But the Conquered, or their Children, have no Court, no Arbitrator on Earth to appeal to. Then they may appeal, as Jephtha did, to Heaven, and repeat their Appeal, till they have recovered the native Right of their Ancestors, which was to have such a Legislative over them, as the Majority should approve, and freely acquiesce in.
-John Locke

Saturday, January 5, 2013

On Julie Borowski's video addressing the lack of female libertarians

Julie Borowski recently posted one of her inimitable videos that asks the question, "why aren't there more libertarian women?"   The video has elicited more than a few responses, with varying degrees of support for her answer.  In short, Julie suggests that pop culture promotes a liberal viewpoint and that women are easily swayed by a need to fit in or conform to whatever they are told is trendy and stylish.  Her solution is to expand the numbers of libertarian entertainers and artists to bring the libertarian viewpoints into the mainstream.

I agree with her that this is a worthwhile question to explore, and not simply because libertarian cocktail parties need more women at them.  However, I disagree with her in that although much of what she says in the video is true with regard to women and conforming to trends and style, I do not believe that it is at the core of why there are relatively few libertarian women.  I also disagree with her proposed solution, at least in part.

When we look back at the 2012 Presidential election, one of the things that sticks out the most to me is what we learned about women voters.  First of all, I think we can accept as fact that the overwhelming majority of voters reside somewhere between uninformed and under informed.  What was particularly interesting among female voters was the degree to which abortion played in motivating and swaying their votes.  I saw many of my female facebook friends "liking" and sharing various election posts about abortion. I listened to my female friends and co-workers talk about who they were going to vote for and why abortion was the key issue.  I was astounded.  Here we are, 40 years on from Roe v. Wade, our country has been stuck at a dangerously high level of unemployment, we are running record and clearly unsustainable deficits, our national debt is staggering, Iran inches closer to becoming a nuclear power every day, Syria, Egypt, Libya, Benghazi-gate, Fast and Furious, the list goes on.  At no point had Romney made it a part of his campaign to outlaw abortions.  And yet, many women voted on exactly that singular issue.

Credit Obama for creating the ultimate smokescreen; he (his campaign) got that issue out there and made it real to many voters.  But temper that credit with the sad realization that it could only have succeeded with a group of uninformed voters.  These voters obviously are unaware of a number of realities; first, the President can't outlaw abortions via executive order; second, there is absolutely NO WAY that Congress is touching that legislation - they almost tried it once in the last 40 years, but never got serious about it - and you can forget a constitutional amendment as well; third, even if Romney was able to appoint enough SCOTUS justices AND these justices were of the mind to throw stare decisis out the window and completely undermine our legal system by establishing a precedent for "anything goes," the only real result would be that the issue gets kicked back to the individual states to decide for themselves, in which case a minority of states might enact legislation that outright bans abortion.  In other words, it's really a non-issue and abortion isn't going away.  Particularly so while we are a nation that has a majority who, to varying degrees, support at least some kind of right to an abortion in certain circumstances.

Are the voters who were swayed by the abortion issue simply victims of a slavish devotion Vogue and People and the like?  I don't believe so.  Nor do I believe that they are all unintelligent. Judging from the facts that I have seen, Sandra Fluke is more likely a victim of having spent too much time devoted to Michael Seidman than she is Cosmopolitan. But we learned something very important about women.  The women who are strongly in favor of choice are overwhelmingly single women, while  married women tend to take a pro-life stance.  What this indicates is that the fear of being a single mother is real.

What are the Libertarians to do?  Well, one of the problems for Libertarians is that we generally discourage people from telling other people what to do.  It's part of freedom.  Liberals, on the other hand, love nothing more than to tell people what to do, how to do it, and to shut up. Republicans actually like to do this as well, but they just try to convince you that they have a better fiscal approach.

Julie suggests mainstreaming Libertarianism.  There are a few problems with this.  First is that most artists who have injected politics into their art - such as music and comedy - have only succeeded in hurting their careers.  George Carlin was an absolutely hilarious comedian who was pushing boundaries, until he decided to get overtly political, at which point his audience dwindled and his comedy truly suffered.  The Dixie Chicks learned a painful lesson.  I think the reality is that people who look to be entertained do not want a lecture or lesson.  The second issue is that Libertarians tend to be informed people, who do not require others to do their thinking for them. We aren't looking for a bandwagon to jump on or for cheerleaders.

I believe that there are two ways that the ranks of Libertarians will swell.  One way is that people finally get tired of restrictions and regulations and find their own way to us, and all we have to do is resist the urge to say "I told you so."  The other is to increase the information.  It's how the abortion issue would have been effectively neutralized this past fall.  Reduce the number of uninformed voters.  This effort doesn't happen by recruiting artists and entertainers.  It happens through education, which means that the real battle begins in our schools and in our homes.

Saturday, July 21, 2012

Gadsden Rising - Now on Twitter

You can now follow Gadsden Rising on Twitter!


Also, new content on the way.  As always, thanks for your patience!


Thursday, March 8, 2012

Why We Fight

Things have been in suspended animation here for the past few months.  I have chalked it up to the increasing demands of work (new position) and family (6-month old boy).  I offer that as a reason, not an excuse.  I had also felt that there were enough of the "good guys" out there doing this work that whatever tiny contribution this blog made was but a tiny drop in bucket, especially as compared to the work of many of the blogs and news sites that I read. 

But then Andrew Breitbart died.  His passing reminds us that to be silent is to accept, to acquiesce.  So, in that spirit I am rejoining the fight.  I don't know that any one person can fill Breitbart's void, but if enough step up and into that breach we will not lose any ground, for we are all Andrew Breitbart.

I heard this song this morning, and I thought about Breitbart's legacy.  It's called "Save The Planet."

When Constitutions of granite can't save the planet/what's to become of us?

That's when the powers of observation
come to the periphery town
and we carry their water
we don't make a sound
and after gaining our resignation
they come through the chainlink fence
your only enemy's panic
your only chance is to start making sense

Sleep plunging into deeper debt
into bunkers and black minarets
on geyser of ink
a morning voice faint and yet

Why do we fight?  So that they may never gain our resignation; because we will not carry their water.

Monday, December 19, 2011

C'mon, Mr. Holder

Operation Fast & Furious, as most people know by now, was a bad idea poorly implemented.  Instead of achieving its goals, it resulted in 100's of deaths in Mexico as well as the death of Brian Terry, a US Border Patrol agent.  It has now blossomed into full-on scandal.  US Attorney General, Eric Holder, has denied knowledge of the Operation prior to May of 2011.  Obama has claimed that he first heard about it in March of 2011.

The issue has a few levels to it, but at it's core is what did Holder know about Fast & Furious and when did he know it?  It would appear to me that if Holder was not involved in vetting the operation, he should be going after the head of the person who did.  If Holder was not advised of the operation and how it was being run, then he needs to explain why.  "I'm a very busy person" does not quite cut it here. 

One thing that Holder SHOULD be doing is making it clear that the buck stops with him.  Bottom line is that whatever level of involvement he had in Fast & Furious, he screwed up.  He either was asleep at the wheel, or neck-deep in it himself.  He needs to show that he is in control and that his judgment can be trusted.

Instead, today we are told that Holder believes that Fast & Furious is not a scandal, but is manufactured by the media. That coupled with the growing chorus in Congress calling for his resignation or dismissal are the result of racism directed at Holder and Obama.  You read that right - it's racism, not a scandal.

Wednesday, December 14, 2011

Stay Classy, Mr. President

You have to hand it to the Obama campaign - they sure do have a keen sense of humor.  Their newest stunt is asking donors for the email addresses of their Republican friends, so that the campaign can send those Republicans an email telling them that they have inspired their friend to donate to Obama.  The fact that it will also help build a database of Republican email addresses is a mild bonus; the stated goal is to irritate Republicans.

This President has made a long habit of acting un-presidential, so this is just the most recent example.  Should we make more of this because it flies in the face of everything he has said about bringing a nation together?  What would be the point?  This just helps prove what we already know to be true: the President is a dick jerk.

Monday, November 28, 2011

Barney Frank Fallout

Before folks start rejoicing too much at the news that Barney Frank will not be seeking re-election, we need the sobering thought that Maxine Waters is next in line to be the ranking Dem on the Financial Services Committee.  Yes, you read that right: Maxine Waters is poised to take over from Barney Frank.  And she knows it, too.  In fact, today she made the point in a statement regarding Barney's decision to allow America to prosper not seek another term. 

Interestingly, it puts the Dems in a tough spot - pass Waters over and risk the ire of the CBC, or support her and have to deal with her three pending ethical violations charges which all tie into her position on the Financial Services Committee.  Pity them.

Is this a big deal?  Well, that depends on what you view as "a big deal."  If you are at all concerned that the Dems will re-take the House in 2012, and you recognize that banks play an enormously important role in our economy, then this might be a "big deal," or as VP Biden likes to say, "a big f#*&ing deal!"  If you don't think the Dems will re-take the House, this is still a "Big f#&*ing deal" because Maxine Waters hates banks and doesn't understand finance.

Business Insider has this on the prospects:

Unfortunately for the banking sector, the next Democrat in line to succeed Frank as the committee's ranking member is none other than Rep. Maxine Waters, the controversial California congresswoman best known for her questionable ethics and apparent lack of understanding about how the U.S. financial system works.
If the 2009 TARP hearings are any indication, Waters's ascension will likely have Wall Street longing for the days of Dodd and Frank. During those hearings, Waters totally befuddled bank CEOs — and Treasury Secretary Tim Geithner — with crazy, rambling questions and conspiracy theories about Goldman Sachs.
She also introduced a bill calling for a ban on credit-default swaps and, more recently, called on President Obama to rein in "gangsta" banks and "tax them out of business."
Hold on to your hats!

In all seriousness, the Republicans should be using this fact to remind voters exactly why it is important to not the Dems regain the House.  Let the Dems deal with the problem of their own making.


Barney Frank will NOT seek re-election in 2012!!!

After 16 terms in congress (that's 32 years!), the man whom many view as the architect of the (now-burst) housing bubble will finally leave. 

Good riddance!

Monday, November 21, 2011

Why The Super Committee

John Hinderaker at Powerline offers a history lesson regarding the Debt Crisis, Budgets and the ultimate need for the Super Committee.  I am copying his entire post here, but do make a point of visiting his site at least daily.

The Supercommittee is now officially a failure. On balance, I think that is a good thing, in part because the whole approach of trying to solve our country’s deep-seated fiscal problems with a closed-door, back-room deal is fundamentally wrong. Senator Jeff Sessions, ranking Republican on the Senate Budget Committee, reminds us of the history that gave rise to the present crisis and points the path toward a more sensible, if inherently difficult, approach: 
All of us had hoped that the supercommittee would succeed in producing the sound, long-term plan this country desperately needs. But in order to properly understand why they did not, we must recognize the strategic decision made by the president, and Senate Majority Leader Reid, at the beginning of the year. 
The budget process began with the submission of the president’s budget plan. Analysis of that plan quickly revealed that the president’s $1.6 trillion tax increase proved totally inadequate to offset the enormous levels of new spending that would occur. Under this plan, over ten years, we would accumulate another $13 trillion in debt, never produce a single deficit less than $748 billion, produce a deficit in the tenth year of $1.2 trillion, and leave entitlement programs like Medicare in grave financial peril. 
For this, the president was widely and correctly rebuked. 
Next, the newly-elected House Republicans—dispatched by voters to restrain Washington’s big spenders—introduced and passed a budget plan as required by law. It was a detailed, honest, and concrete plan to put our nation on a sound footing. 
The Senate Democrat majority then made a decision: Rather than introduce a plan of their own, they chose to ignore the law and craft no budget at all. Majority Leader Reid even said it would be ‘foolish’ to have a budget. After the president’s disastrous budget rollout, Democrat leaders knew their rhetoric would not hold up on paper—that the public would not accept the level of spending, taxing, and borrowing their fiscal vision requires. It was simply easier to avoid accountability. 
From that point forward, the president and Senate Democrats did everything possible to avoid having to develop a concrete plan to address this nation’s most dire long-term challenges. The president ignored three consecutive Medicare funding warnings—even though this trigger, by law, requires him to submit a plan to resolve Medicare’s fiscal imbalance within 15 days of submitting his budget. They left the serious policy playing field to fight on the political one, even as America’s balance sheet tipped us closer in the direction of Greece. Should America go down that path, those with the fewest resources, the poorest among us, would be hurt the most; there is nothing compassionate about economic disaster. 
A series of secret meetings ensued—meetings of the Gang of Six, talks with the vice president at the Blair House, talks with the president at the White House, and, most recently, the supercommittee. These secret meetings disengaged the congressional process and prevented the serious national and legislative debate we need from taking place. It also allowed Democrats—who still had no real budget plan—to continue avoiding accountability for the fiscal and economic consequences of their political agenda. Indeed, in the first two years of the president’s administration, non-defense discretionary spending surged 24 percent—and by the end of the first three years, gross debt will have increased almost $5 trillion.
Had the president made clear he wanted an agreement, a deal would have been achieved. It seems clear he wanted a campaign issue instead. Rather than confronting the great threat of our time—our $15 trillion debt—the commander-in-chief fled the battlefield. That’s not clever; it’s irresponsible. 
Progress must, and will, be achieved. But the kind of deep, systemic, and far-reaching solutions that are ultimately needed won’t be achieved with an 11th hour deal or secret meeting. It will require the full and vigorous participation of the public, the Congress, and the president. It will require a sometimes messy, public, democratic process. And it will require senators and congressmen to cast many public votes and to be held accountable by the American people.

Super Committee Failure?

Yes and no.

Yes, it appears the congressional Super Committee created as the compromise kick-the-can-down-the-road solution to the past summer's debt ceiling crisis is on the verge of failing to accomplish, well, anything.  That's a bit harsh, actually.  It has failed to accomplish the stated goal of finding $1.2 trillion of spending cuts that would be implemented over the next decade. 

However, if you look at the fact that this was simply an exercise in posturing that would in no way bind any future budgets or other congressional spending, then you can conclude that this was doomed from the start, or that it accomplished exactly what was expected: nothing.  Hence, success or failure is moot.

But what did we learn? 

We already knew that in the current political climate, Republicans and Democrats cannot get along, so no surprises there.  With the Dem's intent on raising taxes, and the Republicans dead-set against doing so, there is no middle-ground, especially when the only stakes involved are political positioning.  All this has done is reinforce where the battle-lines are drawn.

Each side will point fingers at the other, so it's useless to discuss whether one side or the other is "at fault."  Since nothing actually happens until 2013 under the deal, both sides have another year in which to work something out.  Also, there is an election next year, so it will likely turn out that many of the people who get to vote on such things will be replaced before the clock actually strikes midnight on the NEXT debt-ceiling crisis.  And, in the meantime, the Supreme Court will rule on Obamacare, so the whole budget and economy will be in flux.

what we really learned is that we have populated Washington with folks who are far more motivated to protect their elected positions than they are in making serious decisions and helping the nation.  The notion of the Super Committee was broken from the start, given that it could do nothing better than make suggestions AND that the "failure" option meant nothing.

As I have stated before, these are examples of why we should enact term limits.  At the very least, Congress should not be allowed to receive paychecks if they have not passed a budget! 

Saturday, November 19, 2011

Obama Versus The Economy

There has been a lot of discussion during the last three years regarding Obama's handling, if you will, of the economy.  The left's view seems to be that Obama inherited a mess entirely of George W. Bush's making, and that but for Obama's herculean efforts and vision, America would have plunged into a Greater Depression.  It looks like that line of thinking has finally hit the wall, as the CBO has acknowledged that the stimulus programs have a negative effect on long-term economic growth. 

Meanwhile, on the right, the debate is whether Obama is simply ignorant and inept regarding the economy, or whether he is a sly fox who knows exactly what he is doing and his design is to weaken the economy and increase the number of Americans who are dependent upon the government.  I have long believed that Obama falls into the latter category, and that part of his plan is to create a permanent bloc of democrat voters, and squeeze the country until we all give up and consign everything over to a larger federal government, resulting a giant social democracy. More on this in a future post.

Getting back to the present, Charles Krauthammer wrote a nice piece in Friday's WaPo about the Keystone XL Pipeline.  It also addresses the schism between Obama's economic political decision-making.  In short, Krauthammer observes that Obama realized that green lighting the pipeline would not garner him a single additional vote, but stalling it - no matter what the cost to our economy - could gain him the support of thousands of "environmentalists."  The cost to our economy?  Thousands of actual jobs; easy access (read: cheap) to oil (read: ENERGY that we don't have to buy from the Middle East).  This decision was probably win-win for Obama - politically expedient AND curbs economic growth.

Over at Powerline, John Hinderaker takes up the same point with Obama's decision to halt shale gas drilling in Ohio.  His colleague Steven Hayward carries that story a few yards farther in his post, Obama to Ohio: Drop Dead.

Tuesday, November 8, 2011

OWS-ers Exposed as The Dimwits We Were Waiting For

The following video (H/T: Powerline) gives a not-so-surprising glimpse into the OWS mind.  What is clearly lost on the occupiers (at least, before the film-maker Evan Coyne Maloney spoke with some of them!) is the irony of a movement that seems to want the government to do something about the "evil" of banks and Wall Street, when the current President is so beholden to those very banks.  What part of the logic of  "if BoA is a terrible institution - it is! -then the politicians it strongly supports should be suspect" is the stumbling block?

Cain Accuser Update

According to an article in the Chicago Sun-Times, Cain-Accuser Sharon Bialek was spotted HUGGING Cain at a TEA Party event 6 weeks ago. (Hat Tip: Lucianne)

So, we seem to have a woman who, according to her descriptions, is nothing more than the subject of a clumsy pass made by Herman Cain (who, if the accusation is true, honored her decline of the advance), demanding an apology for something that supposedly happened years ago, but was comfortable and friendly with Cain mere weeks ago.

At what point can we start to definitively say that the appearance of Gloria Allred signals the disappearance of credibility?  How can you tell when someone is lying? Gloria Allred is at her/his side.

Monday, November 7, 2011

So that's Where She's Been

According to an article in the New Yorker, Nancy Pelosi has held 311 fund raising events this year.  Three Hundred and Eleven!!!  I'm no mathematician, but by my count we have only had 310 days thus far (as of today - Nov. 7th) in 2011. 

 How on earth do these numbers do anything to dispel the perception that Washington is broken?  That's literally a fundraiser every day, plus one.  That doesn't have the appearance of working to help fix the nation; it smacks of elected officials working hard on nothing more than getting re-elected. 

File this story as one more argument supporting the need for term limits.  Being in Congress should be about serving the country, and not merely feeding at the public trough for a living.

And to be clear, this goes for both sides of the aisle.

Thursday, October 27, 2011

Student Loans

There has been a theme coming from the White House in recent weeks.  It's this: Obama wants your vote.  Are you mad at Wall Street - not the actual street, but the bankers, or at least the ones who you have been told are responsible for getting us into our current Great Recession?  Obama is too, and he wants to teach those millionaires and billionaires a lesson, even if he has to take it out on people making a mere $250K a year.  Are you sick of the super-wealthy not paying their "fair share?"  Obama is too, and he's going to try to increase the capital gains tax, so that Warren Buffett et al pay a fair amount.  Obama and the media are not talking about the fact that the only thing raising the capital gains tax will do is remove any incentive for the middle class to make any investments whatsoever.  We can discuss later what this will do to retirement planning.  The point here is that Obama is engaging in class warfare because he knows the rich are a minority and he wants the majority of votes, even if it means dividing the country and retarding the economic growth.

Now he has realized that one of his biggest voting blocks - the young voters - are not too enthused about supporting him.  He wants those votes, so he has decided to "help" them on their student loans.  Let's take a look:

First, we can probably all agree that the cost of higher education is climbing out of control.  It is well-documented that student loan debt has increased at a rate that far outstrips the increase in income.  Part of the problem may well be that loans and tuition prices are locked in an upward spiral: as tuition goes up, loan amounts must also go up; as loan amounts increase, schools can increase tuition because they know that the loans available to students will increase.  Each enables the other.  Schools aren't honest enough to make a decision to stop spending money and control tuition, instead choosing to charge far more than their degree is actually worth.  The student loan people (now the Federal Gov't) have yet to put the brakes on the loan amounts. Defaults on student loans are up 25% in the past year!

So, enter Obama with a plan to help students, or, more specifically, the ones with loan debt.  His plan is to tie repayment into one's income, with a cap at 10% of that income, with a long-term cap of 20 years. One way of looking at this is to say, borrow money for school, and repay as much as you can over the next 20 years; just do the best you can.  Looking closer, this plan does nothing to help anyone who finishes school and goes on to be financially successful within a short time after graduating.  If you make enough money, you will pay back 100% of your loans.  But if you don't make a lot of money after graduation, don't sweat it - do your best and the rest will be forgiven.  Gee...this sounds very familiar.

The Atlantic has a useful article on the subject.  The author concludes that the 10% cap will really only impact people who make under $32K.  What is important here is to look at the amount of debt versus income.  the article correctly points out the correlation between educational attainment and income.  People go to law/medical/business schools because those graduates have a tendency to earn more. 

But it is all smoke and mirrors.  First, the it appears that the average holder of student loan debt would only save about $8 per month, with people who hold even $100K in debt saving maybe $28/month.  That is not the kind of money that helps people buy a home or a car; it's not even beer money.  Second, Obama has not conjured this "gift" out of thin air.  The 10% cap and 20-year forgiveness program are part of legislation slated to into effect in 2014; Obama is just moving it up 2 years.  Of course, 2012 just happens to coincide with the election.

The real question that will be answered next November is whether today's young adults care more about their future.  Rewarding Obama for an empty handout today is selling out the future of this country.

Still Here

It's been a little bit slow here lately, and there is a reason.  Seven weeks ago we welcomed our first son into the world.  Since then, finding time to sleep has been hard.  Finding time to keep up with current events has been even harder.  Finding the energy to have coherent thoughts and the time to put them into blog form has been, as you have seen, impossible.  But Gadsden Rising continues, and new content will be posted regularly again.

For starters, here is a must-see.  Scott Johnson, over at Powerline, has posted a brilliant video of Prof. Epstein discussing income inequality.  We have all been watching the collection of dolts, criminals, community organizers, nihilists, suckers, the naive/misinformed, anti-Semitic, and whathaveyou who have been occupying various cities streetcorners throughout America (and abroad, it seems) who are upset about things and want the banks destroyed or free money or student debt repaid or free food or they're-not-quite-sure-what-but-they-want-something.  These people claim to be the 99%.  Well.

As Prof. Epstein comments, the 1% probably does have a disproportionate amount of influence, but they hardly have a controlling influence.  If 99% of the population agreed on something, there is nothing the remaining 1% could do to counter it; the sheer number of votes proves this.  But what if a large number of the "99%" agreed with many or most of the principles that allow the 1% to exist in the first place?  Perhaps that number is better represented by the 53% of Americans who actually pay taxes.  Might be why the Occupiers are getting so little actual support, although their inability to articulate their demands is probably also a hindrance.

Saturday, October 8, 2011

Taxing Millionaires...

...will do almost nothing.  According to the CBO, the democrat-proposed surtax on millionaires will raise about $450 billion over the next ten years.  We are currently operating at a deficit of about $100 billion per MONTH.  Do the math; we can take money from millionaires and openly engage in class warfare and achieve a deficit balance for 4 out of the next 120 months.  Taxing millionaires more will help us make up 3% of the deficit over the next decade.  Wow.  Looks like the perfect solution...if your definition of solution is to do something that accomplishes close to zero % of your goal.  Of course, it IS the perfect solution if your goal is to continue the ruination of the economy, expand the number of people dependent upon the government, disincent the accumulation of wealth and foment lasting class warfare.

Thought For the Day

As much of a juggernaut as the '85 Chicago Bears were, they did not repeat as champions.  In '86 (and '87), Washington ended their season.  

Friday, October 7, 2011

The Restaurant At The End Of The Universe

It's the follow-up book to Douglas Adam's Hitchhiker's Guide To The Galaxy.  In it, the characters wind up at a place called The Restaurant At The End Of The Universe, where during dinner they are able to watch the universe end. 
"Ladies and gentlemen," he said, "The Universe as we know it has now been in existence for over one hundred and seventy thousand million billion years and will be ending in a little over half an hour. So, welcome one and all to Milliways, the Restaurant at the End of the Universe!"
In the book, Milliways is only accessible via time travel.  Why is this important to current events?  Because although we don't have the ability, as yet, to travel through time, we do have people looking for Milliways.  Why look for Milliways?  Because many people are starting to realize that our economy is on the verge of collapse and will take pretty much the rest of the world with it if it, in the words of Monty Python, becomes an ex-economy, expires, ceases to be.  Here's Terry Coxon of Casey Research (via Zero Hedge):
By Terry Coxon, Casey Research

"A rock and a hard place" is a long-running theme of Casey Research publications. It refers to the dilemma the US government has wandered into with its continued policy of rescue inflation. The "rock" is what will happen if the Fed pauses for long in printing still more money – the collapse of an economy burdened by an accumulation of mistakes that rescue inflation has been keeping at bay. The "hard place" is the disruptive price inflation that becomes more likely (and likely more severe) with every new dollar the Fed prints to keep the effects of those mistakes suppressed.
When the dollar was cut loose from the gold standard in 1971, the Federal Reserve was freed to create as much new money as it saw fit, whenever it saw fit. Enabled, it turned with enthusiasm to doing what central bankers imagine they are supposed to do – eliminate downturns in the economy. The Fed fancied itself as being on the answering end of a 911 system: whenever the financial markets signaled distress, whenever the economy came down with the flutters, the Federal Reserve would dispatch a van, an ambulance, a fire engine or even an assault vehicle, whatever seemed right but in every case full of cash.
To most people, rescue inflation was entirely agreeable. It made their world more comfortable and seemed to make it safer. Comfortable, yes. Safer, no. The pernicious but entirely welcome effect of rescue inflation was to cover up mistakes and keep them going. It allowed people – especially people handling other people's money – to make progressively bigger mistakes. Lending on implausible mortgages and buying securities tied to those mortgages are the most recent examples, follies that required decades of training.
Rescue inflation allowed everyone to get away with everything. The assurance that a high-speed vehicle with flashing lights on top would always arrive in time let individuals pay for houses with a little cash and a big mortgage. It let corporate managers rely on borrowing heavily, rather than selling stock, to raise capital. It let investors cheerfully accumulate junk bonds. And it let banks hire and set loose bright young minds to design financial gizmos with astounding leverage guaranteed to deliver excellently profitable results for so long as the economy continued on its excellent and guaranteed way. All of those hang-glider stunts seemed safe because if at any point the prices of the assets underlying anyone’s commitment failed to rise... a Federal Reserve rescue inflation vehicle would surely dash to the scene. That’s what FedVans are for.
And rescue inflation let the politicians dodge the consequences of their own thoughtlessness. The economic drag of the tax rules the politicians found convenient to enact and the effects that deficit spending has on economic growth and on living standards were obscured by the ready supply of that all-purpose balm and lubricant, new money.
But problems that are hidden don't go away; they accumulate; and they grow. Answering its most recent 911 call (the one that rang in 2008), the Fed dispatched an entire fleet of trucks stuffed with cash. It increased the money supply by 40%, yet today the economy is barely staggering forward. At this point, creating more cash might buy some time, but it can't buy a solution.
The problem, unless you think there isn’t one, seems impossible to solve. But rather than dismissing the possibility of a way out, it would be more circumspect to consider how the economy might in fact navigate between the rock and the hard place. That won't happen simply because we've found a way for it to happen. The White House hasn’t called me in a long time. But if we understand what it would take to slip past the rock and the hard place, we can judge how likely such a passage is.
The economy doesn't need anyone to fix it. It's all that fixing for the last 40 years that is the problem. Unmolested, the economy will right itself. The only thing needed is for the Great Molester, the government, to surrender to a serious regimen of behavior modification and let the economy operate without suffocating interference. Then it would be able to shed its problems – not painlessly but quickly and with a minimum of pain. Here's the protocol.
Bring out your dead. Even after catching the trillions in bailout money thrown at them, some financial institutions remain under water – closer to the surface than before but still snorkeling. Let them go. Release them from their zombie state. Bless them with the peace of zero assistance and the promise of unbeing. Paying the dead to mimic the living casts a blight on all the banks that are competently managed, and it leaves trillions of dollars of capital to be allocated by hired hands who've shown by their performance that their talents call them to some other line of work.
And give up on mouth-to-mouth for the biggest corpse of all. Stop trying to prop up housing prices by financing the banking system's huge inventory of foreclosed property and by funding programs to slow the foreclosure rate. The housing market won’t recover its health until prices reach a market-clearing level.
Stop the acknowledged deficits now. That means cutting federal spending drastically. There's already unanimous lip service for doing so, but even if there were a genuine resolve to do it, there are an infinite number of ways to go about it. A clean starting point would be to revert to the last Clinton budget, which would almost certainly require getting by on one war at a time. Stopping the deficits is essential to allowing the economy to heal itself because it slows the wasting of resources and because it eliminates the fear of higher tax rates, which is a fear that retards business investment.
Make tax rules a little less stupid. The two most mischievous features of the Internal Revenue Code are the double-taxation of corporate profits and the deduction for home mortgage interest. The former is a powerful and dangerous invitation for high debt-to-equity ratios; make dividends tax-deductible for the paying company, and the problem goes away. The deductibility of mortgage interest has operated as an amplifier for everything the government does to encourage overinvestment in housing. Yes, eliminating the mortgage deduction will be another blow to the housing market, but since we're committed to bringing out the dead, let’s think about cremating the remains.
Stabilize tax rules. High tax rates are bad enough for the economy. Not knowing what next year's tax rates are going to be is much worse. It paralyzes business decisions. Make the current rates "permanent" in the sense that it would take further legislation to change them.
Reduce the legal minimum wage to zero. Minimum wage laws are convenient for labor unions whose members are somewhat skilled, but they toss the unskilled into the economic dumpster. A minimum wage law effectively prohibits the unskilled and inexperienced from working by pricing them out of the market. It’s an unemployment guarantee program for millions of the economically weakest people in the country. I’d miss the minimum wage, because there is nothing that shouts louder that government uses the poor as human shields to protect the state. But to let the economy recover, let it go.
Destrangulate. Repeal the Sarbanes-Oxley law and its weird spawn, Dodd-Frank. Repeal Obamacare. Allow individual states to license drugs without waiting on the FDA. End all prohibitions on insider trading. Charge banks for FDIC insurance at rates tied to a balance sheet formula – and then free them to make their own lending decisions. (You might like even more deregulation than that, but we're not building utopia, we're only trying to avoid camping in dystopia.)
Euthanasia for Social Security and Medicare. Raise the eligibility age by one month every year. The unfunded net liabilities for those programs (variously estimated at $60 trillion to $80 trillion) will evaporate, and everyone who has been counting on impossible promises being kept will have plenty of time to come to terms with reality.
That would do it, and that or something similar is what it would take. The economy might need a year or so for the dust to settle. A certain number of mental breakdowns would be provoked by the trashing of heart-felt assumptions, but for the other 99.9999999% of us, the Greater Depression would be canceled.
It's not politically impossible. Everyone, politician and politician-afflicted alike, is capable of a 180-degree course change when fear and pain become great enough. It's not impossible at all. And unicorns aren’t impossible. Typically, they get started when a pony is fighting a cowlick.
At the just-concluded Casey/Sprott Summit When Money Dies, the all-star faculty unanimously agreed that the US economy is in dire straits… and will be for a while. But there are ways to protect your assets and profit from this crisis. Listen to John Hathaway, Mike Maloney, Richard Hanley, Doug Casey, Chris Martenson, and many more expert speakers on more than 20 hours of audio recordings – incl. their best stock picks and hands-on investment advice. Learn more.

Wednesday, October 5, 2011

Should We Be Worried?

(H/T: the Mysterious Stranger)

Ever had that nagging feeling that something massive is about to happen? You're not alone:

Michael Malone, writing at ricochet.com has a fascinating article.  Remember (from history class, probably not personal recollection) who Gavrilo Princip was?  He was the young man who kicked off WWI by assassinating Arch-duke Franz Ferdinand.  Malone's article points out some interesting similarities between today's world and that of 100 years ago, and how delicate the balance is.

As it happens, I’ve been thinking about Princip lately – not the pathetic little man – but what he represents.  When, amazed at his luck that the Imperial motorcade had stalled in front of him, Princip pulled out that pistol and started shooting, he unknowingly tripped a series of switches in palaces and ministries across Europe – and eventually around the globe – that would lead to a four year war that would pull down the royalty of Europe, murder millions of soldiers and citizens, and set the stage for an even greater slaughter a quarter-century later.
But the fact that all of those servers and networks, storing and transferring much of the world’s financial and intellectual capital are also interlinked via the Web with few protections and no kill switch, is enormously dangerous. It gives the global economy, says Davidow, an unprecedented volatility and vulnerability to tiny events that can chain react at light speed into world-wide crises. 
Four years ago, when I read Bill’s first draft, I thought he was being a bit over-the-top.  After subsequent events, from the global economic crash to the Arab Spring, I now wonder if he didn’t go far enough.  Suddenly the pace of technological change (Moore’s Law) and the networking effect (Metcalfe’s Law), so long celebrated for their benefits to modern life, are now showing us their very sharp teeth.  We are now discovering to our dismay that the democratization of information not only can improve the lot of billions of people, but that it can also empower little men standing outside cafes with hatred in their brains and pistols in their pockets awaiting the chance to unleash both.
As for the United States, the world’s military protector and economic backstop, there is not only the greatest philosophical schism since the Civil War, but a dangerous lack of leadership at the top.  Even as it is crushing new business and new job creation at home with endless regulations and the corruption of corporatism, it is also projecting a self-righteous image of weakness abroad.  The lesson of history is that vacuums in leadership are always filled, more often by the ambitious than the responsible.  And that, at least in the short run, “soft” power is no defense against hard men.  Right now there are some very hard men out there leading nations, loading their pistols and eyeing their neighbors and rivals.

Michael Moore Is An Idiot

Michael Moore has joined in the chorus of buffoons who are protesting Wall Street.  He appeared on Olberman's show (which seems to have so few viewers that even Keith is taking a casual approach and going sans tie) to talk about how great the protests are. 

Here's a link to the clip.  See if you can figure out what the heck he's talking about.  I can only conclude that he's as misguided as the protestors...because if the folks on Wall Street have committed crimes you would want to march there and in other cities that have...people?...and not march on Washington and protest the Dept. of Justice's failure to act.  Wait, that's not it.  Moore says that people who are in charge of our economy are to blame...so that's Bernanke and Geithner and Obama?  No, Moore is programed to like and support those people.  Is it Congress?  No, better not go there...the democrats controlled congress during the "meltdown."

Confused yet?  Well, don't feel bad.  Moore is so confused he doesn't know that "tens of hundreds of billions" equals the "even trillions" he tries to stretch his tiny brain to understand.  Wonder what he would think if someone showed him how much money Obama has borrowed since taking office...of course, it would have to be described to him in terms of "tens of hundreds of billions."