A few weeks ago I explained why I’m going to have to spend the next few years as an indentured servant to the feds to pay the taxes and penalty on my 401(k) withdrawal…but if I hadn’t done it when I did, I may never have seen that money again.

The Wall Street Journal reports that 401(k) investors are finding that they can’t get their money.

“When Ed Dursky was laid off from his job at a manufacturing company in March, he couldn’t withdraw $40,000 from his 401(k) retirement account…”

“I hate to be whiny,” said Mr. Dursky, “ but it is my money,”

Turns out that the money you put into the 401(k) can be locked up a lot longer than you’d like. Most plans allow investors to borrow from their own accounts and some even allow outright withdrawal of matched funds—with the requisite 10% penalty and income tax. The only way to get all of it, however, has been to terminate employment…but now even that’s not good enough.

Of course if you’re the kind who pays attention to things like history and human nature, you’d have noticed the funny smell around the defined contribution plan a long time ago. And you would have seen this coming.

Here at Whiskey Bar we never stop casting a suspicious eye at the government and we turn our noses at their offers for help. We regret that this time around the feds aren’t the ones keeping voluntary and involuntary retirees from their cash.

Still, if the entire mess hasn’t filled you with fear and loathing, then I’ll have what you’re having.

General economic collapse means that fund managers are finding it in their best interests to limit reallocation and withdrawal by 401(k) investors. It doesn’t matter if you’re a 69-year-old recent retiree or a laid-off schlimazel who was counting on the money you’d saved to see you through a few months of unemployment.

Folks are starting to catch on to how important it is to own gold. We harp about that every day in these pages. Not a one of you reading this doubts for a moment that the value of little green pieces of paper that so many others take for granted is only good as a politician’s promise.

So what escapes me is why anyone smart enough to save in gold and silver would still tuck money away in a defined benefits plan. The circumstances concerning retrieval have always been extreme. We were assured this was for our own good. After all, this was supposed to be retirement money; the rules had to discourage us from getting at it ahead of time!

But the whole set up smacked of the sort of paternalism that really should have raised our hackles.

And now we discover that fund managers can keep our retirement funds…even after we’ve retired…or been separated from the payroll under less pleasant circumstances. Looks like in some cases, some folks may never see that retirement money. The value of their locked investments may dwindle to nothing or they may die of old age before things are sorted out in the courts.

I remember years ago when I began my working life and didn’t know enough to be wary of the state’s siren songs about financial security. I thought the 401(k) such a wonderful idea. As suspicion toward leviathan grew I still harbored a child’s hope that at least this whole “invest pre-tax and get a company match” thing wasn’t a trap. Of course, turns out it was…

The federal government itself hasn’t yet taken a turn at freezing 401(k) accounts, but this sudden if inevitable betrayal by fund managers should serve as a warning.

Please don’t let this happen to you. No matter how the feds try to lure you with tax-deferrals, no matter how tempting the company match is, don’t fall for it.

Granted, money you deposit anywhere besides your mattress can be nationalized or misappropriated, but putting funds into something like a 401(k) is akin to forcing your head into the mouth of the lion.

So what can you do?

Well, you don’t have to bind your retirement money with government red tape.

Fellow editor Jim Nelson sits just a few feet from the Whiskey Bar and in response to my outraged cussing over this news about 401(k) freezes he’s offered to share his own strategy for building retirement wealth.

And this is money that can’t be penalized by the feds for early withdrawal, or kept from you by callous fund managers…

Be sure to be reading when Jim Nelson stops by tomorrow to tend the bar.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

May 11, 2009

This article was originally featured on Whiskey and Gunpowder

401(k) Investors Can’t Get Money

I should admit up front that I am a doom-and-gloom sort through and through. I’m also a fan of spectacular collapses and disasters with a special place in my heart for zombie fiction.

Zombies, you see, are the pop culture manifestation of our fears of plague, societal collapse, and the extinction of our own species. These are the very topics that have consumed my interest and shaped my worldview. Heck, I’ve even managed to parlay writing about them into my visible means of support.

I don’t, however, cheer on death and disaster; I just recognize how woven into the course of events they are. And in addition to this zombies have a very special place in my heart. In modern American lore they are often the result of a virus—quite literally a walking plague. They devour without actual need of nutrition. Each victim they masticate rises again in a ghastly parody of life to join the indefatigable, shambling army.

There’s something positively reflective about their reproduction and consumption. It’s not just the viral base or their walking corpse shtick that strikes a nerve. Their efficiency at needless, destructive consumption is downright American. We’ve met the enemy…and they look awfully familiar.

Zombies individually really aren’t that scary, however. It’s their amazing efficiency and speed at reproduction combined with the slow but relentless advance of their growing horde. The genre’s power isn’t in the glamour of a single horrible monster; it’s in the horror of the collapse of civilization. Cities fall…life becomes a very uncertain struggle…humanity gives way to much baser behavior. And against it all looms the likelihood of extinction. Good stuff!

Societal order isn’t quite as thick and binding a chain as folks like to believe. Chaos rears its ugliness pretty frequently. The more ordered and complex the system, the more shocking the unwinding when it inevitably occurs. In fact, size and complexity invite monstrous bushwackings by chaos. Chaos is like a Midwest tornado eyeing the Trailer Park of Order. It just can’t stay away.

So we don’t get zombies…this time…and frankly we don’t need them. Fate has always done just fine with the usual four horsemen and can afford to spurn such fiction. I think zombies would be a nice way to spice things up, but I’ll probably have to settle for the run of the mill plague or two. And it will be hard enough to fight my neighbors for food when energy prices squeeze supply lines and drive the price of agricultural inputs through the roof. This could be especially true in urban centers dotted with federal reservations housing wards of the state. Those folks could get especially restive when the going gets rough…and they’d be a lot faster than zombies.

Still, I find it helps to think in terms of a zombie infestation. How would I survive if my post-industrial built environment were to become unserviceable? How would I fare should basics like food and clean water become scarce enough in megalopolis to fight over? Really, how useful would gold be in the thick of collapse?

Well, we make our stand where we can. Most of us won’t be able to secure an escape to a well-prepared countryside retreat. We’ll have to make dothe best we can in our urban or suburban wilds. Some non-perishable food, some soap, toilet paper, water…a little whiskey…some gold if things stay fairly sane, some lead in case they don’t. A bit of philosophy would help, too. As Matt Savinar has written, we should be ready to kiss our asses goodbye.

Times are getting rough and all bets are off. It won’t be zombies, but it’ll be interesting.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

May 4, 2009

This article was originally featured on Whiskey and Gunpowder

Zombie Pandemic Preparation

I’m like a former child star, tidying up the cell he shares with his prison boyfriend and wondering where it all went wrong…

How many of you are wondering on this latest April 15 — as I am — how this present slavery became so thorough?

I just grudgingly did my taxes. Turns out I owe my lecherous Uncle Sammy more money in fees and surprising amounts of progressive taxes than I can truly hope to pay in one natural lifetime. How could this have happened?

It’s a sad and sordid tale of misspent youth, ruinous debt and the women and booze that caused them. You see, I wasn’t always the stalwart Austrian economic schoolboy and ascetic doomsayer you’ve come to know and love. Like my fellow benighted consumer statists, I prayed in the same temple of credit worship and government trust.

I thought Citibank would lovingly provide my electronic toys and shiny vehicles at negligible interest forever and ever. I thought the government was giving me the best of every world with social security and the stock-boosted defined benefit plan.

Live and learn.

The 401(k) is a trap. The banks and the government — as usual — have given the populace enough rope to hang themselves with credit and intimations of retirement security…and the ability to borrow from the retirement accost or even withdraw from it…at very high cost…

Try to take out that money you’ve been saving. I dare ya. See, the deal is that you cannot use it before the age of 59 ½ except under a narrow band of circumstances. If you contract with the devil, don’t be surprised when you wind up in hell.

If you need that money before you’re halfway through your 59th year — say to pay off those enormous debts that the banks were so happy to let you run up — then expect to pay a 10% vig off the top and then have whatever you save count as income on the year. In a progressive tax system, that means you get to watch roughly half of it disappear.

The 401(k) only works under circumstances that don’t exist in the real world. The fiat currency in which you save won’t be worth diddly by the time you are allowed to get it. Try to take it out before that and the government will kill you with fees and progressive tax.

And I certainly hope you don’t still believe the one about growth and interest outpacing inflation.

Looking back, the come-on does bear a strong resemblance to those internet scam letters I get in my inbox. The maliciousness of the scammer and the greed of the victim have to work together closely and well for the crime to take place.

“We’ll let you save pre-tax (taxes we impose in the first place) dollars, and guard your account (forbid you from taking it out without making it extremely costly).”

When I jumped ship from my last job to become your editor, I made the mistake of demanding all the money I’d trusted to Fidelity under the rules of the defined pension plan. I wanted nothing further to do with them or the banks…but they sure don’t make escape easy or cheap.

For the love of God and the sake of liberty, don’t do it. Steer clear of these complications.

Having the government guard your retirement money is more than a little like putting a wolf on watch duty at the door of your hen house.

Much like Morgan Freeman’s character in The Shawshank Redemption told the parole board: I wish I could meet the young man I used to be, talk some sense into him. I’d tell him that the bankers and the government were not his friends, that those mortgages, credit cards and tax-deferred government accounts were not in his best interest.

Alas, it is too late.

I entered into this bondage willingly, but ignorantly. I didn’t have a clue how dangerous bankers and government gangsters were. I accepted the promises of ease and plenty and I’ve been justly rewarded for my gullibility. I suspect I’m not alone.

I don’t believe, however, that most of my fellow slaves have woken up yet. More and more, however, are starting to stir.

Surely millions of them will be sending off a hefty check to their masters even as they stew about how the government is bailing out rich, evil banksters.

As you read this I will indeed be joining a few folks that have some notion that government by its nature uses money that it doesn’t earn. They demand at least a little accountability, a little representation to go with the taxation. Roving Whiskey reporter Samantha Buker and I will be attending the Tax Day Tea Party in both Annapolis and Baltimore. (We’ll let you know how it goes.)

These Tea Parties will be held nationwide today. Folks want to know what the hell is going on with the money continually hijacked from their paychecks. But how many of them wonder at the criminality of the income tax itself, no matter what it goes to support? How many realize that greedy conmen in nice suits are eating out their substance, legally but immorally? Does anyone question the notion that government must be funded?

An income tax and a fiat currency: what a fine pairing. The one is a gun in the face and the other is a shell game. Both break the Eighth Commandment and both will lead to complete ruin.

Far be it from me to incite you Shooters more than I normally do. Whether or not you fund the fraudulent thug that is government is between you, your god and those with the power to investigate and arrest you. This tax day, I just want you to think very carefully about the whole shebang.

At the very least, stay the hell away from any enticements the government may offer. You have to earn an income in their paper and odds are there’s no way to keep them from tracking everything you collect…but instead of a 401k, you may want to look at gold and silver.

For those of you already entangled in the web of the defined benefits plan, tread very carefully. As we say here in the Whiskey Room: sometimes there is no forgiveness, only punishment.

And today your editor accounts for the sins of his youth.

Oh well, Baltimore is a fantastic place to make less money and ride out an economic disaster all while owing obscene amounts of money to the imperial government. The city never really picked itself up from the postwar urban freefall. Won’t be so good in the event of the collapse of industrial society, but if you’re gonna be down and out, this is the place to do it.

Regards,
Gary Gibson

April 15, 2009

This article was originally featured on Whiskey and Gunpowder

A Tax Day Lament and a Warning

Greeting Shooters,

Your submissions are rolling in, but I figured I’d pour the first shot.

Welcome to Morning Whiskey. We’re going to use this little corner of our site to feature your thoughts on the matters dear to all the hearts at this bar.

First up: Muntadhar al-Zeidi has been punished for striking a symbolic blow for liberty; he insulted the head of an invading state and he did so with no regard to personal cost. How utterly American! You’d think that Bush and Co. would be proud.

The law of his land demands at least three years jail time for assaulting a visiting head of state. Ironically, Bush II hadn’t been officially invited that day…just as his forces hadn’t been invited back in the spring of 2003. The man just can’t seem to figure out when he’s not wanted.

My sympathies lie with Mr. Al-Zeidi. That won’t score me any points with the sort of Republicans who often pay lip service to the ideas of republicanism (little “r”) and liberty, but who still love an aggressive king. But there it is.

I have a hard enough time living under the yoke of my own government. I can’t imagine how incensed I would be if another bunch of armed thugs from across the globe swooped in with the usual bushel of state lies and tore my country apart.

And before the “Yes We Can” crowd starts to cheer too loudly at my Republican-bashing, allow me to express my sympathies to Bernie Madoff. Surely the man’s a swindler…and just maybe he deserves to spend the rest of his life in prison…maybe…

But he was just fulfilling a necessary ecological role. In the blow off stage of the era of central banks, easy money and easier credit, someone had to separate a bunch of fools from their money. Amway is allowed to do it with impunity. And the Fed actually encourages this sort of thing by creating the credit and cash that inflates these bubbles in the first place. But Bernie is the one who’s going to the big house.

Says Bernie "When I began the Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme, however, this proved difficult, and ultimately impossible, and as the years went by I realized that my arrest and this day would inevitably come."

How tragic. The poor man probably never really got to enjoy the wealth he amassed. He went to sleep every night with full knowledge that at any time the jig would be up. All the fine food he surely ate must have been like ashes in his mouth…or maybe he did savor every bit of his well-heeled life since he knew it would all vanish one day.

Now in service to his family—who probably were in on the scam—he is making no deals with prosecutors and giving up no names, and plans to live out his remaining years as a guest of the federal government…the same enabler who runs a much bigger Ponzi scheme of fiat money and social security. Bernie must feel a like a low-level drug dealer who just got beat up and jailed by the same crooked cop who was supplying him with dope.

But as mentioned, Bernie belongs in jail. Still, I can’t help but see him as a noble patsy, a martyr for the mob’s expectation of something for nothing. I’m less ambiguous about Muntadhar; I don’t wish Bush II any lasting physical harm, but occasionally the smug bastards who ruin millions of lives need to be embarrassed a little.

I just wish Muntadhar had had a little better aim.

Happy Friday the 13th.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

This article was originally featured on Whiskey and Gunpowder

Al-Zeidi and Madoff: Liberty and Capitalism at Work

During a credit deflation, things get cheaper. Without lines of credit, people can’t bid things up and prices fall to their “cash on hand” level. Given a long enough time, things settle out and prices relative to wages actually become attractive. But it’s a long and bumpy ride from here to there. The trick is to maintain roughly the same level of income as others take wage cuts or lose their jobs entirely. Add this to the general lack of credit and you find that the cost of living drops dramatically. You might have felt poor a couple of years ago when you earned $50,000 per year, but if you can hold onto that income, why, in the next couple of years you could feel positively wealthy!

The holding on part is where it gets a little tricky.

It’s tricky because when credit evaporates, less goods and services can be bought. A lot of jobs providing those goods and services become unnecessary. Layoffs become all the rage. You wind up with a lot of formerly employed people with no jobs and no money and no attractive prospects. Doesn’t seem fair, but that’s what happens when hopes and livelihoods get propped up on the shifting sand of credit expansion.

When credit vanishes, actual cash becomes king. Promises to pay take a back seat to actual ability to pay. Exactly what are we calling “cash”, though? God and the free markets like gold and silver because they’re relatively rare, easily divisible, and it’s very difficult to control their supply, and hence they’re innately honest. Governments prefer colorful bits of paper that they issue precisely because they can print up as many as they need.

While credit isn’t wealth, neither is money. Money is just a commodity we use to represent and exchange wealth. It’s rather vital to have a measuring tool that resists stretching and deformation or else you get into all sorts of trouble. Gold and silver tend to resist stretching; paper money begs for it.

During the last really big credit bust in this country cash was very strictly tied to gold and silver. The exchange rates were fixed; you got one ounce of gold for a twenty-dollar bill (plus 67 pennies). Fifty-four cents got you an ounce of silver. So when the credit bubble popped and prices slumped, they did so in terms of a dollar that was a reliable proxy for gold and silver. How things have changed!

First FDR devalued the dollar and a little later Nixon killed it. The currency we have today is a hoax wrapped in a lie. It isn’t tied to anything. The old dollar was a certificate that could be exchanged for a very specific amount of gold. The one we’ve had since 1971 is a promise from the U.S. government…and little paper promises from governments have a dismal history.

You might have noticed that during our recent gargantuan credit bust people again ran to the dollar. They expressed a very strong preference for greenbacks over…well, just about everything else in the wide world. But running to the dollar for shelter these days is like seeking protection from the man who is shooting at you…or running from the doorway of a burning building to the second floor.

During the last depression, the dollar’s tie to gold limited the ability of our communist dictator to goose the money supply. Roosevelt had to coerce the citizenry to give him their gold under pain of imprisonment so he could allow for some easing of the dollar’s value. This time around, FDR II can just have central banks conjure up as much cash as deemed necessary out of nothingness because the dollar isn’t tied to gold anymore.

Inflation is a slow burn on its default setting, which governments enjoy so much. It’s why they insist on monopolizing currency in the first place. But let inflation go on long enough and the currency becomes worthless. Sometimes events conspire to accelerate the race to worthlessness. Wars, laughably unpayable national debt, financial panics…that sort of thing.

The government would prefer an endless boom, even though such a thing—like individual biological immortality or perpetual motion — just isn’t possible. The central bank gets things started by expanding credit. Good times ensue. Everyone is employed and everyone lives beyond their means and bids up the prices of assets with money they don’t really have. This can’t go on forever (and never does!), but governments hate to see the ravages of the inevitable contraction after their artificially-induced boom. States love for their citizens to be blissfully distracted with fantasy, especially the really unsustainable sort.

So what is a government to do when it wants people to spend and they just refuse? When the rubes refuse to play ball and insist on hanging on to their savings, all you have to do is make saving less attractive than spending. Increase the money supply…make the money people hold less valuable…encourage them to get rid of it. Set the currency ablaze and ferret the consumers out.

Around these parts, we subscribe to the view that savings are essential for capital investment, but politicians side with Keynes on this and believe savings are for suckers; debt is where it’s at. And if private debt has brought the population to its knees, then the obvious answer is a dollop of public debt to kill their currency and finish them off!

It’s not just the amount of dollars that the central bank produces, however; it’s the amount that actually gets circulated and the speed at which it moves through the economy. When the general populace senses that the dollars they’re holding are losing value (because the central bank is accelerating the increase in supply), they try very hard to get rid of them as quickly as possible. They trade them for things that will hold their value.

The real trouble with hyperinflation isn’t that it devalues the currency, however; it’s that it devalues souls. It leads people astray. It removes the moral stops. It changes all sense of proportion. Like a sadistic, juvenile prankster, government spikes the punch with a little quantitative easing and before you know it all bets are off. People drunkenly succumb to the baser instincts they normally keep in check. The thin layer of restraint provided by the neo-cortex is broken and all sorts of reptilian longings are indulged…and consequences be damned.

Trying to invest and plan for the future under a fiat currency regime is like trying to be witty and convincing while drunk. Inevitably the wrong things are said and done because perception and judgment are hopelessly warped.

During a hyperinflation, the majority of the population who counted on the scrip they were forced to deal with and save can only feel angry desperation as all their savings turn to ashes practically overnight. The reward for personal thrift coupled with trust in the largest institution around—the state—is loss and future uncertainty. Under such conditions, societies tend to come apart fairly rapidly. Crime rises as savings and incomes disappear. Ethnic tensions may mount. There is a bull market in internal strife and personal misery.

People generally rather consume than produce or delay gratification. This is why the masses can be lied to with paper. But the universe is a weighing machine, not a voting booth. Wishes don’t trump reality. And disaster must befall those who expect something for nothing. We here in the Whiskey Room like to point the finger at governments, but we also have to acknowledge that thing in human nature that allows governments to exist in the first place and to flourish.

For the past decade in the U.S. easy credit — pretend money — led people to put their houses up as collateral on debts that could only be paid back if real estate prices kept getting propped up by more easy credit. Then they used this debt to finance vacations and trips to big retails chains to buy things that would not be used to produce or store wealth. And this was just an expansion of credit!

When the actual money supply expands in order to ease debt repayments…well, all sorts of screwy things happen. That’s what generally spurs the vulgar expansion of the money supply: the political desire to ease massive debt repayment, both public and private…that and war. When you see a nation living beyond its means, watch out; its currency will be thrown under the bus when the bill comes due.

Destroying the currency, however, means that the debts really weren’t repaid…because they were paid back with dollars that aren’t worth the value of those that were initially borrowed. It’s a big swindle and everyone involved knows it. But it goes on anyway with all the nasty consequences you’d expect from such massive debauchery, delusion and theft.

The list of countries that have suffered the ravages of paper money hyperinflation is pretty darned long…and ironically it starts with the very first country to give paper money a try, long, long ago. China’s Yuan Dynasty’s little experiment with paper money ended badly. In fact, it helped end the Yuan Dynasty.

For the first time in history, currencies everywhere are merely paper…including the world’s reserve currency. The potential…the inevitability…of a worldwide bonfire of these little paper vanities staggers the imagination. The conflagration will be mesmerizing in its size and intensity. You may even find yourself enjoying the view…if you make it a point to be standing far enough away not to be consumed.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

February 17, 2009

This article was originally featured on Whiskey and Gunpowder

The Joys of Hyperinflation

Americans of obvious African descent really got a raw deal. Their ancestors were slaves in Africa and sold to Europeans by their African masters. That’s some introduction to American society…and you never really get over the first impression you make. And then there was the fact that Africans just looked so alien; surely, if you weren’t one of them, it must have been hard to think of them as human in quite the same way; the same genus perhaps, but not the same species. The swarthy Greek and Italian, epicanthic fold-bedecked Pole and Swede and even the unwashed Irish all eventually melded into the existing Anglo-Germanic society of North America…but at least they were honest-to-God white people. And the Asians! As exotic as they must have seemed to a European, they at least weren’t so brown (well, maybe the South Asians were…), nor at all nappy-headed.

It must have been easy for people of pure European stock to view Africans as chattel with only vaguely humanoid shapes: sort of like bipedal goats and cows. That, of course, didn’t stop white slave owners from doing what slave owners have done with their female slaves from time immemorial: add them to the harem. The result: there is hardly a person of African descent in the New World today who doesn’t have anywhere from 10 to 60% European ancestry (the median is about 20%; those with more than 60% or so were able “to pass” and sometimes they integrated into white society). In Latin American countries some of them wouldn’t even have to check “black” on the census box! On the other hand if you’re white in America and your ancestors’ arrival predates one of the waves of European immigration in the 19th and 20th Centuries, then you may be surprised at what’s in your family tree; it’s probably not just “a little bit of Indian.”

There are tons of blacks in North America with no immediate pure white ancestry who nevertheless carry about as much European DNA as someone like Obama whose own father was about as pure black African as one can get. Obama, despite having a white mamma, looks like any random sampling of blacks in the U.S. who on average have almost as much white ancestry, though very rarely as immediate as a full-blooded parent or grandparent. Someone like Obama has geographical/racial genetic markers occurring in clumps as opposed to the more sifted occurrences in the chromosomes born of generations of mixing. Whatever the case, it doesn’t take much African blood to make one black. A drop will do…particularly if the evidence is written on one’s features.

Let’s be frank: a lot of the resentment folks rightfully feel about government handouts and entitlements are focused very squarely on a particular group of recipients: the descendants of the African slaves in the U.S. To the average white taxpayer, they amount to shiftless negroes, crack-dealers and bastard-producing welfare queens…even more simply put: just about every single black person on these shores who isn’t a professional athlete, entertainer, Colin Powell, or Condoleezza Rice.

What does this have to do with the price of tea in China or the price of gold in a Comex squeeze?

I dunno.

I’m just pointing out that there is a very real and seemingly irreconcilable resentment among a small handful of different groups in this country. The two largest players are the American white and black races, but making a growing claim are the Spanish-speaking folk of largely indigenous descent (the majority of those reading this will know them simply as “Mexicans” or “illegals,” whatever their actual nationality). Their arrival to our black/white tussle is like that of fashionably late Kurds to an all-nighter being thrown by the Sunni and Shia.

I can only guess at the role these post-1492 mestizos will play as our nation wends its way toward currency destruction and resource shortages. Maybe a lot of them will just go back home. Maybe the ones who’ve been in the Southwest of this country for generations will conspire with the government of their ancestors and help reconquistar California, Texas, Nevada, New Mexico, and a hearty chunk of Arizona. I do know that just about every one of the hundreds of Mexican or South American immigrants I’ve ever met usually works at least 10 hours per day and is willing to live in a small, neatly kept room for years at a time, often in a houseful of strangers. In other words, like the white immigrants who preceded them, they are willing to risk, sacrifice, and work hard in hopes of a better a future for their descendants. I also know that they feel about as much solidarity with blacks as do the Irish or Italian immigrants who came before.

Though the ethnic, linguistic and cultural differences certainly don’t help the situation, the hatred toward Hispanic immigrants (remember: the ones we see tend not to be primarily of European descent who tend to stay in their home countries…unless a communist dictator kicks them out…) is largely a byproduct of our welfare state. Those of us paying into it can’t help but resent those who benefit from it without paying a dime. Few probably hate the old, the sick or even the illegal immigrant so much as they hate being forced to give strangers money…though giving money to strangers from another tribe is probably more painful. Alas national socialism is a perfectly natural end result of the state…and it tends to breed the longing for genocidal purging.

But as I pointed out a little earlier, at least the Hispanic immigrant will be looking to earn his keep, even if he benefits from the taxes we pay and which he does not…and even if his descendants in this country are tripped up on their way to integration because of multicultural political frippery like bilingual education. On the other hand, black folks in this country have come to rely on politics to address grievances, instead of simply getting to work. Yet they mistrust and hate the state from which they demand resources. The result is an entire race stumbling through life like an indolent teenager who when asked to pitch in falls back on the line, “I never asked to be born.” Fair treatment before the law is about as far as anyone should want to take things. Government subsidy just begs for resentment.

Race is a troublesome and unscientific way to group things, but like Newtonian physics, it’s tremendously useful for where the rubber meets the road. Race is both real and ephemeral, a concrete phantom, a mirage that you can smell and taste just enough to think it has considerable substance. As with the aforementioned Newtonian mechanics, it breaks down when you look really close, but it’s real enough for the gross world in which people must live. Angels and molecular biologists can ignore it; most of us can’t.

The trouble really comes not from folks making personal decisions based on race, but on the state doing so. And here we come to the meat of this argument. The ideal American attitude toward people-who-aren’t-exactly-like-me ought to be “I’ll tolerate you…but don’t expect me to pay for you. I ask that you do the same.” Perhaps it would be so if we hadn’t been accelerating toward outright national socialism for the past hundred years. Socialism, despite its attempts at kindergarten inclusiveness, naturally lends itself to genocide. It’s what happens when you mix the basic human tendency to favor those clearly of one’s own tribe with forced resource-sharing a la the state.

Forced integration is as pernicious as forced segregation. Leave people alone and they’ll sort themselves out. I can’t fault anyone for wanting to live among people who look like they do and speak the same language. But that’s really a matter of property rights and personal freedom. When it becomes a matter the state feels obliged to address, the results are the enhanced division we see manifest in the decay and color-based blight in our cities. It was the state that initially passed laws forbidding people to intermarry and that racially codified who would be property, thus retarding integration of people of obvious African descent into mainstream society. It is the state that now uses money stolen from one set of citizens to pay off and simultaneously cripple another along glaringly racial lines.

It doesn’t matter whose ancestors did what or had what done to them. Things are as they are now, and compounding past errors with the excuse of past grievances is just not a good idea. Of course, the state doesn’t agree with me on this. Hence the past hundred years of forced integration and legislation, whose end result has been to strip one segment of the people of initiative, morals, and hope…and which continues to foster resentment and mutual distrust…and often hatred.

Working whites don’t’ mind the relatively small portion of their own race on the dole so much, but they see the black race as (innately) parasitical and perhaps intellectually challenged. And this goes for those whites who voted along party lines for the black messiah. Whether they think this calls for coddling, deportation or extermination is an individual matter, but the perception is probably fairly uniform. They may view Hispanics the same way to varying degrees, while Hispanics may have similar intimations towards blacks. Whites see non-whites as taking food from their own children’s mouths at the point of the government gun and offering only criminal violence in return. Whatever the accuracy of this perception—and it’s very accurate to quite a few—whites may not stand for it as the going continues to get unbelievably rough for them financially. Meanwhile, the black race seems to be itching for a chance to enact wholesale violence against the white race…and probably won’t be in any better shape materially as scarcity increases.

A black face will be superimposed on the head of the monster from D.C. I suspect that it doesn’t mean a blessed thing in terms of healing the damage done to race relations by state intervention in the first place. And then there’s what we expect will happen to the currency. Hmm…hyperinflation and three large and distinct racial groups who really don’t care for each other? How do you think this is going to turn out? Personally I think no amount of wishful thinking and singing “Kumbaya” together is going to help. When resources get scarce, people tend to eat the horses…and then each other…and they tend to do their killing along ethnic and racial lines.

Regards,
Gary Gibson

January 16, 2009

This article was originally featured on Whiskey and Gunpowder

A Few Nations Under God: Race and National Socialism in America

And what has been the means by which hundreds of millions of people have turned themselves into a race of clowns bound for extinction? Why, faith in the voting booth… Misplaced trust in the state…The usual stuff.

Government is simply the means of compounding mistakes, of bundling them up and paying them forward. Instead of the agility of the market, you get the lead foot and heavy hand of centralized planning. Mistakes that individuals would make and learn from—in the form of individual bankruptcies and failures—are necessary to keep a society on a healthy and sustainable path. That multitude of tiny failures throughout society is a required corrective feedback…but people—given the chance—come by and by to prefer the state’s interference to this natural process of failure and correction. The state impedes processes that are unpleasant in the short term, but healthy and essential for the long term.

Acceleratory hyper-growth is only possible with the streamlined efficiency of the state, but that efficiency and that growth come at the cost of inevitable overshoot. The actual slow and steady growth of a market-driven world is replaced by the state’s breakneck “efficiency,” but the mistakes that characterize the creative destruction of the market don’t magically disappear…they get stored up and unleashed all at once later.

Our tendency toward bad decisions manifests as massive governance itself. Government is simply humanity’s way of ignoring reality’s warnings…at least for a while… People cherish the roads, the trade, the complexity and comfort that come to fill their lives: Highways, globalism, social security, the peace of empire, systems too big and wonderful to go without and too big to fail …until they do.

The mobs always favor lending the state more power and the state is only too happy to keep the goodies coming by the usual scams: currency debasement, easy credit, foreign resource grabs. The market would probably never have brought us many of the supposed “goodies” to which we’ve become so accustomed and certainly not at the scales only possible with larger government. And we most likely would have been better off.

The state is essentially pretence to a wealth that doesn’t really exist. The state’s essence is welfare and warfare. It’s public works, make-work, misappropriation and misallocation.

Want more of something, but can’t afford it? Want roads, highways, more trade, or war when trade doesn’t work to your liking? No problem!

Guaranteed income in old age? Nationalized compulsory education (and indoctrination), nationalized health care, government guarantee against all failure? Just ask.

Why merely allow an economy to grow at that a glacial but natural rate? Just stimulate! Lower interest rates below what the stodgy market would have. When in need, print money and goose the system with pretend wealth.

And if all the above results in an infrastructure and lifestyle that require deals with the devil to prop up…? Well, a state can always resort to war.

Were an individual to commit pre-emptive murder (“my neighbors kept looking at me funny…”), take things that didn’t belong to him or pass bad checks, he’d be locked up before too long. If a smallish group of unelected individuals were to do this, we’d call them gangsters. But grand larceny, gangsterism and mass murder become things to celebrate in the hands of the state. In fact these things are the true raison d’etre of governments. Things that the sane and law-abiding individual would never dream of doing on his own become entirely reasonable when he is in the midst of a mob. That’s the appeal of government. The formation of the state is the manifestation of the uniquely human tendency to overreach. The state is the culmination of the wish to ignore limits: of ecology, of civility and of good sense. It specializes in fostering the unsustainable—spending, habits, infrastructure and population—through activities normally regarded as sin when done by any individual.

Right now the market seems to be telling us one thing, but the feds would like us to believe another. They want us to believe that we can and should keep zooming back and forth over massive distances, getting goods cheaply from around the world, showing up dutifully every day to our cubicles…but according to the market it’s time to reform our ways and redirect our energies…time to create a built environment worth inhabiting and more in line with what will work amid reduced energy availability and to occupy ourselves with things worth doing, like producing the things we need to live closer to where we live.

The market—oft-ignored augur of reality—seems to be telling us to expect to stay closer to home, to start a garden,maybe even to get to work on an actual farm. It’s time to come in from the exurban expanse. It’s time for the auto industry to die—the commercial airlines, too. Heck, if it hadn’t been for the federal government’s vigorous intervention neither of those industries might ever have assumed the size and importance they did in the first place. The market would have gotten in the way of a lot of the things we take for granted today…but then we wouldn’t miss them. Now we get to bawl as our presumed entitlements of conquering distance, of ease and plenty get ripped away from us.

The market is trying its best to start correcting those state-driven errors. Maybe it’s trying to pry coddled unionized workers from the cooling corpse grip of the auto industry so that labor can be (naturally) reallocated to local food production (farms). But the state will fight that by stealing a little bit from everyone in the form of inflation in order to prop up that which should fail. The same goes for every other “bailout.” The market says firmly “Time to stop this…and it was a dumb idea anyway,” but the state will resist…But that’s what states do. They try to defy the market by means of theft and force…and as a result bundle the mistakes and their consequences to be suffered all at once.

Please don’t misunderstand; I’m not calling for any edicts or proposed solutions from the state. That’s rather like asking the arsonist to help put out the fire. I don’t care much if climate change is man-made. I don’t care whether or not you believe Peak Oil is a hoax. I just know that somethin’s gotta’ give. We’ve gotten away with efficiently making collective stupid decisions for a long time. Now it’s time to get what we got coming…good and hard. What I expect to happen is for the mess to sort itself out with all the attendant consequences. Sometimes there’s no easy way out despite the wishing and the begging. Sometimes you can’t avoid the gnashing of teeth and the wailing that goes with it.

Regards and a Happy New Year,
Gary Gibson,
Managing Editor, Whiskey & Gunpowder

January 6, 2009

This article was originally featured on Whiskey and Gunpowder

Compounding Error: Your Tax Dollars At Work

I even did the usual due diligence and wandered around a bit at night to get a truer sense of how safe the neighborhood really was. Thing is, a cursory walk-through cannot substitute for actually living in a place. For example, I’m sure even downtown Baghdad has its moments; you’d have to stick around a bit to see exactly why the property values are so low in places. I’ve since come to know just how unsettling this otherwise lovely neighborhood can be in the dead of night. I’d heard endless stories of how rough Baltimore was (“Haven’t you seen The Wire?”) and I knew it looked bad on paper, but what I’d seen of historic Mount Vernon assuaged any doubts…until I actually moved in…

My last neighborhood in New York was historic as well—in fact, last year it became NYC’s newest designated historic district—but it felt safer by an order of magnitude. I would often venture out to the local 24-hour grocery stores or all-night food carts at 2 or 3 in the morning. There were many other times I couldn’t sleep in the hours past midnight and would walk the ten blocks to the 24-hour gym. I can’t remember once feeling the least bit afraid while doing so. New York has had the distinction of being the safest big city in America for a while, a phenomenon I’ll address in a bit. Baltimore’s not nearly as big…nor nearly as safe.
Ironically Baltimore does resemble the fictional New York in the movie adaptation of the classic Richard Matheson novel I Am Legend. For those of you who didn’t catch that Will Smith vehicle, the plot in the movie is as follows: a treatment that was supposed to cure mankind of an age-old plague becomes a virus that transforms over 99% of humanity into violent, blood-sucking, mindless monsters.

I hope you see where I’m going with this.

Federal Ghetto-ization

Baltimore—like a host of other old central cities in the U.S.—has for the past couple of generations been an ulcerating hole surrounded by affluent towns where the sane people with money would rather live. The ostensible reason is the flight of the pale, pale middle class while those with less access to capital—and who tan easily—remained stuck in the middle. Most folks take the decline of the American city as some sort of mysterious but certain given…like ageing and death…but I still point the finger of blame squarely at government.

Government at all levels—local, state and federal—is directly responsible for hobbling our cities, draining them of their human capital and mentally and economically crippling those that remain. And all the programs to “help” the cities after the initial wounding just wound up making things worse. Government created the problem and all its supposed balms turned out to be poison. Of course, this is government we speak of…so we really shouldn’t be surprised. Friend Jim Kunstler has made the point that the suburbanization of America was the manifestation of the will of the masses to escape the nightmare of the industrialized city…and that’s true…but it was the federal government that greased the wheels on that particular road to hell. They built the highways and subsidized the housing tracts miles from the daily necessities of work and commerce. They knocked down the neighborhoods in the old core cities and replaced them with housing projects where the poor devolved into listless and violent wards of the state.

I suspect that market forces would have worked to keep the cities and suburbs in balance, that they would have fostered the co-existence of multiple modes of transit between them, which in turn would have kept center cities and surrounding towns both distinct and compact, both internally walkable and efficiently linked by road and rail. Instead, the federal government catered to the fantasy that no one should ever have to walk again anywhere. In turn the built environment transformed into a place where no one can ever walk. A byproduct of all this is that the land between distinct urban zones that used to be devoted to local food production (“farms”) has been gleefully paved over to cater to the auto-dependence fetish.

Allow me to anticipate the criticism that I’m just a Luddite and an anachronist in love with some romantic notion of pre-automobile life…and that I’m nurturing an unreasoning but increasingly popular hatred of suburban icky-ness. What I am is a realist. Our living arrangement is an affront to human instinct…and it was never sustainable. We are returning—as things do—to the mean. We are going to be inhabiting our cities in a way more in line with how other humans have throughout history…and in the process we are going to be reversing the federally-funded ghetto-ization that has all but killed our core cities.

The Middle Class Comeback

The neighborhoods of Baltimore clinging to the Inner Harbor are actually quite wonderful…but I defy anyone reading this to venture for a stroll in the other two-thirds of the city. The resettlement of the city by people other than welfare-recipients, hustlers and muggers is well underway in those more pleasing precincts along the water, but the rest of the place remains marginal at best and downright seedy and dangerous at worst. The reason I felt so safe in my New York neighborhood and many others in that vast conurbation (with the notable exception of East New York and a lot of the South Bronx) was that New York has been experiencing massive re-colonization by middle and upper class people for years.

My own neighborhood in Baltimore is a curious case; it’s a nice collection of blocks just atop the so-so downtown and that inner ring around the water. It straddles North Charles Street which bisects the city into east and west; it’s surrounded on three of its sides by a ring o’ ghetto. The more disruptive inhabitants of that ring often wander on through. It’s especially bad after sundown. It’s best not to venture out too late at night, but if you do, travel in a group, stay on the main drag and avoid eye contact. In the movie referenced above the monsters come out in hordes at night and the hero has to board up his home and lie completely still till morning lest they find and devour him. Yet he could move about in the daylight in relative safety while the monsters hid from the sun. I know how he feels.

Reality has begun to trump the vagaries of energy excess, government interference and government misallocation. The middle class is choosing to move back to the cities, not because of D.C. diktat, but because of market forces. The lifestyle the feds sought to encourage with their highways, sins of railroad omission and their vigorous corralling of the poor within city lines…all of that is simply becoming unaffordable and therefore unsustainable. It’s all going away. Our cities will—must—become places where everyone can live again without having to get into a vehicle on a regular basis…or constantly worry about getting assaulted. The presence of honest citizens going about their business and doing honorable and necessary work will make the city streets much safer again. When the purposeful outnumber the idle, the tide will have turned. Lord, haste the day.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

December 05, 2008

This article was originally featured on Whiskey and Gunpowder

Thank the Government for the Ghetto

It’s a story as old as human civilization. The humble village and modest republic eventually grows into a bumbling empire; death and taxes come along for the ride. We believe in the sovereignty of the individual over the state not because of slavish devotion to an ideal, but because it works best. We’re not ones to keep defending ideas that look good on paper, but ignore frivolous things like history, biology and reality.

Our job here is pretty straightforward; knowing that things tend to move away from their sustainable starts, we take stake in the opposite position when we see things heading toward extremes. A slight simplification of history would be to call it a series of stories in which over time otherwise rational individuals become dangerous mobs willing to plunder their neighbors, both foreign and domestic. We fully expect our society to follow suit and degenerate under the influence of growing government, growing debt, unbacked currency, interventionism, redistributive taxation and war. Does any of this sound familiar?

Our currency’s fiat status is old news; it’s been completely unfettered from the discipline of the gold standard for nearly forty years. A gold standard is one of the things that keep governments in check. Without it, governments tend to do really evil and stupid things…like setting up a central bank that creates “money” at will, simultaneously destroying the savings of the citizenry and subsidizing unproductive businesses, practices and people. OK, now this really is starting to sound familiar.

The bad news: Our currency is probably going to collapse completely and we are probably seeing the very first days of a very long, very severe economic depression. These things happen. They happen because people think that there is something magical about voting, that it can repeal the laws of physics and that despite the old adage, one really can get something for nothing. Or at least one can simply vote what’s in a neighbor’s pocket into one’s own. It’s like magic.

Before you know it, every humble republic gives way to a society of freeloaders, nannies, connivers and bums. One set of folks makes lifelong careers out of telling independent adults what to do with the fruits of their labor. And each person in the populace expects to get at least a few things at the expense of some other portion of the populace: Housing, healthcare, food… And they don’t stop at trying to pick each other’s pockets either. At fairly regular intervals a nation will cast a covetous eye abroad at another nation’s bounty.

It’s entirely natural for people to want more than they currently have…but actually believing one can have as much as one wants is a fantasy for children…actually trying to take as much as one wants is the province of criminals. Governments by their nature result from and promote this sort of infantile banditry.

That’s why we love gold so much…and why we hate taxes. Gold enforces a rigorous standard. Gold keeps governments from quietly stealing from individuals through inflation…and what they can’t steal they can’t use to finance invasions and land grabs. And what they don’t tax they can’t idiotically redistribute.

This country’s founders got it as right as any human beings ever could and the Constitution they produced indeed resulted in the most perfect union. We wish that document hadn’t been continually ignored almost immediately thereafter.

Just a few years after the founding of the Republic, the new federal government assumed the states’ debt from the Revolutionary War. Taxes were needed to pay this debt. Alexander Hamilton convinced Congress to approve a tax on whiskey, which had become the de facto currency for western settlers. These settlers were perennially short on cash, but long on grain that was very difficult to get to faraway markets over very poor roads. Fermenting and distilling the excess grain into portable spirits just made sense. These spirits became a medium of exchange along the frontier, in effect commodity money.

The whiskey tax led to protest and revolt. General Washington himself led the federal forces to Pittsburgh to suppress the rebellion. This was the very first time under the new United States Constitution that the federal government used military force to impose its will over U.S. citizens. You can see why we take inspiration from the rebellion’s name.

We’re not really counting on a taxpayer revolt this time around — as nice as that would be — and frankly we don’t expect things to work properly for very long even after they are set right. That’s just how it is. Nothing stays in whack. A nation, like the individual bipedal organisms that comprise it, moves from birth to a peak of vigor to frailty and senescence. Then it dies. Then something else comes along and goes through the steps again.

Just because the world gleefully marches into Hell on a regular basis doesn’t mean one should lose one’s bearings. In fact it’s vital for at least a few of us to be ready to put things back together after the mobs rip everything apart.

Whiskey & Gunpowder will merrily continue to explore the intersection of personal liberty, government, sound currency, commodities and encroaching commodity scarcity.  We hope you continue to join us as we wish for something better but plan for the worst.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder
November 21, 2008

This article was originally featured on Whiskey and Gunpowder

History Rhyming: Gold, Government and Taxes