Independent American Education

Technology and a Digital Renascence for 2013?

2012-12-19T18:06:00.002-08:00

Google, Adobe, Microsoft, Intuit, and other tech companies may be responsible for the next generation renascence. With the advent of constantly improving technology and software, the world is looking brighter for those interested in media, entertainment, and communications.

Take Adobe for example. They recently released their new CS6 software suite. Responding to the needs of so many struggling artists and companies, Adobe has created a subscription service whereby any regular Joe can get access to some of the best professional level software. Only a few years ago a user might pay thousands of dollars to acquire the 5 programs or so needed to complete a digital media production. Now users can pay less than $50 per month to get access to Adobe's entire Creative Cloud which offers about 30 or so programs which significantly lowers the barrier to entry for start ups and digital enthusiasts. Professionals use this software to create the photos you see in magazines, animations like South Park, compilation clips on Youtube, and music for iTunes.

Youtube reports as of the date of this article that 72 hours of video is being uploaded every minute. Movie shots that may have taken 3 days in the past can now be done in about 4 hours according to J Neil Schulman, author of Alongside Night (video to right). Alternative news and entertainment channels are popping up all over because the overhead of production is decreasing dramatically allowing anyone to offer high quality content to the entire world (video to left). Communities spontaneously arising form coalitions and communication networks for achieving goals. These groups are geared towards politics, charity, business, education, and a myriad of other categories and sub genres. The diversity of billions of human intellects are coalescing and creating an amazing array of digital media. A mother starts a blog on Wordpress about raising her children and building support networks for other anxious mothers. A drunk guy makes a Youtube video go viral by falling down some stairs, bringing some form of entertainment to 50 million people. The struggling artist gets her big break after she releases her debut album for free on The Pirate Bay, a torrent site which may have servers in space soon.

Because of the advances afforded to efficiency and productivity, over 4 million people can get a free lesson in the historical economic controversy between Keynesian Economics and Austrian Economics via rap video (video to left). Millions more men of all ages may get to enjoy the wondrous and hilarious phenomenon known as dissolving bikinis (video to right). Moments of inspiration are captured and broadcast, sad stories shared, debates and discussions rage on. If you want to put forward a new idea or theory and are brave enough, you can offer it to the world and can count on getting plenty of feedback.

One thing I've learned in my adventures on the interwebs is you can always count on at least one person to disagree and challenge every idea or premise you may ever have. Information is churning in the hive mind and great things await us on the other side. It's nearing the end of 2012. Welcome to the age of the new Digital Renascence.

About the author: Carter Callahan

Property Rights to Suit Republicans, Anarchists, Libertarians, Socialists, Voluntarists?

2012-12-13T22:29:00.002-08:00

The liberty movement is perhaps the most controversial and intellectually stimulating in the arena of ideas for organizing society. One common theme runs through most of them. The Non-Aggression Principle also known as NAP. The idea that no individual can justly claim to aggress against another individual. The only just claim to use violence is in self-defense. Already being such a small fraction of the population, those whom wholeheartedly apply the NAP, it would be a shame for so many sub factions to emerge if it stalled the effort to bring this one principle into the acceptance of general society. One of the most contentious among the topics of discussion which can lasts for hours in the chat rooms, or for years in the forums of the liberty interwebs, is the idea of property rights. There is a general consensus among the liberty not-leaders, Adam Kokesh, Stefan Molyneux, Kevin Carson, Larken Rose, Jeffrey Tucker, Lew Rockwell, Hans Herman Hoppe, and Ron Paul is that self-ownership is inviolable. These folks typically prefer to go without labels, but if pressed would self-describe their positions as Anarchist, Voluntarist, Free-Market Socialist, Libertarian, Republican, Anarcho-Capitalist. However, where does self-ownership end and where do property rights begin? This is the problem I hope to solve. I do not claim this argument to be conclusive, but I do offer it humbly before you.

Can someone justly claim exclusive use of scarce resources outside their own body? I am not certain of the moral position, but it would seem like the claim to a resource is only meaningful in a conflict of claims. If I claim to own 100 acres of land, but do not use it for any purpose, then there is no conflict and no moral content. If I claim to own 100 acres of land, and I do use it, then there is still no problem to solve. The problem only needs answering in cases where two different people want to lay claim to the same resource whether it is tress, land, metals or any other raw material. Who can make the best claim? Well if two people claim to both own the same resource, then both claims are made arbitrarily. i.e. If you claim to own 100 acres of land by decree, then I should be able to also make such a claim since both people should be held to the same moral standards or perhaps better described as recognition of their equality. Why should one person be able to claim resources by decree if the other person is not? But even in cases where two different people are making their claim by proclamation, there is still no actual conflict between them for the land I claim to own is not harmed by your thoughts or words. It is only when someone actually puts the resource into use that a conflict might even logically arise. I will propose that a better case might be made had one of the parties expended some labor or energy in transforming the resource in question. Who has a better claim to the tree than the one who cut it down? The person who wrote on a piece of paper and filed it in some database? How about the person who merely shouted at the top of his lungs his claim upon it? I will suggest that it is I, who has taken action and actually transformed a resource that can make the best claim for its exclusive use towards making chairs instead of canoes. This means that a principle can be logically applied to both parties equally while only one may be considered correct. For if shouting out a claim grants its permission, then both parties may do so, but without a logical resolution. Only one of them could have cut down the tree. But the opportunity was available to both of them. Now some might worry that applying this principle would allow one individual to control all of a particular resource. I don’t foresee a single individual being able to control all necessary resources. If he did, then he would be the most productive human on the planet and I would tip my hat to him. It would also be the first time in history that a highly productive individual put forth so much effort and labor as a means to destroy humanity. Usually those bent on destruction tend to use much less costly means to acquire power, such as lying, defrauding, and threatening aggression. Even if the possibility of the evil super lumberjack is granted though, humans need more than one resource to survive. In order to persuade such a person who could transform an entire earth’s worth of trees, others could withhold their own transformed resources. No violence would be necessary in order to convince him to hand over the lumber. Or we could just grow hemp instead.

Is Walmart Evil for Paying Low Wages and Trading with China? Maybe so...

2012-12-02T22:36:00.000-08:00

Is Walmart evil for paying low wages or because they offer chinese products.

1. Low Wages:

Who earns low wages? Usually it’s low skilled less productive people. Typically they're young with few skills and little experience or older people who have become less productive due to the limits placed on them by their age. People who earn higher wages are typically more productive with more experience. This is why plumbers, electricians, engineers and doctors never have to worry about earning a minimum wage. Their goods and services are valued higher in the monetary sense because the demand for their goods and services relative to the supply of their goods and services is higher. This is determined by consumers. Employers don’t determine the value consumers place on a good or service. If employers were the only ones that determined the value of an employee then employers could just value their workers at a million dollars and pay them a hundred thousand dollars per hour.

It might be better explained by talking about what the consequences of raising the wages of wal mart workers.

One possible outcome of Wal Mart implementing a policy of no one is allowed to earn less than $20/hour. This means that if Wal Mart can put a machine in place which costs less than $20/hour to own and operate, they will replace a human job with a machine. So if there’s a machine that can stock shelves and it costs $15/hour to own and operate accounting for the purchase price, depreciation, maintenance, etc. then it is in Wal Mart’s best interest to fire shelf stockers and buy shelf stocking machines. If Wal Mart can pay low skilled workers $10/hour then it’s more profitable for them to hire people than buy the machine.

Another possibility is that Wal Mart can raise the prices on their products to maintain profitability. This means that the costs of the wage increase passes on to the consumer in the form of higher prices on items sold at Wal Mart. So if a pair of shoes used to cost $10 at Wal Mart, that same pair of shoes now might cost $12. Wal Mart consumers then have to do more work for a pair of shoes or make do with less. So paying $12 instead of $10 means that a consumer is left with $2 less than they otherwise would have had. Instead of having a pair of shoes and a $2 pair of socks, they now just get a pair of shoes for $12.

One more possibility of Wal Mart implementing pay raises to $20/hour. Since businesses are in competition with each other, if they raise prices too much people can just go to another store. So there is only so much that Wal Mart can do to pass on the costs of pay raises in the form of price raises. Let’s say Wal Mart decides to take less in corporate profit. Then people who invest in Wal Mart stock have less of an incentive to keep their investment. They can always sell Wal Mart stock and go invest in another company. So now maybe Wal Mart was going to put up a store in a new market, but instead decide not to. People in that market are then denied a choice of shopping at Wal Mart. So maybe those consumers have to continue paying higher prices. That means they have to make do with less or just work harder for the same amount of stuff.

This is very much related to the arguments against minimum wages which can be researched. Resources will be listed in the description for further reading.

2. Chinese products:

Some people seem to be under the impression that if they purchase a product from China it somehow hurts our economy. Somehow Americans lose something when they trade with China. This animation will give a demonstration of one community, regardless of size, trading with another community. It gives a visual of how no one loses anything when making a voluntary trade. The only way a Chinese company will send over a product is if they are getting something in return. So that means an American company has to produce something that a Chinese company wants. We typically use money as a medium of exchange so we don’t have to directly barter with the Chinese, but that just gives the Chinese a wider variety of American goods or services that they can purchase. So if I give a Chinese person $1 for a pen, that Chinese person then has $1 to spend on an American product. Even if the Chinese person takes that $1 and trades it with another country, it just makes the ultimate chain of transactions more complex, but it doesn’t change the nature of trade. An American dollar is a claim on an American resource. It’s required by law that American companies accept dollars whether it’s a Chinese person who has a dollar or an American. It’s not necessary for there to be a law requiring people within a certain geographical region to accept a particular money, but that will be covered in another video.

Now someone might say yeah maybe on net as a country we don’t lose anything by trading with China, but what about the business who can’t compete with a Chinese company. So lets talk about an American pen company. What does that mean if they can’t compete? Well, it means the Chinese pen company can make pens and ship them half way around the world more efficiently than an American pen company can make pens and ship them across the country. So maybe that American pen company goes out of business. Now those resources that used be put towards inefficiently making pens can now be used to make something else. So maybe investors in the pen company pull their money out and invest in a technology company that can efficiently allocate resources in making some kind of software.

Henry Hazlitt has a great book called Economics in One lesson where he describes this process in great detail.

So I have explained why Wal Mart isn’t evil for paying low wages and trading with China. Is that the end of the story? No. If you want to hate Wal Mart for something, you CAN hate them because they receive the same benefits special benefits from the State as any other large corporation. They get special tax breaks from the State. They benefit from the barriers to entry imposed by the State which prevent small businesses from competing like licensing and complicated international trading laws and regulations. NAFTA is the North American Free Trade Agreement. And because it was created by politicians it accomplishes the exact opposite of its stated goal. It prevents free trade. Maybe I’ll cover that in another video.

I felt it was important to direct people’s anger at Wal Mart into the correct direction. If you hate Wal Mart it should be because they get benefits from the State, NOT because they pay low wages or trade with China. Well let me know what you think in the comments and subscribe to my channel.

Watch my video about the subject and get visuals on these ideas: http://youtu.be/IfYtuJ8Pk_I

Isaac Asimov - Foundation Series - Revelation of the Method of Statism

2012-11-12T18:13:00.000-08:00

I just finished the 3rd book in Asimov's Foundation Series. What a thrill! Here is an author who has written literally hundreds of books and articles spanning fiction and non-fiction. In the first three books of this series there seems to be no lack of imagination in the fusing of a truly immersive world of interplanetary politics, spaceship battles, plot twists, futuristic technology and romance. Overall these stories are delightfully entertaining. It does fall upon my critical nature however to point out the fallacious premises by which Asimov has constructed this technocratic future world. Being the free marketeer that I am it seems only fitting I blurt out the most obvious fallacy immediately.

Government brought order to a universe of chaos.

Before proper analysis of the fallacy however I want to look at what Asimov did brilliantly, which was tell a riveting story while revealing the methods by which a state begins, grows, and controls its population. Not that every facet of such a complex subject is covered, but rather a few plausible excerpts from the playbooks of the elite were used to tell this tale. Religion, trade, war. This guy has got all the basics covered and they serve to truly enhance the realism of this potentially dark future.

In order to avoid giving complete spoilers, I will speak as generally as possible about the overall plot lines.

There exists a universe of planets inhabited by humans collectively known as the Empire since one central government rules. The first book starts just prior to the collapse of the Empire after which chaos ensues and a dark age sets in.

Now call me an intellectual oompa loompa, but it seems to me that if an organization with a monopoly on violence and theft over the entire universe gets eliminated mankind should begin to flourish not decay into a cesspit of moral corruption. If the thief goes away, how does theft increase? If the murder goes away, how does murder increase? It's as if the author believes that the biggest thief is somehow already protecting us from thievery. It's a typical logical inconsistency promulgated by statists. Their views about the state always presuppose its angelic qualities and ability to create desirable social bonds. The exact opposite is true.

If all people are good, we don't need a state. If all people are bad, we can't have a state because the state would inevitably be filled with bad people. If most people are good and only some people are bad, we can't have a state because only bad people would want the power to steal, kidnap, and murder and thus join the state. If most people are bad and only some people are good, we can't have a state because it would still be filled by bad people. There is no logical argument which shows anything good could possibly occur when some people are given the power of life and death over others, and in fact quite the contrary.

The idea that if some people have the moral obligation to take some other people's property, then somehow we get charity, security and virtue. If no one has the moral right to take someone else's property, then we get chaos and destruction or as Asimov paints it - "...a thousand years of darkness..."

It probably shouldn't surprise me by now, just how deep the illusion of statism penetrates even the most agile of intellects. And do not take this the wrong way, Asimov certainly was an intellectually thoughtful writer, I just wish there were more great entertainment out there that didn't involve the worship of politicians. Even though at times I wanted to pull my hair out reading these books, I am going to continue looking past the fallacies in order to enjoy the rest of the series.

p.s. I love Mule, but I don't know why? ;)

A Call to Virtue - A Call to Freedom

2012-08-17T16:33:00.001-07:00

All this talk about politics is dizzying. The bombardment of propaganda from every angle about subjects of irrelevance is enraging. Democracy is the most corrupt system of government possible as a means of organizing human society. You cannot vote on morality. You cannot vote on what's right and what's wrong. There is no middle road for virtue and there is no compromise with tyranny. One cannot order freedom in sizes small, medium, and large. There is liberty or not.

For those would say, "Freedom will never work. The world is too corrupt. That is idealism." That is precisely why we need freedom. Liberty and the decentralization of power is the only mechanism which accounts for the fallibility of human nature. What we have right now doesn't work. The systems of control we have right now are corrupt. Freedom is idealism, but unlike the hierarchical structures of power and central planning proposed in the Utopian authoritative forms of government by all the great thinkers and philosophers of the past, it is the only viable and sustainable path for humanity.

We cannot lay the foundation for prosperity upon the grounds of immorality. It is never acceptable for someone to use a gun to extort money or property from anyone for the purposes of charity or goodness. The philosophy which accepts the premise of coercion as a means of helping the poor and downtrodden is the same as that used as a means of helping the banksters and wall street manipulators. A constitution which grants a monopoly privilege of taxation will always lead to a state much as we find ourselves in today. It is true, the closer we can get to freedom, the smaller we can make the government, the better. But the great American experiment which started with the smallest government the world had ever seen was the vehicle by which was created the largest government the world has ever seen. I cannot bear the thought of leaving that legacy to be bourne by our grandchildren. The constitution began with the assumption that it was acceptable for an organization to utilize methods of extortion, kidnapping, and murder as the means of protecting those it committed crimes against. How can we ever trust someone who would resort to such measures to do the right thing? How could we ever expect morality to follow immorality? What kind of person could use evil to achieve good?

To the detractors of liberty on the basis of its alleged insensitivity to the needs of humanity who would put forth the argument, "We must care for those who cannot care for themselves." It is true, we must as a society do just that. It is a non sequitur to then propose violence and immorality to achieve such an end. I am not charitable because I kick down my neighbor's door, put a gun to their head, take their money, and then give it to the poor. It is beyond disgusting to see the demagogues and politicians prancing around with proud smiles on their face after doing so as if they were the champions of charity.

To those who would call themselves Christians and would ask the government to "...do something about it." I say to them, "When did Christ go around extorting people's money to give to the poor? When did Christ go on a murder spree in the name of Democracy and charity? When did Christ pursue political action as a means of achieving his ends?" How can you call yourselves Christians while sending our money off to be used for the purposes of immorality, death, and destruction? Did the great men of renown follow orders to worship false gods or did they defy the most powerful rulers and refuse to compromise their virtue and morality even in the face of death? Did Christ tell us that following him would mean persecution and torture? Surely it was written so. Christ took it upon himself to make sacrifices at his own expense and so must you. Never should we threaten our neighbor to make such sacrifices for then we have defeated the purpose.

To the great skeptics of freedom who constantly bombard us with excuses and justifications on the basis that freedom is a great idea, but it could never work for "Who would protect us from the great evils of the world if not for the government?" I say to them, who will protect us from those who take our property against our will, offer us no choice as to how much protection we should want or in what fashion we should want it, without any say in how much we pay for it? Is there any benefit that could justify the alleviation of our fears, supposing it could be done, if it required us to commit violence against our neighbors? Who then will alleviate their grievance?

There is no hope in politics as the avenue to freedom. To do so assumes that freedom can be given by politicians. It is impossible. It is the intellectual evolution which is our only salvation. Understanding and accepting morality and virtue as ends, in and of themselves, worthy of our efforts are the path to liberty. We cannot place our faith in men who achieve their goals through means of corruption, no matter how genuine and sincere they paint their good intentions. We cannot call upon them to steal, kidnap, imprison, or murder for any good cause. To do so renders our goals invalid.

For those who would criticize the proponents of freedom with ridiculous cajoling, "Well what can we do about it?" The first thing I'm going to do about it is have discussions and debates with all my friends and family about the virtues of freedom. I am going to make the case for morality and justice. If I cannot convince those who confess to love me how can I hope to persuade those who openly hate me? Every opportunity afforded to me will be spent spreading the message of freedom. I will take every chance to speak with every customer where I work, every member of my church, every neighbor, every passerby on the street and every passenger on the bus. I will post in every forum, call in to every radio show, pass out as many flyers as I can afford, create blogs and youtube videos, speak at every club and organization which will give me the floor, and scream "freedom" from my rooftop.

Do not ask me my opinion about the current man running for office. I do not care. Do not ask me which party I belong to. It does not matter. Do not deluge me with questions of how each and every man should solve his specific problems or how to ameliorate his doubts and fears. That is the great mystery which life asks us to solve as we go. There is no such world where all uncertainties and risks are removed. There is no telling where we will be swept off to once we place our feet outside our door.

In the past there were pragmatists who asked, "Who will pick the cotton if not for the slaves?" I respond, "I do not care. Slavery is wrong!" If I were a seer and told them, "Do not worry friend. One day great metal machines with enormous robotic arms will one day thrash through your fields to pick the cotton. They will feed upon the juices of million year old dinosaur bones after being put through a complex refinement process by the sciences of alchemy." I would be called a lunatic, a madman, an idealistic visionary with no practical proposals. I do not pretend to know the future. We cannot solve the current problems which plague our race if we do not first address the fundamental issues of ethics and morality. Do not ask me what the future will bring should we achieve a free society. I am not smart enough to predict it. I can only hope to live in times where the discoveries afforded by liberty are unleashed upon humanity and I look forward with an eager heart to the day when that dream is realized.

Join me in the fight for freedom.

Gold and Economic Freedom by Alan Greenspan

2012-08-06T11:50:00.000-07:00

Published in Ayn Rand's "Objectivist" newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.
With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

How to Communicate the Ideas of Inflation to the Mainstream

2012-08-03T13:25:00.002-07:00

We've probably all seen a free market economist on a mainstream financial news show at some point addressing the issue of inflation. If you haven't, then you may wish to check out some videos of Peter Schiff or Ron Paul. Many times it seems like arguments arise whenever inflation is mentioned. The typical argument may run something like this:

Free Market Guy: "There is massive inflation in the market thanks to the Central Bank."
Mainstreamer: "There doesn't appear to be any inflation as the CPI has remained steady at 3%."

I propose that at this point the argument is really over definitions and semantics rather than anything of substance. I'll go further to propose a clean and easy way to settle the dispute in a fruitful and educational manner which will allow the opportunity for the real ideas about inflation to be communicated clearly.

When somebody takes the argument that inflation doesn't exist, we should qualify the word. So instead of saying there was massive inflation, we can say there was massive monetary inflation. Monetary inflation inevitably leads to higher prices. It should be easy to get agreement that when the Central Bank increases the money supply, it can be defined as monetary inflation. We can go still further to explain that even if prices remain stable the effects of monetary inflation are detrimental. In a market where prices would normally decline, if prices remain stable we lose the benefits of falling prices which help the poor and the economy.

The CPI is a narrowly defined set of prices which do not indicate the real effects of monetary inflation. The numbers that comprise the CPI also change over time which makes its use as an indicator less effective. Monetary inflation does in fact affect food prices. Food prices are essential to many people. A rise in food prices is a burden upon the most down trodden in society and especially those on a fixed income.

It is also important to note that the price inflation may be separated from monetary inflation by a factor of several months or several years. This also causes a lot of confusion, because many people may look at prices directly following a monetary base increase and thus conclude, "Aha! Monetary inflation doesn't cause prices to rise." The housing bubble is a good example of the time difference. It was the monetary inflation of the early 2000's that ultimately manifested as higher prices several years later. We cannot predict the exact timing or the magnitude of the price increase, but there is no question as to effects which must be caused by monetary inflation.

I believe this definitional work is essential not only in explaining the idea to the newscaster, but also to the viewers who are often not versed in free market economics. You can check out a brief video I made on the subject: If you would like to become an expert in free market economics from your hom you can also check out Tom Wood's Liberty Classroom.

Declaration of Independence Illegal - A Nation of Hypocrites

2012-07-09T11:54:00.000-07:00

Remember that story in school about how our founding fathers overthrew a tyrannical government? Do you recall celebrating these acts of heroism and American excellence? Well, apparently some Brits say it was an illegal act and Abe Lincoln would agree.

Secession from government, which no longer serves the people, is the duty of every American according to the Declaration of Independence.

"Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."

To the British, however, secession isn't the legal or proper tool by which to settle internal disputes. "What if Texas decided today it wanted to secede from the Union? Lincoln made the case against secession and he was right," they argue in their brief. This is a good point for the Brits. Lincoln certainly was a hypocrite when he ordered his general to march through the south and slaughter men, women, and children. It was known as Sherman's march and ultimately led to the end of the civil war for independence. When Lincoln said secession from the tyranny of American federal government is illegal, he never seemed to make comparisons or reconcile his philosophy with the war for independence from British rule.

It is amazing that there are any Americans today who would argue against the American tradition of overthrowing tyranny. There are more than you might expect. Remember the deal with Texas threatening to secede? The Federal government quickly swooped in and threatened to shut down all air traffic in the state. The governor quickly folded to pressure. I wonder when states will actually follow through with secession? I wonder how many innocent people the Federal government will kill in response? The Feds have been gearing up to take on the American people for decades now and I hope we never have to see a civil war in this country again. However, it is impossible for a politician to give up their power. Let's pray that enough people are awakened to the ideas of liberty before large scale violence ever breaks out.

When I first read the BBC article headline, I laughed out loud. Then after reading it I cried. The defenders of American secession never addressed the issue with Texas nor did they address the civil war. Essentially it seems like they all agree that secession is only good if you are overthrowing a government from across the sea. If the government at home is tyrannical, then we should just hold signs and protest so cops can single you out and tase your face. At least that's how I read into this story. They completely side stepped the bigger issue of secession. They ignored the philosophical nature of the act of withdrawing consent. I wish I were there to argue the case for American freedom. I suppose I will have to settle for making the case on my blog.

Resist Tyranny Before it Takes Root

2012-07-08T14:49:00.004-07:00

I read a great quote from Churchill today. It describes the precarious nature of fighting something before it's too late. This is a very difficult subject and many people I talk to about liberty carry the attitude that, "as long as it doesn't affect me, I don't care." Here is what I would say in response to those who will not lift a finger to resist tyranny.

"Still, if you will not fight for the right when you can easily win without bloodshed, if you will not fight when your victory will be sure and not so costly, you may come to the moment when you will have to fight with all the odds against you and only a precarious chance for survival. There may be a worse case. You may have to fight when there is no chance of victory, because it is better to perish than to live as slaves." - Churchhill

History has shown our race to be one almost always subject to the will of evil men. Only pockets of freedom have ever existed and usually only in a local time and place. It is never long before the new generation is born into freedom, never having fought for it themselves and they tend to take it for granted. Most people today seem to think about our own history as an abstract idea in a far away fantastical place. It is extremely difficult to picture what our lives would be like if we had to fight in the streets for our very lives. And yet, history has demonstrated this is precisely what will inevitably happen.

The hands of tyranny press ever onward crushing the innocent under its boot. At first a small number are oppressed and the masses are acclimated to accept it. Yet the number of downtrodden grows ever steadily by increment as the lobster boils in the pot. Eventually the day will come when the water is so hot there is no choice left but to fight for your life. And in that moment the greatest odds are against you. I doubt I could convince even a sizable fraction of the population that erecting the fort against the coming dangers is our best hope. And so, as it always does, the task of upheaval falls to a dedicated minority. In the coming crisis it will be up to the lovers of liberty to put forth the ideas of freedom and prosperity to ensure that in the moment of dire decision, our fellow man does not fall victim to the temptation of an even greater evil.

If you are interested in this subject, I would recommend reading C.S. Lewis' The Abolition of Man. He describes in great detail the mindset of those who oppose a free society. In his words, the state is always working towards the day when the final rebellion will be quelled and no one will have the capacity or desire to resist.

Stealing Your Money for Obamacare is Constitutional - Cause I Said so - Rand Paul Replies

2012-07-01T09:47:00.000-07:00

I just read an article posted by the ever insightful Washington Post about Rand Paul's response to the supreme court's decision to declare Obamacare 100% American as apple pie.

“One of the tea party’s folks — who’s, by the way, a member of the United States Senate — said, just because a small number of people said that’s constitutional doesn’t mean it is,” said Senate Majority Leader Harry Reid (D., Nev.). “Now, can you believe that? But that’s what he said.”

Can you believe someone didn't instantly go prostrate and worship people in official state issued black robes? Paul must be some kind of weird reality monster.

The truth is so obvious it's hard to clarify it further. If the supreme court said shooting your children is constitutional then it must be so. What kind of pretentious crank do you have to be to surrender your ability to define morality to a few black robed deities? Obviously the constitution was put in place to specifically limit the power of government. If government interprets the constitution as a guarantee for accumulating power, then as per the Declaration of Independence,

"But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."

It is our duty to throw off an out of control government that no longer serves the people. But apparently
Naftali Bendavid of the Washington Post feels that being a patriot like our founding fathers is unpatriotic. Paul had recently received a lot of flack from the liberty movement in response to his endorsement of Republican presidential candidate, Romney. This small outcry against the raging state machine comes as a refreshing reminder of Paul's roots and will hopefully bring libertarians and independents back to the political battle ground.

Though I do not believe the political process is a realistic way to bring about true change, I do see it as a great platform for sending out the message of liberty. We need to utilize every opportunity afforded us to educate people so that when the next crisis hits, liberty rather than tyranny can be brought in as the solution. If there is one thing we know about politicians, it's that they love a good crisis. That's when people are most frightened and consequentially vulnerable to the government's plea for more power as the only way we can protect ourselves. We must ensure that when tough times come, people understand that only freedom can solve the problem of big government.

Tax the Lucky and Reward the Politicians - A Great Tax Plan for Finishing Off the American Empire

2012-06-28T11:13:00.000-07:00

Brad Delong of the NY Times wrote an article in the economics section titled, "Tax luck, not thrift." He goes on to talk about the fairness of progressive taxation while recognizing current drawbacks about offshore tax shelters and toting the benefits of a substantial social insurance. You might think that in light of the long list of government failures more skepticism is warranted. However, Brad enjoys speaking in sophomoric generalities and assumes that services rendered by the state are both positive and desirable. He also ignores the implications of what he deems as lucky moves in the market.

What this statist must have missed in Economics 101 at Harvard is the basic function of an entrepreneur. An entrepreneur is someone who forecasts future market conditions, such as a consumer's demand for a certain product or service, and then goes about allocating production resources in order to meet that demand. If he is "lucky" he earns a profit and if he is wrong he earns a loss. Interestingly enough Brad does not detail at all how luck is to be taxed but instead he focuses on taxing consumption which apparently in his mind is the equivalent of luck? Perhaps the NY Times just assumes that the once ruggedly independent and shrewd Americans are now only a horde of drooling zombies who are incapable of the basic lines of fundamental logic. Perhaps it is this disdain for the general public by the NY Times that is driving readers to the wider world of information and to smaller independent venues of news which don't start with the assumption that their readers are complete idiots.

Regardless of the reasons, if we take this headline literally we see instantly that taxing luck translates to taxing success. If we take his unrelated explanation at face value we see that Brad actually wants to tax consumption. While a consumption tax would be preferred to an income tax, the fact still remains that in whatever form we pay politicians they will surely only use it to acquire more power and wealth for themselves. And however the taxes are collected, I don't think that the NY Times will be analyzing the larger issue of what the role of government should be in a free society.

Despite their "reasoning" for such a mindless article, I will emphasize my own point with the following list of failed socialist programs where the politicians posed that we trust them with our money for our own benefit. Perhaps in another article I will go into greater detail about these few failures in American government's long history of failures.

Social Security
Medicare
War on Poverty
War on Drugs
Post Office
Amtrak
Fannie Mae and Freddie Mac
Public Education
Federal Reserve Bank

Need we say more? Why not? The very idea that I would ever pay someone to follow me around and extort me for money as a means to discourage me from doing things which are contrary to my self interest from the perspective of a politician is ludicrous. And yet apparently I pay the local police to perform this task. How could it be argued that it is in my own self interest to pay someone (IRS) to threaten me with violence if I don't give them money, some of which will go to the post office so I can then go to and pay again if I want a letter mailed? Why is it so unreasonable for us to expect that there are in fact other companies who would love to deliver our mail with no guns involved in the transaction? Instead, violence is actually used against those who would even attempt to perform this function (Fed Ex) without violence and extortion.

Calling All GOP Racists: Commence Guilt Now (Fast and Furious is just a Movie)

2012-06-22T14:47:00.002-07:00

Unfortunately I was listening to the Sean Hannity show today and my head almost exploded. The big hoop la over the fast and furious scandal brought out all the race pimps shamelessly to make their voices heard. One particular caller could not even comprehend the possibility that the GOP was not racist because they raised some noise about an attorney general's involvement in arming criminal gangs. I am not a Republican, but how ridiculously has the political discourse fallen when many common folks start arguments with conclusions fed to them through their brain tubes?
If you are not familiar, Hannity is a radio talk show host self-described as a conservative Republican. The caller's opinion seemed to carry so many logical fallacies and assumptions it may be difficult to know where to begin. The case in question was in regards to Holder's role in the scandal involving thousands of guns being delivered to Mexican drug cartels resulting in violent border outbreaks. With an allegation so serious, the first explanation you make is that Republicans hate black people and that's why they are pushing for answers and hinting at sentences? The worst part of it all is that the caller seemed oblivious to any other alternative explanations for why Holder should be summoned to provide the people who pay his checks with some answers for causing a gang war.

The finer details of the story seem to suggest many possible motives for this operation. Some sources suggest that the ATF not only knew what they were doing, but did it deliberately as a pretext to the introduction of upcoming weapon ban legislation. This operation had begun under the Bush regime and was carried on through to the Obama regime.

Regardless of the Republicans' true intent, the fact remains that the U.S. government gave thousands of weapons to cold blooded criminals and someone should answer for it without skin color being introduced as evidence for a public mistrial. This kind of tactic reminds me of the days of Bill Clinton. The focus was placed upon his sexual indiscretions rather than on his decision to drop bombs on innocent men, women, and children in the middle east. Chalk this one up to another false debate. Either you like Holder because he is black or you hate Holder because he is black. Never does the question, "Is this guy a criminal?" ever enter the equation.

Let's hearken back to the radio feeds during the Bush rule. One big question at the forefront of the false debate was, "Is water boarding considered torture?" No questions were raised about arresting innocent people and throwing them into foreign prisons without trial. Can anyone remember Blackwater? I suppose we shouldn't expect anything more from the old guard of the American empire. It will fall of its own accord soon enough, I just hope in that time of our most desperate hour the new generation will choose freedom.

Private Arbitration instead of Public Courts

2012-06-19T15:32:00.001-07:00

I just finished watching Tom Woods guest hosting the Peter Shchiff radio show talk to the founder of a private arbitration company judge.me, Peter-Jan Celis. Celis explains the benefits of using this service as an alternative to the expensive and time consuming process of public courts. The site also claims that its philosophy of "ex aequo et bono" ensures there is no legal mumbo jumbo. This is explained in the following way: "which means our arbitrators act 'from equity and conscience'. Without legal loopholes to exploit, there is no need to hire an expensive lawyer."

The current system of justice has so many inherent bad incentives it is no wonder the average person feels like they can't get justice in a court room. Judges, cops, and lawyers are all on the paying end of a monopolized protection racket. Judges justify the tickets the cops give out. Lawyers collect a hefty fee for the incredible skill of "navigating" the millions of laws on your behalf. No one can represent you except a lawyer approved by the government after several years of re education anyway. Cops provide fresh leads for the lawyers. It's just a big cesspit of corruption.

The judge.me solutions sounds like a great way to reduce the time and resources needed to resolve the average small claims disputes. This is a private company who doesn't have a monopoly. So if they lose their stellar reputation for being quick, efficient, and just then they lose their clients. This is the perfect free market check on justice that our society needs.

Could anyone even imagine how to go about getting a judge fired for being corrupt? I guess we could ask our lawyer to help get rid of the system which ensures his steady flow of clients. I guess we could ask the police to help get rid of the system which ensures they have a constant flow of ~~tax money~~ ticket money. Good luck to you on that endeavor. Let me know how it goes?

It just fills me with joy to see someone striving to provide free market alternatives to closed market monopolies. I'm sure everyone can see the benefits of having control over how their contracts are enforced. And probably the best aspect of all about a private solution such as this is that there is no gun involved in the transaction! Imagine trading with people with no guns to your head. Well perhaps it is difficult for us to imagine at present, but I have faith in the new generation of liberty lovers to bring us into the new age of freedom.

If you find this topic intriguing please don't stop reading about the subject. Many economists and philosophers explain in great detail the fundamental principles of private law and its advantages over the public system. To learn more about the academic intricacies of this type of court system, I would recommend watching Hans Hermann Hoppe on youtube, State or Private Law Society. You can also always just Google, "Private Law."