Ron Paul Was Right

I ran across the video while I was trolling through Twitter.  It’s a Ron Paul speech from 2002, the year I graduated high school.  I had no idea who he was back then, but his words sort of hit me like a knuckle sandwich to the nose.  It’s not that I don’t already know about these things, but hearing it condensed into a five-minute speech that was made ten years ago really puts the hook in you, to use a phrase from a favorite film of mine.    Ron Paul may not be the only person in Washington who understands what has been going on, but he’s the only person brave enough to stand up and repeatedly tell us the truth.  Unfortunately, all of his predictions made in this video have come true.  All the more reason we need him to be the last man standing.

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.

The Constitutionality and Morality of the Fed

The constitutionality of the Fed is something that has long been debated by parties on all sides.  It is especially popular with conspiracy theorists, who like to make it sound as though Jekyll Island was more dramatic than it really was.  The reality is that Jekyll Island, while beginning as a secret, didn’t end that way.  In fact, there was a fair bit of open debate surrounding the creation of the Fed – debate that unfortunately ended with the creation of the monster.  That said, there might be still be something left regarding the debate about the constitutionality of the Fed.

The Federal Reserve Act came into being on December 23, 1913, though it was dreamed of long before then.  In fact, our current Federal Reserve was not the first central bank in America.  The subject of central bank creation was hotly debated, even among the Founding Fathers.  In fact, the first central bank, the Bank of North America, was chartered in 1781.  However, the state of Pennsylvania repealed its charter a scant four years later amid complaints of corruption, favoritism for foreigners, and fictitious credit.

The First Bank of the United States, which was signed into being by none other than George Washington in 1791, was essentially a revival by Alexander Hamilton of the Bank of North America.  Hamilton’s plan for a central bank was closely modeled off of the Bank of England.  Thomas Jefferson was no fan of the bank and viewed it as an engine of corruption and speculation, among other things.  In fact, Jefferson, Madison, and others railed against the creation of this bank, stating that is was not included in the enumerated powers of Congress and therefore could not be created.  In any case, despite Hamilton winning the initial debate, Congress didn’t renew its charter in 1811, and it never controlled greater than 20% of the US money supply.  At that point, Congress took control of the US money supply by issuing Treasury Notes.

In 1816, James Madison signed the charter for the Second Bank of the United States in hopes that it might end some of the runaway inflation that had occurred during the previous five years after the dissolution of the First Bank of the US.  Andrew Jackson, eternal enemy of central banks, was responsible for the demise of the Second Bank of the United States.

After the death of the Second Bank, there was a period in which there was no real central bank.  There were state banks and lenders of last resort.  Perhaps the most famous of these was the Suffolk Bank of Boston, which acted as a clearinghouse for other banks.  The Suffolk Bank was quite successful for some time, in fact.

After the panic of 1907, the subject of a central bank was again brought to the table for discussion.  The issue of constitutionality, so far as I know, was not raised.  The matter was more or less settled in the 1819 ruling of McCulloch vs. Maryland, when the Supreme Court ruled that the creation of a central bank fell under the implied powers clause.  So if we look only to legal precedent, it would seem that the case is won by the Fed, since the Supreme Court has never changed its ruling and doesn’t seem likely to do so any time soon.

But what of the original intent?  Well, as usual, not everyone agreed on the issue.  However, Jefferson, Madison, and Randolph adhered always to the strictest of constitutional views, meaning that if it was not specifically laid out in the powers enumerated in the Constitution, the government lacked the authority to do it, and the power rested with the states alone.  There will be libertarians on both sides of this argument, but I have yet to meet a follower of Austrian economics who thinks that the Fed is a good idea.  In any case, the constitutionality of the Fed seems, for all practical purposes, a settled issue, even though some (many) of us would like to see it reopened for debate in the federal government.

So what exactly does the Fed do, anyway?  Without going into a long, boring explanation, the Fed controls the expansion of the money supply (M3) and interest rates.  How does it control the money supply?  It buys or sells various securities, which can include Treasury securities issued by the US government.  It also alters the reserve requirements that commercial banks must hold in reserve against deposits.  Finally, it can adjust the discount rate – that is, the interest rate charged to commercial banks.  When the Fed wants to shrink the money supply – it’s been a long time since that happened! – it sells securities and raises the reserve limit on the banks.  Raising interest rates will also help control inflation.

What is inflation?  Simply stated, inflation is the increase in the money supply.  No more, no less.  If the Fed is inflating the money supply, inflation is happening.  Period.

Why might this be a bad thing?  Well, when the Fed is increasing the money supply, as it has been doing for some time now, it tends to lead towards higher government debt.  The Fed will continue buying up Treasury securities, which basically means that the government has a blank check to spend whatever it wants.  While it allows the US to continue overseas expenditures and programs that might otherwise have to be cut during economic hard times, this expansion of money and credit simultaneously devalues the currency.  As the money supply increases, prices go up, up, up.  In fact, we’re seeing it at the gas pump now.  Wonder why those gas prices are going higher?  It’s because oil is primarily traded in US dollars, and more and more of them are needed to purchase a barrel of oil.

Unfortunately, the problem with printing money out of literally nothing has the result of creating more money out of thin air.  Suppose we have a bank called “Liberty Bank.”  Liberty Bank deals US government securities, kind of like Goldman-Sachs or J.P. Morgan.  The Fed has decided to buy $1 billion in US securities from Liberty Bank.  Liberty Bank happily skips home with its free money, cashes the check, and then unleashes the money on the market.  Within a relatively short period of time – a matter of weeks or even less – that bank will have further expanded the credit to the tune of about $9 billion more dollars.  In other words, what begins as a comparatively paltry sum quickly grows to the size of an elephant.  Using that knowledge, think about how much the Fed as expanded the money supply since 2008.

So what happens if the money supply gets inflated too far?  Well, several things could happen.  If the Fed raises interest rates to avoid hyperinflation, it will make the US debt instantly unmanageable.  We will no longer be able to meet our minimum payments.  In other words, the US government is going to be getting a lot of angry phone calls from debtors and collection agencies.  The result in this case may be the government admitting insolvency.  In other words, the government would be bankrupt and unable to meet the burden of its debt.  Debt would have to be written off, government programs would likely be scaled back en masse, and government agencies would be be cut.

Think this is an unlikely scenario?  Think again.  According to a report in 2010 by Bloomberg, the IMF has already said, in not so many words, that the US is already bankrupt.  At the time the article was written two years ago, the author calculated the actual indebtedness of the US government to be somewhere around $202 trillion, including off-balance sheet liabilities.  The IMF made the claim that the debt-to-GDP ratio was too high, and that in order to stabilize that fiscal gap, the US government would have to make a permanent adjustment equal to 14% of the GDP.  At that time, 14% of the GDP was how much the government was taking in with tax revenues.  In other words, taxes would have to double their current rate for the government to get into the IMF-determined “safety zone.”

Hard-line Keynesian economists like Paul Krugman have repeatedly made the claim that adding more and more money to the economy isn’t a bad thing.  In fact, every time I read an article from that guy, he’s railing on about how we should be spending more.  Well, he’s wrong.  According to Bloomberg and, frankly, common sense, it’s all a matter of arithmetic.  Basically, whatever isn’t paid at the end of the year (14% of the GDP, for example) will be added to the government “credit card bill,” which will roll over on the next year’s balance.  In short, the debt will continue to grow, and it will eventually reach the point of being too big to even meet the minimum payment, if allowed to snowball indefinitely.

At the same time, the possibility of hyperinflation looms.  Think hyperinflation can’t happen?  Think again.  In the 20th century, hyperinflation happened multiple times: Weimar Germany, Argentina in the late 1980s and early 1990s, Russia in 1992, China in 1949-50, Brazil in 1989-90, Zimbabwe in 2006-09, etc.  Yes, it can happen.  Before it was all said and done in Weimar Germany, it was something like $1 billion marks to $1.  Argentinians woke up one morning unable to withdraw money from savings.  When they were finally able to get their money out, they discovered that it had only half of its original value.  Life savings were wiped out.

How might this happen?  Two years ago, Thorsten Polleit contributed an article to the Mises Institute that suggested we may experience a crack-up boom – that is, people finally come to the conclusion that the Fed will continue to print money at an unrelenting rate.  They begin buying things for which they actually have no need, if only to get rid of the paper money, which is quickly becoming worthless scrap.

He also suggests that another credit crisis is possible when creditors are no longer willing to roll over maturing debt at prevailing interest rates.  Borrowers can neither meet their obligations nor afford the increased borrowing rates.  They go bankrupt and collapse.  This will set off a chain of similar events that will finally result in the collapse of the credit structure.  He goes on to note that, should investors expect more bailouts financed through money creation, the demand for money will dry up.  The central bank will extend more and more money in an attempt to stop the wildfire spread of bankruptcies, and thus the crack-up boom will come home to roost.  Scary, huh?

At this point, I might highlight the reason I included the word “morality” in the title of this post.  When all is said and done, which people really lose the most in these scenarios?  The people who receive the money last, the poor and middle classes, lose the most.  Those receiving the money first, namely the bankers and so on, are having more and more wealth transferred into their hands.  Those on the bottom lose the most as their purchasing power evaporates and their savings become more and more worthless.  The question of the desirability of such a transfer of wealth is not economical, but ethical: is it right to take people’s money away in this manner?  Ask the folks at Occupy what they think about the rich getting richer and get back to me!

The moral hazards of the fiat money created by the Fed also include the ability to prolong war (see Iraq, Afghanistan, Libya…), the slow decline of the financial system, the expansion of an irresponsible state, and many others.  I think it would be hard to deny, at this point, that we are not experiencing at least one, if not all, of these things.

So the question now is do we really want the Fed?  Are they really doing more good than harm?  We are now four years into this recession, and there don’t appear to be many signs that things are getting better.  If anything, it seems that the Western world is in a state of financial decline that is getting worse by the month.  Krugman says that we haven’t done enough, that we haven’t pumped enough money into the economy.  Is that the case, or could it be that the Fed’s policy of fast and easy money is causing a slow, painful death of the US economy?  Are we only prolonging what may now be inevitable?

I don’t want to seem doom-and-gloom about this.  I really don’t.  Unfortunately, I don’t see a situation that is improving.  That said, I don’t want to leave my readers without hope.  Is it too late?  I don’t know, and that is the honest truth.  But here’s what you can do.  Educate yourself about the Fed and Austrian economics.  Hell, educate yourself about Keynesianism.  If you believe as I do that the Fed is at the very heart of this “evil empire,” write some angry (but cordial) letters to your representatives and tell them to support HR 459 or S 202, which are the current incarnations of the Audit the Fed bills.  The Fed has never received a full audit that would include off-balance sheet transactions and tell us where the money is going.  (Aren’t you interested in knowing if there might be some conflicts of interest or primary beneficiaries of that money?)  Sign the Audit the Fed petition online; it only takes about two minutes of your time.

Please take some time and read the following material.  It helped me write this article, and some of it is invaluable reading.  I encourage you to download the (free!!) PDF file of Murray Rothbard’s The Case Against the Fed.  It isn’t very long, and it explains things rather concisely.  I will also freely admit that I used his billion-dollar credit expansion example.  Given how Rothbard and most folks at Mises felt/feel about “copyright infringement,” somehow I doubt that he’d mind.

Read and do more!

Sign the Audit the Fed Petition

US is Bankrupt and We Don’t Even Know It – Lawrence Kotlikoff via Bloomberg

The Federal Reserve vs. the Constitution – Ron Paul

Hyperinflation, Money Demand, and the Crack-Up Boom – Thorsten Polleit via The Mises Institute

For and Against Paper Money – MisesWiki

The Case Against the Fed – Murray Rothbard (PDF available for free download courtesy of the Mises Institute)

Visit Campaign for Liberty, as they do a lot towards auditing the Fed.

More suggested reading: End the Fed by Ron Paul, Gold, Peace, and Prosperity: The Birth of a New Currency by Ron Paul, America’s Great Depression by Murray Rothbard, The Case for Gold by Ron Paul and Lew Lehrman (free PDF available from Mises)

My Two Cents on the Birth Control Debate

I know, I know, I haven’t been posting much lately, and for that I’m sorry.  I seem to go through slumps with my writing, and I’ve definitely been in one lately.  I think I’m going to fancifully call it an “intellectually lazy” period because that sounds better than saying I’ve just been plain lazy.  I’ve been equally lackadaisical about following the bruja on birth control that has been swirling around the US as of late.  I’m sure it’s just as (intellectually) lazy to admit this, since I have no solid evidence to support this other than Facebook observations, but truthfully, it seems like a bunch of progressives getting miffed because a religiously affiliated university doesn’t see fit to provide students with birth control.  Maybe that’s why I didn’t blink: it’s a Catholic institution.  Didn’t everyone already know that, generally speaking, the traditional Catholic stance has been against birth control?

Of course, then it seems like the religious right proclaiming that nobody should be on birth control, since they don’t believe in it.  And if it’s morally wrong, then nobody should have the right to do it.  I don’t know if that’s exactly what they’re driving at, but it sounds like the sort of knee-jerk statement that would come out of the mouth of someone like, for example, Rick Santorum.  Being as how neither side makes any sense, I’m going to assign both of them a dunce cap and tell them to go sit in the corner.  Much like my student whom I’ve dubbed “the scarecrow” – brains made of straw and a face to match – they probably will neither sit down nor shut up.

Both sides are wrong for a similar reason: they are attempting to force their beliefs on those who don’t share them.  In the case of the left, they are attempting to coerce a group or groups of people to financially support something with which, for whatever reason, they do not agree.  In the case of the right, they are attempting to deny a group or groups of people something that they desire from the marketplace.  Neither has any real legitimate claim to coerce another group, regardless of all the well-intentioned arguments and ideas behind it.

Let’s start with the progressives.  From what I’ve gleaned, they support insurance companies and businesses forcibly providing birth control for medical reasons, such as cystic ovaries.  They have also argued, essentially, that society benefits from the effects of more women being on birth control.  One friend of mine also argued that providing birth control, rather than not providing it, ends up costing the insurance providers and businesses in question less over time.

There are very few, if any, insurance companies that will refuse birth control if it is necessary to save one’s life or prevent more expensive procedures further on down the line.  I find this to be a rather weak argument, so I’m going to leave it where it is.

The argument that “society owes it to itself” is a huge fallacy that was exposed by the late, great Murray Rothbard.  Simply stated, society doesn’t exist.  I know that sounds like a claim from outer space, but let’s look at the facts.  Society is frequently treated as though it is some entity that actually exists, and it doesn’t.  Rothbard, in his brilliant work For a New Liberty: The Libertarian Manifesto, provides us with the example of a band of ten robbers.  Those ten robbers show up to a home, break in, and take whatever they please.  They are caught and, when brought to court, make the argument that they are a “society,” and they were robbing other people because it was in their best interests to do so.  Naturally, this idea would not hold up in any respectable court.  However, when the number multiplies and suddenly we are speaking of a large number of people seeking to rob another large (or small) number of people, the argument suddenly becomes cloudy and more difficult to perceive.  Interestingly, this argument about “society” can also be used to take blame away from a person or persons who most properly deserve it, thus removing the need for accountability.

I view the argument that “society” owes it to itself to be a completely erroneous and frankly illogical argument.  In order for a “society” to truly exist, it must be homogenous with identical beliefs, hopes, and standards.  Obviously, this “society” or utopia, if you will, has never and will never exist.  Even if everyone else were in favor of doing something, if one person doesn’t consent, then that person has a right not to be coerced.  Put differently, it is not moral or ethical to force me or anyone else to pay for something that you want, if I do not wish to provide it of my own free will.  This applies to taxes just as easily as birth control and a host of other things.

The savings argument is an interesting one, and I have not seen any articles or statistics on it, though I will freely state that statistics can be skewed to go the way the person reporting wants them to go, in many cases.  One might ask why, if there are such great savings to be had, businesses and insurance companies are not already taking advantage of these great savings.  Honestly, why?  The only reason I could think would be if there were some sort of government subsidy that provided more money and thus negated those potential savings.  Knowing how heavily government is involved in the medical and insurance industries, this would not be unexpected, though I have no evidence to back it up; it is merely a hazarded guess.

Ultimately, birth control specifically and reproductive rights generally are a deeply personal issue for most, if not all, women.  Women should have the right to choose, of course.  Nobody should be asked to cosign another individual’s beliefs, whatever they may be.  However, being forced directly or indirectly to subsidize those choices is demanding that acquiescence.  The only way to forever settle this issue is to forget this notion about what is good for society and let people take care of themselves with their own money.  Leave the government out of it.  Leave the church out of it.  I have the right to decide for myself, and so does everyone else out there.  Don’t let anyone, left or right, tell you otherwise.

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.

Paul Krugman Gives Me a Rash: A Rant

There are very few things that get me angrier than Paul Krugman’s Nobel Prize-winning economic analyses.  Seeing people post his articles on Facebook and then worshipfully extolling the virtues of Keynesian economics is one of them.  I have to restrain myself from verbally attacking people on a personal level.  That is how much I can’t stand Paul Krugman.  Reason goes completely out the window.  Furthermore, I have noticed a pattern among these posters, and I now assume that they are all career students or professors who have never had a real job because, well, most of them are.  Call me judgmental.  It won’t hurt my feelings.

I can never quite decide if Paul Krugman is secretly a genius who knows that he’s writing pieces that are full of b.s., or if he legitimately believes what he’s saying.  I also can’t decide which option is worse.  Whatever the case, he seems to offer overly simplistic, one-sided solutions delivered with a healthy slathering of unclear language.  Because being obtuse makes you smarter…

I’m not going to cite any particular Krugman articles on here, since I’m filing this under “Rants,” and I’m going to speak purely about my personal opinion.  I feel like every Krugman article I read comes back to one central theme: we aren’t spending enough money.  Every time I read a Krugman statement that amounts to an admonition that we should be printing/spending more money, my left eye twitches and an overpowering urge to punch someone repeatedly in the face takes over.

Putting the fancy economic analysis aside, let’s address this with plain common sense.  How in the world is it possible to spend oneself into prosperity?  I’m sure Krugman has offered some explanation somewhere about spending oneself into prosperity, but I honestly can’t think of an instance in the last century when that has happened.  If any of you readers think of one, please do post it in the comments section.  Some folks will try to use WWII as an example, but the depression didn’t end until the post-war era, so that one falls flat for me.  Lord knows the New Deal didn’t do the job.

I am probably (hopefully) being somewhat extreme in my rantings, but I truly feel as though Krugman is constantly advocating greater and greater debt, saying that it generally doesn’t matter.  Just keep spending.  Keep driving consumption.  Spend, spend, spend.  Consume, consume, consume.  Um, isn’t that what most liberals/progressives/lefties/whatever trendy name they’re using now are generally against?  Consumption?

The on-the-books US debt right now $15.4 trillion.  That doesn’t include Fannie and Freddie, nor does it include the Fed’s off-balance sheet transactions.  I shudder to think what it would look like, were those additional items added to the computation.  As though $1 trillion isn’t a number too big to grasp!

The ever-increasing money supply can only have one final result: hyperinflation.  As I’ve stated previously, there are various reasons why hyperinflation hasn’t hit us yet.  For one thing, US and international banks are still sitting on a lot of that capital that is just floating around out there.  For another thing, it is being used outside the US to settle international transactions.  Again, this is why the US dollar’s status as a reserve currency is so important.  Were we to lose that privileged status, it wouldn’t be long before those dollars started making their way home.  There is only so far down that the Fed can drop interest rates, which seems to be Krugman’s other solution for every ill our economy faces.  If the money supply were suddenly contracted and interest rates were to go up, it would certainly make debt repayment a lot more interesting for the US government!

Whatever the case, I have caused myself a whole evening of stewing and mumbling to myself just for reading two Krugman articles.  I’m convinced that he has never taken the time to read and even passingly consider the Austrian business cycle model.  He laughingly brushes it off, but I have yet to see him mount a convincing argument against it.  I suppose he doesn’t have to.  He already has masses of slavering fans who adore him and think that his ideas about spending a seemingly endless supply of cash, soaking the rich, and redistributing the wealth are incomparable genius.  Maybe I’m the one who needs a reality check, but I don’t think so.

Taxation and wealth redistribution is still legalized plunder.  Creating an endless supply of cash with no backing will eventually lead to a hyper inflated currency.  Go ahead.  Ask the South Americans.  The Romans.  The French.  There are many, many examples throughout history of such a thing happening, so every time I hear a Keynesian say that it can’t happen here, I have to shake my head and remind them that it has, it can, and it could.  That’s usually about the point where someone says, “Oh, aren’t you a libertarian?  Yeah, you’re one of those Ron Paul supporters,” and they think that solves the matter.  I’m wrong, and they’re right.  I suppose if it helps them sleep better at night.  For my part, I think Krugman’s articles make far better bonfire starters than reality-based economic reading material.

C.I.A. Intelligence Claims Iranian Nuke Probably Doesn’t Exist

I feel like it’s the W. era all over again.  Where are those weapons of mass destruction?  Has anyone seen them?  Are they under the coffee table?  Are they buried in the sand?  Oh, right.  They don’t exist.  Now I remember how this story goes!

The New York Times ran an article on February 24th stating that the C.I.A. has so far failed to confirm the existence of a nuclear weapon in Iran.  Well, actually, that isn’t just the opinion of the C.I.A., but rather it is an opinion shared by all 16 of the United States’ intelligence agencies.   Let me repeat that.  Sixteen intelligence agencies have failed to confirm the existence of a nuclear weapon in Iran.  In fact, an intelligence assessment dating back to 2007 stated that Iran had abandoned its nuclear aspirations some time ago.  That view was re-confirmed in 2010, and it is the opinion of the intelligence agencies that it is still held today.  So why in the world are we talking about going tear-assing into Iran because they have nuclear weapons?

This whole business smells like another Iraq.  Can you smell it, too?  It’s a cross between a burning oil field, napalm, and the Fed overheating the computers that “print” the funny money.  And believe me, folks, this gasoline smell doesn’t smell like victory.  It smells like death, destruction, and further loss of freedom for American and Iranian citizens.

Iran has not yet enriched uranium, which is absolutely necessary to make a warhead.  Although it is not outside the realm of possibility for them to accomplish this, and they could be making moves in that direction, in all probability, it has not yet been accomplished.  And that brings me around to another point in the debate about Iran’s nuclear capability: Why shouldn’t they have a nuclear weapon?

Approaching this from a purely unbiased standpoint, if other countries such as the US, China, Russia, and others are allowed to arm themselves for “defensive purposes,” why isn’t Iran allowed to do it?  Who gets to decide this?  Why do they get to make that decision?  Does the United States get to make that decision, and if so, what is the logic behind it?  Is it a case of whomever has the biggest guns gets to determine the destinies of everyone else?  Because if that is indeed the case, one might be able to understand why Iran would want to have a nuclear weapon: self-determination.

Frankly, I am rather surprised that Iran doesn’t have a nuclear weapon.  One would think it might be one of the few ways to keep the American military from invading, quite truthfully.  At least the US government would be far less willing to go to war if Iran had such a weapon.  Certainly we never made so bold a move as to attempt to send an invasion in the USSR at the height of the Cold War.  To have done so would have been risking nothing less than total annihilation.

Let’s assume that the C.I.A., the Mossad, and others are completely correct in their analysis that Iran has not yet produced a nuke, as of today.  Are we going to head into Iran on the off chance that they will have a nuclear weapon?  It seems to me that their only motivation for producing one is the threat of invasion.  And if we are so concerned about this situation, why have we not stopped other countries, such as North Korea, from producing nukes?  What stopped us then?  Was Kim Jong-Il deemed more reliable somehow?  Or could it possibly be that Iran has run afoul of the US government in a way that the North Koreans could never dream?

I have discussed petrodollars and the role that I firmly believe they play in US foreign policy.  The world market is saturated with US dollars, courtesy of our numerous and hefty bailouts.  Iran still refuses to trade in US dollars.  All of its transactions, particularly those big, juicy oil transactions, are settled in currencies other than the US dollar (and, to the best of my knowledge, the euro and pound).  Call me crazy, but I’d be willing to be that if Iran suddenly caved and started settling its international transactions in petrodollars, the US government would suddenly be far less interested in putting boots on the ground.

The article has an interesting moment when it interviews David A. Kay, who was the head of the C.I.A. team that searched for Iraq’s non-existent weapons of mass destruction after the invasion.  He says that, “They don’t have evidence that Iran has made a decision to build a bomb, and that reflects a real gap in intelligence.  It’s true, the evidence hasn’t changed very much [since 2007], but that reflects a lack of access and a lack of intelligence as much as anything.”

Maybe I’m being a bit dense – feel free to tell me if I am –  but that almost sounds like Mr. Kay is hesitant to believe that any reports claiming that Iran doesn’t have nuclear capabilities are somehow false.  If the evidence hasn’t changed much, does it necessarily reflect a lack of intelligence?  What if it reflects a simple truth, that Iran is not nuclear capable and has not concluded that it wants to become so.  Granted, there could be a lack of intelligence, and I’m certainly not an intelligence expert nor would I claim to be such, but the fact that 16 US intelligence agencies agree with this assessment makes me think that perhaps we are trying to see something where there is nothing in order to justify an attack to the American public.  Even the former head of the Mossad has said that Iran isn’t nuclear armed.  Is the US government trying to scare us into war by making us believe that Iran is a Muslim boogeyman that wants to blow us off the map?

I acknowledge that there are extremists in the Muslim world.  However, I don’t think for a second that the Iranian government has a death wish.  I don’t think that they would reach the conclusion that they were going to bomb us simply as a result of them having a nuke.  I do think, however, that their unwillingness to work with the US government probably has something to do with the decades-long sanctions against them imposed by said government.  Sanctions are, after all, the precursor to war.

The economy is the real safety concern in America, not Iran.  Iran is not nuclear capable and even if they were, they would still have to have a way to deliver that payload to US soil.  What is a serious problem, however, is the massive amount of US money floating around in the world economy that could potentially lead to hyperinflation.  A hyperinflation of the US dollar would have disastrous consequences at home and abroad, and the US government cannot be so stupid as to not recognize this simple fact.  Anyone who thinks that inflation is not a serious problem doesn’t know the definition of the word inflation.  As my devoted readers know, inflation is simply the increase in the money supply – nothing more and nothing less.  Therefore, it is silly to argue that inflation does not exist in the current climate.  If trillions of dollars have been pumped into the economy, inflation is real, regardless of whether or not it is yet reflected in prices.

We are embarking down an increasingly dangerous path.  By threatening Iran, we may end up arming a country that was not previously nuclear.  We will be risking the lives of our own young soldiers, and we will be risking the lives of the Iranian people.  And they are people.  I think sometimes that, because the US is somewhat isolated from the rest of the world geographically, we forget that these are real people.  They have homes and families, hopes and ideals.  They may be different from us and we may consider them strange, but they have just as much right to be here as we do.

When it is all said and done, there is only one candidate who is truly a candidate for peace, and that is Ron Paul.  Dr. Paul is the only candidate who is speaking truth to power, in terms of our foreign policy.  He is the only person who is talking about changing our insane monetary policies for the better.  The bottom line, whether or not Republicans, Democrats, or others want to admit it, is this: If you believe in fiat money, bailouts, and redistribution of wealth both at home and abroad (especially abroad), you are in support of war.  That is not a statement I make lightly, but it is the truth.  Without war, our current system will eventually lead to economic failure.  From the looks of it right now, war may not even be enough to feed the widening black hole of debt.

I strongly encourage those of you who haven’t already to consider Ron Paul.  He is the only person on the stage, including Obama, who is talking about real change.  We cannot re-elect Obama just because he says that he is for change; he isn’t.  We cannot elect goons like Mitt or Newt who say they they will work for change; they won’t.  Their records are proof enough that the status quo is all a vote for them will garner us.  It is now or never, folks.  Now is the time to change America for the better.  Vote Ron Paul – he is the best hope for a peaceful and prosperous future!

Check out the Times article here!

%d bloggers like this: