Liberty Forged

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

Posts Tagged ‘independent’

Left or Right? Stalin or Hitler? That makes no sense.

Posted by Jesse on March 15, 2009

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The Lone Statesman in our US Congress say No. (HR 951)

Posted by Jesse on March 7, 2008

Stop Choosing Sides
by Rep. Ron Paul

On Wednesday, March 5, the US House of Representatives passed a resolution (HR 951) condemning Palestinian rocket attacks that include a strident defense of recent Israeli tactics in the Gaza Strip. The resolution also condemned Iran and Syria for “sponsoring terror attacks,” and demanded that Saudi Arabia publicly condemn Palestinian actions.

The resolution was originally introduced in January, but contains new language including a passage saying that that “those responsible for launching rocket attacks against Israel routinely embed their production facilities and launch sites amongst the Palestinian civilian population, utilizing them as human shields” and “the inadvertent inflicting of civilian casualties as a result of defensive military operations aimed at military targets, while deeply regrettable, is not at all morally equivalent to the deliberate targeting of civilian populations as practiced by Hamas and other Gaza-based terrorist groups.”

Although 23 Congressman abstained or voted “present,” only one bravely voted no: Rep. Ron Paul.

Below is Rep. Paul’s statement he gave to the House before the vote.

Mr. Speaker: I rise in opposition to H. Res. 951, a resolution to condemn Palestinian rocket attacks on Israeli civilians. As one who is consistently against war and violence, I obviously do not support the firing of rockets indiscriminately into civilian populations. I believe it is appalling that Palestinians are firing rockets that harm innocent Israelis, just as I believe it is appalling that Israel fires missiles into Palestinian areas where children and other non-combatants are killed and injured.

Unfortunately, legislation such as this is more likely to perpetuate violence in the Middle East than contribute to its abatement. It is our continued involvement and intervention – particularly when it appears to be one-sided – that reduces the incentive for opposing sides to reach a lasting peace agreement.

Additionally, this bill will continue the march toward war with Iran and Syria, as it contains provocative language targeting these countries. The legislation oversimplifies the Israel/Palestine conflict and the larger unrest in the Middle East by simply pointing the finger at Iran and Syria. This is another piece in a steady series of legislation passed in the House that intensifies enmity between the United States and Iran and Syria. My colleagues will recall that we saw a similar steady stream of provocative legislation against Iraq in the years before the US attack on that country.

I strongly believe that we must cease making proclamations involving conflicts that have nothing to do with the United States. We incur the wrath of those who feel slighted while doing very little to slow or stop the violence.

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Russia’s KGB Putin-Americans Sovietized.

Posted by Jesse on March 5, 2008

MP3 here. (43:13)

Antiwar Radio: Scott Horton Interviews Eric Margolis

Award winning author, columnist, and broadcaster Eric S. Margolis has covered 14 wars and is a leading authority on military affairs, the Middle East, South Asia, and Islamic movements.

Eric Margolis, foreign correspondent for Sun National Media and the American Conservative magazine, discusses the state of emergency in Pakistan, the history of the Musharraf dictatorship, his relationship with Dick Cheney, the return of Benazir Bhutto, her accusation that Musharraf was behind the recent suicide bomb attacks, the Islamists in Waziristan, the cause of their insurgency, Pakistan’s feudal system and the slim chance that crazies could get their hands on the nukes, the tension between Pakistan and India, the collision course coming this way as the Kurdish PKK attacks Turkey and vice versa, the U.S. and Israel’s policy of splitting off Kurdistan Iraq while simultaneously backing the Turks, U.S. support for Kurdish terrorism against Iran and the plan for long term occupation of Iraq.

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Keynes’ General Theory. Much like cluster bombs for the world.

Posted by Jesse on March 5, 2008

The Crisis Point of the Inflationary Boom
By Sean Corrigan

Posted on 3/4/2008

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In a recent survey — jointly conducted by CFO magazine and Duke University — one of the top concerns being expressed by industry executives across the United States, Europe, and Asia was that of the rising cost and — to a slightly lesser extent — the reduced availability of labor, especially that of the skilled variety.

The worry most forcibly competing with this angst was that of whether “consumer demand” would hold up in coming months.

For a Keynesian this conflict can have no meaning, for the central chicanery around which the General Theory is constructed is that depressions can be warded off through monetary debasement, simply by stuffing the workers’ pockets with extra cash, while simultaneously fooling them as to the real value of the nominal wages being received in such a newly clipped coinage.

In the case where wages are rising (labor costs are mounting) because employment is near full (suitable candidates for work are hard to find) then, assuming the mythical “propensity to consume” remains broadly constant, consumer demand should be a shoe-in, and unlearned industrialists need not lose too much sleep over their prospects for either sales or profits.

Granted, “end demand” could also become (temporarily) curtailed by a sudden outbreak of thrift, that virulent, unpredictable strain of global pandemic feared by the macromancers more than dirty bombs, bird flu, melting ice caps, and a direct asteroid strike, combined, for its potency in disrupting the pristine, academic beauty of their consumption functions and ISLM curves.

The unlikelihood of this taking place in a world whose mail boxes bulge daily with unsolicited offers of new credit, and whose masses have been conditioned to view shopping as a sacramental rite, should be all too apparent.

In fact, what our survey results really display are the classic symptoms of the unhealthy discoordination that an unbacked credit expansion induces in the body economic.

What we see here is that most of the businessmen canvassed are finding their costs are rising and, in particular, the dominant cost they typically bear: that associated with retaining a competent and motivated workforce. At the same time, those who do not directly play a part in satisfying the needs of end consumers (an overriding majority, if our sample is representative of industrial and commercial organization as a whole) are beginning to fret about a slackening of demand for their (mainly higher and intermediate goods) output.

As Mises, Hayek, et al. took great pains to explain, what this means is that the seemingly golden age — in reality, a thinly gilded one — during which the first, most favored issuers of cheap credit and artificially boosted equity prices enjoyed almost effortless success, has reached the limit of its ability to postpone the workings of fundamental economic law.

Even if financial capital once appeared so abundant as to provoke strange, Swiftian fantasies about the “saving glut” and the “asset shortage,” real, physical capital was never called into being quite so readily, since its creation requires not the staccato keystroke of a fiat banker, but entrepreneurial vision, hard work, and genuine saving.

By that last we mean a voluntary abstention from current consumption, undertaken in order to improve the chance of greater plenty in the future, and not the corrupt preemption of a man’s spending power — effected with monetary trickery — which inflationists laud as “forced saving.” Being a species of initially unrecognized compulsion, this is a deceit doomed to fatal self-contradiction, once its dupes wake up to the nature of the con being practiced upon them.

Since the boom has been driven forward according to the projections of the borrowers and the low-hurdle eagerness of their lenders, rather than being predicated on meeting the imperatives of consumer sovereignty, we eventually find ambition has come to overmaster achievability and hope to have triumphed over hardheaded calculation.

To be harmonious and self-consistent, production should be guided by the wants of those whose ability to express them comes by virtue of being in harness to the same web of mutually supportive processes that help satisfy the needs of others, in turn. If not, scarce physical resources will be squandered in trying to realize misplaced visions of a world as overbrimming with affordable means as the unnaturally low interest rate treacherously seems to imply.

Worse still, once the fever of the boom spreads from its initial promoters and their preferred clients to infect the populace at large, sobriety and forbearance tends to vanish in a kind of Gresham’s Law of the spirit. A world awash with “liquidity” is not one where the steady flame of good husbandry can outshine the neon-lit promise of instant gain.

To recap, what then we find is that not only does the availability of financial capital become wholly divorced from the extent of the pool of physical capital goods; not only does much of that pool become misused (and, hence, ultimately, stripped of its original “capitalness”); but that the wellspring of capital maintenance and augmentation — namely, voluntary saving — is concreted over to provide a gaudy, Baroque fountain of greater exhaustive consumption.

As this happens, many final-goods prices will rise as they are revealed to have been undersupplied in relation to the monetary means now pouring into the hands of their would-be consumers. Where such goods also comprise inputs to production taking place further upstream (as is archetypically the case with, say, energy), this increase in expense will primarily add to costs and may therefore begin to sap profitability, if these are not either offset with greater efficiencies or fully recouped in higher selling prices.

Furthermore, as they find their standards of living slipping, those workers who are so enabled — and they will be legion at the height of the boom — will be far less shy about insisting upon more from their employers, by way of compensation for their efforts. Labor costs will now feature in the list of boardroom anxieties.

Simultaneously, since “demand” will have come to a white-hot focus of insistency on end-consumer items, all those who can do so will be shifting resources towards meeting it. If this means abandoning half-completed schemes for long-duration projects in favor of pursuing more mundane but now more lucrative goals, such as putting food on the average man’s table and keeping his boiler stoked with fuel in the here-and-now, so be it.

Unfortunately for the Keynesians, with their quaint, quasi-hydraulic depiction of the economy, such intensified end demand will not automatically translate into higher revenues for all the businesses strung out along the chain of production, just as a sudden appetite for beef will not instantly cause the grass upon which the cattle feed to grow more luxuriantly in the pasture.

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What it will tend to do instead is to strip those not immediately involved in meeting that end demand of their ability to call upon productive resources on the same terms as before.

Squeezing margins as in a vice, this development may also diminish the orders received from those closer to the shop front, since these erstwhile business customers will now be too busy scrambling to restack their emptying shelves to contemplate closing off the sales area for a refit, much less to ponder the purchase of a gimmicky new IT system, or to think of splashing out on an expensive and distinctly nonessential corporate makeover.

This last may not wholly be a matter of discretion since, besides seeing their own wage bill expand, consumer-goods merchants are likely to see inventory replacement come complete with higher invoices, so working-capital needs may soon start to crowd out much more deferrable fixed-investment schedules.

Costs up, labor more pricey, yet demand flagging: this is the fate of all too many of the myriad businesses which comprise the vast, hidden, submarine bulk of the iceberg that is our modern, highly specialized, vertically stratified, distributed assembly-line economy — to the befuddlement of a mainstream lacking a proper theory of capital or a true appreciation of the role of time.

Welcome to the crisis point of the inflationary boom!

Sean Corrigan is Chief Investment Strategist at Diapason Commodities Management. Send him mail. See his articles. Comment on the blog.

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America’s Monetary Policy. Easy credit n bailouts = moral hazard.

Posted by Jesse on March 4, 2008

Financial Services Committee Hearing

Monetary Policy and the State of the Economy
by Ron Paul

A Statement to the House Financial Services Committee, February 27, 2008

Mr. Chairman,

A topic that is on the lips of many people during the past few months, and one with which I have greatly concerned myself, is that of moral hazard. We hear cries from all corners, from politicians, journalists, economists, businessmen, and citizens, clamoring for the federal government to intervene in the economy in order to forestall a calamitous recession. During the boom, many of these same individuals called for no end to the Fed’s easy credit. Now that the consequences of that easy money policy are coming home to roost, no one wants to face those ill effects.

We have already seen a plan from the administration to freeze mortgages, a plan which is alleged to be only a temporary program. As with other programs that have come through this committee, I believe we ought to learn from history and realize that “temporary” programs are almost anything but temporary. When this program expires and mortgage rates reset, we will see new calls for a rate-freeze plan, maybe for two years, maybe for five, or maybe for more.

Some drastic proposals have called for the federal government to purchase existing mortgages and take upon itself the process of rewriting these and guaranteeing the resulting new mortgages. Aside from exposing the government to tens of billions of dollars of potentially defaulting mortgages, the burden of which will ultimately fall on the taxpayers, this type of plan would embed the federal government even deeper into the housing market and perpetuate instability. The Congress has, over the past decades, relentlessly pushed for increased rates of homeownership among people who have always been viewed by the market as poor credit risks. Various means and incentives have been used by the government, but behind all the actions of lenders has been an implicit belief in a federal bailout in the event of a crisis.

What all of these proposed bailouts fail to mention is the moral hazard to which bailouts lead. If the federal government bails out banks, investors, or homeowners, the lessons of sound investment and fiscal discipline will not take hold. We can see this in the financial markets in the boom and bust of the business cycle. The Fed’s manipulation of interest rates results in malinvestment which, when it is discovered, leads to economic contraction and liquidation of malinvested resources. But the Fed never allows a complete shakeout, so that before a return to a sound market can occur, the Fed has already bailed out numerous market participants by undertaking another bout of loose money before the effects of the last business cycle have worked their way through the economy.

Many market actors therefore continue to undertake risky investments and expect that in the future, if their investments go south, that the Fed would and should intervene by creating more money and credit. The result of these bailouts is that each successive recession runs the risk of becoming larger and more severe, requiring a stronger reaction by the Fed. Eventually, however, the Fed begins to run out of room in which to maneuver, a problem we are facing today.

I urge my colleagues to resist the temptation to call for easy fixes in the form of bailouts. If we fail to address and stem the problem of moral hazard, we are doomed to experience repeated severe economic crises.

——————–

The Dollar is a Big Element of U.S. Security (2/29/08)

The following letter to the editor from Dr. Paul ran in today’s Wall Street Journal:

“I was delighted to read in Judy Shelton’s op-ed, “Security and the Falling Dollar” (Feb. 15), that at long last the security implications of the dollar’s collapse have made their way into the mainstream media. The dollar’s strength (or lack thereof) has been of paramount concern to me, and the subject of many of my statements over the past several years. Decades of manipulation by the Federal Reserve have benefited the government and certain politically-connected firms, while gradually destroying the purchasing power of middle-class Americans. Despite numerous warnings in the past, it is only now at a point of acute crisis that Washington insiders are beginning to awaken to the reality of the end of dollar hegemony.

“While I desire reform of our current monetary system, my own proposals have not been as all-encompassing as Ms. Shelton’s suggestion to return to a Bretton Woods-style system. Her recommendation, though, that gold backing should make up a component of a future monetary system, is one that we would all do well to heed. My own legislative proposals focus around eliminating the taxes and laws that dissuade individuals and institutions from using gold as currency or as a backing for currency. By allowing market processes to determine the issuance of currency, we can allow individuals to decide for themselves what currency they wish to use. This would lead to a gradual reintroduction of sound money and avoid the market shocks that occur when monetary decisions are mandated by government fiat.”

Rep. Ron Paul (R., Texas)
Washington

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