In 1794, when Congress appropriated $15,000 to assist some French refugees, James Madison, the acknowledged father of our Constitution, stood on the floor of the House to object, saying, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” He later added, “(T)he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.” Two hundred years later, at least two-thirds of a multi-trillion-dollar federal budget is spent on charity or “objects of benevolence.”

The extension of this policy, causing extension of corresponding ideas, fosters everywhere the tacit assumption that Government should step in whenever anything is not going right. “Surely you would not have this misery continue!” exclaims someone, if you hint a demurrer to much that is now being said and done. Observe what is implied by this exclamation. It takes for granted, first, that all suffering ought to be prevented, which is not true: much suffering is curative, and prevention of it is prevention of a remedy. In the second place, it takes for granted that every evil can be removed: the truth being that with the existing defects of human nature, many evils can only be thrust out of one place or form into another place or form often being increased by the change. The exclamation also implies the unhesitating belief, here especially concerning us, that evils of all kinds should be dealt with by the State. There does not occur the inquiry whether there are at work other agencies capable of dealing with evils, and whether the evils in question may not be among those which are best dealt with by these other agencies. And obviously, the more numerous governmental interventions become, the more confirmed does this habit of thought grow, and the more loud and perpetual the demands for intervention.

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The bill, H.R.682 – Stop Trading on Congressional Knowledge Act (STOCK Act), sponsored by Washington Democrat Brian Baird, has only been able to garner 7 sponsors in 18 months.

It is a little suspicious that members of Congress routinely outperform the market. According to Stephen Bainbridge,

A 2004 study of the results of stock trading by United States Senators during the 1990s found that that senators on average beat the market by 12% a year. In sharp contrast, U.S. households on average underperformed the market by 1.4% a year and even corporate insiders on average beat the market by only about 6% a year during that period. A reasonable inference is that some Senators had access to – and were using – material nonpublic information about the companies in whose stock they trade.

See this article by Stephen Bainbridge for more information.

Read the full text of H.R.682 – Stop Trading on Congressional Knowledge Act.

See a summary of the bill below:

1/26/2009–Introduced.Stop Trading on Congressional Knowledge Act – Amends the Securities Exchange Act of 1934 and the Commodities Exchange Act to direct both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to prohibit purchase or sale of either securities or commodities for future delivery by a person in possession of material nonpublic information regarding pending or prospective legislative action if the information was obtained:

(1) knowingly from a Member or employee of Congress;
(2) by reason of being a Member or employee of Congress; and
(3) other federal employees.

Amends the Code of Official Conduct of the Rules of the House of Representatives to prohibit designated House personnel from disclosing material nonpublic information relating to any pending or prospective legislative action relating to either securities of a publicly-traded company or a commodity if such personnel has reason to believe that the information will be used to buy or sell the securities or commodity based on such information. Amends the Ethics in Government Act of 1978 to require formal disclosure of certain securities and commodities futures transactions to either the Clerk of the House of Representatives or the Secretary of the Senate. Amends the Lobbying Disclosure Act of 1995 to subject to its registration, reporting, and disclosure requirements, as well as requirements for identification of clients and covered legislative and executive officials, all political intelligence activities, contacts, firms, and consultants. Requires the Comptroller General to include political intelligence activities, contacts, firms, and consultants in its annual compliance audits and reports.

United States Constitution – Article One, Section Ten

No state shall… coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts

The principal author and “Father of the Constitution” James Madison agrees.

Paper money is unjust; to creditors, if a legal tender; to debtors, if not legal tender, by increasing the difficulty of getting specie. It is unconstitutional, for it affects the rights of property as much as taking away equal value in land. It is pernicious, destroying confidence between individuals; discouraging commerce; enriching sharpers; vitiating morals; reversing the end of government; and conspiring with the examples of other states to disgrace republican governments in the eyes of mankind.

George Washington

Paper money has had the effect in your State that it ever will have, to ruin commerce–oppress the honest, and open a door to every species of fraud and injustice.

George Washington letter to Jabez Bowen – 9 January 1787

Thomas Jefferson

Paper is poverty,… it is only the ghost of money, and not money itself.

Thomas Jefferson letter to Colonel Edward Carrington – 27 May 1788

Abraham Lincoln

No duty is more imperative on the government than the duty it owes the people of furnishing them with a sound and uniform currency.

Lincoln during the Log Cabin campaign – 1840

Alexander Hamilton

To emit an unfunded paper as the sign of value ought not to continue a formal part of the constitution, nor ever hereafter to be employed; being, in its nature, pregnant with abuses, and liable to be made the engine of imposition and fraud; holding out temptations equally pernicious to the integrity of government and to the morals of the people.

Alexander Hamilton – Resolutions - June, 1783

Andrew Jackson

In reviewing the conflicts which have taken place between different interests in the United States and the policy pursued since the adop tion of our present form of government, we find nothing that has produced such deep-seated evil as the course of legislation in relation to the currency. The Constitution of the United States unquestionably intended to secure to the people a circulating medium of gold and silver. But the establishment of a national bank by Congress with the privilege of issuing paper money receivable m the payment of the public dues, and the unfortunate course of legislation in the several States upon the same subject, drove from general circulation the con stitutional currency and substituted one of paper in its place.

Andrew Jackson -  Farewell Address – 1837

Thanks to Lawrence Parks and his lecture for the idea.

Such is the case with unemployment. The government had redefined unemployment so much, that the actual number isn’t nearly as informative as it once was. Unemployment should refer to people who seek employment but are unable to find it. It gets a little more complicated when considering people who seek full-time employment, but settle for part-time employment. I suggest accounting for the underemployed with a partial-employment offset. Somebody who would like to work full-time (40 hours), but is only able to find part-time work (10 hours), should be considered 1/4 employed. Somebody working 30 hours a week would be considered 3/4 employed. When estimating unemployment, these two workers should be added together to show one employed worker and one unemployed worker.  By government standards, both employees are considered fully-employed. The Bureau of Labor Statistics’ (BLS) has redefined unemployment to coincide with popular political agenda, so much so that it is no longer useful.

Only through such refinement can today’s increased jobless rate actually be a good thing.

Employers stepped up job creation in April, expanding payrolls by 290,000, the most in four years. The jobless rate rose to 9.9 percent as people streamed back into the market looking for work. AP

The unemployment rate rose .2% from 9.7 percent in March to 9.9 percent in April. This increased unemployment rate was due to the creation of new jobs! Again, an increase in existing jobs, led to an increase in unemployment. The article continues…

The unemployment rate rose… because 805,000 jobseekers — perhaps feeling better about their prospects — resumed their searches for work.

Because there were no jobs available and people stopped looking, they were no longer counted as unemployed. Now that they have hope, they are considered unemployed. That’s illogical to me. I consider somebody who is able, and has the desire to work, unemployed. Not the government.

For once, the government manipulation of the unemployment number makes progress look like failure. Even though there are more jobs available, unemployment is up!

When I want an accurate estimation of unemployment, I look at John Williams’ Shadow Government Statistics.

Alan Blinder then claims that “Ben Bernanke got a lot of things right”. When prompted by Schiff to name one thing that Bernanke got right, Blinder says that he doesn’t have enough time. That’s right, not enough time to name one.

Schiff then rattles off that,

he [Benanke] said that there was no housing bubble, and then that even if we have a decline in the housing market its not going to have a meaningful impact on employment. He said that the subprime mortgage problems were contained, that we didn’t have to worry about it. I can’t think of one thing that he got right. Not only was he wrong, he was as wrong as you can possibly be on a grand scale.

In this short video, Schiff also explains the effect of savings in China on spending in the US, a response to Bernanke’s Global Saving Glut.

To read the whole book… buy it online | read it for free

Our Enemy, The State
by Albert Jay Nock, 1935

If we look beneath the surface of our public affairs, we can discern one fundamental fact, namely: a great redistribution of power between society and the State.

It is unfortunately none too well understood that, just as the State has no money of its own, so it has no power of its own. All the power it has is what society gives it, plus what it confiscates from time to time on one pretext or another; there is no other source from which State power can be drawn. Therefore every assumption of State power, whether by gift or seizure, leaves society with so much less power; there is never, nor can there be, any strengthening of State power without a corresponding and roughly equivalent depletion of social power.

Every positive intervention that the State makes upon industry and commerce has a similar effect. When the State intervenes to fix wages or prices, or to prescribe the conditions of competition, it virtually tells the enterpriser that he is not exercising social power in the right way, and therefore it proposes to confiscate his power and exercise it according to the State’s own judgment of what is best.

The process of converting social power into State power may perhaps be seen at its simplest in cases where the State’s intervention is directly competitive… It is obvious that private forms of these enterprises must tend to dwindle in proportion as the energy of the State’s encroachments on them increases, for the competition of social power with State power is always disadvantaged, since the State can arrange the terms of competition to suit itself, even to the point of outlawing any exercise of social power whatever in the premises; in other words, giving itself a monopoly.

Thus the State “turns every contingency into a resource” for accumulating power in itself, always at the expense of social power; and with this it develops a habit of acquiescence in the people. New generations appear, each temperamentally adjusted–or as I believe our American glossary now has it, “conditioned”–to new increments of State power, and they tend to take the process of continuous accumulation as quite in order. All the State’s institutional voices unite in confirming this tendency; they unite in exhibiting the progressive conversion of social power into State power as something not only quite in order, but even as wholesome and necessary for the public good.

In the last section of the book (page 38), Nock makes one of, what I believe to be, his most simple and insightful statements.

It is a curious anomaly. State power has an unbroken record of inability to do anything efficiently, economically, disinterestedly or honestly; yet when the slightest dissatisfaction arises over any exercise of social power, the aid of the agent least qualified to give aid is immediately called for.

Nock continues, making reference to the banking industry,

Does social power mismanage banking-practice in this-or-that special instance – then let the State, which never has shown itself able to keep its own finances from sinking promptly into the slough of misfeasance, wastefulness and corruption, intervene to “supervise” or “regulate” the whole body of banking-practice, or even take it over entire.

Ms. Pelosi wants to pass new legislature so that everybody can have access to health care. Not just healthcare, but better healthcare. The new health reform will lower costs, increase accessibility and increase performance. This is great. I didn’t realize that all of this can happen with the stroke of a pen. Capitalism and the markets are totally unnecessary… And that’s when it hit me.

If she can just legislate the way to better healthcare, she should start at the heart of the problem. Don’t mandate healthcare for everybody. Mandate away the need for healthcare at all. Mandate an end to cancer. That’s right, make it impossible to get cancer, with the stroke of a pen. Not just cancer, mandate away diabetes and obesity and heart disease and asthma and osteoporosis and depression and AIDS. Once we’re legislated our way out of all of these health problems, we’ll be in great shape. Then we can start getting into the more exciting things. Legislate my ability to fly. Legislate my ability to have mind control. Oh, and legislate the end to war and famine.

Thanks.