhile, in Beijing, the housing prices make affording a property a luxury that is available only to the wealthy, in some cases.

It seems fairly obvious that this is a result of government intervention. State planning can never truly anticipate the needs of the market. This was true back in the USSR, and it is true today in China. Unfortunately, it would appear that China has a housing bubble to rival that of the US bubble that burst back in 2008. That bubble is currently on the upswing, which means that it’s due to burst sometime in the nearish future. Encouraging. Just what you wanted to hear, right?

Anyway, the video is about 15 minutes long and very interesting. I highly recommend you take a gander, when you have a few minutes to spare. Enjoy!

**Sorry, I had to just paste the link on the page.  For some annoying reason, the URL wasn’t showing up.  Not sure if it’s the link or WordPress, but if you copy and paste it into a new window, there shouldn’t be any problems.

Freedom Watch Booted from Fox Business

I am so disappointed to be writing this to you, readers.  Freedom Watch on Fox Business has been cancelled.  For those of you who don’t know about it, Freedom Watch was a show hosted by Judge Andrew Napolitano.  Judge, as he is commonly known, showcased Austrian economics, libertarian philosophy, and real news issues.  Judge was probably the only libertarian on the news, and now he’s been cancelled.  If you’ll allow me a moment of perfect candor, the first thought that I had when I was saw this headline was, This is bull$h1t!  I’m angry.

Judge was shining a bright light on the Fed, the NDAA, and the tomfoolery that goes on daily on the Hill.  Judge was the only host bringing us real straight talk about the economy and the state of the world today.  I watched his show often in clip version, as we don’t get it in Korea, and found every segment to be enjoyable and informative.  I will admit, of course, that he was preaching to the choir.

Why can’t libertarians have a newsman of their own?  I don’t believe that there weren’t enough viewers, because there are plenty of libertarians, and more are coming to the fold every day.  Judge was a great voice for liberty, and that voice has been silenced.

I, for one, don’t intend to take this lying down.  I love Judge’s show, and he is probably the only person on Fox – or TV, generally – for whom I have any respect.  If you are libertarian but you haven’t watched his show before, I suggest you head to Fox and watch some clips before they get removed.  I’m sure there will be plenty of devotees who have him on YouTube, as well.  I will continue to reuse and distribute his clips, as I think they are interesting and informative.  I’m also going to send an angry letter to Fox and tell them exactly what I think about this.  If you love Judge and refuse to let him go quietly into the night, I suggest you do the same!

Freedom Watch: Ron Paul Will Be On GOP Ticket

Continue reading on FreedomWatch with Judge Andrew Napolitano has been cancelled – Wilmington Civil Rights |

**Addendum: Fox has apparently been inundated with emails about Freedom Watch.  Judge has posted on his Facebook page that, while he appreciates the show of support, the people at Fox are getting pretty irked about the constant emails, and he is requesting that people stop immediately.  We must respect Judge’s wishes on this matter.  Please DO NOT email Fox News about Freedom Watch.  I have taken down the links to the Fox exec’s emails.  

Judge has also stated that the decision was based purely on business and not on the content of the show.  He says that he accepted the decision cheerfully and feels that there will be another opportunity or project for him some time in the near future.  I can only hope this is true.  In any case, please don’t email Fox anymore, guys!

Financial Crises Over? Not Yet…

Groundhog Day was a few days ago, and apparently ol’ Punxsutawny Phil saw his shadow.  I guess that means eight more weeks of winter, and although there are significant portions of the US that haven’t had much of a winter, the news that more might be on the way is never a welcome sound, at least for someone like me.  Anyone who knows me will tell you that I hate winter and am highly intolerant of cold.  Were it not for the hurricanes and high housing prices, I’d be living in south Florida.  I started thinking about the economy and the weather, and it’s funny how the media and government treat them as though they are similar animals.

We’ve all heard a lot of talk about how the US economy is making a recovery or more jobs were created or some such thing.  If we’re being totally honest, I don’t think there are too many people in the private sector right now who would be willing to make the claim that things are getting better.  They’re not.  The government and the media, however, insist that they are.  Everything is fine!  Things are getting better every day!  Lighten up, people! That would be like telling me that winter is over when there is six inches of snow on the ground.  I would be far more willing to look at the hard-to-miss evidence of snow on the ground versus some pie-in-the-sky claim that “winter is over.”

US Treasury Secretary Tim Geithner has made the claim, according to an article on Business Insider that “the worst is behind us.”  Geithner made the erroneous claim that the weakest parts of the economy have been shut down or restructured and that we are getting stronger every day.  In spite of this statement, however, the Treasury released a statement that it will consider allowing investors to participate in negative-yield auctions.  Yeah, I didn’t know what those were either, and frankly, they didn’t sound like anything I’d care to buy.  In layman’s terms, that just means that investors are willing to take less yield now in exchange for the perceived financial security of US Treasury bonds.  In other words, Wall Street investors are worried about where to put their money and perceive a lack of recovery in the global markets.  Therefore, they are putting their money into something that they believe will keep it safe: Treasury bonds.

The Treasury, if it decides to go ahead with this, will be issuing the bonds at premium rates.  This is notable, because normally Treasury bonds are sold at a discount.  In this case, the bonds would mature at par.  That means that the investor receives the difference between the amount it paid at purchase (premium) and the amount received at maturity (par).  Translation: the investors are receiving less at maturity than what they put in at purchase.  Investors are currently willing to take what appears to be a loss in order to secure their money.  Wow.  In my eyes, that is incredibly telling about the current state of financial affairs.

It is truly interesting that Secretary Geithner (who will not seek a second term as Treasury Secretary) is willing to, in my view, lie to the American people about a recovery when clearly market investors are not all convinced of this fact.  Why in the world would we choose to believe the weatherman when he says it’s sunny, a man who has been proven to be wrong on many occasions, when we can look outside and see for ourselves that it is snowing?  Is it just me, or does the emperor have no clothes?  In my mind, the actions of the market speak far louder than anything some government-Fed crony is saying.

I think it would behoove most of us to be cautious and be prepared, financially.  With rumors of QE3 swirling around and investors making moves to stash their money in safe havens, it seems that the worst may not be behind us yet.  That is not welcome news for anyone but unfortunately, anyone who is willing to look outside and see sun when it is snowing is either insane or so good at playing pretend that (s)he may as well be nuts.

The Big Shut-Down

Chances are, if you were born before 1988 or so, you probably remember the prime time TV drama “Dallas.”  I remember my mom watching “Dallas.”  We watched it together, and she always made me be quiet so that she could hear what was happening.  I still love that show, even today.  Who doesn’t love watching the diabolical J.R. Ewing try to scheme his way out of a sticky situation, usually of his own creation?  There was an episode in, I believe it was season three or four, called “The Big Shut-Down.”  J.R. tries to put Clayton Farlow, an oil refiner, out of business for harboring his ex-wife Sue Ellen and their son, John Ross.  J.R. ends up garnering huge losses for Ewing Oil, and Miss Ellie has to step in and negotiate with Clayton to buy up their oil.  In the end, in spite of his scheming to be top dog, J.R. ends up getting himself removed as president of the company.  More and more, the U.S. is starting to remind me of J.R.

The U.N. just had a vote about whether or not to intervene in Syria.  China and Russia, as was predicted, vetoed any action in Syria.  China suggested the U.N. turn its relief efforts towards Somalia, which has been going through on of the worst famines in recent memory.  This is hardly surprising, given the fact that there is a strong bond between China and Russia, and Russia has long had ties to Syria and other countries in the Middle East.  Russia is Syria’s main arms supplier.  Russia forgave most of Syria’s Soviet-era debt.  Syria allows Russia use of its port of Tartus, where Russia maintains a Mediterranean fleet.  Russia also has at least one major natural gas project going in Syria that is reportedly worth into the billions.  It is not surprising, therefore, that Russia isn’t keen to oust President Bashar Assad.  Things have gone fairly well for Russia in Syria.

If the U.N. (i.e. mostly the U.S. with Europe in the backseat) goes into Syria on one of its “peacekeeping” missions, it seems inevitable that Russia will lose out, probably in a big way.  Its natural gas project could be nationalized.  It could lose the right to keep its navy in Tartus.  Hardly a satisfactory situation.  No country would be happy about another country or group of counties messing with its cash flow.  One might also assume that, given Russia’s veto of the U.N. intervention, if the U.N. decides to go into Syria anyway, Russia will see little benefit from it, in oil or gas trade or otherwise.

The Sino-Russian link is becoming stronger and stronger.  They have been showing solidarity against the West as of late.  China has been working hard to broker the influence of the yuan in the Middle East.  China and the UAE just reached a deal worth about $5.5 billion dollars.  The UAE has agreed to hold renminbi (yuan) in its vault, which will give increasing prestige to the Chinese currency.  Make no mistake about it: Russia and China generally, and China most particularly, are looking to strengthen their ties with the Middle East, and one of the ways that they want to do that is by pushing the renminbi as a viable trading currency.

Something to keep in mind is that China strictly controls its currency flow, as of right this minute.  That is, it only allows for a certain amount of transactions to be done in its currency.  That said, the writing is on the wall, in terms of how China is looking to the future.  There will come a day when China will loosen its currency policy, and it is making inroads to ensure that the renminbi emerges as a currency of favor.  It is estimated that by 2025, China will import three times as much oil from the GCC as the U.S. would need.  Let’s face it: money talks – and walks.

Unfortunately, we are pursuing an increasingly dangerous path in the Middle East.  We are continually intervening for the sake of maintaining the dominance of the petrodollar, which is vital to the continuation of the loose money policy of the Fed.  I could hazard to guess that were it not for the petrodollar and the use of the U.S. dollar as the main reserve currency, the dollar would already be belly up like a goldfish in a dirty bowl.

Frankly, I’m beginning to get extremely worried about the situation that is unfolding in the Middle East.  The U.S government is making it fairly clear at this point that “nothing is off the table,” and if you believe what the news media is saying, war with Iran is practically a foregone conclusion.  I’ve talked at length about why this is probably true.  Follow the money, find the incentive, and you will understand what is happening today.  The same is true about Syria.

The root of this evil lies with the Federal Reserve.  The Federal Reserve has inflated our currency, and now, in order to maintain reasonable purchasing power at home, we are going into foreign countries in an attempt to maintain our ill-gotten standard of living.  It is completely and utterly unsustainable, and people are dying along the way.  It is still incredible to me that the peaceniks I heard who were calling out for Bush’s impeachment are strangely silent now, in spite of the fact that the “war for oil” is nowhere near at its conclusion.

I am afraid of where this constant foreign intervention is leading us.  We are making more and more enemies abroad while further destabilizing an already perilous situation at home.  It is high time that we heed the words of the Founding Fathers and cease our foreign entanglements.  It is time to audit and finally abolish the Fed.  We must return to sound money, for if we don’t, we will only continue down a violent path that will lead to our own inevitable destruction.

While I know that the “gloom and doom” scenario gets tiresome and depressing, there are things that we can do about it.  The first thing that we can do is educate ourselves.  Start reading Mises, Hoppe, Rand, Rothbard, and other Austrian/libertarian philosophers.  Get acquainted with liberty.  It is, for lack of a better word, liberating.  Also, get out there and vote for Ron Paul.  I know that some states have already held their votes, but if you’re on the fence, get off it and go vote for Paul.  Read some of his speeches and articles.  They can be found for free.  Go to the Mises Institute.  There is so much free information available to us, if only we will take the time to go out, find it, and read it.  There is still time to turn this situation around.

Bailout Blowback: We Aren’t Picking a Fight with Iran Over Nukes

My husband was doing his evening check of the BBC World News yesterday evening, and he stumbled across an article from a week or two ago about how London is setting itself up to be the new global leader in Chinese yuan (remnibi) trading.  London has long been the world leader in currency trading, and the fact that several key news outlets are reporting the desire of the city’s financial institutions to wade into the pool of serious yuan trading sends a clear signal about a change in the world money markets.

China and other nations have made it known over the past several years that they would like to begin moving away from the US dollar as the major reserve currency.  This is not a big secret nor is it breaking news.  China is quite keen to throw its hat into the arena, and there are a variety of reasons for that, but the big one is that every time the Fed turns on the printing presses, China, as a large holder of US debt, loses wealth.  Let’s face it: no country or business in their right mind wants to run the risk of continually flushing their own wealth down the toilet.  It doesn’t make sense.

Instead, over the last year or so, China and Russia have been leaning towards using the yuan as a settlement currency.  A settlement currency is exactly what it sounds like: currency that is used to settle financial agreements.  For example, many oil exporting nations trade in US dollars, euros, etc.  These would be settlement currencies for those nations.  Notable, at this point, is that Iran doesn’t accept the US dollar as a settlement currency.  Hold that thought, and we’ll come back to it.  (You may also refer back to my earlier article, “The Usual Suspects,” where I briefly discussed Iran’s oil bourse.)

Back before the Iraqi invasion, Saddam Hussein made the decision to sell Iraqi oil in exchange for “petroeuros,” which would have put the dollar out of business in Iraq by making the euro the settlement currency for its oil trade.  Shortly thereafter, President Bush declared war on Iraq.  We all know how that event went for Saddam, and we all know what Iraq looks like today.  It is fair to say that the US government doesn’t take well to other leaders messing with their cash flow.  We have a strikingly similar situation going on in Iran today.

Why are petrodollars so important?  Well, it essentially allows the Fed to continue printing money (monetizing the debt) without that money creation having a drastic effect on prices at home.  Why is that?  Because foreign countries will buy up that money and use it to trade for oil and gold.  China has long been the biggest financier of the US trade deficit by keeping the price of the yuan artificially low, which directly harms Chinese consumers and businesses by subsidizing the US markets.

However, China is now making its move to push the yuan to international stardom.  For those paying attention, the signs are there.  China is attempting to push the yuan to the forefront as a potential replacement for the US dollar.  France and other countries have participated in talks with China concerning a move away from the US dollar.  That said, a changing of the guard for reserve currencies is not something that will happen overnight.  According to an article by Ron Hera entitled “China’s Dragons: Oil, Gold, and the US Dollar,” the removal of the US petrodollar as the settlement currency of choice will big a large nail in the coffin of the US dollar’s dominance in the world markets.

Why is that true?  Hera uses Paul van Eeden’s Actual Money Supply (AMS) model to show how large the US monetary base (M3 line) has grown since 1971.  Assuming a rate of approximately 8% monetary inflation per year with interest compounding yearly, the monetary base has grown by about 1,863% since 1971.  However, Hera goes on to point out that the prices of US consumer goods has only risen 533%, which leaves 1,330% hanging out there in the wind.  How has this been possible?  Petrodollars.  Most of those dollars that have been printed by the Fed have been used on the global markets for dollar-based transactions (oil, gold, currency reserves, etc.), rather than kept at home and allowed to inflate the price of goods in the home market.

At this point, the picture is becoming clearer and clearer.  Let’s go back to the subject of Iran.  Iran is accepting most anything for its oil except US dollars, and China recently signed a deal with Iran that promised expansion of trade, with the provision that those deals not be settled in dollars or euros.  In fact, Iran stopped trading its oil for dollars in 2007.  China gets about 11% of its oil from Iran, according to CIA data from June 2011.  Interestingly, this 11% of China’s oil amounts to 22% of Iran’s oil exports.

So why is the US getting belligerent about Iran?  Is it because Iran is a threat to US national security with its supposed nuclear weapons?  While the government and its media drones would like for the masses to believe that is the case, the reality of the situation leads us down an entirely different avenue.  It seems more likely that the US is trying to protect its economic interests, rather than merely maintain a stranglehold on the world’s oil supply.  I have long heard so-called intellectuals beating the drum of “no war for oil,” but the reality of the situation is hardly so simple.  The US is not going to war for oil: it’s going to war to prevent economic shutdown.  The petrodollar is arguably one of the major assets keeping the dollar – and the US economy – above the water.

But we must also look at this as an act of aggression against China, in some respects.  China is a direct competitor for oil, for China is a mass consumer  of oil, second only to the US, and it will need more as production and economy expand.  The US is standing directly in China’s way, and although many are neglecting to look at this important perspective, it should not simply be ignored.  The battle of currencies and oil is pertinent and of the utmost importance to the national and world economies.  While we are fighting a secret cold war with China right now, most hot wars are fought for economic reasons, and I do not believe that it would be out of the question for this to turn warmer as time wears on.

The bottom line for the US is this: we must begin to live within our means immediately, and we must work to shrink the money supply.  To fail to curtail spending and monetization of debt will be our (silent) undoing.  The majority of Americans do not understand this, not because they are stupid, but because they are grossly misinformed by the government and media.  We are being made to believe in a terrorist threat that may or may not exist so that the people will approve of these endless wars in the oil-producing nations.  If the worst comes to pass, and the public ever discovers the truth, I believe that there will be hell to pay.

Please pass along this information.  Educate yourself, your family, and your friends about these issues.  If we ignore the reality of this situation, we will surely reap exactly that which we have sown.  God help us.

Please read the article by Ron Hera.  I found it compelling and interesting.

China’s Dragons: Oil, Gold, and the US Dollar

A New Reserve Currency to Challenge the Dollar: What’s Really Going on in the Straits of Hormuz” by Golem XIV

SOPA Leaves Door Wide OPEN for More Bad Legislation

When I was a kid, I loved the X-Men comic series.  My favorite character was Phoenix, I suppose because she was, quite honestly, a kick-butt kind of girl, and believe me, when you’re a picked-on fat kid who moonlights as teacher’s pet, wanting to atomize the jerks around you is a daily fantasy.  This childhood fascination with a lovely villainess led me to learn a fair bit about the phoenix legend at a relatively young age.  The phoenix, for those of you who aren’t up on ancient mythology, was a beautiful bird who lived for 500 years before building a dry nest of twigs and then fanning the nest to flames.  The phoenix was consumed by fire, only to be reborn again from the ashes of its defeat.  Thus we have an interesting story about life cycles, death, and rebirth.

Thanks to the efforts of individuals and businesses across the Internet blacking out for 24 hours, a powerful message was sent to Congress regarding the abominable bill known as SOPA.  I covered SOPA and intellectual property law last week as the blackout was going on, and I’m proud to say that my entry was re-posted on the Center for the Study of Innovative Freedom, which was quite an unexpected honor.  In any case, through the concerted efforts of the indignant masses, it seemed that SOPA was quietly shoved to the corner.  I thought to myself almost immediately that that fight was easy… Perhaps a little too easy.  It seems like whenever the government has a bad idea, it is determined to force it on us, in spite of our protestations and attempts to throw monkey wrenches into the system.  Unfortunately, I was right: it seems that from the ashes of the old SOPA phoenix, a new bill called OPEN is rising, and I worry that this time, defeat might not come so easily.

I had downloaded and read through most of the new OPEN bill, which is relatively svelte compared to its predecessor; OPEN clocks in at 18 pages, whereas SOPA was a heft 78 pages in length, although I suppose both are somewhat short when you compare them to behemoths like the NDAA or the Patriot Act.  In any case, the PDF document ironically reads “Keep the Internet OPEN,” but the reality is that any document that gives the government the authority to shut down websites is doing the opposite of keeping it open, regardless of what the neat print on the paper says.

In a nutshell, a rightsholder can make a petition to have a supposedly offending site taking down for rights infringement.  The ITC will then examine the case and make a ruling.  One major difference between OPEN and SOPA is that SOPA demanded that advertisers and PSPs immediately stop revenue flows to the site, regardless of whether or not the claim proved to be a valid one, whereas OPEN will not make this demand until the site is definitively found to be in violation of the law.

While it doesn’t seem that OPEN is as blatantly bogus as SOPA, most of my basic concerns still exist, and most of them have to do with rent-seeking and the legitimacy of intellectual property, a notion which I am admittedly still debating internally, at least to some degree.  As I wrote in “Against Intellectual Property,” one of the main flaws with this type of legislation is the fact that it is pandering to a group who are seeking to prop up an outdated and ineffective business model.  The entertainment industry has yet to provide us with conclusive evidence that they are really suffering drastic losses due to Internet piracy.  It is impossible to ascertain the supposed losses, since it cannot be proven that individuals who are downloading media for free would have paid for it at all, in the absence of the offending download site.

In truth, all I see here is an attempt to thwart or redirect money supplies to an industry which is hardly suffering.  Should we support legislation that largely exists because a small group is angry that their business model is no longer effective?  The fact of the matter is that the way people purchase and are exposed to media has changed a lot in the past 10 years or so.  It’s a brave new world out there, and it seems more and more like the entertainment industry is afraid to change with the times.  Ultimately, if a site is conducting illegal and legal activities, this legislation would shut down all activity, and then the money from both of those activities is lost, so there is a very real possibility that this legislation will result in net losses rather than gains.  As I stated previously, there is no conclusive evidence that this lost money would be redirected in the way that the entertainment industry hopes.

Although it doesn’t seem that this legislation is nearly as dangerous and nuts as SOPA, it seems to have been created for the same reasons.  This is the unfortunate effect of businesses lobbying for favor in the legislative world – taxpayers are forced to support an industry that either can’t or won’t evolve, and other, healthier businesses with more effective models suffer.  Much like my favorite heroine-turned-arch-villainess, it seems this Internet legislation is the proverbial phoenix that just won’t die.  And if I’ve learned anything from the Phoenix story lines, it’s this: the first story was great, but resulted in a sociopathic maniac who destroyed an entire planet, and the subsequent stories were of far lesser quality, and Marvel ended up degrading one of the greatest characters they ever created for the sake of making a few extra bucks.  I suppose that means of the moral of the story is that when the behemoth that has been created dies, sometimes it’s better just to let her stay dead.

Please take a look at the legislation, if you have a minute.  There are elements in it that I haven’t covered in this article, such as the issue of sites that sell phony drugs and the opt-out option for foreign websites.  

“The OPEN Act: Significantly Flawed, but More Salvageable than SOPA/Protect-IP” by Eric Goldman

Against Intellectual Property

It seems like the Internet is up in arms today, protesting SOPA and PIPA.  Wikipedia is going on a 24-hour blackout, and even WordPress here seems to have put up “censored” versions of peoples’ blogs.  I’m all for it, frankly.  Protest the heck out of this thing.  I can’t decide whether or not SOPA/PIPA is really about intellectual property issues, or whether it’s about control.  I suspect the latter, but the government seems to be touting it as a blow in favor of the former.  I thought you all might appreciate a post on intellectual property and why it might not be such a great idea, given the current goings-on.

Most all libertarians espouse a firm belief in property rights.  Libertarianism is firmly rooted in property rights, in fact.  Property rights, according to the core libertarian ideals, include tangible things, such as security of your person, your home, your land, your car, etc.  Intellectual property rights include the rights to intangible things.  According to author Stephan Kinsella, these are divided into ideas expressed as copyrights or as patents, which represent practical implementation.  So what’s wrong with protecting your ideas?  Don’t you have the right to do that?  Not every libertarian might agree on this point, but I am here today to argue against intellectual property and therefore the foundations upon which the government is trying to control portions of the Internet.

Copyright comes into effect the minute something is put onto a tangible item, such a book, movie, or script.  The copyright lasts for the duration of the author’s life, plus seventy years after his/her death.  In the case of an employer owning the copyright, it would last an additional ninety-five years.  (I have no idea why it would last longer in the latter case.)  Patents are property rights on inventions, and they will typically grant the individual who owns them a limited monopoly on manufacture, use, and sale of the item in question.  Interestingly, according to Kinsella, the patent actually only grants rights of exclusion and doesn’t actually grant the patentee the right to use the invention. Patents last twenty years from the date of the original filing.  Things such as “natural phenomena,” “laws of nature,” and “abstract ideas” may not be patented, though why people honestly need the Supreme Court to tell them this is beyond me.  Patents can be disadvantageous to trade secret holders, since a person or company that independently discovers a trade secret held by another person or company can patent it and exclude the other from using it.

Trademarks differ from the two forms of IP mentioned above in that they use a symbol, word, or phrase to identify the company.  For example, the “half-eaten fruit,” as my husband calls it, has become a well-known symbol for Apple computers.  Trademark basically prevents rival companies from copying identifying symbols of another company and attempting to pass it off as their own.  A good example of trademark infringement might be seen at the cheap Asian markets I like to frequent, where guys and gals can buy any number of knockoff designer items that range from ridiculous to excellent in quality.  Though they weren’t made by Louis Vuitton or Chanel, they do a pretty darn good job of looking the part, but they weren’t manufactured by the actual company.

In any case, intellectual property rests on the notion that not only does the creator own the idea, but they also own the tangible forms of the idea.  Kinsella provides a novel as an example.  The author holds the copyright to the novel and everything contained in every printing of the book.  (Hence the word “copyright.”)  That means that even if another person buys a copy of the book, they don’t own the novel – the pattern of words – contained therein, and they have no right to copy any part of that book using their own computer, pen, paper, etc.

There are a lot of ways that libertarians could choose to look at intellectual property.  The first is from the perspective of natural rights.  Simply put, a person subscribing to this system would believe that because a person owns his body and the instruments used to create the idea, that the idea is his.  He/She would be entitled to own their own creations.  That seems reasonable enough.

The utilitarian ideal sets forth the supposition that it creates more wealth or utility to have IP laws.  More creative, artistic endeavors lead to more wealth.  It also states that if there are no copyright laws, there are fewer profits reaped, and therefore it is beneficial to have IP laws.  Utilitarians will usually hold that restricting an individual’s complete freedom to do with his property has he wants is justifiable because of the wealth created by preventing him from exercising his will.

Kinsella argues that this is faulty reasoning.  One could redistribute part of group A’s wealth to group B and argue that the net wealth increases, though this would not actually be the case.  The amount of wealth is the same, but it is merely being stolen from group A and given to group B.  Nothing about this transaction implies the creation of greater wealth.  Kinsella further argues that the goal of law of not wealth maximization but rather justice – “giving each man his due.”  That means that wealth generation does not give a moral pass to limitation of personal rights.

The most important thing to consider, though, from a utilitarian standpoint, is whether or not IP actually provides a net increase in wealth.  Are patents and copyrights really necessary to foster innovation and creativity?  Do the immense costs of implementing IP law outweigh the comparatively marginal cost of innovation?  Is is possible that companies would have a greater incentive to innovate without twenty years’ reliance on patents?  What if companies had to constantly continue improving their products in order to stay on top of the market?  Would consumers lose out in such a situation?

Economically speaking, it has never been proven that IP laws result in net gains in wealth.  What we do know for certain is that companies and individuals seeking copyrights, patents, and trademarks must spend an awful lot of money employing lawyers to navigate the often murky waters of IP law.  Could this money not ultimately be put to better use in R&D.  In any case, it is unsound to argue that increasing wealth is a legitimate reason for depriving others of their rights.

If you look at Rand’s take on natural rights, she essentially cosigns on the idea that certain philosophical and scientific discoveries cannot be copyrighted, since certain truths have always existed, even if people don’t realize it.  She argues that only things created by the individual in question could fall under IP law.  Of course, if you take this down to its minutiae, nobody creates matter; they just manipulate it according to their will and skill.  Kinsella also presents an interesting conundrum whereby a scientist discovers a scientific theory or principle that was previously unknown to mankind.  This individual would not be rewarded for his/her creative thinking and intellectual ideas, but the engineer who uses that law to create a new invention would be.  Hmm.  Doesn’t it seem a bit silly to reward Beyonce for writing “Single Ladies (Put a Ring On It)” but not reward Einstein the theory of relativity?

At the end of it all, we also come to the conclusion that IP laws are essentially monopoly grants.  My husband made the point to me that IP laws protect the “little guy” from big competition, but I argue the opposite.  In fact, IP laws create barriers to entering the competitive market.  For example, if a young entrepreneur/inventor comes up with an idea, it would be relatively simple for big business to copy it.  Big businesses know this and do it.  The fact of the matter is that they can claim that they invented it first, and they have the resources to drain the inventor in an IP suit.  This effectively eliminates the competition, for the big business in question doesn’t even have to win the case; they merely have to wait until the little guy runs out of cash to fight the legal battle.

You can continue by pointing out that a big business could steal the idea once the idea has been presented to them by an inventor.  Kinsella has argued that this can be solved with non-disclosure agreements.  I am not a lawyer, but I can see how the same issue might come into play, at this point: if the entrepreneur sues the big company, the company is able to win by playing the waiting game.  I would certainly welcome further thoughts and comments on this end of the subject, since I haven’t come up with what I would consider to be a final and useful answer on this matter.

However, all things considered, at the end of the day, the cross-licensing and defensive patenting that is rampant in business today effectively amounts to serious barriers to entry for potentially budding companies.  It has come to the point that, because businesses are so happy to suit for infringements on their IP, that other businesses will actually file “defensive patents” to keep the lawsuits at bay.  Nobody really profits from this except lawyers and government – the lawyers because they are garnering outlandish fees and the government because it is revenue that doesn’t come from taxation.

Let’s take a look at the situation with SOPA/PIPA.  The government has created this intellectual property legislation to prevent people from downloading music, movies, etc. for free on the Internet.  It would effectively give the government the ability to shut down unwanted sites that allow pirating.  There are several points to make about why this legislation is misguided.

The first is that it will not solve the problem.  Firefox is already talking about making a SOPA-proof platform.  Basically, the software developers will write into the code a way to avoid SOPA software detection.  It will contact the website via an offshore server – in Europe, Asia, Australia, or wherever – and users will automatically be redirected to that website.

The second problem is that this act is essentially propping up an outdated business model.  The entertainment industry has been lobbying hard for Washington to do something about all this pirating.  What the industry doesn’t seem to realize is that the people who pirate files online also tend to buy more of these same music or movie files than those who don’t pirate the files.  Another flaw in this thinking is assuming that those who pirated, say, a movie file would have bought the movie, were it not for pirating.  This is hardly a foregone conclusion.  When the entertainment industry argues that they are losing money, they are making an assumption that may not, in fact, be true.  I have some friends who rip movies and shows, and let me tell you, I haven’t run out and bought a single one of those TV shows or movies.  Not a one.  Why?  Simple.  They weren’t entertaining, and I wouldn’t pay money for them.  Does it really make sense, from a free market standpoint, to prop up entertainers, music, and shows that suck?

The final issue that is quite interesting is the potential of this act to create a black market for Internet rips.  Look at the drug war and the black market for drugs in America today.  Making drugs illegal has done nothing more than lead to extremely high prices for black market drugs, which in turn leads to massive drug-related violence, both in the US and south of the border.  I’m not saying that violence would be the ultimate result in this case, but it certainly has the potential to increase profits for purveyors of the desired good – that is, free music, movies, books, etc.

One last point that I might make is that, for the music industry, most of the profits are made on tours, anyway.  Most of it is made from things like merchandise sales.  Besides that, for struggling artists and those looking to enter the marketplace, free downloads are a great way to get their music heard.  I will honestly admit that if I hear something I genuinely enjoy, I don’t mind paying for it.  I want to see my favorite artists succeed.

Ultimately, I see SOPA/PIPA has yet more government regulation that we don’t need.  It will harass the people who least deserve it, and will fail to meet its supposed goals.  Besides that, I just can’t get behind intellectual property, at least not 100%.  You be the judge, but speaking for myself, I believe that we stand to benefit the most from a free exchange of ideas, and it would pain me to see the Internet falling under government control.  I love the Internet if for no other reason than there is a vast amount of information and ideas available right at my fingertips, and that is something that is truly incredible about this point in history.  I would hate to see the government attempting to turn back the clock on so great an innovation.

If you are interested in reading and hearing more from Stephan Kinsella on intellectual property law, check out these links:

How to Slow Economic Progress
SOPA, Piracy, Censorship, and the End of the Internet? – Freedomain Radio w/ Stephan Kinsella
The Case Against IP: A Concise Guide
The Fight Against Intellectual Property
Against Intellectual Property (PDF)

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