Libertarian Archives - The Allegator

Some Ron Paul Videos

Just an update on some recent Ron Paul videos. First up we have a couple from Jon Stewart, who has given a boost of cred to both Ron Paul and himself by highlighting the coporate media’s fear of everything Ron Paul. Stewart shows once again that he earned his place as the most trusted journalist in America. Sometimes all you need is an observant nature and an unwillingness to be bought.

Stewart had him on again more recently. Below is the third part of the interview. The first two parts are there too, but were of less substance. Ron Paul needs to get better at explaining his positions to liberals. It isn’t that he wants to destroy all social programs and safety nets, he is just trying to get them back to a more local level.

There was also this interview on FOX, where he talks about working with the Democrats, and how compromise in the modern political sense is where you give up half of your beliefs. He instead is willing wo choose his allies issue by issue, and find common ground rather than concessions.

National Budget Vs. Personal Budget

• U.S. Tax revenue: $2,170,000,000,000 • Fed budget: $3,820,000,000,000 • New debt: $ 1,650,000,000,000 • National debt: $14,271,000,000,000 • Recent budget cut: $ 38,500,000,000

Got it?

OK, now let’s remove 8 zeros and pretend it’s a household budget:

• Annual family income: $21,700 • Money family spent: $38,200 • New debt on credit card: $16,500 • Outstanding balance on credit card: $142,710 • Total budget cuts: $385

I’ve seen the above posted on a number of sites recently. I think it’s valid to think of the budget in these terms.

Sure, there are differences, such as our government’s ability to legally launder money, but the basic principles of home finance do relate, and taking eight zeroes off helps make things imaginable.

Considering that there are approximately 300,000,000 Americans, around half of whom don’t pay income taxes, it isn’t even too far off for figuring your own percentage of the debt.

Gimmicks aren’t going to change this chart. You can tax the people to give out loans (more debt) to small businesses, but that is mostly zero-sum. You can tax the people to pay for unemployment to encourage the unemployed to spend money to stimulate demand for products and thus create jobs, but that is like buying your employer’s product on your credit card in order to keep them paying your paycheck; It gets you nowhere or worse. You can tax the rich dry and barely make a dent in that number.

Just like in your personal finance, if you want to gain wealth, you need to provide something that someone else needs. If we aren’t selling more to foreign nations than we are buying, we are losing.

This isn’t so much a supply or demand problem as it is a relative value problem. If we are going to be on the losing side of this equation, we need to be printing money rather than borrowing it. This may not be fair to the savers, but they will fail right along with the rest of us on the current course.

Printing money eventually devalues it. A devalued currency will make imports more expensive and exports more affordable, putting us to our rightful place in the market again.

I would also support an eye-for-an-eye tariff policy to prevent socialist nations from taking advantage of us. Until one or both of these things are instituted, our economy will continue to decline.

Even with those changes, we also need to reduce our spending on the military, foreign aid, micromanaging regulations, incarceration, social programs for non-citizens, and benefits for public employees.

Stereotypes, Taboo, and Equality by Force

If philosophy is questions that may never be answered, and religion is answers that may never be questioned, then politics is asking the wrong questions in order to avoid unwanted answers.

There are times when truth is the bane of politics, often justifiably so. It is one of the most central tenets of our nation that everyone is treated equally under the law.

Or so we say.

If a man and a woman go out for a walk topless, only one of them will be arrested for indecent exposure.

When they turn 18, only one of them has to register for the draft.

Sometimes it is somewhat less certain. If a couple are getting divorced, which one is going to get the kids and which one is going to pay the child support? We all know the answer, most of the time.

In Arizona, if you look Mexican they will ask you for your papers.

Age discrimination is so rampant in our legal system that we wouldn’t even know how to remove it. We consider our kids to be old enough to go overseas and kill and be killed in war years before we consider them to be responsible enough to drink a beer.

And then you have groups who claim to be crusading against discrimination, arguing to mandate it in their favor in order to balance the scales. They argue that high crime rates and low test scores among their constituents are the result of poverty and tests written by the majority for the majority. They suggest that the solution is affirmative action. Grants for minorities, hiring quotas, and legal protections against discrimination based on their minority status.

I would argue that these things cause the very things they claim to prevent. You can’t just give an opportunity to one person without taking it away from another. Denying a job to the most qualified candidate in order to give it to a lower scoring minority breeds dissension and lowers productivity. It foments racist and sexist thoughts in those who are turned down for the job they are best at.

It also creates a perception of incompetence. Would you want to be a minority who had earned their position through skill and hard work, only to have everyone figure you were given the job to fill a quota? I’m not saying such policy should never be made, but that we need to be honest about all of the effects it will have, rather than optimistic cherry picking. If the state of repression is significantly more serious than the ill will generated, such as slavery or segregated schools, then so be it, but there comes a time when the only time you approach equality is when you take the training wheels off.

I say approach equality rather than achieve equality because I don’t believe we will ever get there. There is no divine entity making sure that everyone’s weaknesses are perfectly balanced out by some hidden strength. Some people are just bad people. Some are weak, some are strong. Science tells us that many of these traits are passed on genetically.

So what do we do when science tells us that people with short index fingers are more prone to violence? What happens when a racial profile accurately predicts aptitude? When a gene predicts that you will cheat on your spouse?

Most of us don’t even want to admit that it might be possible. Pretending that such data doesn’t exist is just hiding our head in the sand. It’s out there. People read it. People act on it. The Amish riding around in buggys doesn’t prevent the existence of military satellites.

If we are to have equal treatment under the law, our only hope is to studiously prevent our government from collecting, interpreting, and acting on details of our personal data. This means in order to prevent such profiling, we also need to be rid of the quotas.

These kinds of issues are things I occasionally ponder. If you are interested in getting a much deeper understanding of the news and issues surrounding the battle between reality and social expediency, there is a blogger who seems to devote his every waking hour to the subject, and I’m sure gets a daily earful of people calling him a racist for doing so. Whether he is or not, he’ll make you think, and alert you to news you just won’t hear elsewhere, for example:

The Cherokee Nation voted to amend their constitution to remove the citizenship of descendants of slaves once owned by its members. More casino money for the rest of the tribe?

Asians pulling away in SAT scores.

Race and DNA based medicine.

Study shows other apes don’t have shared goals.

How Microsoft reduced its taxation from 25% to 6% in one year.

Dept. of Justice legal loophole to discriminate against Americans.

For Everyone Else, There’s WikiLeaks

I haven’t spoken much about WikiLeaks, but I’m glad that such organizations exist to shine some sunlight on the back-room dealing of those in power. It’s a sad day when the truth is a crime.

Our secrets are a weakness, not our power. Who can be blackmailed, if they have no secrets? Who embezzles money in the light of day? If torture is humane and effective, then why don’t we do it publicly? What investor invests in a market they know is overvalued?

If the state of our Union is strong, don’t tell us it is strong, show us it is strong. Open the books. Knowing that the data they see is the truth will brink confidence in our Dollar and our nation, not chase it away. Besides, if you don’t open the books, Assange will do it for you.

I also think it’s key, when the media and politicians talk about the damage done by a Wikileak, that we assess for ourselves whether that damage is at the feet of Wikileaks or those who perpetrated what they have exposed.

Wikipedia keeps a current list of all of the major stories they’ve broken here.

Booms, Busts, and Government Stimulated Demand

Those who look busy in politics enjoy short term success. After Sept. 11, the majority were thirsty for blood and supported the Patriot Act and the invasion of two foreign nations. Now they are demanding that something be done by government to fix the economy.

It could be argued that politicians talked up the economy. It isn’t so much that they talked it up or down, but that they did them backwards. If they had tightened lending during the boom, we never would have been in the position to bust. Talking up the bust and down the boom makes me wonder if they wanted us to crash in order to boost U.S. manufacturing (see my conspiracy theory post), or if it was just straight corruption at the point where regulators choose who gets the money.

Our government is comprised almost entirely of investor-class elected officials. When times are good, they want to use their power to fuel growth and for their own profits and popularity. When times are bad, they feel the ire of the populace threatening their re-election and seek someone to blame in order to appear to be cracking down on the problem. We can see an example of this in the housing market boom and subsequent crash:

In 1977 Jimmy Carter signed the Community Reinvestment Act, which went a long way towards giving government the right to force the banking system to lend to high risk borrowers.
In 1982, Congress (with a Democratic majority) passed the Alternative Mortgage Transactions Parity Act, which allowed non-federally chartered housing creditors to write adjustable-rate mortgages.
Bill Clinton put pressure on “Government Sponsored Entity” Fannie May to relax credit requirements in order to try to boost lending to low income buyers. HUD wanted them to keep 50% of their portfolios in loans to low income people.
Bill Clinton threatened to essentially audit lenders and air their dirty laundry if they didn’t comply. Here is what realtytimes was saying back in the beginning of ’03: “Government policies encouraged riskier lending. They did this ‘encouraging’ with threats to step in with GSE reform legislation in response to accounting scandals, and other such methods.” There is clear evidence of both carrots and sticks being used by the government.
George W. Bush continued and expanded these policies. In 2008, Government Sponsored Entities had extended over five trillion in loans, with a mere hundred million in total assets. They were able to do this via Fractional Reserve Lending, which is an outdated concept from back when banks didn’t want to have to hold on to large amounts of gold, and more recently is used as a way for central banks to regulate the money supply.
Investors would flee if they saw the banks making such high risk loans, so the banks started bundling risky loans and selling them at bargain prices in order to keep profits up for investors.
People saw great profit in real estate and started taking out as much debt as they could, figuring they could always just sell some if things got tight.
A hiccup in the housing prices started a cascade. Housing prices began to drop, and people started to default on homes that were no longer worth as much as the loan.
As the problem gained media attention, the politicians deflected the blame, blaming the banks for the government-pushed subprime loans. They assured us that they would fix the problem by regulating these wicked banks and doing away with their subprime lending.
The inability of people to get loans or refinance demolished the housing market, making it even harder for those in trouble to sell, even at a loss. Foreclosures cascaded further. This tanked the housing prices and caused the very foreclosures they were intended to prevent. People who would have gladly sold their homes or refinanced were foreclosed on instead. The banks were nothing but a Ponzi scheme.
George W. Bush realized his legacy was threatened, and that the collapse of the American banking system would be put at his feet. He abandoned any pretense of free market and crafted the largest corporate bailouts in history.

To unravel the above mess, you have to realize that government financial regulation is an illusion. It creates waste and assures that the booms and busts are larger, last longer, and affect everyone. The bottom line is that we had people borrowing fake money from the central bank, money which was backed up by the government, which is backed up by the people – people borrowed fake money from themselves to buy houses they couldn’t afford, and subsequently lost them. The free market balanced itself, via crash, despite the government meddling, but with a much greater magnitude than it would otherwise have had. Without government regulation, fractional reserve lending wouldn’t exist on a national scale, nor would subprime loans, and neither would the problem.

From the wiki: “fractional reserve banking benefits the economy by providing regulators with powerful tools for manipulating the money supply, interest rates, and government debt creation. From a Keynesian point of view this debt creation provides governments with much greater latitude to stimulate the economy through government spending.”

On the Federal Reserve: According to the wiki, “The Federal Reserve System is subject to the Administrative Procedure Act. It is not “owned” by anyone and is “not a private, profit-making institution”. It describes itself as “an independent entity within the government, having both public purposes and private aspects””. The Federal Reserve was created in 1913, by a Democratic Congress and approved by Woodrow Wilson. The Chairman and Vice Chairman of the Federal Reserve are both appointed by the U.S. President.

The very creation of the Federal Reserve gave regulators both the power and the inclination to lengthen booms and then plunder private sector savings (monetize) to ‘stimulate’ our way out of the ensuing and ever larger busts.

Lack of oversight? There is a difference between no oversight and bad oversight. The government controls everything from taxes, to laws, trade treaties, tariffs, lending practices. If the regulators were pushing subprimes and Fractional Reserve Lending, then how would additional regulating been helpful? The only idea I’ve heard out of Washington lately is that we should borrow money to make a product we don’t want and then go buy it. We have a sinking boat with one party wanting to bail water out of the front of the boat into the back, and the other party wanting to bail water from the back of the boat into the front. It doesn’t help to shuffle the money around if you don’t earn it in the first place.

It isn’t so much the fault of the market or government, but at the point at which the two meld, where government decisions affect the flow of large amounts of money in the private sector, corruption is inevitable. The banking sector is a tough issue. The way I see it there are three main ways we can deal with this:

We can nationalize the banks. It wouldn’t be the first time. Obviously, the government has its own problems with inefficiency and corruption, and this essentially gives a competitive advantage to those banks which are subsidized by the government (as does our current meddling in which we have seen bailed out failures buy up successful competitors).
We can do nothing. This is high risk in the sense that if the banks fail, the government is obligated to pay for most of what the banks lose (FDIC guarantee of 250k per account), so if they fall, we pay anyway. As for if they will fail; deflation causes defaults, which causes bank failure; inflation higher than interest rates makes the banks lose money on all of their loans. Due to fractional reserve lending, this means they will fail if the economy is at all unstable. Seeing how we just doubled our money supply last year, this is pretty much going to happen. A failure of the banking industry impacts lending, which is central to the Ponzi schemes that are most modern businesses, and to the housing market. If everyone has to buy their houses with cash, the price is either going to fall a lot farther, or they are going to be bought by China.
We can do what we are doing now, which is leave them private and give them money, which they will abuse, both due to human nature and greed, and due to it being in the bank’s best interest to hold the money as long as the dollar is gaining value (which it has been until very recently), because using it causes inflation (if the dollar drops much longer, expect dramatic inflationary action by banks trying to drop dollars which are losing value). This is just meddling, and isn’t healthy for anyone.

The problem is that we are so deep in this Keynesian lunacy, that switching systems guarantees a crash. What are we to do?

I think this highlights a serious flaw in human nature. People have this unshakable feeling that there is a benevolent deity looking out for them, that everything will turn out fine in the end, and that there is a good solution to every problem, that when life gives you lemons, you get lemonade.

Sometimes every solution comes with pain and sacrifice. Sometimes the government can’t fix it, people die, wars are lost, retreat is the best you can do. Sometimes you just have to eat your damn lemons.

The longer you fight the tough decision, the worse the consequences get. We need to deal with the core issue, which is that every day we pay more regulators more money to regulate a shrinking industrial base. It’s time we let go of the micromanaging and let our good citizens keep the fruits of their labor so that they might afford to keep doing it.