Tag Archives: China

Libertarianism = the Marxism of the Right ???

A friend recently posted on my Facebook wall Robert Locke’s misguided criticism of Libertarianism in The American Conservative magazine:

Libertarianism is basically the Marxism of the Right. If Marxism is the delusion that one can run society purely on altruism and collectivism, then libertarianism is the mirror-image delusion that one can run it purely on selfishness and individualism. Society in fact requires both individualism and collectivism, both selfishness and altruism, to function. Like Marxism, libertarianism offers the fraudulent intellectual security of a complete a priori account of the political good without the effort of empirical investigation. Like Marxism, it aspires, overtly or covertly, to reduce social life to economics. And like Marxism, it has its historical myths and a genius for making its followers feel like an elect unbound by the moral rules of their society.

My rebuttal:

The difference between libertarianism and statism is the difference between peace and war. As Ludwig Von Mises wrote “A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.”

Let me now back up this statement by picking apart Robert Locke’s:

libertarianism is the mirror-image delusion that one can run it purely on selfishness and individualism. Society in fact requires both individualism and collectivism, both selfishness and altruism, to function

Selfishness does not go away when you replace economic power with political power. Bureaucrats are just as selfish as entrepreneurs. The important difference is that to the extent which we have a free market, people must act on their selfishness by providing goods an services which society VOLUNTARILY consumes. We are all slaves to the consumer. No such pressure exists on bureaucrats. To whatever extent economic activity is run by the state, people act upon their selfishness by bending the coercive hand of government to force people to buy their product, get direct subsidies, outlaw competition, etc.

Secondly, Locke seem to find a contradiction between altruism and libertarianism. You do not need to hold a gun to my head (taxes are collected under threat of violence), and filter my money through a den of theives for me to be altruistic. Were we allowed to keep more of our money, society would be MORE, not less, altruistic.

Like Marxism, libertarianism offers the fraudulent intellectual security of a complete a priori account of the political good without the effort of empirical investigation.

False. The empirical evidence is overwhelming. The correlation between economic freedom and economic prosperity should have long ago put to rest all these collectivist ideas that keep rising from the grave. We have yet to see a society which is too free.

My favorite examples are the ones in which similar cultures adopted different economic policies: Estonia vs. Latvia & Lithuania, West Germany vs. East Germany, Hong Kong in the 80s vs. the rest of China in the 80s, Botswana vs. the rest of Africa. I also hesitate to mention Chile vs. the rest of S. America, because their relatively free economy was put into place by a murderous dictator and often deemed guilty by association.

You can also look at all former Soviet states and see an almost exact correlation between economic freedom and economic prosperity.

Secondly, I disagree completely with Locke’s criticism of priori theory. You need theory. Without theory, economics is just endless data that tells you nothing. The world is too big to isolate experiments the way a physicist does.

An example often cited by Murray Rothbard are prices in the 1920s. Without theory all you see are stable prices. Just data attributable to almost anything. Theory tells you that the incorporation of the electric grid into production increased efficiency which should have lowered prices, but at the same time, massively inflationary monetary policies put upward pressure on the dollar, weakening its purchasing power. Hence, prices were stable.

Libertarianism in Ancient China

by Murray Rothbard

By far the most interesting of the Chinese political philosophers were the Taoists, founded by the immensely important but shadowy figure of Lao Tzu. Little is known about Lao Tzu’s life, but he was apparently a contemporary and personal acquaintance of Confucius. Like the latter he came originally from the state of Sung and was a descendant of lower aristocracy of the Yin dynasty. Both men lived in a time of turmoil, wars and statism, but each reacted very differently. For Lao Tzu worked out the view that the individual and his happiness was the key unit of society. If social institutions hampered the individual’s flowering and his happiness, then those institutions should be reduced or abolished altogether. To the individualist Lao Tzu, government, with its “laws and regulations more numerous than the hairs of an ox,” was a vicious oppressor of the individual, and “more to be feared than fierce tigers.” Government, in sum, must be limited to the smallest possible minimum; “inaction” became the watchword for Lao Tzu, since only inaction of government can permit the individual to flourish and achieve happiness. Any intervention by government, he declared, would be counterproductive, and would lead to confusion and turmoil. The first political economist to discern the systemic effects of government intervention, Lao Tzu, after referring to the common experience of mankind, came to his penetrating conclusion: “The more artificial taboos and restrictions there are in the world, the more the people are impoverished — The more that laws and regulations are given prominence, the more thieves and robbers there will be.”

The worst of government interventions, according to Lao Tzu, was heavy taxation and war. “The people hunger because theft superiors consume an excess in taxation” and, “where armies have been stationed, thorns and brambles grow. After a great war, harsh years of famine are sure to follow.”

The wisest course is to keep the government simple and inactive, for then the world “stabilizes itself.”

As Lao Tzu put it: “Therefore, the Sage says: I take no action yet the people transform themselves, I favor quiescence and the people right themselves, I take no action and the people enrich themselves—” (read more from informationliberation.com)

Yet Another Congressman Questions 9/11

Congressman Jason Chafetz just said that we need to be vigilant and continue to investigate 9/11.

A nutjob, right?

Maybe.

But he joins quite a few other Congressmen:

* According to the Co-Chair of the Congressional Inquiry into 9/11 and former Head of the Senate Intelligence Committee, Bob Graham, an FBI informant had hosted and rented a room to two hijackers in 2000 and that, when the Inquiry sought to interview the informant, the FBI refused outright, and then hid him in an unknown location, and that a high-level FBI official stated these blocking maneuvers were undertaken under orders from the White House (confirmed here)

* Current Democratic U.S. Senator Patrick Leahy said “The two questions that the congress will not ask . . . is why did 9/11 happen on George Bush’s watch when he had clear warnings that it was going to happen? Why did they allow it to happen?”

* Current Republican Congressman Ron Paul calls for a new 9/11 investigation and states that “we see the [9/11] investigations that have been done so far as more or less cover-up and no real explanation of what went on”

* Current Democratic Congressman Dennis Kucinich hints that we aren’t being told the truth about 9/11

* Former Democratic Senator Mike Gravel states that he supports a new 9/11 investigation and that we don’t know the truth about 9/11

* Former Republican Senator Lincoln Chaffee endorses a new 9/11 investigation

* Former U.S. Democratic Congressman Dan Hamburg says that the U.S. government “assisted” in the 9/11 attacks, stating that “I think there was a lot of help from the inside”

* Former U.S. Republican Congressman and senior member of the House Armed Services Committee, and who served six years as the Chairman of the Military Research and Development Subcommittee Curt Weldon has shown that the U.S. tracked hijackers before 9/11, is open to hearing information about explosives in the Twin Towers, and is open to the possibility that 9/11 was an inside job

And 9/11 Commissioners:

* The Commission’s co-chairs said that the 9/11 Commissioners knew that military officials misrepresented the facts to the Commission, and the Commission considered recommending criminal charges for such false statements (free subscription required)

* 9/11 Commission co-chair Lee Hamilton says “I don’t believe for a minute we got everything right”, that the Commission was set up to fail, that people should keep asking questions about 9/11, and that the 9/11 debate should continue

* 9/11 Commissioner Timothy Roemer said “We were extremely frustrated with the false statements we were getting”

* 9/11 Commissioner Max Cleland resigned from the Commission, stating: “It is a national scandal”; “This investigation is now compromised”; and “One of these days we will have to get the full story because the 9-11 issue is so important to America. But this White House wants to cover it up”

* 9/11 Commissioner Bob Kerrey said that “There are ample reasons to suspect that there may be some alternative to what we outlined in our version . . . We didn’t have access . . . .”

* And the Senior Counsel to the 9/11 Commission (John Farmer) – who led the 9/11 staff’s inquiry – recently said “At some level of the government, at some point in time…there was an agreement not to tell the truth about what happened”. He also said “I was shocked at how different the truth was from the way it was described …. The tapes told a radically different story from what had been told to us and the public for two years…. This is not spin. This is not true.”

And senior intelligence officers:

* A number of intelligence officials, including a CIA Operations Officer who co-chaired a CIA multi-agency task force coordinating intelligence efforts among many intelligence and law enforcement agencies (Lynne Larkin) sent a joint letter to Congress expressing their concerns about “serious shortcomings,” “omissions,” and “major flaws” in the 9/11 Commission Report and offering their services for a new investigation (they were ignored)

* Former military analyst and famed whistleblower Daniel Ellsberg recently said that the case of a certain 9/11 whistleblower is “far more explosive than the Pentagon Papers”. He also said that the government is ordering the media to cover up her allegations about 9/11. And he said that some of the claims concerning government involvement in 9/11 are credible, that “very serious questions have been raised about what they [U.S. government officials] knew beforehand and how much involvement there might have been”, that engineering 9/11 would not be humanly or psychologically beyond the scope of the current administration, and that there’s enough evidence to justify a new, “hard-hitting” investigation into 9/11 with subpoenas and testimony taken under oath.

* A 27-year CIA veteran, who chaired National Intelligence Estimates and personally delivered intelligence briefings to Presidents Ronald Reagan and George H.W. Bush, their Vice Presidents, Secretaries of State, the Joint Chiefs of Staff, and many other senior government officials (Raymond McGovern) said “I think at simplest terms, there’s a cover-up. The 9/11 Report is a joke”, and is open to the possibility that 9/11 was an inside job.

* A 29-year CIA veteran, former National Intelligence Officer (NIO) and former Director of the CIA’s Office of Regional and Political Analysis (William Bill Christison) said “I now think there is persuasive evidence that the events of September did not unfold as the Bush administration and the 9/11 Commission would have us believe. … All three [buildings that were destroyed in the World Trade Center] were most probably destroyed by controlled demolition charges placed in the buildings before 9/11.” (and see this).

* 20-year Marine Corps infantry and intelligence officer, the second-ranking civilian in U.S. Marine Corps Intelligence, and former CIA clandestine services case officer (David Steele) stated that “9/11 was at a minimum allowed to happen as a pretext for war”, and it was probably an inside job (scroll down to Customer Review dated October 7, 2006).

* A decorated 20-year CIA veteran, who Pulitzer-Prize winning investigative reporter Seymour Hersh called “perhaps the best on-the-ground field officer in the Middle East”, and whose astounding career formed the script for the Academy Award winning motion picture Syriana (Robert Baer) said that “the evidence points at” 9/11 having had aspects of being an inside job

* The Division Chief of the CIA’s Office of Soviet Affairs, who served as Senior Analyst from 1966 – 1990. He also served as Professor of International Security at the National War College from 1986 – 2004 (Melvin Goodman) said “The final [9/11 Commission] report is ultimately a coverup.”

* Professor of History and International Relations, University of Maryland. Former Executive Assistant to the Director of the National Security Agency, former military attaché in China, with a 21-year career in U.S. Army Intelligence (Major John M. Newman, PhD, U.S. Army) questions the government’s version of the events of 9/11.

And other government officials:

* U.S. General, Commanding General of U.S. European Command and Supreme Allied Commander Europe, decorated with the Bronze Star, Silver Star, and Purple Heart (General Wesley Clark) said “We’ve never finished the investigation of 9/11 and whether the administration actually misused the intelligence information it had. The evidence seems pretty clear to me. I’ve seen that for a long time.”

* Former Deputy Secretary for Intelligence and Warning under Nixon, Ford, and Carter (Morton Goulder), former Deputy Director to the White House Task Force on Terrorism (Edward L. Peck), and former US Department of State Foreign Service Officer (J. Michael Springmann), as well as a who’s who of liberals and independents) jointly call for a new investigation into 9/11

* The Group Director on matters of national security in the U.S. Government Accountability Office said that President Bush did not respond to unprecedented warnings of the 9/11 disaster and conducted a massive cover-up instead of accepting responsibility

* President of the U.S. Air Force Accident Investigation Board, who also served as Pentagon Weapons Requirement Officer and as a member of the Pentagon’s Quadrennial Defense Review, and who was awarded Distinguished Flying Crosses for Heroism, four Air Medals, four Meritorious Service Medals, and nine Aerial Achievement Medals (Lt. Col. Jeff Latas) is a member of a group which doubts the government’s version of 9/11

* Deputy Assistant Secretary of Defense under President Ronald Reagan (Col. Ronald D. Ray) said that the official story of 9/11 is “the dog that doesn’t hunt”

* The former director of the FBI (Louis Freeh) says there was a cover up by the 9/11 Commission

* Director of the U.S. “Star Wars” space defense program in both Republican and Democratic administrations, who was a senior air force colonel who flew 101 combat missions (Col. Robert Bowman) stated: “If our government had merely [done] nothing, and I say that as an old interceptor pilot—I know the drill, I know what it takes, I know how long it takes, I know what the procedures are, I know what they were, and I know what they’ve changed them to—if our government had merely done nothing, and allowed normal procedures to happen on that morning of 9/11, the Twin Towers would still be standing and thousands of dead Americans would still be alive. [T]hat is treason!

If he’s nuts, Congressman Chafetz is in good company. And see this and this.” (Read more from washingtonsblog.com)

NY Times Obituaries for 3 Communist mass murderers, and 1 anti-Communist mass murderer

Below are the headlines of four obituaries that have run in The New York Times. The first is that of the recent obituary of the Anti-Communist Augusto Pinochet. The next three are those of the obituaries of the Communist mass murderers Mao, Stalin, and Lenin. Please be sure to note how many are described as having ruled by terror.

December 11, 2006, Augusto Pinochet, Dictator Who Ruled by Terror in Chile, Dies at 91

September 10, 1976, Friday, . . . Mao Tse-tung Dies in Peking at 82; Leader of Red China’s Revolution

March 6, 1953, Friday, Stalin Rose From Czarist Oppression to Transform Russia Into Mighty Socialist State; RUTHLESS IN MOVING TO GOALS

January 24, 1924, Thursday, ENORMOUS CROWDS VIEW LENIN’S BODY AS IT LIES IN STATE; Wait Hours in Snow and Zero Temperature Outside Moscow Nobles’ Club. COFFIN CARRIED FIVE MILES Members of Council of Commissars Stagger Under Load, Refusing Gun Caisson. LENIN CALLED A CHRISTIAN Archbishop Summons Synod to Declare Founder of Bolshevism Member of Church. ENORMOUS CROWDS VIEW LENIN’S BODY

(Read more from blog.mises.org)

My Review of Recent Headlines.

– Association of American Physicians and Surgeons — an organization of physicians who oppose mandatory vaccination, universal healthcare and government intervention in heathcare.

– Hidden History: The Wild West wasn’t really wild

– Ron Paul: The difference between Democracy and Republic

– Credit Suisse Declares the U.S. a Riskier Investment Than Indonesia

– Great pics: Palestinians dressed as the Na’vi from the film Avatar stage a protest against Israel’s separation barrier, also here

– There is no global warming. Period.

– Video: Smashing Myths and Restoring Sound Money

– China Dumping US Treasurys: What’s the Message?

– Governments ADMIT That They Carry Out False Flag Terror

– South Carolina Lawmaker Seeks to Ban Federal Currency

– Wilson’s War

– Ron Paul’s Floor Statement on Assasination

– Vancouver’s $1 billion Olympic debt

– Libertarian themes in The Simpsons

– Fannie Taps Treasury for $15.3 Billion More After a 10th Loss

– The War on Terror Is Anti-Conservative

– New Yorker writer writes great article describing moral hazard in medicine, then, instead of searching for the root of the hazard, concludes money is evil and free markets don’t work: The Cost Conundrum

– ABC News plans 25% cutback — see also: I’m a blogger, hear me roar!

– Congressman Ron Paul returns a whopping $100,000 of his office budget to the US Treasury

– Rebuttal to Neo-Con article “Hawks we are, hawks we must remain.”

– The Census and Despotism

– Ron Paul win primary with 80% of vote!

– Iceland’s Voters About to Tell Global Banksters to Shove It

– Ron Paul: How I would put the Constitution back in the Oval Office

– In Louisiana, you need the government position to arrange flowers

– Peter Schiff’s outstanding commentary continues: Pretending job losses are good news, subsidizing Freddie & Fannie (irresponsibility), & more

– Greece’s austerity plan condemned by trade unions & public sector employees, Violent Protests in Greece. My interpretation: many people live not off the free market, but from government coercion. These are people who earn government salaries, industries with government subsidies or protections. Many politicians have made their careers by granting favors to these groups. Once a government is no longer able to pay them, these people should be force into the voluntary sector of the economy, but they do not go quietly. They protest, cry, advertise their suffering in an attempt to get to government to continue it’s exploitation of the voluntary economy on their behalf.

New Zealand rated most peaceful, U.S. 83

Americans pining for a peaceful existence might consider moving to New Zealand, the most peaceful nation on Earth, according to the 2009 Global Peace Index released Tuesday by an Australian-based research group that counts former President Jimmy Carter, Ted Turner and the Dalai Lama among its endorsers.

The U.S. is 83rd on the roster, according to the Institute for Economics and Peace that rated the relative tranquility of 144 nations according to 23 “indicators” – including gun sales, the number of homicides, the size of the military, the potential for terrorism and the number of people in jail.

. . . .

After New Zealand, the top 10 most peaceful nations are Denmark, Norway, Iceland, Austria, Sweden, Japan, Canada, Finland and Slovenia. In the bottom 10 are Zimbabwe, Russia, Pakistan, Chad, Democratic Republic of the Congo, Sudan, Israel, Somalia, Afghanistan and, in last place, Iraq.

Traditional U.S. allies generally fared well on the list: Germany is at 16, Australia at 19, Spain (28), South Korea (33), Britain (35) and Italy (36).

Libya, Nicaragua, Jordan, Cuba, China, Peru and Ukraine all are rated more peaceful than the United States. Rwanda is rated 86, Syria 92, Iran 99 and Mexico 108. (Read more from washingtontimes.com)

Turkey partially abandons Dollar

Turkey to use national currencies in trade with Iran, China
Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S. dollar and the euro for about 20% of its commodity turnover, local media reported on Wednesday.

Turkey has already switched to settlements in national currencies with Russia amid weakening confidence in the greenback as the world’s major reserve currency. The move was initiated by Turkish President Abdullah Gul during his visit to Moscow in February. (Read more from rian.ru)

Bernanke reassures markets on dollar
The Federal Reserve is monitoring currency markets “closely” and will conduct policy in a way that will “help ensure that the dollar is strong”, Ben Bernanke said on Monday in rare comments on the US currency.

In remarks apparently aimed at reassuring markets and foreign governments that the central bank is not indifferent to the fate of the US currency, the Fed chairman said “we are attentive to the implications of changes in the value of the dollar”. (Read more from ft.com)

Stopping the dollar’s demise means stopping Congresses endless spending on war, healthcare, bank bailouts, etc. Not very likely.

First Lady requires more than twenty attendants!!

No, Michele Obama does not get paid to serve as the First Lady and she doesn’t perform any official duties. But this hasn’t deterred her from hiring an unprecedented number of staffers to cater to her every whim and to satisfy her every request in the midst of the Great Recession. Just think Mary Lincoln was taken to task for purchasing china for the White House during the Civil War. And Mamie Eisenhower had to shell out the salary for her personal secretary.

1. $172,2000 – Sher, Susan (CHIEF OF STAFF)
2. $140,000 – Frye, Jocelyn C. (DEPUTY ASSISTANT TO THE PRESIDENT AND DIRECTOR OF POLICY AND PROJECTS FOR THE FIRST LADY)
3. $113,000 – Rogers, Desiree G. (SPECIAL ASSISTANT TO THE PRESIDENT AND WHITE HOUSE SOCIAL SECRETARY)
4. $102,000 – Johnston, Camille Y. (SPECIAL ASSISTANT TO THE PRESIDENT AND DIRECTOR OF COMMUNICATIONS FOR THE FIRST LADY)
5. Winter, Melissa E. (SPECIAL ASSISTANT TO THE PRESIDENT AND DEPUTY CHIEF OF STAFF TO THE FIRST LADY)
6. $90,000 – Medina, David S. (DEPUTY CHIEF OF STAFF TO THE FIRST LADY)
7. $84,000 – Lelyveld, Catherine M. (DIRECTOR AND PRESS SECRETARY TO THE FIRST LADY)
8. $75,000 – Starkey, Frances M. (DIRECTOR OF SCHEDULING AND ADVANCE FOR THE FIRST LADY)
9. $70,000 – Sanders, Trooper (DEPUTY DIRECTOR OF POLICY AND PROJECTS FOR THE FIRST LADY)
10. $65,000 – Burnough, Erinn J. (DEPUTY DIRECTOR AND DEPUTY SOCIAL SECRETARY)
11. Reinstein, Joseph B. (DEPUTY DIRECTOR AND DEPUTY SOCIAL SECRETARY)
12. $62,000 – Goodman, Jennifer R. (DEPUTY DIRECTOR OF SCHEDULING AND EVENTS COORDINATOR FOR THE FIRST LADY)
13. $60,000 – Fitts, Alan O. (DEPUTY DIRECTOR OF ADVANCE AND TRIP DIRECTOR FOR THE FIRST LADY)
14. Lewis, Dana M. (SPECIAL ASSISTANT AND PERSONAL AIDE TO THE FIRST LADY)
15. $52,500 – Mustaphi, Semonti M. (ASSOCIATE DIRECTOR AND DEPUTY PRESS SECRETARY TO THE FIRST LADY)
16. $50,000 – Jarvis, Kristen E. (SPECIAL ASSISTANT FOR SCHEDULING AND TRAVELING AIDE TO THE FIRST LADY)
17. $45,000 – Lechtenberg, Tyler A. (ASSOCIATE DIRECTOR OF CORRESPONDENCE FOR THE FIRST LADY)
18. Tubman, Samantha (DEPUTY ASSOCIATE DIRECTOR,SOCIAL OFFICE)
19. $40,000 – Boswell, Joseph J. (EXECUTIVE ASSISTANT TO THE CHIEF OF STAFF TO THE FIRST LADY)
20. $36,000 – Armbruster, Sally M. (STAFF ASSISTANT TO THE SOCIAL SECRETARY)
21. Bookey, Natalie (STAFF ASSISTANT)
22. Jackson, Deilia A. (DEPUTY ASSOCIATE DIRECTOR OF CORRESPONDENCE FOR THE FIRST LADY) (Read more from canadafreepress.com)

See Also: First Lady Now Requires 26 Servants

Marc Faber

Common Sense. “The U.S. dollar will be like wall paper.” Real estate in China.
“The sad part of the current crisis is that no problems were solved, they were postponed.”

Obama stimulus a failure. Asia doesn’t need the U.S..

“Economies will continue to disappoint.” The dollar rebound (short term).

What is Fractional Reserve Banking?

This is an important essay for anyone who wants to understand banking.

The first bankers were goldsmiths, who owned safes in which to store the raw materials of their profession. Wealthy individuals paid goldsmiths a fee to store their gold, and goldsmiths issued them receipts. Eventually these individuals started using the warehouse receipts as fiduciary media; meaning that rather than go to the goldsmith and redeem one’s gold in order to purchase something, these individuals started endorsing over their warehouse receipts. Thusly, the warehouse receipts circulated in the economy rather than the gold itself. Over time the goldsmiths realized that they could issue warehouse receipts in excess of the gold held in their vaults and reap a profit, because at no time did all the people who owned warehouse receipts for gold travel to the bank at the same time to redeem their certificates for gold specie. Now, the goldsmiths did not simply spend the excess receipts on consumer goods; rather, they lent them to borrowers and earned interest. (Doubtless the goldsmiths and even some economists today do not consider this practice to be fraud.) Since there now were more warehouse receipts for gold circulating in the market than gold in the vault to back them, it was said that the gold reserves amounted to only a “fraction” of the outstanding claims.

. . . .

All would be well until the public became concerned that the bank had over-issued certificates. (Sometimes rumors were started by his competitors.) Then the holders of the certificates would “run” to the bank to redeem them for gold. A bank run had been born.

. . . .

Notice that the certificates backed 100% by gold could always be redeemed without any difficulty. Thusly, such money could never be the source of inflation or deflation. But the excess certificates were not back 100% by gold; they were backed by the promise of the borrower to repay–that is, this money was backed by DEBT! If the debt could not be repaid, these excess money certificates could not be redeemed for gold.

. . . .

Of course, money certificates today are backed by nothing—not gold, nor silver, nor cockleshells. The money we use is fiat money, and yet governments everywhere maintain the fiction that banks must hold reserves in some small percentage amount in order to cover their customers’ deposits. But what are these reserves? These reserves are debt, too.

. . . .

In the U.S. the only money that may be used legally “for all debts public and private” is a Federal Reserve note. These notes—the money we carry in our wallets—are referred to as “standard money”. There is no recourse to anything beyond these paper notes. If a person wished to “redeem” his Federal Reserve note, he could go to the nearest Federal Reserve Bank and redeem it for…another Federal Reserve note.

. . . .

If that person deposited his Federal Reserve note in a bank, the bank would create a demand deposit, also known as a checking account. The bank would send to the Federal Reserve Bank the Federal Reserve notes that it collected whose numbers were above what it deemed necessary to meet the normal needs of its customers for pocket cash. These notes would be deposited in the bank’s reserve account at the Fed. (A bank’s “reserve account” is nothing more than a checking account.) But the bank would not be required to maintain a 100% reserve account balance to match the total of all of its demand deposits. It is required to hold only a fraction in reserve–along a sliding scale, the fraction becoming greater for larger banks–to meet the withdrawal needs of its customers. The rest of his reserve account balance is “excess”, meaning not required to meet his “reserve requirement”.

So what can a bank do with its “excess reserves”? It can create a loan to another of its customers, credit that customer’s demand account, which will increase its reserve requirement and reduce its excess reserve position at the Fed by a fraction of the amount of the loan. The bank—actually, the banking system–can continue to lend and create demand deposits in this fashion until its reserve account balance matches its “reserve requirement”. This is how banks create money out of thin air, and one can readily understand the enormous ability of the banks to expand the money supply from this updated fractional reserve banking practice.

The key point is that the bank created the new demand deposit by creating a loan—the loan is an asset on the bank’s books and the demand deposit is a liability. Thusly, money in our bright new world of fractional reserve banking is backed by DEBT! In order for a deposit to be redeemed would require that the loan be repaid. If the loan cannot be repaid, the bank cannot meet its withdrawal obligations and goes bankrupt.

. . . .

Enter a new player–the central bank. Our Federal Reserve Bank (or European Central Bank, or Bank of England, or Bank of Japan, or Bank of China) was created to prevent bank insolvency. The central bank stands ready to loan our bank unlimited funds so that it may honor its deposit withdrawal obligations. . . . but where did the Fed get the funds to place in our troubled bank’s reserve account? Why, it created them out of thin air, too! . . . The central bank has become a money creation machine.

. . . .

Thusly, all central banks are the source of what the public calls inflation, creating money out of thin air to prop up bank credit expansion made possible by fractional reserve banking. The entire Rube Goldberg mechanism is a thing of frightening beauty, beloved by college professors who force their students to understand all the gory details, but especially beloved by bankers and politicians who can literally paper over bad debt with massive increases in the money supply. . . . The long-term harm to the economy is found on many fronts, from higher prices (perhaps even hyperinflation) to moral hazard to civic unrest as interest groups fight one another to feed at the government’s feed trough. Each dollar of new money, born of debt and not production, reduces the purchasing power of all other dollars already circulating in the economy. Nothing has been produced, not one nut or bolt, not one new car…nothing. But more money creates the temporary illusion of prosperity. One’s home increases in value. One’s 401K increases in value. Jobs are plentiful. New office buildings pop up to house all the new businesses that are born. The only problem is that nothing has been built on true savings, only debt. Yes, it is a brand new world, but it is a frightening one that cannot last. (Read more from patrickbarron.blogspot.com)

China eyes ban on rare metal exports

“Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons.

A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs.

China mines over 95pc of the world’s rare earth minerals, mostly in Inner Mongolia.” (Read more from telegraph.co.uk)

Healthcare flame war highlights

These are perilous times to believe in liberty. Because I oppose Obama’s plan for expanding government, people assume I was for Bush’s expansion of government, his wars, etc. Such is the world through the lenses of left-vs-right glasses.

I’ve been lumped together with neo-cons, called a Republican agent and faced comments like: “You Republicans want taxes to kill people in Iraq, while Democrats want taxes to *save* people in America.”

I’ll note that I voted for neither McCain nor Obama – neither the old white guy who believed in bank bailouts and expanding foreign, undeclared wars, nor the young black guy who believes in bank bailouts and expanding foreign, undeclared wars.

The opponents of socialized healthcare are demonized, just as the opponents of the Iraq war were demonized. In both cases, it’s ordinary people resisting the power of government. In both cases, dissenters are portrayed as fringe, radical and irrelevant, and the conflict is crammed into a paradigm of left-versus-right. In both cases, it’s an uphill battle for those of us who oppose an expansion of government.

Anyway, here are some flame wars, and excerpts from emails I’ve received from friends about their own struggles. Esoteridactyl, you have my thanks and admiration.

I got dragged into a facebook flame war on the subject. Someone posted about how “stupid those stupid fucking townhall protesters are”. I had to comment that, well, many people have very serious concerns and willfully mis-representing their arguments does disservice to oneself.

Anyway, we went back and forth a few rounds on that, until I delivered the closer: I support the interpretation that Roe v Wade guarantees certain privacy rights; how can you oppose gov’t intrusion into fertility, but support it for every other health decision. The sputtering rage was priceless.

***

so, i am officially out of the closet on health care, at least on facebook. and i hate to admit it, but im so scared everyone i know is going to hate me :( or that i wont have the energy or will to effectively argue the position. this shit is hard!

. . . .

its just such a frustrating thing to have to keep reassuring people that i dont want to kill all the poor people.

. . . .

oh boy, here we go: “Dude, I’m sorry but if you keep on this townhall-meeting propaganda status kick, I might have to defriend you, just a warning.”

. . . .

i feel like im having an argument with myself a year ago

***

Comment wars on Reddit. I should have known better than to bring the ideas of economic freedom to a post about one their most sacred cows, subsidies of alternative energy. I’ve since learned that most liberty-minded people are hiding out in the Libertarian subreddit, leaving politics and economics for the statists.

rangerkozak -6 points 15 days ago[-]

Here in Iowa, I know a guy in the bio-diesel industry who readily admits it’s complete bullshit, but if you close your eyes, tap your ruby slippers together and say “bio-diesel” or “sustainable” or “electric car”, then money begins to fall from the sky.

Problem is, the money is taken from you and me at the point of a gun. This is nothing but a giant subsidy of less efficient energy production which wouldn’t be able to compete in a free market.

ParanoydAndroid 13 points 15 days ago* [-]

This is nothing but a giant subsidy of less efficient energy production which wouldn’t be able to compete in a free market.

Exactly. Since this technology wouldn’t be able to compete in the open market, it wouldn’t get developed. This way we provide the money, the technology gets developed and improved, the efficiency increases, and then it becomes marketable without subsidies.

Suddenly everyone has cheaper fuel sources, renewable energy makes our lifestyle more sustainable, and everyone wins.

Or we could keep rabble-rousing about how since the technology is bad right now then that it means it could never, ever improve our lives at any point in the future, whatever floats your boat.

rangerkozak -6 points 15 days ago[-]

Double Facepalm!

“War is peace. Freedom is slavery. Ignorance is strength.” ~George Orwell

captainwasabi -1 points 14 days ago[+] (0 children)

Think of it this way. It’s a new weapon to use against the middle east. It’s weapons research. That should satisfy your tiny repubtard mind.

bad_llama 6 points 15 days ago* [-]

Problem is, the money is taken from you and me at the point of a gun.

Stop with the hyperbole.

rangerkozak -1 points 15 days ago[+] (22 children)

This is no hyperbole. If you want to see the guns and just how real they are, then stop paying your taxes.

Our government’s benevolence is financed by money taken from us under threat of violence.
This is no hyperbole. If you want to see the guns and just how real they are, then stop paying your taxes. Our government’s benevolence is financed by money taken from us under threat of violence.

Braggs 3 points 15 days ago[+] (0 children)

Going even further, if the government would have kept its nose out of the commercial sector in the first place (i.e. subsidies on gasoline/diesel vehicles and petroleum products) then the increased prices (due to lack of government funding) would have already forced the commercial sector to provide more economical alternatives. What is happening is the government competing against itself.

bad_llama 3 points 15 days ago* [+] (19 children)

You live in a society that has a governing body. You are represented in this governing body. You can vote, you can protest, you can debate freely. There are a million and one ways to make a change in this system. If you don’t like something (like the ways our taxes are spent) you are free to try to change it. The thing is, everyone else in this society has a say in how it operates (how it spends taxes) as well. If you have a compelling argument and can sway the people in the society to agree with you, change will happen in your favor. If you don’t have a compelling argument, society will not agree with you and things will keep moving along with or without you.

Let me say again, you live in a society. That is a fact. Nothing you can do will change this. Everything you do affects others and everything others do affects you. Everyone gives and takes according to the agreed upon rules. That is how a society functions and this is how a society advances.

rangerkozak comment score below threshold[+] (17 children)
rangerkozak -6 points 15 days ago* [-]

The fact of a society is no excuse for a tyranny. What in our Constitution gives government the right to redistribute wealth from some industries to others???

Speaking of facts, in America, 1/6th of the labor force is employed DIRECTLY BY GOVERNMENT. (source)

The taxes on every five people support the salary (and benefits) of a sixth. So I would be very, very hesitant to call for more government programs, more government spending, more government good ideas.

Yes, we live in a society. I’m not calling for anarchy, I’m calling for economic freedom, and you should too.
The fact of a society is no excuse for a tyranny. What in our Constitution gives government the right to redistribute wealth from some industries to others??? Speaking of facts, in America, 1/6th of the labor force is employed DIRECTLY BY GOVERNMENT. ([source](http://www.lostrepublic.com/archives/637)) The taxes on every five people support the salary (and benefits) of a sixth. So I would be very, very hesitant to call for more government programs, more government spending, more government good ideas. Yes, we live in a society. I’m not calling for anarchy, I’m calling for economic freedom, and you should too.

[deleted] 5 points 15 days ago[-]

There are countries that operate as you suggest. The problem is they are dirt-poor and nobody wants to live there.

Look around at all the really good countries – the countries where it is possible to accumulate wealth and have a nice life-style. Do you notice how those countries all have taxes and social programs and strong central governments?

Maybe your “economic freedom” fantasy just doesn’t work as well as you think.

rangerkozak -5 points 15 days ago[-]

The fantasy is the success of centrally-planned economies. There is tremendous evidence suggesting that liberty works best:

* West German vs East Germany
* South Korea vs North Korea
* Hong Kong in the 80s vs China in the 80s
* Estonia vs Latvia or Lithuania
* Botswana vs the rest of Africa
* Chile vs the rest of S. America

This debate was settled (again) when the Berlin wall fell, at yet socialist ideas continue to rise from the grave. I’ll never understand the public’s lust for tyranny.

Recommend Hayek’s Road to Serfdom

dethbunny 1 point 15 days ago* [-]

Chile? The same Chile that was ruled by Augusto Pinochet for 16 years? What a shining beacon of liberty! . . . .

rangerkozak -2 points 14 days ago[-]

Obviously, Pinochet was a murderous dictator, and deserved the condemnation he receives. In everything but economics, he was a tyrant.

If you care to to look at economics, however: The Global Competitiveness Report for 2007-2008 ranks Chile as being the 26th most competitive country in the world and the first in Latin America

WRT Scandinavia in general, and Sweden in particular, there are some good excerpted essays here which cast doubt on the common perception. They are authored by Swedes.

***

***

***

A smart comment I saw on reddit in response to this article:

genius_in_progress 6 points7 points8 points 2 hours ago* [+] (1 child)

Brilliant article!
The US government actively pursues policies that both drive up demand and drive down supply.
To drive supply down:

* Professional licensure and immigration restrictions artificially limit the supply of physicians
* Perverse incentives at the FDA regarding safety and efficacy standards artificially restrict the supply of medication
* A large regulatory burden and a prohibition against selling health insurance across state lines artificially restrict the supply of insurance

To drive demand up:

* Publicly funded programs encourage over-use (Medicare and Medicaid)
* Tort law encourages doctors to order excessive tests and procedures, to avoid malpractice suits
* Tax incentives for employers to shop for insurance on behalf of their employees. If employees chose their own insurance, they would likely opt for lower premiums and higher deductibles, and would therefore be more selective about what health care expenses they incur

If that’s not a recipe for high prices, I don’t know what is.

Show trials in Obama’s U.S.S.A. – Sooner than we thought

This excellent about our new administration was written by Yuri Maltsev.

Check out his excellent book, Requiem for Marx. Another excellent essay which serves as the book’s introduction is excerpted here.

Sooner Than We Thought
by Yuri N. Maltsev

The new Obama regime is taking shape in Washington and provinces eager to take power and secure the “change you can believe in” using humungous propaganda machine of both government radio and television and still privately owned, so-called “mainstream media.” These private networks are competing with National Public Radio (NPR) and Public Broadcasting System (PBS) in praising Obama’s first choices from his new dog to his new chief of staff.

The thought scene in the US today resembles that of Russia in 1917, Cuba in 1959 or China in 1948. Incessant calls for “unity” and “fairness,” attacks on “divisive,” “toxic” and “hateful” language are nothing new – they resemble Germany of 1932 and Venezuela of 1996, today’s Putin’s Russia and Mugabe’s Zimbabwe. . . .

In the old Marxist tradition, the new great Leader’s calls for “a civilian national security force that’s just as powerful, just as strong, just as well-funded” as the U.S. military. His chief of staff, Rahm Emanuel, had openly shared this vision of the civilian national security force (CNSF) in his book:

It’s time for a real Patriot Act that brings out the patriot in all of us. We propose universal civilian service for every young American. Under this plan, All Americans between the ages of eighteen and twenty-five will be asked to serve their country by going through three months of basic training, civil defense preparation and community service.

. . . .

A phone call from Moscow woke me up in the middle of the night. My friend Vladimir, former Soviet Army general turned reformer under Yeltsin and businessman under Putin, sounded slightly drunk and very agitated. “I am watching televised interrogation of Alan Greenspan and another guy by some Jewish investigator and it looks exactly like the “Great terror” is back, but not here, for a change. What is going on? Would they shoot all these economic subversives and saboteurs at the end of the day? ”

“I am not sure about that, definitely not at the end of the day. Maybe after elections,” I mumbled in response and went back to bed. My sleep was ruined however, and in a desperate attempt to get it back I opened Greenspan’s “Gold and Economic Freedom” chapter in Ayn Rand’s Capitalism: The Unknown Ideal.

Yes, Comrade Waxman (D-CA) definitely has a case against former capitalist sympathizer Greenspan. This now repentant agent of the world capitalism wrote back in 1966 about Waxmans of the time:

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

Make no mistake about it – Greenspan was attacked by Waxman and the new socialist establishment because of his libertarian past and free-market rhetoric and not because of his job as chief inflationist and central planner. The show trial over Greenspan’s pro-capitalist past was turned by Waxman and his committee comrades into the trial against capitalism itself.

(Read the whole thing at lewrockwell.com)

Economics and the Pope’s latest Encyclical

I am not questioning the good intentions of the Pope, but I’d like to offer a very brief criticism of his recent encyclical.

From section 65: “Both the regulation of the financial sector, so as to safeguard weaker parties and discourage scandalous speculation, and experimentation with new forms of finance, designed to support development projects, are positive experiences that should be further explored and encouraged, highlighting the responsibility of the investor.”

The end of this statement is rock solid – “highlighting the responsibility of the investor” – but is it government regulation which did away with this responsibility. It is more liberty, not more government which would “highlight the responsibility of the investor.”

Missing from most narratives of our financial crisis is the fact that our government subsidized irresponsible behavior and allowed our financial kings to invest without responsibility. It allowed the reckless experimentation which the Pope criticizes and, like many others, seems to blame on the free market.

Example 1: The 1998 bailout of the Long Term Capital Management. Had the Federal Reserve not supervised a bailout of this irresponsible hedge fund in 1998, we would not have begun as severe a financial crisis in 2008. Instead, the message from our government was clear: Gamble away. We have your back.

Example 2: Freddie Mac. Fannie Mae. These were government sponsored enterprises. Government created a demand for loans, even bad ones. Had the government not subsidized the purchase of bad loans, many fewer would have been made.

Example 3: Community Reinvest Act. This politically expedient legislation required banks to hold a certain portion of bad loans, or else they couldn’t expand. Once again, government subsidized irresponsibility. Do you remember how both Presidents W. Bush and Clinton bragged about how more Americans than ever before owned homes?

From section 67: “In the face of the unrelenting growth of global interdependence, there is a strongly felt need, even in the midst of a global recession, for a reform of the United Nations Organization, and likewise of economic institutions and international finance, so that the concept of the family of nations can acquire real teeth. . . . To manage the global economy; to revive economies hit by the crisis; to avoid any deterioration of the present crisis and the greater imbalances that would result; to bring about integral and timely disarmament, food security and peace; to guarantee the protection of the environment and to regulate migration: for all this, there is urgent need of a true world political authority. . . . such an authority would need to be universally recognized and to be vested with the effective power to ensure security for all, regard for justice, and respect for rights[148]. Obviously it would have to have the authority to ensure compliance with its decisions from all parties. . .”

Though I believe his intentions are good, this section is very troubling. It is a call for the creation of an unelected institution subject to no nation’s constitution with massive control and massive authority. The Road to Serfdom is paved with good intention (and a mistrust of freedom).

Though I would choose liberty over prosperity, the best economies happen to also be the freest. This is true almost without exception. Look at West Germany vs East Germany, South Korea vs North Korea, Botswana vs the rest of Africa, Chile vs the rest of S. America, Estonia vs Latvia or Lithuania, Hong Kong in the 80s vs China in the 80s, Cuba before communism vs after. The call for a global authority is an invitation for further economic fascism, and there are many arguments against it. I’ll make two:

1: The IMF and World Bank are completely corrupt and ineffective. Here I posted a Jim Rogers interview in which he says “abolish the World Bank and the IMF. . . they do little more than take care of themselves, their own pensions, their own perks, their own salaries, if you work for the World Bank or the IMF you have a great life, but they’ve not done much for the rest of the world.”

2: As Ron Paul said (here): “We do not abdicate American sovereignty to global institutions. The purpose of the United States is to protect the liberty of the American people. We should never allow the WTO, NAFTA, the U.N. or the Law of the Sea Treaty to transfer power from America to an international body.”