Liberty Forged

the State has no money of its own, so it has no power of its own. ` Nock

Posts Tagged ‘big government’

Most of my writing are comments are other blogs….

Posted by Jesse on October 17, 2008

my blog is more of a library with a little bit of “diary/notes” that I feel like recording.

another comment I have made on LibertasExemplar


i wish more people would try to apply the logic you just cited to other problems. (in this country, not other people’s countries) you are exactly correct in asking how government distorts the market. the current banking/wall st. crisis is difficult to analyze for precisely the reason there is and have been massive government interventions.

short term and long term is highly important. if we talked about the theory of intervention in more depth we could expose the reasons why the market is far superior to government control of the economy.

there is no choice that separates short and long, they are integrated. what differentiates the two is a matter of efficiency. so it is simple, yet complex. which is exactly the reason it is inefficient for a central authority to even attempt to command such a complex phenomena as the market.

government cannot control the economy, in fact, it is subject to the economy, not the other way around. this is why it is futile and destructive for government to assume authority in these matters. just as government is supposed to be of, by, and for the people, so is the market. but the market comes first. government is born out of the market. (choices are limited, we live under oppressive standards, lets create a more prosperous environment where our rights are secured and protected, i.e., the liberal idea of the function of government) one can only explain the market and act in it, whereas government is instituted and established to protect the rights to life and property. the market is made up of human actors that produce the goods that we enjoy in life.

it’s easy to see how they are similar, and indeed we can integrate them, but it is completely against the idea of a free society to say that government should create the market and dictate the rules thereof. a free society can be explained in terms of economy, and the government should, if at all, only exist to protect that right to act in the economy so long ones actions are not coercive. a peaceful society should be protected. it cannot be dictated.

so this statement is exactly backwards: “trying to divorce the “free-market” from what is actually happening in the world.”

“That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it”

this statement exactly represents the true nature of the market. it is supposed to be voluntary. it cannot be ‘coercive’ and at the same time ‘free’. value is subjective. it cannot be dictated. which is exactly why this bailout is flat-out robbery. “the people”, the citizens are buying at a price that is being dictated by government. there is no choice. this is not the function of government. government is instituted to protect and secure the property of its people, not squander it.


For more on praxeology, austrian theory of price, modern subjectivist economics, causal-realist economic theory, scientific economics and the constructs and structures thereof….Man, Economy, and State would be the source to read.


Capitalism is not the culprit, it’s bad policy by Peter Schiff


Ron Paul is going the distance.

Posted in antiwar, Constitution, Current Events, economy, Education, free market, Mine, Politics, republican, Rights, Ron Paul | Tagged: , , , , , , , , , , | Leave a Comment »

A response to a good intention.

Posted by Jesse on October 13, 2008

Kelvin. You are correct. This is the system we are presented with at this time. Taking advantage of the opportunity to make a difference is all one has. voting can be beneficial. I said it “Can be” beneficial. It depends. This is an important thing to ponder. some countries have different systems, indeed, throughout history there have been many different ways to affect society. art, votes, charity, crime, deception. societal changes are not always good. and voting is simply mob rule. there is no way to make the claim that a majority vote is inherently good. a very easy example that most people can understand is the election of dictators. this is definitely not good, but it happens. the idea upon which this country was founded understood the dangers of mob rule and tried to design a system that restrained government power and the will of the masses, simultaneously, because both citizens and government employees will grab for power.

Another point you bring up Kelvin is the laws and their long term effects. Now, I live in a highly regulated society. The US Gov’t is quite a vast organization. The amount of money and resources it commands is massive. The US is the “superpower” of the world. The biggest the world has ever known.

It makes no difference that I live in a small state and small town and I have my own concerns that are not always the same as my governments. I am not bailing out wall street and wouldn’t. i am not invading iraq and wouldn’t. i am not threatening iran and wouldn’t. i would not conduct anti-drug operations in multiple countries around the globe. i do not arrest my neighbors for smoking. i do not always support my police department who i think should be held more accountable to the people of their region instead of bureaucratic commandments miles and miles away. i do not take money from my neighbors and say that’s its for their own good. keep in mind this is one of the functions of police: to collect taxes. this is one of the primary ways that government pays for all the activities it engages in. i did not voluntarily give any money or consent to anyone to engage in the activities i described above. it is taken from me by force. this is an indisputable fact.

Thinking about this fact makes one realize that when a new president or other democratically elected official takes office they are subject to a structure of governance that is already in place.

One of the larger points I am driving at is the idea of policy.
This is an idea that involves a structure of laws and regulations designed to achieve a certain goal. Sometimes, these goals may be achieved. Sometimes there are huge failures. And there are large policy issues being debated by Americans today! The war on drugs, the war or terror, the war on poverty, the idea of spreading democracy around the globe by using our own military that we citizens are supposed to have for defense! and special interest benefiting at the expense of the many….these are policies that the US gov’t will pursue right now no matter who is elected senator, congressperson, or president. I can say that with confidence because there are not many people who have been elected to office that strongly oppose these measures. how to decide what policies to pursue?

There are many more policies we can discuss, such as the current monetary policies that have been complicit in the economic problems we have today. Again, these are long-term policies. They came about incrementally over time through various initiatives and will take a long time to change or reverse even if many people wanted to change them now. so in this way, it is a matter of trends. the general trend has been to add new regulations and therefore money and power to government, instead of the other way around. some people claim to be conservative and say they are in favor of limited or minimal government and less spending, etc. but where is the evidence that this ever happens? the trend line showing the power and scope of government is just the opposite.

So… I am not arguing altogether with what you say Kelvin, but I do want to highlight one part of it. People will get mad, or angry, or frustrated, not so much because they don’t like the outcome of an election. Many people are frustrated with what happens to them personally and also in their name, as an american. Maybe a friend is arrested because of the war on drugs even though that person didn’t do anything wrong. Maybe a family is member is sent to Iraq even though the president and those around him are clearly lying about threats the nation faces. Maybe people are paying a lot of money in licenses, taxes, fees, fines, and other regulations and it makes it hard to earn a good living because of the little money they have. maybe a lot of people are frustrated because people around the world who have had injustices brought to bear against them by our government hear and feel what our leaders are saying and doing and know that we, as a nation, elected them. a voter can feel misrepresented and betrayed by those that claim to represent them. and it is a matter of fact, that not only do some politicians lie, but many make promises they cannot keep! on top of that, when was the last time an elected official has been help personally responsible for measures that they endorsed? can we really believe that throughout all of american history there have been so many good and noble politicians? there have been so many actions taken by government because of certain laws and policies that have been harmful to its citizens…where is the justice? why are these “representatives” not fined, jailed, or other?

These are issues that are actually on the table as we speak, but changing them is so hard to do because of the levels of governance, (its structure/bureaucracy) that are involved between the voter and the change that they seek.

So while voting is a tool that this nation uses, the question remains as to what impact that vote can actually have when the political structure that exists is so powerful and doesn’t seem to ever change much. All it does is grow bigger and bigger. meanwhile, less and less people are happy with it. not just here in this country, but other countries around the world. if you don’t believe me, go talk to people on the street and look at the reactions around the world. even the nightly news covers it sometimes. what is the obama campaign all about? “change”! but what change are we talking about? this is where we are today in this election. and i am not implying that everyone who is unhappy agrees. many people have different ideas and thoughts on what the problems are and what to about them. this fact only reinforces the idea that government can’t be too much of a one-size -fits -all solution. it needs to have only a basic foundation and specific measures can be reserved for regional enforcement.

And the last thing I would like to mention is what you started your response with. the important documents of the US Government. elected bureaucrats take an oath of office to uphold the constitution of the US. i am confident that if the american people demand that the us gov’t follow the constitution more strictly in certain areas we would be far better off than we are today.

there are some major changes developing in america. one way or the other. my hope is that we can do this peacefully. voting is a tool one can use. but i guarantee you that mccain and obama are not the best america has to offer and they are not changing much in current US policy. our voting system has some serious flaws. the only way the government can be improved is when its citizens become more responsible and not dependent on their government or media for solutions and news. this is the reason why i believe individual liberty and the education therof is the best foundation for a just and civil government.

i do have my own opinions on the actual act of voting. my main point was to show the contrast between a democratic action through bureaucracy and a democratic action in the market. they are very different creatures.

one reason this whole discussion is a problem is that we are talking about something very much larger than any one of us. being able to talk about and discuss these issues in a personal way is very difficult to do. no one knows all the rules of the us government. each person only knows some of it. that’s why it can help to try and take an overall view and analyze it from an objective viewpoint. i may come across as being skeptical but that’s only because of the current state of of the nation and its history. but i am really optimistic because i believe that people want a better life. and they want responsibility for it. and that’s how society carries on.

one thing that we need more than ever right now is honesty and transparency in government.

i am done writing for now. please feel free to comment.

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Why costs are being driven upward. What can be done.

Posted by Jesse on March 15, 2008

What the Price of Gold is Telling Us
The financial press, and even the network news shows, have begun reporting the price of gold regularly. For twenty years, between 1980 and 2000, the price of gold was rarely mentioned. There was little interest, and the price was either falling or remaining steady.
A Foreign Policy of FreedomA ManifestoThe Pillars of Prosperity
……….The rise in gold prices from $250 per ounce in 2001 to over $1000 today has drawn investors and speculators into the precious metals market. Though many already have made handsome profits, buying gold per se should not be touted as a good investment. After all, gold earns no interest and its quality never changes. It’s static, and does not grow as sound investments should.

……….Buying gold and holding it is somewhat analogous to converting one’s savings into one hundred dollar bills and hiding them under the mattress – yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There’s a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, i.e. gold, however, goes up if the government devalues the circulating fiat currency.

Holding gold is protection or insurance against government’s proclivity to debase its currency. The purchasing power of gold goes up not because it’s a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.

………..One of the characteristics of commodity money – one that originated naturally in the marketplace – is that it must serve as a store of value. Gold and silver meet that test – paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It’s more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.

The point is that most who buy gold do so to protect against a depreciating currency rather than as an investment in the classical sense. Americans understand this less than citizens of other countries; some nations have suffered from severe monetary inflation that literally led to the destruction of their national currency. Though our inflation – i.e., the depreciation of the U.S. dollar – has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only four cents. Officially, our central bankers and our politicians express no fear that the course on which we are set is fraught with great danger to our economy and our political system. The belief that money created out of thin air can work economic miracles, if only properly “managed,” is pervasive in D.C.

In many ways we shouldn’t be surprised about this trust in such an unsound system. For at least four generations our government-run universities have systematically preached a monetary doctrine justifying the so-called wisdom of paper money over the “foolishness” of sound money. Not only that, paper money has worked surprisingly well in the past 35 years – the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these several decades have gained the knowledge necessary to make paper money respond as if it were gold. This removes the problem of obtaining gold to back currency, and hence frees politicians from the rigid discipline a gold standard imposes.

………..Today no one in Washington believes for a minute that runaway deficits are going to be curtailed. In March alone, the federal government created an historic $85 billion deficit. The current supplemental bill going through Congress has grown from $92 billion to over $106 billion, and everyone knows it will not draw President Bush’s first veto. Most knowledgeable people therefore assume that inflation of the money supply is not only going to continue, but accelerate. This anticipation, plus the fact that many new dollars have been created over the past 15 years that have not yet been fully discounted, guarantees the further depreciation of the dollar in terms of gold.

There’s no single measurement that reveals what the Fed has done in the recent past or tells us exactly what it’s about to do in the future. Forget about the lip service given to transparency by new Fed Chairman Bernanke. Not only is this administration one of the most secretive across the board in our history, the current Fed firmly supports denying the most important measurement of current monetary policy to Congress, the financial community, and the American public. Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply.

Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting the monetary aggregate known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us and Congress makes no demands to receive it.

……….A soaring gold price is a vote of “no confidence” in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to rein in runaway spending.

Denying us statistical information, manipulating interest rates, and artificially trying to keep gold prices in check won’t help in the long run. If the markets are fooled short term, it only means the adjustments will be much more dramatic later on. And in the meantime, other market imbalances develop.

………..Though everyone decries inflation, trade imbalances, economic downturns, and federal deficits, few attempt a closer study of our monetary system and how these events are interrelated. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline of gold – since it serves as a check on government size and power. This is a sad commentary on the politics of today. The best analogy to our affinity for government spending, borrowing, and inflating is that of a drug addict who knows if he doesn’t quit he’ll die; yet he can’t quit because of the heavy price required to overcome the dependency. The right choice is very difficult, but remaining addicted to drugs guarantees the death of the patient, while our addiction to deficit spending, debt, and inflation guarantees the collapse of our economy.

………..Special interest groups, who vigorously compete for federal dollars, want to perpetuate the system rather than admit to a dangerous addiction. Those who champion welfare for the poor, entitlements for the middle class, or war contracts for the military industrial corporations, all agree on the so-called benefits bestowed by the Fed’s power to counterfeit fiat money. Bankers, who benefit from our fractional reserve system, likewise never criticize the Fed, especially since it’s the lender of last resort that bails out financial institutions when crises arise. And it’s true, special interests and bankers do benefit from the Fed, and may well get bailed out – just as we saw with the Long-Term Capital Management fund crisis a few years ago. In the past, companies like Lockheed and Chrysler benefited as well. But what the Fed cannot do is guarantee the market will maintain trust in the worthiness of the dollar. Current policy guarantees that the integrity of the dollar will be undermined. Exactly when this will occur, and the extent of the resulting damage to the financial system, cannot be known for sure – but it is coming. There are plenty of indications already on the horizon.

Foreign policy plays a significant role in the economy and the value of the dollar. A foreign policy of militarism and empire building cannot be supported through direct taxation. The American people would never tolerate the taxes required to pay immediately for overseas wars, under the discipline of a gold standard. Borrowing and creating new money is much more politically palatable. It hides and delays the real costs of war, and the people are lulled into complacency – especially since the wars we fight are couched in terms of patriotism, spreading the ideas of freedom, and stamping out terrorism. Unnecessary wars and fiat currencies go hand-in-hand, while a gold standard encourages a sensible foreign policy.

……….Foreign policy contributes to the crisis when the spending to maintain our worldwide military commitments becomes prohibitive, and inflationary pressures accelerate. But the real crisis hits when the world realizes the king has no clothes, in that the dollar has no backing, and we face a military setback even greater than we already are experiencing in Iraq. Our token friends may quickly transform into vocal enemies once the attack on the dollar begins.

False trust placed in the dollar once was helpful to us, but panic and rejection of the dollar will develop into a real financial crisis. Then we will have no other option but to tighten our belts, go back to work, stop borrowing, start saving, and rebuild our industrial base, while adjusting to a lower standard of living for most Americans.

Counterfeiting the nation’s money is a serious offense. The founders were especially adamant about avoiding the chaos, inflation, and destruction associated with the Continental dollar. That’s why the Constitution is clear that only gold and silver should be legal tender in the United States. In 1792 the Coinage Act authorized the death penalty for any private citizen who counterfeited the currency. Too bad they weren’t explicit that counterfeiting by government officials is just as detrimental to the economy and the value of the dollar.

In wartime, many nations actually operated counterfeiting programs to undermine our dollar, but never to a disastrous level. The enemy knew how harmful excessive creation of new money could be to the dollar and our economy. But it seems we never learned the dangers of creating new money out of thin air. We don’t need an Arab nation or the Chinese to undermine our system with a counterfeiting operation. We do it ourselves, with all the disadvantages that would occur if others did it to us. Today we hear threats from some Arab, Muslim, and far Eastern countries about undermining the dollar system- not by dishonest counterfeiting, but by initiating an alternative monetary system based on gold. Wouldn’t that be ironic? Such an event theoretically could do great harm to us. This day may well come, not so much as a direct political attack on the dollar system but out of necessity to restore confidence in money once again.

……….The economic harm done by a fiat monetary system is pervasive, dangerous, and unfair. Though runaway inflation is injurious to almost everyone, it is more insidious for certain groups. Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged. Price inflation, a consequence of inflating the money supply by the central bank, hits poor and marginal workers first and foremost. It especially penalizes savers, retirees, those on fixed incomes, and anyone who trusts government promises. Small businesses and individual enterprises suffer more than the financial elite, who borrow large sums before the money loses value. Those who are on the receiving end of government contracts – especially in the military industrial complex during wartime – receive undeserved benefits.

It’s a mistake to blame high gasoline and oil prices on price gouging. If we impose new taxes or fix prices, while ignoring monetary inflation, corporate subsidies, and excessive regulations, shortages will result. The market is the only way to determine the best price for any commodity. The law of supply and demand cannot be repealed. The real problems arise when government planners give subsidies to energy companies and favor one form of energy over another.

Energy prices are rising for many reasons: Inflation; increased demand from China and India; decreased supply resulting from our invasion of Iraq; anticipated disruption of supply as we push regime change in Iran; regulatory restrictions on gasoline production; government interference in the free market development of alternative fuels; and subsidies to big oil such as free leases and grants for research and development.

Interestingly, the cost of oil and gas is actually much higher than we pay at the retail level. Much of the DOD budget is spent protecting “our” oil supplies, and if such spending is factored in, gasoline probably costs us more than $5 a gallon. The sad irony is that this military effort to secure cheap oil supplies inevitably backfires, and actually curtails supplies and boosts prices at the pump. The waste and fraud in issuing contracts to large corporations for work in Iraq only add to price increases.

………When the free market is allowed to work, it’s the consumer who ultimately determines price and quality, with labor and business accommodating consumer choices. Once this process is distorted by government, prices rise excessively, labor costs and profits are negatively affected, and problems emerge. Instead of fixing the problem, politicians and demagogues respond by demanding windfall profits taxes and price controls, while never questioning how previous government interference caused the whole mess in the first place. Never let it be said that higher oil prices and profits cause inflation; inflation of the money supply causes higher prices!

……….Since keeping interest rates below market levels is synonymous with new money creation by the Fed, the resulting business cycle, higher cost of living, and job losses all can be laid at the doorstep of the Fed. This burden hits the poor the most, making Fed taxation by inflation the worst of all regressive taxes. Statistics about revenues generated by the income tax are grossly misleading; in reality much harm is done by our welfare/warfare system supposedly designed to help the poor and tax the rich. Only sound money can rectify the blatant injustice of this destructive system.

The Founders understood this great danger, and voted overwhelmingly to reject “emitting bills of credit,” the term they used for paper or fiat money. It’s too bad the knowledge and advice of our founders, and their mandate in the Constitution, are ignored today at our great peril. The current surge in gold prices – which reflects our dollar’s devaluation – is warning us to pay closer attention to our fiscal, monetary, entitlement, and foreign policy.

Meaning of the Gold Price – Summation

A recent headline in the financial press announced that gold prices surged over concern that confrontation with Iran will further push oil prices higher. This may well reflect the current situation, but higher gold prices mainly reflect monetary expansion by the Federal Reserve. Dwelling on current events and their effect on gold prices reflects concern for symptoms rather than an understanding of the actual cause of these price increases. Without an enormous increase in the money supply over the past 35 years and a worldwide paper monetary system, this increase in the price of gold would not have occurred.

………...Since 2001 the dollar has been devalued by 60%.
In 1934 FDR devalued the dollar by 41%.
In 1971 Nixon devalued the dollar by 7.9%.
In 1973 Nixon devalued the dollar by 10%.

These were momentous monetary events, and every knowledgeable person worldwide paid close attention. Major changes were endured in 1979 and 1980 to save the dollar from disintegration. This involved a severe recession, interest rates over 21%, and general price inflation of 15%.

Today we face a 60% devaluation and counting, yet no one seems to care. It’s of greater significance than the three events mentioned above. And yet the one measurement that best reflects the degree of inflation, the Fed and our government deny us. Since March, M3 reporting has been discontinued. For starters, I’d like to see Congress demand that this report be resumed. I fully believe the American people and Congress are entitled to this information. Will we one day complain about false intelligence, as we have with the Iraq war? Will we complain about not having enough information to address monetary policy after it’s too late?

If ever there was a time to get a handle on what sound money is and what it means, that time is today.

Inflation, as exposed by high gold prices, transfers wealth from the middle class to the rich, as real wages decline while the salaries of CEOs, movie stars, and athletes skyrocket – along with the profits of the military industrial complex, the oil industry, and other special interests.

A sharply rising gold price is a vote of “no confidence” in Congress’ ability to control the budget, the Fed’s ability to control the money supply, and the administration’s ability to bring stability to the Middle East.

Ultimately, the gold price is a measurement of trust in the currency and the politicians who run the country. It’s been that way for a long time, and is not about to change.

If we care about the financial system, the tax system, and the monumental debt we’re accumulating, we must start talking about the benefits and discipline that come only with a commodity standard of money – money the government and central banks absolutely cannot create out of thin air.

Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Runaway inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it.

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