Sunday, May 30, 2010

Great quote

The first casualty in war is truth. The second is money.

Friday, May 28, 2010

Fanaticism

Santayana once commented that "fanaticism is redoubling your effort when you have forgotten your aim." (not directly germane, but quotable is Churchill's definition of a fanatic as "someone who won't change their mind, and won't change the subject."

As I see it, politics serves two principle purposes for people. For genuine Liberals--whose views on an array of issues can differ quote considerably--the point of politics is to get things done. They have concrete problems they see, and they are willing to vary their means of solving them, never losing focus on the end goal. As an example, a true Liberal would realized that the ways we have been trying to end poverty in the inner cities haven't worked. They have been tried, and they have failed. This means continuing to do what has always been done is necessarily counter-productive, since it is throwing good money after bad. We have to understand the system in place, and work that point forward to new ideas.

Yet, for many people politics serves a very different purpose. For them, it is an end in itself, since it leads to a sense of meaning, a sense of belonging, and to power, all of which motivations can be mixed together at once. Note, though, that these are all selfish, personal goals. We can take it for granted that that inner reality will invariably be cloaked in rhetorical appeals to the common good, sacrifice, and nobility, no matter where that person is on the political spectrum.

For that reason, the only politicians who are to be trusted are those who already have a sense of meaning, already belong to a community, and who do not desire power. Logically, then, good politics is simply an outflow of Goodness, generally. Logically, then, the only way to solve our political problems, in the long run, is through a reinvigorated, serious pursuit of moral virtue. I have made this case many times, in different variations.

This leads to the necessary conclusion, though, that efforts to muddy the moral waters, and to stymy or prevent coherent moral discourse necessarily lead to human suffering that is unnecessary, particularly in the long term.

Like any other problem, the problem of what to do and why to do it can be solved through discussion. The moment that discussion ends, though, without good answers, the stage is set for misery. In many respects, we are at that crossroads right now. Moral relativism is a rejection of the possibility of meaningful moral debate, since it has already rejeced in advance the possibility of an answer, outside the confines of blunt power.

Tuesday, May 25, 2010

Post for Glenn Beck site

Consider that the driving voices behind the formation of both the UN and the IMF--Alger Hiss and Harry Dexter White--were Soviet agents. If you look at what the IMF actually does, it does not sponsor capitalism at all. It sponsors New Deal sorts of public works projects, that undermine existing businesses, disproportionately line the pockets of elites, and leave trails of debt that are never repaid.

Patently, the goal was a world filled with dictators who met at the UN to determine the fate of the rest of us, after dispensing with the US through currency devaluations that were utterly out of the control of Congress.

Here is my piece on what the Fed and IMF need to go: http://moderatesunited.blogspot.com/2010/05/going-out-today.html

HOW is a topic dealt with there as well.

Cultural Sadeism

Many years ago, I read some conspiratorial large black book that suggested a link between Marxism and Communism, the name of which I have forgotten. It was suggested to me by a friend whose family was politically connected. Well, I Googled those words today, and found this interesting link.

There are numerous interesting quotes from Marx here, but this will need to stand in for all of them:

With disdain I will throw my gauntlet full in the face of the world,
And see the collapse of this pygmy giant whose fall will not stifle my ardor.
Then will I wander godlike and victorious through the ruins of the world
And, giving my words an active force, I will feel equal to the Creator.


In the intervening years I have developed this notion, that of Cultural Sadeism, in which the simple desire for pain, death and destruction is expressed politically and disguised--as indeed all Satanic naratives must be--in the rhetoric of compassion and community. No proper Sadeist tells the truth, unless in so doing he can hurt someone. That is just how it works.

When you add to this the frequent admiration that Saul Alinsky expressed for Lucifer, you see a common pattern. Now, I am not a Christian, per se, but it is manifestly obvious to anyone with eyes that there are evil people in this world, those who enjoy the power that comes with being able to hurt other people.

This is, I am increasingly convinced, the task which those who run the IMF in particular, and to a lesser extent the Federal Reserve, have set themselves.

In the end, I only perceive two primal motivational structures in this world: that of Love, and that of Power. In this, I agree with the Christians. Both are mixed in most people, and each expressed to varying extents during the course of their lives.

Yet, every Bell Curve has a beginning and an end: these are our saints, and our demons. Marx was a demon, as have been his followers ever since. No beliefs in non-material realities are needed to accept this view. One simply need term him an aggressively violent sociopath, who worked through his books--as did, by and large, Sade himself--to accomplish pain and destruction.

Who we are

An image that just popped into my head is that we are flickering flames, where the "wax" from which we emerge is the actual principles which inform our actions. Most people have two reasons for doing things (this insight is not original to me, by the way): the reason they give, and the actual reason. The actual reason is who you really are, which may be quite different than the face you offer to the world.

I spend a lot of time pondering the nature of self and identity, since our answer to those questions cannot be separated from our political commitments. Conservatives view "politics" as a means of preserving a way of life that already exists. If you ask them what they want for the future, that is an easy question to answer: the same as today, except that we implement our core historical ideals even better than we have to this point.

Leftists have a much larger problem. So much of their "doctrine" is actually praxis. Their "orthopraxis", if I might be permitted that word here, is the rhetorical rejection of injustice, within which is enfolded inequality. Their orthopraxis consists in an effort to achieve rhetorical and then political dominance over anyone who disputes their leveling narratives.

Yet one searches in vain for actual positive principles by means of which they define themselves. Obviously, they are not racists, sexists, "adultists" (an amusing word I did not make up), elitists, homophobes, Christo-cenric, ethnocentric, or classist. What, then, are they?

Logically, if no differences are permitted in how we view different groups, however, they might be constituted, then the movement is necessarily in the direction of homogeneity. This flows from the ineluctable conclusions that I can't priviledge me and mine, simply because that is what has always been done, and because those are the people I feel closest to.

For now, various cultural "others" are permitted their identities. For the purposes of western leftists, the current dichotomy between Us and Them in our own cultural system--which is to say the Politically Correct versus everyone else--is sufficient to let pass the racisms and sexisms of other nations and cultures. They presume such cultures are on their side, since they are speaking AGAINST the posited oppressions of the people--the non-PC--in our own culture who have "hurt" them.

It is an undifferentiated ocean of rhetoric backed by praxis, but unbacked by articulated or articulable principles. Why should difference be eradicated and not negotiated, for example? To take a concrete example, how is it that leftists can be so plainly bigoted against white Christian males that they refuse to accept their mere existence, and yet claim to be enlightened?

The key, here, is not what they think, but what they DO. Action is the point of propaganda, not coherence. In fact, mutability is a primary intended outcome of propaganda, since the needs of the Party change.

All of this matters because when you look at, say, the outcomes of the World Bank, which was founded by Leftists, you see they have been appalling. Yes, rich white men have played their part and made their fortunes. But on balance, the INTENT of the thing was to build a Communist world--also an invention of rich white men, I might add--which looks like 1930's America, but forever and with an infinite array of surveillance gadgets to keep the people thereby "saved" from ever mounting an effective resistance.

How do people seek these things? How do they fail, after decades and generations of potential learning, to learn the lessons?

One can only explain this by positing that for leftists their belief system is an article of faith. If they do as they are told to do, if they repeat the mantras they are given, they are rescued from the tyranny of freedom. They don't have to think about who they are, and what to do.

In a culture in which traditional values survived--take as an example any intact culture which the Left wants to "protect", say South Vietnam before it was invaded by the North, or Sudan--these questions would have been answered for them. Gender roles, social roles, cultural patterns, all would have been assigned.

In the modern world, though, so much of what we took for granted has been destroyed. Space has been cleared for a "New World", but no one knows what it might look like. Marx never spoke to it, and in neglecting morality, discouraged consideration of it as more important than impersonal historical and economic forces.

Yet as Emerson rightly said, history, proper, is biography. There is no history outside the concrete decisions of individuals, as leaders and in groups. We CANNOT build a positive future without the cultivation of good decisions, which themselves depend on coherent moral codes.

One tends, in studying history, to think of groups as relatively static in their motivations. One tends, as an example, to think of the Federal Reserve and IMF as composed of people who cannot be swayed from the conviction that what they do is acceptable. Yet, people do wake up, at times. A good example is Whittaker Chambers, who outed a whole spy ring in Washington, although he was ignored by FDR and Truman for some years.

Such things are possible. People can reach new decisions, based on perceptions that are new to them. One never knows how things will play out, but, again, it helps a lot if you have a means for making decisions, and a plan.

Where has our money gone?

I have said that our purchasing power should be 20x what it is. As I ponder this further, I think a more accurate way of putting it is that we should have 20x the money in the bank that we do.

Inflation is like taking taxpayer money and depositing it in an interest bearing account which belongs to someone plugged into the system. That account is jointly owned, in my view, by Wall Street and the Federal Government. Internationally, it is co-owned by international Wall Street equivalents, our Federal Government, and its counterparts, mainly in Europe.

This deposit was made some 100 years ago. Each year, it accrues interest in an amount equal to the inflation rate. My math may be a bit off--since I know from practical experience that markup and Gross Margin are related, but two different calculations--but it is close. Let us say it is 3%.

That is now money which is growing, but which we the people who provided it can't touch. That is money that would have been used by our grandparents to pay off loans, and invest in real estate. It would have been used by our parents to create a nest egg to pass on to us, their children.

It is hard for many of us to imagine, but there are a not inconsiderable number of people in this world who have millions of dollars in reserve. Most of them live like the rest of us, but when they need money, they have it. Most of us live on the edge. It has not always been thus. Everyone in America should have a large savings account.

Our net worth should be 20x what it is. I think that is a better and more accurate way of putting it, although this remains a work in progress.

I will comment editorially, though, that from what I can tell professional economists likely do a decent job of describing theoretically what IS happening, but a horrible job of describing what COULD have happened, or what SHOULD happen, within a radically different system, based on real money.

As far as I can tell, no one has proposed a truly fixed money supply based on gold. Of course, it may well have happened, and the author laughed out of the academy. It is a radical idea, but our straights are increasingly and unnecessarily dire.

Paradox

It seems to me that our current system of "Capitalism" is in fact drawing us ever nearer an autocratic socialism, and that the only secure means forward to a socialism that would improve the world is through more complete capitalism.

Our markets are not free. Big Money, in partnership with Big Government, has the power to levy almost unlimited taxes--in the form of wealth redistribution called inflation--with NO regulatory checks whatsoever. This is the state of affairs. Taxes are levied both domestically, through deficit spending, which necessarily involves money creation, since money is spent that we don't have; and internationally, where MORE money is spent on our behalf--for example the bailout of the Euro--that we don't have.

Now, one fact that is easy to miss is that inflation can happen without prices increasing here in the United States. The value of money only diminishes when it is competing with other money, which for our purposes would mean money that was being circulated in the United States.

What happens, though, when dollars flow out to, say, the Chinese, in exchange for goods, and stay there, in effect hoarded? Those dollars represent real buying power, and hence a real net transfer of our wealth. Yes, we get in the exchange real goods, but in the process--since that was fiat money--our net wealth decreases invisibly. If the Chinese dumped their dollar holdings, in the form of securities and actual dollars, the hidden wealth transfer would become obvious in the fact that our money would no longer be worth anything. That transfer happened with the dollar transfer, and is merely hidden, for now. It may remain hidden for the foreseeable future, since China will not for some years be in a position to challenge us directly; yet things are flowing, for them, in a positive direction. We are bleeding, and the more debt we incur, the faster the blood loss.

Monday, May 24, 2010

Economics

I believe that one can infer economics is not a science from the mere fact that diverse opinions exist among equally intelligent and erudite men (and presumably women, although I know of no major female economists).

In point of fact, I believe it is not only possible to be a complete idiot in the field of economics, but that this is the most common condition. Look at our current state of affairs. If we were to evaluate our economic situation through the lens of private enterprise, it is in horrible shape. Our balance sheets are filled with debt, our assets are shrinking, and revenues are shrinking as well. We carry on through hard work, creativity, and the sheer tenacity borne of necessity.

Consider Keynes. It is quite possible to paint him as a socialist. He was a member of the Bloomsbury group (where he was a bisexual), and palled around with Fabians.

No one can be so stupid as to miss the fact that deficit spending in the present leads to taxes in the future: in actual taxes, interest payments, and inflation. Thus, you are borrowing, at a disadvantage, money from the future, and using it to fund, today, enterprises which will not be self sustaining, which will not move an inch once the money is gone. This is absolute idiocy, yet trillions of dollars have gone and continue to go into such projects. During the Great Depression, it literally would have cost less simply to pay unemployment than to build the roads and bridges they did.

What such "Keynsian" spending DOES do, however, is discourage private enterprise. Who creates sustainable jobs, in ANY economy? The private sector. If you have no private sector--as in Communist nations--you have no real jobs, and no wealth. You sink into poverty almost immediately. If you like, it might be useful to think of Cuba as a nation that went into a Great Depression, and never exited.

In our own case, FDR did NOTHING to build the faith and trust of private enterprise, and virtually everything in his power--including exorbitant, ridiculous tax rates--to discourage it.

"Keynsian" economics is good at moving capital from the private sector to the public sector, with all the shift in political power that implies.

And when one considers that what the IMF does internationally is implement Keynsian spending in developing nations by loaning the money (which we financed with deficit spending) which is used to build things like dams and highways, you realize that perhaps Keynes was no fool in economics; he was a fool in politics, for thinking any good could come from squelching the desires of individuals the world over for political freedom, and economic self reliance.

I am often tempted to pretend that the horrors of Communism never happened. The history is so nauseating that it is quite impossible for me to see any possible motivation other than garden variety sadism. Millions killed, for the rest to live in chains under tyrannical despots.

Yet, for the same reason one cannot reject this history--patently, it happened--I cannot reject out of hand that all of the negative consequences that flow, inevitably and invariably, from implementing the supposedly "counter-cyclical" (where the "cycle" itself is a function of fiat money) policies of government make-work projects, were not precisely those intended by Keynes himself. He was--along with Soviet agent Harry Dexter White--a "fountainhead" of the bad ideas that flowed from Bretton Woods, and which went on to cause so much hunger, poverty, despotism, and terror.

Can one not accede some merit to the Christian idea that this world is ruled by forces of darkness? It does sometimes seem that way. Still, we all get a voice, don't we? We know the terrors of history must, in some infinite expanse of time, end. Perhaps one is even justified in hoping it will be sooner rather than later.

Letter to National Review

Subject: Federal Reserve/IMF

Yes, I know this is the province of the "right wing crazies". The principle lecture series on it on YouTube ends with an endorsement of the John Birch Society.

Please hear me out, though. I have studied this topic carefully, and come to the conclusion that it literally doesn't matter who we elect, in the long run, as long as unelected people have the power to devalue our currency through inflation.

You don't often see it stated this way, but inflation is WEALTH TRANSFER, and it is my contention, which I can and will argue in the piece, that our purchasing power as a nation should be many times what it actually is.

For most people, inflation is something you see out of your intellectual peripheral vision. You know it's there, but if it's in the "normal" range of 2-4% or so, you don't pay attention. Most of us graduate school with this vague notion that growth in production leads to higher prices, and that's just how it works. Sometimes the Fed has to pull money out, sometimes put it in, to keep things growing steadily. This is the received wisdom, that the Fed is sort of like the regulating rods in a nuclear reactor, keeping things from getting too hot or too cold.

This isn't right. Prices should be DROPPING, with constant wages. Let us posit that there is, for simplicities sake, $10 trillion in "dollars", which is to say money held in banks and in paper and coin. 3% of that is $300 billion created out of thin air every year. Somebody gets that. That is now buying power the rest of us don't have.

The trick is to keep it low enough that nobody asks too many questions.

This is the most important issue facing us. Nothing else is close. All the problems of wealth and poverty can be solved, if we just grasp this one fact. And if we don't, it doesn't matter in the slightest, in the long run, who gets elected in November.

I would appreciate a shot at writing a piece on this.

Sunday, May 23, 2010

Profit

Profit is nothing more or less than motivation. Why did I make that widget? To earn a return. Why did you paint that picture? I was hoping to make my living as an artist. Why did you open that trendy East Village boutique/CD Store/sex shop/Communist bar? I was hoping to make a living at it.

There are no leftists writing today who did not at some point benefit from the profit motive, and very few who pay their bills who do not currently benefit from the profit motive.

Why do people do anything? BECAUSE THEY WANT TO.

What is the proposed motivational structure in a socialist utopia? That people make things for others for no profit because they want to contribute. They want to do the right thing. They want the social order as a whole to do well, and they thus act selflessly. Socialism depends, therefore, on considerable moral development.

Yet, most socialists have no developed moral sense. They are quite good at pointing to what they see as the inequities of the Capitalist system, but Marx himself had nothing to say about morality, and Lenin rejected the concept altogether.

Logically, if one wanted to build a paradise where everyone was nice, and produced just out of their love of their fellow man--a condition I will not reject out of hand as impossible--the ONLY POSSIBLE WAY to get there is through fostering genuine altruism, which in turn depends on a coherent and replicable moral code.

Where is the evidence of efforts in this direction? From where I sit, what I see are people obsessing about presumed affronts to notions of cultural, racial, social and moral uniformity, but who offer no POSITIVE, actionable set of thoughts for moving forward.

This is a massive structural deficit. Let us posit that many of these people are in fact well-meaning. Let us further observe, as historical fact, that into their midst invariably fall people (like Mao, Lenin, Pol Pot) who are NOT well-meaning. How can they fight them, when they lack a positive moral code?

Practically, this defect gets expressed as people being FORCED to produce for others at pain of hunger or worse. This does not build morality; rather, it destroys it. It teaches people to be crafty, dishonest, mistrustful, and lazy.

The ONLY way forward for people who advocate a reduction in the importance of the profit motive is moral education. This requires the development of a coherent moral system, that is not relativistic, and in which certain core truths are unimpeachable. That is what I myself am trying to develop, a project in which I have in large measure succeeded. See my other blog to learn more.

Political discourse

It really seems to me that there are two principle motivations: rhetorical dominance, and a desire for reasoned consensus. In the first, "winning" is the primary goal. Typically, the tactics used are derision, partial and decontextualized use of facts, and repetition. The growth that happens in the use of such rhetoric is in the direction of conformity or exclusion. You have to pick sides, since there is no movement in the direction of compromise.

In the second, it will optimally begin with a shared goal, say world peace. It will then define that goal, such that you know when you have reached it. It will then discuss methods by which that aim can be achieved. This is where genuine difference can be a factor in generating an optimal solution, since varied perspectives tend, in aggregate, to scope out various pathways well, determine their relative merits and dangers, and include differing factual accounts of present reality, which can be researched and debated.

As I have argued elsewhere, the transition from liberal to leftist, and from reasoned debate to rhetorical duels, happens when you NO LONGER CARE about the actual consequences of your actions.

Take the issue of race, for example. It would seem to me that the shared goal would be the thriving of the African American (among others) community within the United States. Success would be defined as full employment in jobs which pay reasonably well, educational attainments on par with everyone else, rates of criminality on par with everyone else, and rates of family success and failure on par with everyone else.

Patently, none of those outcomes have been achieved in the last 50 years. Rather, what we have seen--as a direct result of leftist policies--is an eradication of most good jobs from inner cities, exceedingly high failure rates in high school, rates of crime that are astronomical, and the virtually complete eradication of the nuclear family in the inner cities.

These are problems, and to claim otherwise is to show a cynical disregard for the suffering that underlies these facts.

Is anything solved by calling anyone who suggests these might be problems a racist? Is it helpful for comfortable white suburbanites to spend enormous energies figuring out who the "racists" are, and dedicating NO serious thought to how we might address these problems?

If you look at Al Sharpton, or Jesse Jackson, or Jerry Wright, you aren't looking at people trying to solve the problem: they ARE the problem. They act as if the African American community HAS to rely on them, and on the government programs they get funded, and that they should play NO role, as individuals, in trying to solve these problems.

This is bullshit. Until leftists got that community addicted to getting money for nothing, all of those communities--take Harlem as an example--were growing in wealth, serious about education, and dedicated to the nuclear family and church. Their streets were not crime ridden, and they had self respect that did not come from some preacher telling them "black is beautiful". They had self respect because they EARNED it.

It is not conservatives who are polarizing. We want government to do nothing but not get in our way. It is the LEFT who has a political interest in permanent dependency.

If you look at Greece, today, what you see is that they are failing because they thought that public sector jobs were sustainable. They thought the credit cards would last forever. Yet ALL public sector expense and all government money that is handed out represents a current or future tax. As such, it represents a drag on the only jobs that are SUSTAINABLE, which are those in the private sector.

To be clear, if you borrow money to fund such programs, they are inflationary, and inflation is a regressive tax that takes from the poor and gives to the rich. If you take the money in actual taxes, you provoke the flight of capital, which is what has happened in so many large urban areas. New York actually, in effect, went broke, in much the same way Greece is today. Detroit is a "failed state".

I see clear parallels between the actions of the IMF and the actions of the Left in the so-called "War on Poverty". What you do is take a group of people who are maybe not doing great, but who are growing, and give them money with no strings attached. If you do it in the developing world, you give it to the government. They then take that money and promise their nation the moon and the stars. Everyone is getting rich, at least those who are connected. Whatever business ventures they had, they give up, since the money is so easy. This derails private enterprise in a big way.

One day, the money runs out. All the private infrastructure that had been there, is gone. And people are addicted, as fully as if the substance were crack cocaine. They want more, more, more. So they get more, in exchange for some part of their personal or national sovereignty. They now DEPEND on that supply of money, they can't imagine living without it.

How else can you explain people thinking Barack Obama was going to pay their mortgage, or that all healthcare was now free? Many generations have been taught that the way to get ahead is to trust people like Jesse Jackson, who would FIGHT for them. But how much can they get? You can only draw out without paying in so long.

The IMF says it is for development, but it simply props up dictators, and facilitates corruption and the flight of capital from the industrialized democracies to the developing world.

The Democrats say they want to help African Americans, but all they seem able to propose are programs that don't work, and larger social aid packages.

Clearly, if we want to develop the world, we need to loan to enterpreneurs and capitalists. Clearly, if we want to develop the inner cities, we need to do the same.

What I think would work would be, first, educational vouchers, such that the parents of the children can pick the schools their kids go to. Schools need to be developed that brook no violence or disrespect, and which enforce discipline, and the self respect and self possession that goes with it. Graduates of such schools can be enrolled in a microloan database, such that business start-up ventures can be funded by private capital.

When you say to someone "go create something", good things flow. When you say to people "do as I say", you disempower them. The irony is thick that leftists think that it empowers anyone to presume to speak for them.

I have faith that most people, if you expect them to succeed, will. I likewise think that if you expect people to fail, they will likewise often accomodate you.

All of these problems can be solved, but you must begin with the goal in mind, not a preoccupation with "message management". If your sole focus is on how these things are TALKED about--not end results--you are complicit in the pain you claim motivates you; you are not compassionate: you are a self important bully.

Saturday, May 22, 2010

Further comment on banking idea

It is worth exploring a bit how banks work, for those unfamiliar with it. As I understand the matter, all banks are required by law to keep in reserve a certain amount of "hard" currency. That amount is determined by the Federal Reserve. This is interesting, since no one at the Fed answers to Congress directly, yet they directly control the cost of our money.

Be that as it may, if you deposit $100 at your bank, they have to keep $10 of that in reserve, and can loan the rest. What actually seems to happen, though, is they keep your $100, and loan $900 against it. That $900 comes out of thin air. Their "reserves" are actually the only hard currency they have. They may own securities, which count in my mind as money, but the loans they make do not.

When I go to the bank to take out, say, a home mortgage, the bank writes the seller of the house a check, say for $100,000. What happens is they put that loan down on both sides of the ledger, as both a debit and a credit. It is a liability, and an asset. It is a liability, since they wrote the check, and since they have to keep $10,000 around (in the vault or deposited at the Fed) to "secure" it. It is an asset, since the borrower signed a promissory note--a mortgage, if my legal terminology is right--to pay the money back. It is money owed the bank.

If the borrower defaults, even though most of the money was created from thin air, it still shows as a debt owed. This is how the accounting is done, I'm sure per some formalized system of accounting. Thus, too many defaults, and you go bankrupt, even though you don't actually owe the money to anyone, since you created most of it. This is logical, since otherwise banks could just loan money to anyone, and just make it vanish if the borrower defaults through the same feat of magic by which the loan was created. This would be massively inflationary. The vulnerability to bankruptcy for bankers is, then, a partial check on what is still a bad system.

If the system were fair, anyone could create money, but that isn't the case. You have to get a charter, and presumably mass a certain quantity of actual assets. In most cases, this is likely the personal assets of those who create the bank in the first place. Those assets are "real", and in my proposed solution to our monetary problems they would of course be paid in full for those.

We would simply wipe clean both the liability and the asset sides of the ledger for loans which were based on "unreal" money. It would seem reasonable, as well, that to the extent real money was in the loan, that that part would be retained.

What is at issue is the long term viability of a system in which loans are used as collateral for futher loans, and in which the whole thing is underwritten by the taxpayers--not just here, but in almost all industrialized nations--but the profits, when they occur are private.

That will have to do for now. Things to do. I will add to this over the next few days.

Reply to Jonathan

Facebook isn't working, so I'm posting this here. It's a response to some comments made there.

Well, we may not see eye to eye on the inflation issue. As I see it, money can flow in different quantities to different places, but never alter in total quantity unless more is "printed". As an example, just picture that there were only 1 million dollar bill in existence. You can pay $500,000 for a coke, but that does not cause any more bills to come into existence. Most of the "bubbles" are financed, which means money was made from nothing, and was hence inflationary. I literally think automobiles should cost $500.

As far as the role of government, once you realize that the greatest current existential threat to our national sovereignty is the on-going assault on our money supply--as enabled by the Fed and the IMF--then you realize that PROTECTING it is one of our most pressing national security issues, and thus a role properly assumed by the Federal government, and implemented by the States.

As far as mining gold, I am not against that at all. I am proposing two types of gold: gold we say is SPECIAL, and normal gold. SPECIAL gold sits in State vaults, and is worth EXACTLY as much as was paid for it. Normal gold is mined and used and traded on open markets like it always has been, as bullion, jewelry, and any other form it might take.

Bottom line, though, I see no more pressing national security matter than sorting this thing out. Once you sort through the details, you see why George Soros does what he does. People get bored with these details, which is how and why this assault--not just on our own sovereignty, but that of all other nations as well--has been able to continue for so long, and enjoy so much success.

How to fix the monetary crisis

I am going to quote Dumbledore and say "This is one of my more brilliant ideas--and between you and I that is saying something." Now the obvious caveat applies that I am perhaps being stupid with confidence, but I think this will work:

A few posts back I posted some ideas on how to abolish the Fed. We need to apply this to the whole world. Let me explain.

One thing I was wondering about, was what happens with loans banks made. Main Street Savings and Loan loaned John Smith $250,000 to build a house, and collects say $2,500 a month on it. It's not in default. It's fine and a source of profit. It shows as both an asset and a liability on the books. If it goes into default, it shows only as a liability, which in enough quantities will either bring the bank down, or get it a bailout, depending on the size of the bank.

Here is my proposal: those loans are forgiven. They are marked paid in full. Now wait, you say, how is that not socialism or Communism. How is that not a patent abrogation of the right private property. Simple: THAT BANK NEVER HAD THAT MONEY TO BEGIN WITH. They loan money they haven't earned. That's how inflation happens in the first place. You can't steal something somebody never earned. Frankly, they stole it from us in the first place, using the coercive police power of the State.

What do they keep? Their REAL assets, which is that money they hold at the Fed, or in their vaults. They get that cash, and can then make loans on that. Most of the employees at most of the banks in the country lose their jobs, but most of the home mortgages and other DEBTS disappear, freeing up an ENORMOUS amount of cash. The Federal debt disappears, since most of it was created through money manipulation, too. The creditors are paid. The carpenters and plumbers who worked on, say, the Federal Reserve building have all been paid. Nobody who made anything gets stiffed.

But what about foreign creditors? What about the Chinese? Here's where it gets interesting. What we have to understand is THEY HAVE A CENTRAL BANK TOO. Much of the money they "gave" us was undervalued, for two reasons: one, they print money to fund the on-going expansion of their State; and two they artificially undervalue the yuan--I call them Mao's, since as I understand it his picture is on them--to increase the amount of goods a dollar will buy.

We give them an ultimatum: switch to our gold backed system, or we default. Now, they can dump their dollars, and cause mass inflation. Provided we have this system already in the works, we can manage inflation, since it won't matter what a dollar actually buys once we switch to a static currency. Maybe it takes $50 to buy a Coke: we shrug, raise wages, and deal with it. Bit of pain in the middle, but permanent freedom.

And if they play with us, they do the same thing. They switch to a static currency--which will still be the yuan, and under their "control"--and money is now real.

Same thing with Europe. They all have central banks, that have abused them the way the Fed has here. Greece's debts are forgiven, and she has to behave in the future, which obviously would include not paying the huge benefits she has been paying. Austerity is forced on them, but without their debts.

So much horror has happened in the last century. Surely at some point the thugs who preach peace and freedom can, on balance, realize they have been speaking for and acting as Nazis, and let go.

One added thought: to keep gold speculators from making too much money from nothing, we could actually state something like: in the next month we will switch to gold, silver, or platinum, and pay whatever the rate is AT THAT MOMENT. There is no reason to use this as a wealth transfer mechanism between those who don't have money and those who do.

Or we could simply say: we will pay X plus 10% for gold, where X is what the investor can prove they paid. That might work best. They make money--they already had X, so they would have needed to get reimbursed anyway, and they are thereby incented to sell--and we get the gold without a huge transfer of wealth.

A golden age ensues. Again, I may be missing something, but I think this will work.

Friday, May 21, 2010

Why we should abolish the Fed

Consider the following shocking claims:

Every day the Federal Reserve exists, we work a bit harder, and earn a bit less.

Since the Fed is a key backer of the IMF and World Bank, every day the Federal Reserve exists, we lose a bit of our national sovereignty, move closer to global currency, and move closer to global government.

If the Fed did not exist, our actual purchasing power would be 5 times or more what it is today.

If the Fed did not exist, we would have little or no national debt, and would instead be a nation of savers.

Coming to these conclusions made my jaw drop, but they appear unassailable.

Consider our productivity gains in the last century. Can we not suppose at a bare minimum a 3% annual improvement? That every year, we make 3% more with the same resources and same effort? This seems low, but reasonable. Why don’t we live better? Our grandparents had houses. They had savings. They may not have gone out to eat every night, but they didn’t go hungry. Most of them had a car. They lived much like we do, and owned what they had.

Today, we are a nation of debtors, that by and large own nothing, have no savings, and will be paying the company store all of our lives, as will our children and grandchildren. Our collected debt just for the national government is $12 trillion--some $40,000 per person--and climbing steadily. How is this possible?

It is inflation that took this wealth from us. Now, we are told 3% or so inflation every year is “normal”. It isn’t. It is completely unnecessary. It is a gash below the surface of the water that is slowly sinking the boat of our economy. It is the direct result of the Federal Reserve.

What is inflation? It is an inflation—increase--of the money supply. Whenever more dollars are “printed”, they decrease the value of every other dollar in existence. There is no way for inflation to occur unless more money is created.

How is this done?

Primarily by writing checks that are backed by nothing. You read that right. The Fed can, for example, buy securities in any amount it likes, with no money. It could write a $1 trillion check if it wanted to. It could write a $10 trillion check. There are no limits, although those things would have immediate inflationary consequences, and shine a light on them they have spent nearly a century avoiding. When you read some nation, like Zimbabwe, is enduring massive inflation, what has happened is somebody had a night on the town by writing themselves checks based on nothing.

The Fed can “loan” money in any amount it wants, backed by nothing. As an example, when Bear Stearns first got in trouble, the Fed bought billions of dollars of mortgage backed securities, since nobody else wanted to. They write the check, against which Bear Stearns cashes checks, and thus the money is created out of nothing. In our digital age, obviously physical, cash money is relatively unimportant, but as inflation increases, they do consistently need to print more.

How does this hurt us? Consider the following thought experiment. Let us put on one side of a table a dollar bill, that stands in for all the dollars in existence--in banks, wallets, and coded as 0’s and 1’s in computers around the world. Let us put on the other side a teacup, that stands for all the material goods in existence, the cars, houses, highways, electronics, watches, and actual teacups.

Common sense tells us that if we are making more stuff with the same amount of effort, that the price of that stuff ought to be dropping. Yes, we add bells and whistles to cars, and houses seem to be getting bigger, but not to the tune of the 3% per year I am here positing. What should be happening is that for every dollar, we get—for simplicities sake—TWO teacups. Material wealth should be inflating, while the dollar stays constant. Why is this not happening?

What is happening is a second dollar is being placed next to ours. This dollar was created out of nothing. It did not exist, then through a feat of accounting magic, suddenly it did. The person who got this dollar—a large commercial bank on Wall Street, nine times out of ten—now has purchasing power with it, despite having done nothing to earn it. Our wealth—our actual purchasing power—has thus been diluted. It has gone to build a house on Long Island sound, or lined the pocket of an African dictator, or facilitated the expansion of the Federal Government.

The game is not keeping up with the Consumer Price Index. This is a fool’s game. Prices on everything should be DROPPING. We should be working 10 hours a week and living as well as we are currently. We should have, for that reason, full employment, and no poverty. This is what a purely Capitalistic system, based on real money, would have won for us. There would be no need for our current conflict between the Left and the Right, at least over anti-poverty programs. We are fighting over crumbs.

To be clear, we have done this experiment: in the 19th Century, after Jackson broke the Second Bank of the US, purchasing power increased substantially. What cost a dollar in 1800 could be had for 66 cents in 1900, despite the fact that wages remained the same or increased. It was, by and large, a time of steady economic expansion. This is what happens without a Central Bank. Given the HUGE strides we have made in the 20th and 21st centuries in technology, that effect should have been multiplied many times over, probably exponentially.

This fact is so large it is missed. Economists spend so much of their time trying to use complex formulas that relate employment, inflation, productivity and the like that they miss the forest for the trees. Economists nearly ALWAYS miss what OUGHT to have been, but wasn’t. They fail either to see the big picture, or the long haul, usually both. You can always help the few at the expense of the many, or the present at the cost of the future. That doesn’t take any brainpower. We have, at this very moment, a Nobel Prize winning economist writing regular pieces for the New York Times, in which he argues we can borrow our way into prosperity, and that increasing the costs of our healthcare will lower the costs of our healthcare.

It gets worse: the International Monetary Fund and World Bank do what the Fed does, but internationally. They loan, in effect, money they don’t have to developing nations. Curiously, they don’t loan it to CAPITALISTS, which is what one would expect if increasing wealth were the goal. In the limited experiments which have been tried, microloan programs work exceedingly well to fund economic growth, and larger loans to startups ought to work yet better. This would be the actual path to world economic development.

Instead what happens is they loan money to GOVERNMENTS, in what amount to New Deal sorts of public works projects that generate no sustainable jobs, no new business, and quite often economic impoverishment, since the projects yield debts with no corresponding business profits. It’s the equivalent internationally to what was done to Detroit: you get people addicted to easy money, ruin what businesses already exist, then withdraw most of the money, and make them beg for the rest. It works great for those at the top--the Mugabes, and the Detroit City Halls--but creates great suffering for those it was supposed to help.

The principle architect of the IMF and World Bank—Assistant Secretary of the Treasure Harry Dexter White—was unambiguously an agent of the Soviet empire. We have the wire intercepts. There is no doubt about this. What would his game have been?

Simple: ruin American money through inflationary dilution, support the development of dictatorships in the Third World, discourage actual Capitalism, and set the stage for a global government to be administered by the UN, and controlled by the Soviets. If this sounds ridiculous, consider that that was in fact the stated goal of the Soviets, and that the conference in San Francisco that created the UN was itself chaired by another Soviet agent, Alger Hiss--whose title was Secretary General at the meeting--who in fact went to jail for espionage later. Again, the Venona wire intercepts—in addition to the physical evidence that put him in jail--permit no doubt as to his loyalties.

Now, this was not the goal of the founders of the Federal Reserve. What they wanted was simply to keep financial power on Wall Street, to make money from nothing, and to have some mechanism by which to pass bad loans off to taxpayers, all of which they got. Yet, history is clear that any concentration of power can be turned in any direction, once it is in place. A bad king can replace a good king. Our Wall Street bankers want continued economic growth, since they get a percentage of everything that is done. They have no desire to see the system go down in flames. Yet, if other people push the situation far enough, collapse is inevitable. They have set us up to fall.

Look at our current situation. What is the debt Obama is rapidly amassing doing? Setting the stage for a collapse of our currency, economic disaster, and correspondingly desperate circumstances in which calls for a global currency—to “solve” the problem—will look reasonable. To cede our money is to cede our sovereignty. If you doubt that, look at Europe today, and the trouble the Greeks are causing everyone else. If the Chinese dumped all the dollars they hold tomorrow, the value of our money would disappear almost overnight. That would kill their exports--so they are unlikely to do it--but the fact remains we are in a very, very precarious position, AND IT IS GETTING WORSE DAILY.

Here is what we need to do: the moderate Left (those who don’t oppose profit, per se) and the Right need to put aside our differences, and realize that if we had a real currency--one in which money could not be created at the whim of an unelected elite--all the problems of development would disappear. This problem is not just an American problem, but truly a global problem. Every nation on the planet is affected in a negative way by the status quo.

The Fed hurts everyone but the very rich, here and abroad. Leftists already hate the rich, so they should be supportive of ending it.

Conservatives hate anything that curtails our liberty, and the Fed definitely does that. It answers to no one but the “club” of bankers who run it in their own interest. There are no elections where We the People can apply pressure, and no rules by which Congress can insert its voice. It is literally an agency that is damaging our democracy, about which we can do nothing but get rid of it. It started with a Congressional charter, and can be ended the same way.

As far as details, here is one concrete proposal: http://moderatesunited.blogspot.com/2010/05/abolishing-fed.html

And to be clear, the supposed "financial reform" bill will actually play to the hands of the very banks it purports to regulate, by supporting the process by which we the taxpayers clean up the messes created by bankers who have no incentive not to take large risks. They keep the money when they win, and get us to pay when they lose. This is the worst possible situation for everyone BUT the bankers.

ALL AMERICANS HAVE A VITAL STAKE IN THIS ISSUE, UPON WHICH OUR VERY FUTURE AS A DEMOCRATIC REPUBLIC DEPENDS. Please forward this link to everyone you can think of who even possibly might read it, particularly any friends you may have on the political left.

Thursday, May 20, 2010

Stocks

The way I understand stocks to work, is a company needs capital. It offers to sell part of the company to investors. Investors buy up pieces of paper--literal or virtual--for whatever the market will bear when the initial sale is going on. They go public at $15, then maybe it climbs to $30, maybe it drops to $5. You collect whatever money is invested, and that is now operating capital. In exchange for buying your stock, you periodically pay dividends.

Once the stock is sold once, it becomes a commodity in its own right. You may have bought it for $15, but now you the investor try to sell it for $20 and pocket the difference. This part of our market is, in my view, irrational and should be abolished.

Here is my reasoning: if buying low and selling high is the objective, then psychology enters the picture in addition to business fundamentals, and disrupts consideration of the actual value and performance of the company. What intrudes instead are guesses as to what everyone else will guess. What evolve in short order are synchronizing signals, that indicate buy or sell, not for intrinsic business reasons, but because they allow you better to predict what everyone else will do. It's like a group of people on a boat at sea. They all rush to one side of the boat, then to the other, and the whole thing is never really in balance.

Concrete examples: layoffs used to signal buy. You saw "layoff", and you knew everyone else would buy, and if your particular software was faster than someone elses, you could hit the float before it peaked, and sell before it dropped, pocketing the difference. This is stupid.

What it does is make good companies underfunded, and crappy companies that market well overfunded, until they go bankrupt after making fortunes they still keep, at least in part.

The bottom line is NOBODY IS MAKING ANYTHING. There is no business value to this, other than that it sucks money away from groups that are less predatory. Yes, stocks go up in time, but so does inflation. I don't have the facts, but one could speculate--accurately in all likelihood--that most of the gains in the market over the last 100 years have to do with inflation. Stocks, like everything else, should not rise in value; what should happen is they pay better and more frequent dividends. At least, that is my belief for now.

My proposed solution is that all companies that want to go public determine the price of their stocks, based on how much money they want to raise. That, then, is the price. What will vary thereafter is how many are created. Say they need to raise $1 million. They offer to issue up to 200,000 $5 stock certificates. If they sell them all, then they get their money. Investors make money on the investment through dividends, which well run companies will pay more of, and poorly run companies less.

In effect, I am proposing converting stock issues to something like bond sales, except that you get variable "interest", and voting rights. When you sell the stock, the price is still $5. That may seem contrary to free enterprise principles, but what we are wanting is stability that is not skewed in favor of the very rich. You can still buy or sell as you choose, and companies can still attract capital for expansion.

Particularly if we eliminate easy money, business fundamentals will have to be observed. Capital can still be raised, but the ridiculous fluctuations of the market--which self evidently can be influenced EASILY by large enough traders--go away.

Actually, let me dilate on that last point. If you own large parts of some stock, say Proctor and Gamble, if you sell enough of them at once, you can start a freefall. You short the stock, then sell your shares, and Wall Street being what it is, the fall will continue for some period of time. If you need to, you can partner with someone who sell short, and you then dump the stocks.

This sort of thing used to be routine on Wall Street. A group of men would literally sit around with brandy and cigars, and pick a stock, any stock. One would buy some, then another, then another. They would pay off a journalist to write something positive about the stock, which would appear credible since the price was climbing, so others would jump on. At some point, they would all sell, returning the stocks to something close to what they should have been valued, and in effect pocketing the money of everyone who bought late.

Again, this is wealth redistribution. Banking and securities laws have made it much harder, but far from impossible. The system is prone to corruption, serves no useful purpose in the manufacture of concrete things, and should be abolished in the way I suggested.

Wednesday, May 19, 2010

How cash gets in banks

I have been wondering about this. Most of the "money" created, of course, is digital. It is an entry in a ledger. But obviously real money is out there too.

The best description I have found to date is here, from the Fed's website. Go to page 34.

The way our system works is banks have to keep a certain amount of "real" money in reserve. They can either hold it in cash in their vault, or deposit it with the Federal Reserve. I think that amount is 10%, but varying required withholding is a basic feature of this cartel, where competition in that regard is formally forbidden under penalty of law.

What I think they can do is convert their reserves at the Fed to actual cash. They are also required by law--by the Fed--to keep a certain amount of cash in their vault. Obviously, that amount is not as high as the total reserves they are supposed to have.

So banks just place orders, that are filled regionally, and the cash is delivered in armored cars by men with guns. There are printing presses operated by the Fed, and paid for by interest and transaction fees system members pay. That part is interesting, too: the Fed is not tax-payer supported. If it were, funding could be cut, which would allow political pressure to be brought on it.

According to their own site, the "need" for cash grows over time, which is a function of inflation they create. Printing more physical cash, though, is a very unimportant means of this.

The other part of that table that I am still working on is what appears to be out and out accounting deception. Here is the actual text:

The amount of currency demanded tends to grow over time, in part ref lecting increases in nominal spending as the economy grows. Consequently, an increasing volume of balances would be extinguished,
and the federal funds rate would rise, if the Federal Reserve did not offset the contraction in balances by purchasing securities. Indeed, the expansion of Federal Reserve notes is the primary reason that the Federal Reserve’s holdings of securities grow over time.


What I think they are saying is that as inflation happens, money buys less, so people ask for more. If, they say, they did not inject money into the system so as to make sure there was enough, the cost of money between banks--the Federal Funds Rate, which is a means by which banks needing short term loans can get them from other banks in the system--would rise.

This appears to be bullshit. What is actually happening is the Fed buys securities, say Bear Stearns securities, for cash they don't have. They literally just write a check, and as long as everyone agrees it was money, it will clear. This process is inflationary, since it creates money. On the back end, then, due to inflation, more people ask for cash, since the amount they hold is up, and the banks have to keep a percentage of that. So there is a relation, but as usual it is exactly backwards.

These people--well educated, wealthy, no doubt in many cases urbane, and certainly intelligent--are defrauding the American people right before our eyes. I have long ceased to wonder how people who knowingly do evil sleep at night. That is only a problem if you have a conscience. If you have no moral decency, you suffer no moral scruples, and you sleep just fine. Short of that, if you can just learn to lie to yourself, to convince yourself the bullshit you are peddling is solid gold, you can get much the same effect. People like that can and do wake up, though. We need them right now.

The Fed is socialist, sort of

Consider this: the distinguishing economic characteristics of socialism are income redistribution, and centralized planning. Marx's argument, in part, was that the chaos of free markets needed to be tamed, and central planning instituted. All vital industries, like energy production, railways, ship-building, and agriculture, were to be overseen by the State. Needless to say, this doesn't work, since it fails to account for local information. Basically what happens is the systematic and inevitable exit of otherwise available information, which makes production irrational and inefficient.

To my point here, though, the Federal Reserve is in fact a means by which wealth is redistributed from ordinary Americans to the rich, and it utilizes central planning in the production of MONEY. How much to lend, to who, at what interest rate: one would think Congress could provide input on such large decisions; one would think voters would somehow be able to influence it; but we don't and can't. Such is the nature of the Beast.

Inflation is worse than we thought

As I pondered this, our actual inflation has been WORSE than 2,000% since 1913, if you consider that what SHOULD have been happening is that the buying power of the dollar was increasing. Thus, to the measurably lost value of the dollar must be added the increases in value that did not occur. Let us posit that the value of the dollar SHOULD have been increasing 3% per year, and instead decreased 3%. That is a 6% swing.

We should be working 20 hours a week and living well on that. We have been horribly, horribly misled. We should never forget that there is evil in this world, and it takes many forms.

Drawing and meditation

I was drawing something the other day--a cowhorn trumpet I have had for many years--and noticed that I had stopped thinking. This is rare for most people, and unheard of for me. I chatter to myself all day every day.

I just stopped and looked at the wordlessness in my brain, and found it interesting and somewhat pleasurable. It felt like there was the possibility of opening a door there somewhere, that I had entered a room that was not well lit, but from which further progress was possible.

Given that the point of meditation in many traditions--notably Yoga, unless I am much mistaken--is to stop thinking, I would submit this might be a way forward that I have not yet seen proposed. Obviously, this is an effect of transitioning to the right brain, but surely meditation does the same thing?

One could simply alternate drawing, and contemplating the thoughtless space, trying to maintain it as long as possible.

Propaganda

I am still working my way towards working on a piece on Jacques Ellul's book "Propagandas", but felt a need to comment on one point here: propaganda is an anti-anxiolytic. It calms and soothes people, who view this as a desirable outcome.

For example, when Paul Krugman tells us confidently that we can spend our way into prosperity, many know on some level this is hogwash, but he is, after all, a Nobel Prize winning economist.

Or when Pres. Obama tells us that by increasing medical insurance costs and building a huge bureaucracy that our overall level of health will improve, the same people who think the government has money believe him. It all sounds so seductive, and people WANT it to be true.

One of the principal qualitative aspects of the indoctrination of our school children is teaching them that EXPERTS ARE ALWAYS RIGHT. Given this predisposition to take things on faith, lying simply involves getting the "experts" on board.

And to the point, here: that is what many people want. The anxiety they would otherwise suffer, of doubt and confusion, would be intolerable.

Perceiving

It occurred to me one could draw a basic relation between certainty and learning that I drew between money and wealth. If one is perfectly certain, one is incapable of learning, which I will define as perceptual movement. If one doubts everything--really, the acceptability of treating anything as a "fact"--then nothing is accumulated; there is no residual one might term "knowledge".

The task, then, is to balance the two. It is a bit like walking. You have believe that in voluntarily falling forward the other leg will catch you. And one can treat all those bits we call facts as useful until they prove otherwise. Practical knowledge is what is useful, which in turn normally means observable and repeatable.

Media Violence

From the book "Viewing Violence": "Violence on television is damaging to children. Forty years of research conclude that repeated exposure to high levels of media violence teaches some children and adolescents to settle interpersonal differences with violence, while teaching many more to be indifferent to this solution. . .

Children who are heavy viewers of television are more aggressive, more pessimistic, weigh more, are less imaginative, less empathic, and less capable students than their lighter-viewing counterparts."

These are not speculation, but facts, to the extent any general statement about a human social system can be. Why is this issue not considered to be of vital importance? Quite literally, our future is being shaped by forces we do not control--except to the extent we turn the TV off--and which are pernicious.

I think most people who have travelled will agree with me that when you return to this country, one thing you note is how superficial people seem, how little emotionally engaged they are with the big issues of life. How impervious, in some ways, to poetry, and a capacity to "get" big works of literature.

This is not universal, obviously, but it is certainly something I noticed. The reason for this "fact"--which I am positing as subjective judgement--is that our media consumption patterns differ from other nations. Clearly, we are infecting other countries, exporting our own worst cultural impulses, but that virus can be contained with better programming, and/or less TV use.

What is the political impact of this? It seems to that anything that makes people pessimistic, less empathic, and more violent is going to create a pool of people vulnerable to recruitment in a "grand cause", of precisely the sort the Left has in mind.

From that basic framework, you have people who are isolated socially. They know people, but not deeply, since their training has been in superficiality and an inability to express or even feel deep sentiments. Lacking compassion, they don't develop deep attachments. Using violence as a solution, they push people away. Just look at the patterns of internet use by our young: aggressive, brash, stupid, inhuman in many ways. Their "connection" is striking out, preferably within a "community" of like-minded simpletons.

They are uncreative. They don't have practice working through complex issues of profound importance. They are used to constant stimulation, not being the ones doing the stimulating.

All of this goes far beyond asking if movies showing explicit scenes of sadistic torture should be legal. This is not a First Amendment issue. What should be an issue is if we CARE what our future will look like. If we do, then such movies, when made, will not sell. That they do sell should be a cause for much concern.

Tuesday, May 18, 2010

Hidden light

As I was watching the sky on an intermittently cloudy night, it occurred to me that the stars are always shining, even when covered by clouds. Remembering they are there is an act of faith, but one backed by repeated experience. The first time they disappear, the child may doubt they will return, but they do. Likewise, all of experience troubles, but they end, or we learn to deal with them. The stars return, and we value them all the more for it.

Rivers

I was watching the Ohio River a few weeks ago. One thing about it that has always interested me is that it always seems, on the surface, to be flowing in any direction except the direction it is actually flowing. Often, it appears, on the surface, to be going backwards.

It seems to me that often our perceptions work like this. We look at the surface only, and never dig deep enough to get at deep realities. Truth, itself, is a type of river. Things that work happen in systems in motion. They never operate with perfect consistency in social systems, since they are complex, but on balance they all flow in the same direction. Capitalism works, but it is not perfect. Democracy works, but it is not perfect. Flaws happen, water get stuck in eddies that never quite resolve themselves, but the eddies move, and different water composes them.

The whole task of perception is to look at the big picture. Had I thrown a float on the water, I would have seen soon enough what way the water was going, and researching social realities is no different.

The "Stimulus"

Patently, the Stimulus was in large measure intended as a slush fund for various projects that couldn't get funded if named. Consider that some $6.4 BILLION went to 440 Congressional districts that don't exist.

Where could that money have gone? That is no clerical error. Let's consider some possibilities. First, it seems virtually certain that that money will find its way into the hands of various leftist activist groups, like ACORN. It will fund the agitation (which we might define as "resentment building") of community organizers.

It could, with some care, quite easily find its way into various lobbying and election funds. It can be disbursed to individuals, then recontributed in amounts small enough that no documentation is needed.

It could be used to fund political research that is used for "message refinement", which is to say lying more skillfully, based on more complete knowledge of what people want to hear.

It could be used for outright bribes of key officials in influential positions, which may not take the form of outright payments, but maybe contract preferences, or jobs for family and friends, or vacations, or houses, or boats.

Or, if one wants to take a more conspiratorial, paranoid stance (the foregoing, regrettably, all seems eminently plausible for a disciple of Saul Alinsky), what about high tech spying tools? Software to map social networks, to discern patterns of internet use and thereboy isolate political "deviants" (non-leftists)?

What about the paranoics obsession: mind control? Hear me out: what if technologies could be developed that were able to alter behavior patterns through subliminal elements in your computer or TV? It apparently worked for selling popcorn. Frankly, getting Obama elected in the first place was a triumph of deviousness. What if those same people now had tens of millions to play with in labs?

As an example, look at this piece.

No doubt, most Americans don't want to think about these things, but I will offer a historical reminder: Communism happened. It is happening today in North Korea and Cuba, and has been used to deny basic human rights to a billion Chinese.

How did economists get inflation so wrong?

It's a reasonable question, again, assuming my own views will prove, if tested, to be most correct.

The obvious first response is that many economists are idiots. We have, to this day, Nobel Prize winners arguing that we can spend our way into prosperity. How is this possible? Maybe they are bought; more likely is that are smart enough to make the puzzle so complicated that they can get counter-intuitive--and wrong--answers.

Whatever the cause, I do want to point out one thing: it seems to me that inflation and full employment are related, but that the causal arrow needs to be reversed. Specifically, I believe inflation causes full employment. How is inflation created again? Through money creation, which is used to fund industrial expansions.

Now, how the investment banks benefit from fiat money is obvious. They get something for nothing. This tool, though, is also used by people who do actually make things.

Let us take as an example a business startup in China, which we are told is getting ready to go into high inflation. A young man marries the daughter of a prominent local Communist Party official. You have to be connected to them, from what I can tell, to get anything done. You can bribe, you can kiss their ass, but you need their support, since no one has any rights in China not granted them at the whim of the ruling elite.

This young man wants to start up a shoe factor. Our official loves the ideas, makes a few calls, and poof he has a business license (you can't be on any shit lists and get a license), and $10 million "Mao's" in startup capital. That money is from the Chinese equivalent of the Federal Reserver. It just "prints" the notes.

Our young man works hard, and the factory succeeds. He employs 100 Chinese, who pay two thirds of their money or so in taxes, and he is now rich. The business is now his, and self sustaining, and he pays the money back.

Yet, this money was created from nothing. Therefore it added to the money supply. Therefore it is inflationary. This is basic. A year or two or five down the road, the effects of this policy hit, and the workers money now purchase less than it used to. So wages rise, and we are told their employment is what caused the inflation.

This gets it backward. Perhaps this correllation is what has confused so many people. Once you learn the lingo, and calculus, and especially once you start reading recondite treatments by economic theorists, common sense flies out the window. That's how people still believe in Marx, and how Paul Krugman has a job.

Monday, May 17, 2010

Comments on inflation and banking

We were all taught in school that 2-3% inflation is normal, and needed to balance production, employment and everything else. This is wrong.

As I have said a number of times now, inflation is a means of wealth redistribution. Why don't we notice this?

As Hazlitt argued in his classic "Economics in one lesson", a key error that many or most economists make is to forget about opportunities lost. In the "broken window fallacy" of Bastiat, as retold by Hazlitt, what everyone misses is that the shopkeeper could have bought SOMETHING ELSE with the money he spent fixing the window.

Likewise, what we miss with inflation is what we now can't buy. We miss all the things that our money could and should have been able to purchase, if it had not been devalued.

Let me be clear: Wall Street bankers buy very real estates from the proceeds of profits enabled by the same mechanism that causes inflation, which is fiat money, money from nothing, money which competes with money already in existence, and lowers its value. But in the moment of creation, that part which contributes to inflation changes hands.

Instead of buying a lawnmower, we actually bought a drawer for a desk for a Congressman or a banker. We lost this money, but since the system is so complex, very few see this. But bankers--and I mean here the really big, many, many billion dollar banks that get the bailouts when they fail, and the profits when they succeed--understand this.

Here is another way of putting the gulf between Capitalism proper, and Inflationism: bankers borrow money to make-create--money; Capitalists borrow money to create real goods and services. We can only consume the latter.

Cultural effects of borrowing

It is interesting to ponder what the cultural effects of being a nation of borrowers, rather than a nation of savers, have been. Clearly, it has been the policy of the bankers behind the Federal Reserve to, in effect, get us addicted to easy money, to spending more than we make. What they want is a nation that is constantly making interest payments, but never paying off their debts.

If not one of the effects of never thinking in the long term frivolity? A sense of tenuous and superficial pleasure in material things, that never quite scratches the itch, because you haven't earned them?

Does not a sense of dependency emerge? One thinks of the movie "Brazil", where Michael Palin's character instructs the protagonist not to hold out too long, lest it affect his credit rating. Our credit ratings: surely this is a point of vanity, to "earn" the right to spend considerably more than you make?

Is any amount of money enough to avoid bankruptcy, if you spend just a bit more? Are the foreclosure rates less in the swank neighborhoods than the poor ones? Probably a bit, but there have been many, many bonfires of the vanities lately.

Does easy credit not alter our perceptions of what to value, what to pursue? Does it not alter it in slight but real ways in the direction of materialistic acquisitiveness?

Worth pondering.

Abolishing the Fed

Here is what I propose: a Federal law is passed directing all States to find or construct a gold depository, and to print up paper notes that meet the best spec's currently available to deter counterfeiting. Within a time window of, say, one month, all dollar bills in circulation are to be turned in, and will be replaced with State bills in exactly equal amounts. Those dollars, in turn, are used to buy gold. This would apply as well to bank balances.

Obviously, the price of gold will go up, and some speculators will make a lot of money. So be it. The money used to buy the gold is the new State bills. This will be mildly inflationary, since you are paying out what the gold is worth, plus the money you give to the depositor. This means you are paying out slightly more than what the gold is "worth" (if I thinking correctly: this is a complex system, and obviously I may have overlooked some important variable, but you have to start somewhere).

Now, money creation is what banks do now, anyway. They can loan out 9x what they have in actual reserves. This is where inflation comes from in the first place.

This is not a bank, though: it is a State agency that directs all the banks to turn in their actual assets for new State money. And once the transition is done, they have little to do but guard the building. No further action is needed.

The actual price paid for the gold doesn't matter, because in my view what we need to do is make it "special" gold. Once it is bought, and physically placed somewhere secure, it is now, say TEXAS gold. Texas gold is special because its price never changes. It is always worth exactly as many notes as were issued against it.

What many economists seem to miss (and, again, I am here claiming to be smarter than people who have won the Nobel Prize, so take this with a grain of salt, but think it over carefully, and follow what I am saying and look to see where, if anywhere, I err in my logic) is that THERE IS NO VALUE TO ALTERATIONS IN THE QUANTITY OF MONEY. None.

None of us want money. We want what money will buy: houses, cars, trophy brides, golfing trips. Thus free markets in gold don't help. Gold can be mined, and added to the supply, which dilutes it. There is no value in this. Self evidently, the market for gold will not go away; people still need to get married, and make good with the wife on her birthday. But in this scenario gold, per se, is no longer MONEY.

What needs to happen is that the quantity of money needs to be fixed. What will happen over time is that our collective purchasing power will continually increase, since it is no longer being siphoned off by the Federal government through the hidden tax of inflation, and no longer buying oceanfront properties for banking executives.

Now what does this do to banks? If the quantity of State bills is fixed, then you can't make loans with money you don't have. Thus, they will be required to lend real money. This will decrease greatly the quantity of money loaned. We can anticipate an economic crash when this happens, because what we see, today, isn't real. It is smoke and mirrors. It is problem spreading like the ocean of oil in the Gulf, polluting everything.

THERE IS NO PAINLESS WAY TO FIX THIS PROBLEM. But big boys and girls take their medicine, no matter how bad it tastes, because they know--or the adults in the room know--that it is NECESSARY.

How, then, will banks make money? The old fashioned way: they earn it. They pay interest on deposits, and loan that money out at higher rates. They make fewer loans, but fewer go bad. We turn back into a nation of savers.

Pie in the sky? Maybe. But when we crash, a lot of crazy ideas will start looking good. We need to have a plan, and this is my suggestion.

Thought worker

This is the term I think I like best to describe what I try to do. I don't like philosopher or intellectual. Those words conjure in my head a person sitting in a corner, watching static images, and trying to connect them in static ways. What is needed is a sense of dynamism, of motion, added to thoughts, such that they are seen as cascades of ever-shifting but approximately organized flows of water.

At one point I considered coining a word where the Greek word for "approximate" was substituted in the middle of philosopher, such that the result meant "lover of approximate truth/wisdom", but that is ungainly.

It is the case that most large, complex problems require the use of abstraction. This is necessary in our modern society. And it is necessary that we have people who do it well: hence "thought worker", who is someone who, at the end of the day, can point to bridges built, to concrete plans of action which can then be implemented or modified as needed.

Conspiracy theories and further musings

Are there Chinese agents trying to steal the secrets of our government at this moment? Of course. Are they trying to steal the secrets of our industry? Of course. We know this.

But must we assume that the stupidity of our current crop of kids is part of a grander designe? Clearly, there are many Marxists at our universities, since none of those people have ever had to accomplish any large concrete task in their lives. At least many of the Communists of the 50's and 60's had some sort of military service, like Obama's grandfather.

Systems in motion are defined by their principles. Various principles which simply evolve on their own can have enormously disruptive effects. Thus, the principle of No-God, itself, has a disruptive effect on all aspects of society, in that it leads to feelings of meaninglessness, helplessness, alienation, depression, and--to the point here--avoidance. You develop this mechanism by which unpleasant thoughts are avoided, and one way of doing this is to develop this reflexive (think rubber hammer and knee) thought pattern which systematically avoids the conclusions you drew before.

In many respects, I think much of the Left, for over the last century, can be defined, first and foremost, as a mental "technology" meant to avoid the despair of meaninglessness, itself caused by rejecting everything which could not be proven, and which appearted contingent--which is to say all religion and all human culture.

The Nihilists, for example, did not need to celebrate Christmas. They recognized the calendar was contingent, and an artifact of the Church and a Base-12 numbering system. You don't have to say thank you, and you don't have to pray. You don't have to get up early and work all day. You can lie around, and sponge off of others (note the "nihilists"--the name given them by their opponents--were basically hippies without the positive vibe).

This sort of thing is the result of crappy thinking. Religion taught us that codes of behavior were somehow encoded in the cosmos, that there is a natural social pecking order, some meant to be in control, some to feed them. Obviously, this was a lie. Yet, it does not follow from this that there are no rules that can be seen in human social systems, that there is no approximate cause and effect. Plainly, courtesy yields dividends, as does hard work, and having SOME type of calendar. The details don't matter.

The ideas of God, too, as they have arisen around the world yield dividends as well. I think it can be shown prayer works, that we survive physical death, and that a limitless source of energy and order underlies our physical universe.

All of these things start with perception though. You can never cease moving perceptually.

A fly flew in the window of my car the other day. It took it about two minutes of bumping and failure, but it eventually found the other open window, and escaped. A nihilist is a fly who gets trapped, sits on the seat trying to think his or her way out, and dies of hunger.

Sunday, May 16, 2010

Conspiracy Theories

It is manifestly the case that many, many secret conspiracies have been hatched and brought to fruition. Think of the spies we caught during the Cold War; or the secret agreement between the Soviet Union and Germany to carve up Poland; or the assassination of Lincoln, where attempts were also made on the lives of the Vice President and the Secretary of War the same night. If you study history long enough, it becomes clear that at times organized efforts are made in secrecy to accomplish results which appear, but the roots of which remain hidden.

Arguably, the creation of the Federal Reserve could be called a conspiracy. It was done in silence, and a PR campaign was launched in which both sides of the debate were stage managed carefully, such that virtually everyone involved was either a player, or was tricked.

At the same time, in all types of thinking, it is important to stop where you need to stop, to not go too far. One must always remain agnostic with respect to things you simply don't know, and have no realistic means of knowing.

All living systems are in constant motion. Given this, it is important to remember that, say, the Masons may have played a prominent role in our Revolution (not unreasonably supposition, given that George Washington and Ben Franklin were both Masons), but then faded in importance. A group can be prominent in one century, and fade in another. Or the people in a group may evolve their goals. Or they may be fractured and in internal conflict, with one faction leaning one way, and another a different way. They can change their minds completely. Key leaders may die. They may simply lose interest.

I say this since many people tend to have this--in my view naive--view that there is some sort of "them" out there. What I personally think happens is that interests-- for some period of time, to some greater or lesser extent--can become shared. What I have called Inflationists want to make more and more money off of money they create. Socialists want to spend money they don't have. Industrialists want access to easy money, since if they can grow faster than inflation, they still win.

The way to counter conspiracies, however one may frame them, is simply to remove the incentives to cheat, and where possible the means.

The money facing anyone who would want to bring down the Federal Reserve is astronomical, but I choose to believe, for example, that not all beneficiaries of this process are necessarily interested in our national demise. They are just greedy, and indifferent to the suffering their greed causes others. But need this remain that way forever? Can one not hope that among the ranks of the Inflationists there might still remain genuine patriots, or decent human beings, who have hitherto viewed the priviledges their cartel offers them as the spoils of superior intelligence?

I hope so. No system can endure that is filled with bad human beings, and any system which is filled with good ones can evolve in positive directions. The two are always mixed in different ratios, but one can hope ours has not devolved too far. I may of course be wrong, but there is no need to infer any indomitable or uninfluencable force out there. People are people. Some of them are sons of bitches, but not all of them.

Friday, May 14, 2010

Self organizing systems and Socialism

I was thinking about this today while working out: Marxists foresee a period of time in which the proletarians (by which we should understand "non-intellectual") will need to be ruled by their betters, the so-called Dictatorship of the Proletariat. After that, in some magical fashion, a workers utopia will evolve.

Yet, how will this happen? What Marx is describing, implicitly, is a self organizing system, where the "workers" get together and create something beautiful, noble and lasting. Yet, the presupposition of the self organizing system is ordered motion in each of the parts. The individuals in the collective need, each, to be operating as sentient agents, and the whole goal of dictatorship is to STRIP them of initiative and the capacity for independent thought.

Thus, the means and purportedly desired result are at loggerheads. Marx never thought it through; nor do his followers, who as intellectuals themselves tend to view all ideas as equal, since they can be thought. People who have actually accomplished something, though--say building a bridge--understand that ideas are NOT all equal, that there are many wrong ways to do things, and that failing to plan is planning to fail. Obviously, failure is the legacy of all utopians to date, and this was both predictable and preventable.

Libertarianism and Capitalism

I think the reason that Libertarians failed to see--assuming I am right, of course--that a precisely defined amount of money is desirable is that they want as little government as possible. Yet, too little means chaos. If we allow money to expand and contract, then real purchasing power likewise goes back and forth in ways that can be manipulated.

If we posit, as I did in a previous post, that what is desirable is NO CHANGE in the money supply, and MUCH CHANGE in the supply of material goods, then that is a function of the government.

Let us call the opposing poles Capitalism and Inflationism, where inflation is a means of wealth redistribution (perhaps, it is the outcome, but the net effect is the same, so it doesn't matter).

What is the means to fix this problem? We abolish the Fed--which prints all our money--what then? Libertarians think that a market will evolve for money, where everything gets sorted out. I see no value in this, since it does not fix, formally and finally, the underlying problem of fluctuating money supplies.

My proposal is that each State print its own currency. You take any dollars you have now, and exchange them for new ones on a certain date. Any money in your bank account automatically transitions. You transition from Federal Reserve Notes, to, say, Texas Reserve Notes.

We need gold in vaults. Who pays for it? This is the question I am having trouble with. Banks? And what is the proper role of banking? Right now, they in effect loan "on margin". They loan out money, in the expectation that all the depositors will never demand their money at once. Part of the role, now, for the Federal Reserve is to make short term loans so that their books are balanced at the end of each day. Who does that in the future? The States? Does that not replicate on a smaller scale the same problem?

One general statement that can be made is that banks, like any other business, need to be free to stand or fall as businesses. I am not opposed to States providing something like the FDIC to prevent panics, but perhaps we pass laws that state that the Board of Directors and CEO of any firm that uses that money go to jail for 5 years. We get the protection, but we disincent risk taking with other peoples money.

I'm still working all this out. You can see my method in these blog posts. I just take a thought, ponder it, chew it, move it around, stretch it, bounce it, throw it in the air, drop it in water, and somehow through the process it expands, and gets more clear. I use logic to jump from stone to stone where I can, and dream the big perceptions. It usually seems to work out, I think. Unless I am being stupid, which one must always remember is a real possibility.

What is needed

To save our democracy--perhaps, to RECREATE our Republic as a representational democracy--these are the sorts of steps needed:

--Eradicate the Federal Reserve, and go back to a gold standard. What I believe would be best is if each State issued its own currency, based on physical gold reserves, but that part is still evolving.

--Eradicate Social Security completely, stop taking out taxes, and let people provide for their own retirements. I would anticipate this will mean in part locally funded, charitable homes for the elderly, for those who would otherwise go hungry.

--End Medicare. Let the States choose how to provide the elderly with medical care. My vote would be to create a tax incentive for private insurance companies to add a rider to all healthcare policies that if you, in effect, preinvest in your old age by paying some additional amount, that you will never be cancelled.

--Make Medicaid a fully State run program, and let the individual States decide how much they want to provide.

--Self evidently, reverse Obamacare, which will add to costs, increase the role of government, and do NOTHING--NOTHING--to improve our health as a nation. It will in fact DECREASE access to healthcare.

--Downsize our military considerably. We have now, and have had for many years, the ability to project force anywhere in the world within an hour, in the form of ballistic nuclear missiles. We need, simply, to announce that any nation from which terror attacks originate, will be help accountable. Period. No excuses. Then draw down our troops. Keep the Marines as a rapid response force, and limit the Navy to say a 1,000 mile perimeter of the US. Continue developing cutting edge technology, so that the Air Force always has the best stuff, and obviously keep the Coast Guard active. Most of the Army can be eliminated. We can leave Korea. If the North invades, it disappears in a pile of radioactive ash.

--Build a fence with Mexico. Increase the penalties for being here illegally considerably. Maybe we copy their policy of a two year jail term. Or we allow first time offenders to simply be deported, and second time offenders get FOUR years.

--Pay off our debt, then reduce Federal taxes considerably.

--We need to regain the proper balance of power between the States and the Federal Government. The principle means of disrupting that balance has been the Supreme Court. What we need is a Constitutional Amendment by means of which patently unConstitutional rulings by the Court, such as Roe v. Wade, can overturned.

To be clear, CONGRESS did not ban abortion. That was not a right granted to it by the Constitution. How much less, then, was that right granted to judges for life, who are appointed?

--We need to eradicate most other Federal departments as well, including Education, Health and Human Services, Housing and Urban Development (including, obviously, both Fannie Mae and Freddie Mac, who have done so much damage). We need a Treasury Department, a State Department, and a Department of Defense.

At some point, I will run the numbers. I suspect that if we do all of this that we can pay our bills off, restore our democracy, and better enjoy the intended fruits of liberty.

Until then, we need to accept that we will undergo a period of relative poverty. Our system, to some extent, is going to crash. Our bills are coming due. Elderly parents will live with their children; children will stay at home for long periods of time. Homes will be built no one lives in, and our assumption that we can have anything we want any time will come to an end. We will have to learn to satisfy ourselves with simpler things, and that is not such a bad outcome.

Net, net: there is no reason to believe we cannot survive and, in the end, prevail against the problems we face. Step one, though, is to stop digging the hole. That will quite literally take an act of Congress.

War

In a shooting war, people who make things that go bang make profits. This makes some people think that the people who make things that go bang are behind our wars. It's hard to say if this has any merit, but it seems clear that is not the full story. Nothing in life is that simple.

What I would like to suggest, though, is that there is a group of people--the same people, the money people we normally don't think about--who make money in so-called Wars on Poverty. In both cases, money is borrowed. We pay interest on money.

Right now, some $400 billion is siphoned out of our pool of wealth annually, in the form of interest on our debt. That exceeds the amount we spent annually at the height of the Iraq and Afghanistan wars. This happens year in, year out.

As long as money is being borrowed, the richest people out there will continue to get richer. Boeing and Halliburton are small fry, and the Left in particular needs to figure that out.

On that note, we should think of most socialists as sentimentalists given credit cards to help save the world. That is literally the case with most of them. If you like, you can add "war-mongers" given the same credit cards to go fight the enemies of democracy.

Both of them are bankrupting us.

Thursday, May 13, 2010

Scylla and Charibdis

The dangers we face are Mercantilism--which is the protection of private profit by the police power of the State--and Socialism, which is a moral abyss in which a tyrannical central government seeks to eliminate all wealth and difference in the name of "justice".

At times, it seems, they pursue one another. Why else do Mercantilists--Wall Street bankers, to be clear, who had a money trust passed into law in 1913--support people like Barack Obama? In the final analysis, as long as they have the money, they call the shots, so it doesn't really matter who is in power. Yet, for the socialists, the mercantilists pay for their projects. They get people addicted to the crack of easy money, then get them to sell their souls for support. The socialists think they are helping the country, so they go along.

The Golden Rule of this Earth is who has the gold, makes the rules. One can buy comfort for free, in the short run, just as Esau peddled away his birthright for some porridge. Yet, when you go looking for what you had, it will be gone.

One must pass through this world with eyes open. It does no good to hide from evil: it will find you.