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.

Thursday, August 9, 2012

If Obama Wins, These Two Hags WILL Definitely Be In Your Future!

One of these Nanny State nannies wants to take your money; the other wants to make your money worthless.

They look innocent enough, although the one at left has been dubbed "The Most Dangerous Woman In America." She's the one who wants to take your money. Her name is Teresa Ghilarducci. She calls herself an economist because she graduated from the University of California, Berkeley with a B.A. and a Ph.D. in Economics. That's like calling yourself an expert in foreign affairs because you spent six years drinking around the world at Epcot in Disneyworld.

Ms. G is now a full Professor of Economics at the New School For Social Research. You remember the New School? That "legendary progressive university" whose faculty is a Who's Who of leftist dingbats?

Why is Ms. G so dangerous? Because she thinks Americans (that most likely includes YOU, dear reader) are stupid hay seeds who think that the money they invest in their 401(k)'s belongs to them and not to the government. But rather than paraphrase Ms. G's kleptocratic plans for your money, I'll let her speak for herself:
"I want to spend our nation's dollars for retirement better."
Did you get that, folks? Those dollars in your IRA are not yours but the "nation's" and, more specifically, Ms. G's who knows she can spend them better than you can.

If you have a minute to waste you can read the details of her plan. But if you have a weak stomach and don't want to soil your computer keyboard, you may want to just scan the phrases I put in bold type:
Taxpayers are shouldering far more of these leaky retirement boats than anyone imagines. All the tax-free contributions going into 401(k)s, Keoghs, and other retirement schemes reduce federal tax receipts by $193 billion a year. And almost 80 percent of the tax breaks go to the top 20 percent of taxpayers.

So let's scale back the tax breaks. Instead, we can use the money to help everyone sock away 5 percent of their pay in safe retirement accounts that would serve as a universal supplement to Social Security. People could keep their employer plan if it met more stringent standards such as a contribution rate of at least 5 percent, a ban on early withdrawals, and conversion into an annuity at retirement. Anyone without an employer plan would automatically be enrolled in a Guaranteed Retirement Account to which employees and employers would each contribute 2.5 percent. The government would then provide everyone a modest tax credit to offset the employee contributions. The return would be guaranteed by the government at about 3 percent above the rate of inflation--or close to the real growth rate in gross domestic product.

The key to this proposal is pooling individual accounts....
Dear Reader, if all of this doesn't sound familiar, you've been asleep for the last four years! This is ObamaCare for your IRA and 401(k)...Oops!...I mean for the government's IRA and 401(k) which you had nothing to do with building up and which you do not deserve to call your own.

Ms. G sums up her ObamaGrab plan thusly:
There is a recognition on both the Left and the Right that people simply have to set aside more for retirement. And to make that happen, they have to be required to sock away more.
Get it? Us, the ignorant masses, have to be "required" by them, the elite..." Are you about as angry now as I am? This scheme is so authoritarian, so collectivist, so anti-individual, so stupid, so leftist, so European, so Greek!!!...that you can understand how it would appeal to that half of Americans who pay no income taxes and that parasitic enclave in Washington who are oh so arrogant.

Let's face it. The parasitic politicians we've sent to Washington have run up the public debt so high and lined their pockets so greedily, they could never pay the debt down in a thousand years by merely collecting taxes and borrowing. But with trillions of dollars gathering dust in Americans' tax free retirement accounts, Mmmm...

You can bet Obama has noticed that dusty pile of money and will try to get his hands on it during his second term because ObamaGrab has its roots in his first term. That's when he assigned the sharpest tack in his administration to look into it:
Vice President Joe Biden floated the idea, called “Guaranteed Retirement Accounts” (GRAs), in the February [2010] “Middle Class” report.
In conjunction with the report’s release, the Obama administration jointly issued through the Departments of Labor and Treasury a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options” in the form of a notice to the public of proposed issuance of rules and regulations. (pdf)
Pretty scary stuff, huh?

Don't worry though, the Republicans mobilized against ObamaGrab in 2010 with some mighty sharp tacks of their own. Right after reading Biden's "middle class report," House Republican Leader John Boehner and a group of House Republicans fired off a letter to Labor Secretary Hilda Solis and Treasury Secretary Timothy Geithner expressing "strong opposition" to ObamaGrab.

That ought to stop the parasites from messing with our money, don't you think?

So, now that Boehner's solved that problem, let's turn our attention to the other economic powder puff who's threatening our future, the one who is tirelessly campaigning to turn the US Dollar into scrap paper. Her name is Ellen Hodgson Brown. She doesn't pretend to be an academic or an economist. She's written eleven books on everything from alternative medicine to the problems of menopause. She's a has-been lawyer who came out of retirement to serve on "the legal team of a popular Tijuana healer with an innovative cancer therapy" [I swear I'm not making this stuff up!] and she's spent eleven years living abroad in Honduras, Guatemala, Nicaragua and Kenya... Wait...Kenya?! No... No, I'm not even going there.

Anyway, in her last book, Web of Debt, Ms. B puts her "research skills" to work in "an analysis of the Federal Reserve and 'the money trust.'" In short, she argues that our money should be public, not private. By this she means, our government -- Congress -- should be in total charge of it rather than a private corporation, like the Federal Reserve. Ms. B has figured out that, by making this slight change in our monetary system, our government could nationalize the public debt and then just make it go away. Poof!

Exactly how would this be done? Well, Ms. B says the US Treasury could just print money, literally, no backing, no debt, no nothing. Just print the money in whatever quantity Congress tells it to print. That way Congress wouldn't be saddled with an enormous public debt on the money it deficit spends, and citizens who get that deficit money would be able to enjoy as much as they need -- debt-free -- to complete essential projects in the public interest.

If you think this all sounds like Alice in Wonderland stuff, believe me, you're not alone. Ms. B's monetary theories have been debunked by economist after economist. On the other hand, Ms. B's debt-free money message is alluring. She's even taken in some savvy bloggers.

For instance, in December of last year Michael over at The Economic Collapse published an article that swallows Ms. B's argument hook, line and sinker: Debt-Free United States Notes Were Once Issued Under JFK And The U.S. Government Still Has The Power To Issue Debt-Free Money.

To be fair, Michael understands the pitfalls of creating "debt-free" money:
So, yes, there would be a need for strict monetary discipline under a debt-free monetary system, but it would be hard to do worse than the Federal Reserve has already been doing.
Don't get me wrong. I enjoy Michael's blog. It is jam-packed with good information and, usually, sound economics. However, "strict monetary discipline" and "Congress" are mutually exclusive concepts. Can you imagine how the parasites in Congress would behave if they didn't have to worry about taxing or borrowing, but simply printing money up as they needed it? ObamaNotes here we come! And hyperinflation wouldn't be far behind.

I agree that the monetary system we have now is fraught with cronyism and corruption. The Federal Reserve must go. Michael is right when he points out that, according to the Constitution, it is "the U.S. Congress that has been given the responsibility to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." However, it would be a mistake to interpret this clause as the Founders' endorsement of fiat paper currency.

During the American Revolutionary War the Founders had some experience with fiat currency. The Continental Congress printed currency to pay for the war effort. By the end of the war this Continental currency wasn't worth a plug nickel and the phrase "worthless as a Continental" was all the rage. It is absurd to believe that men who coined that phrase believed in a debt-free monetary system in which Congressional spending and currency printing were one and the same thing.

Today economists know that currency is subject to the same laws of supply and demand as any other commodity. A printed piece of paper is not wealth. It's value is not inherent because it bears the seal of the US Treasury. It's value is determined by the judgement of each individual who uses it as a medium of exchange. When a supply of paper dollars floods the market, the marginal demand for each dollar decreases. Consequently, the market price of the paper dollar declines.

Money is not the be all and end all of human prosperity. Money is simply a medium of exchange, a facilitator of trade. When the value of one medium of exchange collapses in the marketplace, traders gravitate to another or, if a suitable medium of exchange cannot be found, they reject indirect exchange altogether and revert to barter.

Eventually, barter leads to common use of yet another exchange medium. In prison that medium of exchange is often cigarettes. In the civilized world it has traditionally been gold, silver or both.

Experience tells us that a medium of exchange must be limited in supply or it's value will depreciate or wildly fluctuate. This is the problem with fiat, paper currency. It's supply is virtually inexhaustible and our politicians know it. So they print more and more and more greenbacks until the value of the currency depreciates and eventually isn't worth a Continental.

Gold and silver are traditional mediums of exchange because their supply is limited and cannot be manipulated by politicians. The market itself decides, based on consumer demand, how much gold and silver is used as media of exchange and how much is used for industry, jewelry or other purposes.

If in this free market bankers introduce paper notes or money certificates backed by gold or silver, the market quickly determines the value of these notes and certificates based on their supply and demand. The mischief arises when the state steps in to "regulate" the value of these notes and certificates by means of legislative and bureaucratic rule or, as in the case of Ms. B's proposed ObamaNotes, Congress is able to print and dispense legal tender on a whim and in whatever quantity it pleases.

Common sense and economics proves that Teresa Ghilarducci and Ellen Hodgson Brown are crackpots of the first magnitude. Yet their hair-brained schemes keep surfacing as the parasites in Washington search for novel and painless ways to extricate themselves from the mess they and we are in.

Dear Reader, larceny and collectivism are bad ideas. You know it and I know it. But crisis has a way of making bad ideas seem reasonable and acceptable. Obama is counting on that. He's working hard to create crisis after crisis so that the bad idea of reelecting him will seem reasonable and acceptable.

And then, after the election -- when he has more flexibility -- he'll turn to Ms. G and Ms. B and order them to make your life and mine more rich and satisfying.

Don't let that happen.

h/t to Ann Barnhardt


LD Jackson said...

So, they want us to pool our individual retirement accounts, do they? Correct me if I am wrong, but that sounds very familiar and very unappealing.

There are three things liberals can always be depended on to do. First, they want to spend a lot of money, preferably money that doesn't belong to them. Second, they want to raise taxes on everyone but themselves. Third, they are always interested in making things fair for everyone.

From that last tendency arises their attempt to take money from the people who have better retirement accounts and redistribute them to those who were not so lucky.

John Galt said...

Sherman, sorry to be off subject, but this is only to advice you that your new "comments" service is blocking out ALL Explorer browsers below version 9. The majority of people are still using Explorer 8 or below - they wont be able to use your comment software. I know that Disqus supports all versions of Explorer, I don't know why your set up doesn't, ask them.

Sherman Broder said...

You're right, Larry. It's frustrating others don't see it the way you do.

Sherman Broder said...

Thanks for the suggestion. I'm baffled. Unfortunately, I just don't have time or the inclination to deal with it.