About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Sunday, July 31, 2011

The Wizards of Oz

Boehner, Reid, Obama and company are still pulling the levers, pushing the buttons and filling the room with smoke and mirrors. The epic "compromise" they unveiled tonight barely even supplies a speed bump to government spending and the size of government.

Predictions:

First, this "compromise" will result in barely $4-billion (yes, I said BBBillion) in real spending cuts over 10 years.

Second, in short order US Treasury Bills will be downgraded.

Third, in due course interest rates will rise substantially.

Fourth, economic activity in this country continues to tank.

Fifth, this "compromise" bill will not pass.

Sixth, Obama will unilaterally raise the debt ceiling.

Seventh, Obama will declare martial law before his term in office ends.

A post script: Obama made reference tonight in his short message to the nation that this "compromise" will drop "domestic discretionary spending to its lowest share of our economy since Dwight Eisenhower was president."

Before you fall for this line of BS, it may do you well to re-read this article from PolitiFact.com.

Could it be that Obama repeats this lie time and time again in order to give the impression that government spending is declining, when the truth is government spending is growing?

Why I Am Hoping For A Government Shutdown

I have been listening to talk radio for 45 years. I listen because I get to hear what ordinary Americans like me are thinking and what never gets reported in the mainstream media.

About 20 years ago I was listening to a liberal talk show host interview the Director of the Social Security Administration. This stereotypical bureaucrat fielded question after question about the Social Security program. I called the show and asked this man about the Social Security Trust Fund. He told me the bonds held in the Trust Fund were assets, Federal Treasury Bills, the equivalent of the Treasury Bills sold to the public. Knowing better, I told this bureaucrat that the bills held by the Trust Funds were the equivalent of IOU's issued by the federal government. That the notes held by the Trust Fund were not traded on any market, that the hard cash the notes represent was spent by the federal government to pay for current operating expenses and that when these notes mature the federal government will have to raise the money to reimburse the Trust Fund by either raising taxes, borrowing on the open market or by cutting other programs.

This sorry bureaucrat disagreed and would not change his story, insisting that the Trust Fund notes were as good as gold. Of course, it is all but common knowledge now that I was correct and that this bureaucrat was lying through his teeth.

The point is that the federal government has been deceiving citizens for decades when it comes to budget matters. We all know a politician would never say "tax" even if he had a mouthful of it. In Washington taxes are "revenue enhancements" or just plain revenue. Moreover, "tax expenditures" is political doublespeak for money Washington lets us keep and thus foregoes for itself. Politicians look at the Bush Tax Cuts, for instance, as tax expenditures. Eliminating the Bush Tax Cuts thus becomes "cutting spending" in Washington double-speak.

In the 1970's Congress enshrined its most grievous budget deception into law when it invented a system of budgeting known as "baseline budgeting." Bill  Wavering, writing in the Intellectual Conservative blog concisely explains this nefarious practice. In a word, baseline budgeting automatically increases the budgets of government departments and programs from one year to the next. This new, higher budget amount becomes the baseline over which politicians argue. In short, if a program's baseline is 10% higher next year over this year and one party insists on "cutting" that program's budget by 3%, in reality the program not only suffers no "cut," but has its budget increased by 7%. Baseline budgeting is simply a way for politicians to lie to us without us catching on to the lie.

This morning on talk radio Paul Ryan, R-Wisconsin, explained to Sean Hannity how Democrats are able to claim budget cuts in their various debt-ceiling plans by merely skimming a per cent or two off a program that was slated for an automatic increase of 7%! Only in Washington could a 5-6% budget increase become a 1-2% budget cut. Multiply that "cut" by 10 years and you have serious "savings."

At least the lying is creative. However, the arrogance is astounding.

This all begs the question: Why should we believe anything a politician tells us when history is replete with their clever, bald-faced lies.

President Obama, Harry Reid, Nancy Pelosi and various Democrat stooges have painted this debt ceiling sham as a "crisis" or a "catastrophe." Obama has speculated that seniors Social Security checks may not be written if the debt ceiling is not raised. In fact, Obama can pick and choose which programs to write checks for and which programs to suspend in the even the debt ceiling is not raised. Why? Because tax money continues to flow into the Treasury regardless.

Another caller I heard this morning on talk radio told the radio host that he was distraught with worry that if a debt ceiling deal was not reached Washington would cease writing checks for a program he deeply cared about. It seems the man is part of a federal government program that feeds, clothes and shelters illegal aliens sneaking across the border from Mexico. Money is also provided to these aliens because "you need money to live in the US."

I ask you, why would President Obama choose to stop writing Social Security checks to seniors instead of stopping checks that go to illegal aliens? The answer pure politics.

The bottom line is that there are millions such ridiculous and stupid programs that stand to lose their funding if the government is shut down. I say, let them lose the funding. No crisis will develop. No catastrophe will be experienced.

Lastly, I heard this morning a repeat of the Rush Limbaugh Show. A 24-year-old caller was defending government spending. He said, in essence, that when individuals spend their own money the benefits of the spending only accrue to that individual. However, when the government spends an individual's money the benefits accrue to everyone, i.e., the benefits accrue to the common good!

Good God! No wonder Washington lies are so easy to tell and so easily swallowed by this nation of economic morons! 

Saturday, July 30, 2011

A Simple Question

The latest manufactured crisis in Washington is failure to raise the debt ceiling. Our dear President, his Treasury Secretary and a host of Democratic morons from Harry Reid to Nancy Pelosi to obscure politicians like Congressman Paul Tonko from NY predict economic catastrophe if the debt ceiling is not raised and the government shuts down.

Really?

Have we in the great bastion of free enterprise sunk so low, have so many in this great country opted to suck at the government teat, that a failure of the government to write checks to constituents will result in economic catastrophe?

Really?

But this is not the simple question I want to ask. My simple question is this:

Why do such crises result in only half of the government shutting down?

Let me explain. If the debt ceiling is not raised, the check writing half of the government shuts down, but the revenue collecting half continues to operate. Why? Why not shut the government down completely?

No more government stipends, grants and subsidies. And no more taxes.

Let the country's wage earners experience what it means to keep all the fruits of their labor and to have the government totally off their back, which begs another simple question.

If both the check writing and tax collecting halves of the government were to shut down, would you want it to start up again...ever?

Friday, July 29, 2011

I'm Sort Of Back

I've been unavoidably caught up in personal business. I apologize to the one or two readers that may be following this blog. I'll post more in due course.

As for now, there is an interesting debate going on at Legal Insurrection over the debt ceiling debate and how lovers of property, freedom and peace should conduct themselves. I made the following comment:

"The Boehner bill establishes the principles of no new taxes, dollar-for-dollar offsets of debt and budget cuts, capping the growth of government, and the necessity of further cuts.  The Boehner bill also establishes this agenda as the agenda for the presidential election by making sure that more hard decisions are made during the electoral season."

I don't understand. The Boehner bill was written by Establishment Republicans with sops to the Tea Partiers in order to secure their votes. From all reports the "budget cuts" are miniscule. This hardly "establishes the principles of...capping the growth of government, and the necessity of further cuts."

Moreover, this claim of establishing principles and agendas is wishful thinking. Are Obama, Harry Reid and company going to heed any "principles" or "agenda" established by House Republicans in this debt ceiling fight?
If the principles you outline were indeed established, the House would be passing Connie Mack's "Penney Plan" with sops to establishment Republicans in order to secure their votes.

The hard truth is that "Establishment Politicians" are in charge on both sides of the aisle. They are supported by the "Establishment Media," the "Establishment Bureaucracy" and a sizeable percentage of the "Establishment Public" which sucks at the teat of the Welfare State. The Tea Partiers are gnats buzzing at the fringe of "The Establishment."
The idea that any political strategy is capable of changing this hard truth or cajoling "The Establishment" to do what is right is laughable. Playing ball with "The Establishment" is suicide.

I say stand on principle, do harm to "The Establishment" by any political means possible. If that means the "Establishment Public" has to come to terms living without a government check, so be it.

Whether you know it or not, the battle lines for 2012 are already drawn. We won't win that battle by conceding anything to the other side. It's Liberty versus the Welfare State. That's the only agenda I'm interested in establishing for the 2012 Presidential election.
  

Wednesday, July 13, 2011

When The Chickens Come Home To Roost

The Austrian Theory of Money and Credit explains the boom-bust cycle that plagues fiat monetary systems. When Nixon took the country off the gold standard in 1971, Austrian Theory predicted the outcome: the monetary crisis we are experiencing today. In short, the gold standard checks credit expansion. When Nixon decoupled the dollar from gold, he opened the door to unending and limitless credit expansion. Because the dollar functions as the world's reserve currency, and because so many other fiat currencies were inflated at a greater rate than the dollar, the value of the dollar has remained relatively strong, although it has lost purchasing power regularly since 1971.

However, the moment of truth is fast approaching. The Fed has flooded the world with dollars. The purchasing power of the dollar has fallen drastically relative to other currencies. Federal spending and debt have exacerbated the decline. Now the US finds itself between a rock and a hard place. The dollar funded welfare state cannot be sustained further. Dollar debt is not longer attractive to world buyers. In order to make dollar debt attractive, interest rates must rise. Rising interest rates are supressed by the Fed in the vain hope that further injection of new dollars will somehow "stimulate" consumer spending which is thought to be the driving force of prosperity. The federal government's deficit spending is out of control and, if interest rates were allowed to rise, the government's bankruptcy would be imminent. As it is, technical bankruptcy only awaits a false step from Washington spendthrifts.

These are dire times. The chickens are coming home to roost. Politicians are slowly but surely realizing that the jig is up. Yet, they don't know what to do.

There is not much they can do other than cut government spending and re-institute the gold standard, perhaps in concert with selling off government assets like land. Of course, this medicine is unpalatable both to politicians who either do not fully understand the gravity of the situation or are hopelessly wedded to the progressive socialist ideology, and to a large majority of the public which is addicted to government subsidies like junkies to heroin.

Chaos will soon descend upon the land. What will follow the ultimate financial reckoning is anybody's guess. The only certainty is that it will be ugly. 

Despicable

Yesterday, President Obama had this exchange with Scott Pelley, CBS news anchor:

"Scott Pelley: Can you guarantee as President those checks will go out on August the 3rd?

"Obama: I can not guarantee those checks go out on August 3rd if we haven’t resolved this issue because there may simply not be the money in the coffers to do it."

This statement by the President is dishonest on many levels.

First, it is pretty much common knowledge that in the event the debt ceiling is not raised there would still be plenty of "money in the coffers" to send out Social Security checks if the President and his Secretary of the Treasury so direct.

Second, and most importantly, it is obvious the President is fear mongering. Why is it obvious? As President, Mr. Obama has immediate and constant access to every budgetary bigwig in Washington, D.C., not to mention his own Secretary of the Treasury. Surely these experts know the particulars of the cash flow situation should the debt ceiling not be raised. Surely they have informed the President of these particulars. If the President has not asked about the cash flow particulars, then he is unbelievably incompetent.

For the President to claim that there "may" not be enough money in the coffers, all the while knowing exactly how much money will be in the coffers and what that sum would pay for, is deception on the highest level. Why would he not explain the situation honestly? The only possible explanation is that he wants to instill fear in the minds of Social Security recipients in order to intimidate them into supporting his position.

This is a shameful ploy by the President and only demonstrates his lack of ethics and integrity! Don't we have a right to expect honesty from our highest public official regardless of political consequence?

Using Social Security recipients as weapons in a political fight only proves to me the danger of becoming seriously beholden to the federal government. Seniors have been backed into a financial corner by being so dependent on Social Security payments. By threatening to withhold payments, the government effectively extorts their support. After we are all dependent on the government for health care, we will all be vulnerable to the same type of threats and extortion.

Obama's scare tactics put real meaning into this quote:

"Any society that would give up a little liberty to gain a little security will deserve neither and lose both."
Benjamin Franklin

Tuesday, July 12, 2011

Why Taxing The Rich And Subsidizing The Poor Always Backfires

This Marxist siren song of wealth redistribution has seduced otherwise reasonable men for centuries. When I was young and naive, I heard the song and was drawn to it. At the time I was employed as a menial worker. As I faithfully labored for my boss, I wondered why he made so much more than I did. He didn’t seem smarter than me or a harder worker. Every time I passed street people pushing shopping carts, I wondered at the unfairness of it all. My boss was rich. Others were poor. I wondered why we as a nation didn’t do something about it, i.e., spread the wealth around.
When candidate Barack Obama met Joe the Plumber on the campaign trail, Obama thought spreading the wealth around makes good sense. Here’s what he said:
“My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody. If you’ve got a plumbing business, you’re gonna be better off if you’ve got a whole bunch of customers who can afford to hire you, and right now everybody’s so pinched that business is bad for everybody and I think when you spread the wealth around, it’s good for everybody.”
How exactly do you “spread the wealth around?” You empower politicians like Obama – compassionate and well-meaning people – to take from those who have more and give to those who have less. Rich guys aren’t going to go hungry if they’re taxed a few more thousands of dollars each year. After all, as President Obama reminds us: “… at a certain point you’ve made enough money.”
Why not authorize the Washington brain trust to figure out just what that “certain point” is? Let them raise taxes to that “certain point.” Let them take the tax money they collect from the “haves” and spread it around to the “have nots.” We’d all be better off, right?
Well, not really. When I got older and wiser I realized that the world didn’t work the way I thought when I was young. Human beings don’t keep working at the same pace regardless of how much money the government takes from them or gives to them.  Individuals are thinking, acting human beings. They are always evaluating what they have, how they got it and how they will spend their time.
A wise man said once that work is called “work” for a reason. In other words, we’d all rather goof off than go to work. By “goof off” I mean spend time doing what we want regardless of whether or not “doing what we want” has value in the marketplace. To some goofing off means eating, drinking and being merry. To others, it means laboring in their garden or remodeling their house or refurbishing old cars. Yes, goofing off sometimes is harder than “work,” but the point is it’s not work. It’s time spent satisfying no one but ourselves.
Now some might object that they love their job, that they’d do it for free. But this is the exception rather than the rule. Even the person who gets paid for goofing off knows what the difference is between work and goofing off.
For most of us work is unpleasant. It’s doing what needs to be done. It’s doing not what we want but what others want and will pay for in the marketplace. We focus on the marketplace because our modern exchange society is not the subsistence living of a century or two ago where individuals worked by themselves 24-7 just to survive. Today we work to produce goods and services that others are willing to buy. We trade them in the marketplace at a profit, which makes our much desired goof off time possible and affordable.
Why is our modern exchange economy so much more productive than a subsistence economy? Our  exchange economy rests on the principle economists call the “Division of Labor.” We all specialize in work that we’re especially good at. When you’re good at something you produce more of it. When each of us works at what we’re good at, production of goods and services is maximized. We are all better off because we benefit from the skills, talents and productive ability of others.
What’s more, we get to have and enjoy things we don’t have the skill, talent and ability to produce on our own, like brain surgery and smart phones. The bottom line is, thanks to our creative workaholic neighbors, we all become richer than we could possibly be by working on our own.
Of course in such a system these workaholics become richer than the rest of us. Why? Isn’t it obvious? They’re smarter, more talented, more ambitious, more creative and more productive than the rest of us. They’re the risk-takers, the movers and shakers.
Politicians regard this as a problem. They decry the “gap” between them and us (the “rich” and the “poor”). But, as I’ve just shown, in our modern exchange economy it is those very risk-taking, productive workaholics who enable the rest of us to be richer and better off than we would otherwise be.
Still, for some reason – either because of economic ignorance or an obsession with the siren song of “fairness” – Washington politicians never learn this truth. They continue to meddle with the exchange economy, taking from the productive and giving to the unproductive. By doing so they believe they are growing “the economy” from the “bottom up,” which, as candidate Obama told Joe the Plumber, is “gonna be good for everybody.”
But, as it turns out, taking from these productive and creative risk-takers only encourages these individuals to recalculate their ratio of work time to goof off time. As a result, they change their behavior. They decide to work less and goof off more. Why? Because they’re not fools. Why work as hard to earn less?
Those among us – the less productive – who are given what the government takes from the more productive and creative workaholics, also recalculate our ratio of work time to goof off time. As a result, we change our behavior too. We decide to work less and goof off more. Why? Because we’re not fools either. Why work as hard when the government will give us more for doing less?
The truth is the meddling of Marxist politicians always backfires. Even though they’re “spreading the wealth around,” the very act of spreading the wealth causes there to be less total wealth. People work less and goof off more. Less goods and services are produced. In the parlance of the politicians, even though they divide the pie equally among us, the very act of dividing the pie causes the pie to shrink – drastically . What was “gonna be good for everybody” ends up being worse than we had it before.
Still, politicians like Obama keep on meddling. They never learn the lesson we all learned as we grew older. Maybe it’s because a politician’s heart is as big as his head is hard.
Or maybe it’s because politicians just never grow up.

Thursday, July 7, 2011

Paulish Blabber

I usually don't waste time responding to twits. However, the comment by "Anonymous" to this article at Robbing America is exceptionally vacant and illustrates the problem reasonable people have in cutting back the welfare state once it becomes entrenched.

Once those in the private market concede that the public market is a legitimate and adequate means of "fixing" any social "problem," then there can be no end to the demands for more from those ensconced in the public market. Robbing Peter to pay Paul becomes the rule rather than the exception. The "Pauls" among us cannot conceive of any way to solve their personal, economic "problem" other than by extorting increased "revenue" from the Peters among them.

In a democracy where the Pauls outnumber the Peters reason and logic become irrelevant in political and economic discourse. Whatever serves to fire up the mob works just fine as the modus operandi of those in the public market.

Keep an eye on Madison, Wisconsin and Greece for further developments on the public market vs the private market front.