Wednesday, February 25, 2009

The Evils of Fiat Money II

An anonymous poster made a comment to this post that I'd like to address. My responses are in bold brackets:


You have a way with words that can really get people into what you are saying, [Thank you!] but that [thank] goodness there are not more libertarians out there. Quite frankly, with the amount of stuff you want to privatize, this country would fail fail fail.

[And just what evidence do you have of that? And more importantly, what does it mean for the country to fail? Fail economically? Fail politically as in the government losing its power? Fail security wise, with everyone ending up dead at the hands of terrorists? Just what does it mean for our country to fail?]

I just can't agree with you, cause quite frankly, we don't own ourselves. Never have. Never will. We are debtors. All of us. Debtors.

[Debtors? To who? Those who came before us? I would agree that we owe all that we have to those who took risks in the past, but they're dead and gone and can't be paid. You're welcome to reject your self-ownership but I don't. And to be free means precisely that. We own ourselves and the fruits of our labor.]

Quite frankly, your columns are making me more grateful for the two-party system, and I hate the two-party system.

[Our two-party system is interesting as both sides are generally half-statist, half-libertarian. What I mean is that, generally speaking, Democrats or pro-civil-liberties, but anti-free-market. Republicans, on the other hand, are pro-free-market, but anti-civil-liberties. Of course these are broad generalizations and there's all sorts of mobility around the spectrum from the left to the center, to the right, to the top (libertarianism) to the bottom (statism), but the only logically consistent position when it comes to freedom and liberty is libertarianism. Libertarianism is pro-free-market and pro-civil-liberties. Libertarianism is anti-force, and thus anti-state, in all it's forms. In the words of Ludwig von Mises, government is the negation of liberty. And it is, whether statist or limited, since the whole foundation of the existence of the state is coercive taxation. It can't exist otherwise. It's founded on aggression. And both mainstream parties like government, just different sides of it.]

I would much rather pay taxes so I can drive on the roads and drink my water, rather than, to be honest, pay you to drive on roads and drink my water.

[I would rather you be free to pay for the services you want and not the services you don't. Be it roads, water, computers, or therapeutic massages.]

Capitalism is not all there is my friend. And your view of capitalism would never work.

[My view of capitalism is the reason I enjoy the standard of living I do. Capitalism is the very reason anybody has ever been brought out of poverty and subsistence. This is indisputable.]

Thank goodness so many of the American people are at least willing to throw support behind their leaders, even if they disagree with some of the plans. I heard it put this way, and I like it.

"You may not like the plays your quarterback is running, but you don't turn around and tackle him."

We are all on the same team. Stop tackling the quarterback.

[Your analogy is flawed. It assumes we are living for the country, or the state, and not for ourselves and our families. Players on a team are playing for that team and work to further the goals of that team. As a free individual, I no more live for my country and it's goals than I live for you.]

Your style is not how this country works, and it was NEVER how the Constitution was framed.

[The country was framed by framers who rebelled against their government through the treasonous act of declaring independence. Had they lost their cause, they would have been hung. Libertarianism is the direct result of the classic liberalism that characterized our country's founding fathers. In the words of Thomas Jefferson, dissent is the highest form of patriotism.]

For someone who talks a lot about personal responsibility, you sure like to shovel off the responsibility on others, namely the government.

[And what of my responsibilities have I shoveled off on the government?]

I know you have had an anonymous poster on here before, and quite frankly, I have to agree with that person. I respect your beliefs, but man, thank goodness those are not the foundations of this nation, no matter how rotten the government can be at times.

[I'm sorry you see the founding of our country differently than it actually was. The British government was pretty rotten, so it was rejected by the people and a new one established. And thank goodness for that. Keep the comments comin'!]

The Evils of Fiat Money

Writing for, George F. Smith makes a great case here for natural money. Several of his points against fiat money (via central banks) are here listed. The article is more of a review/summary of the points made by Jörg Guido Hülsmann in his book The Ethics of Money Production. In my opinion, it is very difficult to ignore the evils brought about by fiat money in particular, and inflation in general:
Inflation's standard definition is too narrow to provide an appreciation of the extent of its harm; it is far more than a deterioration of the currency's purchasing power. It's also much more than a "hidden tax." Government's perennial fiat inflation is a subtle WMD. Consider the following:
  1. In funding wars, it allows government to ignore the fiscal resistance of its citizens.
  2. It benefits the central government at the expense of secondary and tertiary governments.
  3. It turns moral hazard and irresponsibility into an institution, and guarantees recurring economic crises.
  4. By making credit cheap, it encourages businesses to finance their ventures through borrowing rather than equity. Because of market competition, few firms can resist the offer of low credit, making them more dependent on banks. As Pius XI noted in 1931, it puts a dictatorship in the hands of lenders who regulate the lifeblood of the entire economic system.
  5. Fiat inflation drives people to invest in capital markets where few will have the expertise, time, and inclination to monitor their investments properly. In former times people could save simply by holding gold and silver coins.
  6. Under a perennially increasing price level, the average citizen finds his best strategy is personal debt, which weakens self-reliance and independence.
  7. Under chronic fiat inflation, people will tend to choose their employment based on monetary returns. Money then becomes the prime or only consideration for personal happiness.
  8. Perennial inflation deteriorates product quality. Industries that cannot compensate for inflation with technological innovation turn to other means, such as producing an inferior product under the same name. Lying, which is bound up with fractional-reserve banking, tends to spread like a cancer over the rest of society.
  9. By fueling the exponential growth of the welfare state, fiat inflation fosters the decline of the family. Families become degraded into "small production units that share utility bills, cars, refrigerators, and especially the tax bill." The welfare state drives the family and private charities out of the "welfare market."
As Hülsmann concludes, "fiat inflation is a juggernaut of social, economic, cultural, and spiritual destruction."

Tuesday, February 24, 2009

Here's Some Pork To Wash Down That Stimulus

So it seems all the talk of scrubbing the "stimulus" package of pork was really just talk. Depending on your definition of "pork", the stimulus package, though it was claimed otherwise, contained plenty of it. To wash it down, meet the $410-billon pork-laden transportation bill:
President Obama on Monday vowed to reel in wasteful Washington spending and blasted deceptive "accounting tricks" used by the Bush administration to fund the Iraq war even as House Democrats released a $410 billion stopgap spending bill studded with thousands of pork-barrel projects. (Washington Times)

Saturday, February 21, 2009

Is Taxation Voluntary?

According to Senator Harry Reid, it is. But he also says that if you don't pay your taxes, there will be penalties imposed on you. But he insists it's voluntary. But it isn't. But it is. See for yourself in this interview with Jan Helfeld via YouTube:

Thursday, February 19, 2009

Understanding the Philosophy of Liberty

I just found (via Facebook) and watched this excellent video on the philosophy of liberty. I here give it my stamp of approval and endorsement. Understanding the basis for liberty, self-ownership, is extremely important. I have embedded it via YouTube below. It is available in several languages and several formats here. If you like it, please forward it along.

Wednesday, February 18, 2009

Get Your Pork-filled Stimulus! IV

Anonymous made a short response to my last post:

I enjoy these exchanges as well. My only problem is, no matter what I or anyone else who disagrees with you says, we are always going to be wrong. I just have this feeling that if the economic stimulus plan was being presented by a conservative (though you will argue that would never happen), you would be praising the plan to high heaven.
You can be rest assurred that your feeling is counterfeit. As a libertarian, (which you may not have read enough of my blog to have picked up) I first and foremost ally myself with liberty. Whether from the left or the right is irrelevant. I am not a liberal (in the modern sense) and I am not a conservative when it comes to public policy. I am a libertarian. I am also a subscriber to the Austrian school of economics. This is my reason for opposing the simulus, as I opposed Bush's stimulus last year (though I wasn't full-time blogging then).

I view the rights to all freedoms, personal, economic, and political as inherent in humanity and extensions of my self-ownership. Generally, the left stand strong for personal freedoms such as doing what you want with your own body, and the right for economic freedoms. This is where the alliance with each side ends. Statism from the left and imperialism from the right are both gross violations of our freedoms. I am against these. For a better idea on what libertarian principles are, browse,,, or

Tuesday, February 17, 2009

Get Your Pork-filled Stimulus! III

I have received a response by Anonymous to my response to his/her comment. I will post it below will my response in bold brackets spliced in:

[I really appreciate you taking the time to post a comment. I enjoy the exchange.]


The fact is that we are now in an economy where credit is frozen, banks refuse to lend money, and there is no incentive for anyone to spend.

[Have you educated yourself on why the economy has gotten to this point? It's very important to understand the cause and effect of it all. The economy is in the mess it is in, not because of greedy capitalists, but because the foundation of our economy is fiat paper money care of our central bank, the Federal Reserve. Our money is not free-market, and our money is not guaranteed. This makes it completely unstable and prone to government manipulation. That is precisely the reason for our bust, and the preceding boom period. The Federal Reserve manipulated interest rates which sent a false signal to producers, thereby encouraging them to begin projects that could not be finished. This theory, the Austrian business cycle theory, accurately explains every single economic boom and bust since the country was founded, including the 1929 crash, the 1970s, the Dot-Com crash, and our current mess. I recommend exploring it further. You can do so through the links
on my post here.]

There have been plenty of opportunity for the economic environment to change, but quite frankly this has not happened. No, the government cannot create wealth. However, it IS the government's responsibility to increase consumer confidence, which in cased you have missed it, is nil.

[And how is consumer/business confidence supposed to be increased when not only the government got us into this mess, it continues to negatively impact the market through takeovers, bail-outs, and pork-barrel stimulus packages? This "regime uncertainty" existed during the Great Depression for the same reasons.]
This fact, coupled with the fact that we are continually discovering that businesses have been grossly mismanaged and irresponsible in regulating themselves, means someone needs to act. The american businessman won't act. Unless they are coerced.

[I'm not sure that giving the keys to a government that has been irresponsible and mismanaged would produce any different results. Again, it goes back to regime uncertainty and moral hazard. The government has interferred with the market every step of the way. Those claiming our current failures are free-market better take another look at the causes of this mess. They are certainly not free-market. The Federal Reserve and our fiat money system are the complete opposite of free-market.]

Look at the Big Three. It was not until they got caught that they decided to restructure their business models. (I look forward to seeing what that brings today). If it was not for the government, the Big Three would have let the american people hang with nothing.

[The Big 3 are in trouble because the Big 3 are uncompetitive, and they have been for years. What's needed is for them to be restructed through the bankruptcy courts and their unused capital released to find better uses.]

In a previous post, you called Obama ignorant. No, this is not the case. President Barack Obama is tired of the status quo. As am I. I am tired of the same old arguments from fiscal conservatives that have produced NO results.

[And what arguments are those? Do you believe we've been living under fiscal conservatism for the last 8 years? Not so.]

Who knows? Maybe the stimulus plan will fall flat on its face.

[You can be confident that it will.]

But I would rather have a president for one term making every attempt to do what is right by the people, than have a president for two terms looking out only for his own agenda and allowing the same ridiculous economic policies to rule.

[And I would rather have a President who not only understands good economic policy, but also the Constitution and the limits it is
supposed to set on the executive.] 

Quite frankly, it is pathetic that it seems we in this country have learned nothing from our history, and that we are even in this situation in the first place.

[I agree. It's pathtic that we have't learned how damaging government interference in the market is. You'd think with the defeat of Socialist Russia we'd learn something about unintended consequences.]

At the very least, I am glad I can wake up every morning, closed storefronts and all, knowing the President is doing SOMETHING.

[Even Bush did something. Look where it got us. And Hoover/Roosevelt. Ten years of economic depression. Unfortunately, Obama hasn't learned the right lessons from that era.]

If it is really true that the window glazier would just go buy a new suit, then he must be waiting for an executive special ordered suit, or for prices to drop so low he can trade buffalo chips to get it. Cause he's not buying the suit now, and if the american people don't grow up so the government CAN get out of the mix, he won't buy it at all.

[He doesn't need to buy it. Saving it would just as much good to the economy. The problem isn't whether or not people are spending. Spending is what helped get us into this mess. The problem is that we've been living in economic fantasy. Obama's moves are only going to delay the much needed return to economic reality. And when that time comes, it will be all the more painful, so long as the government continues to try to prop-up businesses that need to fail by printing more and more paper money. The problem is the Federal Reserve and the un-regulated (by the market) policies it has enacted.]

Don't Bail Out the Big Three II

Here's a great video by on the continuing auto industry bail-out:

Monday, February 16, 2009

Get You Pork-filled Stimulus! II

This post has a received a comment by an Anonymous poster and I want to it address here. The comment:
Skyler my friend, you obviously have no concept of the purpose of the bill. EVERY SINGLE one of these so-called "pork spending programs" will create jobs jobs jobs and improve infrastructure. Yes, in a way it is sad our country has come to this. But, apparently there are people in the country who believe capitalism is only for the big-shots. The american people are not allowed to use their imaginations anymore because a select few have monopolized the entire economic structure of or country in the name of "capitalism." Come on. You're better than that.
First and foremost, the poster has subscribed to an economic fallacy called the Broken-window-fallacy. That fallacy demonstrates the essence of looking only at what is seen and ignoring what is not seen. For example, as per the broken window example, when a barber's window is broken by a young hooligan's rock-throwing, the town gathers and soon it is proposed that the window being broken is a good thing as it will create business for the window-glazier. As the window-glazier profits, he will buy a new suit, thus creating business for the tailor. An on and on the economy is thus stimulated. That is the seen. The unseen is what the barber would have done with the money had he not had to spend it on a new window. He could have bought a new suit, for example, and on and on, thus stimulating the economy.

The poster above says that the government will be creating jobs, jobs, and more jobs. What he ignores is first where the government gets it's resources (by pulling them from the market) and second what jobs those resources would have created had they been left in the market. Another fallacy thus committed by this poster is one that holds that the government knows how to spend taxpayer money better and more efficiently than the taxpayers themselves. This is absurd, as anyone can tell by considering the money in their own wallets, and who knows better how to spend it then either themselves or someone else. The government can't create wealth. It can merely shift it around, and destroy some of it in the process, thereby making society worse off than before.

What the government needs to do to really stimulate the economy is reduce the size and scope of itself. Let people and businesses keep more of their earnings, thereby creating the incentive to produce. What the anonymous poster says about people not being able to use their imaginations because a select few have monopolized our economic structure, is not something I'm able to respond to because I'm not sure what he/she means.

Friday, February 13, 2009

Get Your Pork-Filled Stimulus!

During his first press conference, President Obama told reports that the stimulus bill had been completely scrubbed of all pork and special interest spending. My only question then, is what do you call this stuff, other then non-stimulative pork?
  • $24 million for United States Department of Agriculture buildings and rent
  • $176 million for renovating Agricultural Research Service buildings
  • $290 million for flood prevention
  • $50 million for watershed rehabilitation
  • $1.4 billion for wastewater disposal programs
  • $295 million for administrative expenses associated with food stamp programs
  • $1 billion for the 2010 Census
  • $200 million for public computer centers at community colleges and libraries
  • $650 million for the digital TV converter box coupon program
  • $2 billion for Byrne Justice Assistance Grant program
  • $10 million to combat Mexican gunrunners
  • $125 million for rural communities to combat drug crimes
  • $1 billion for the Community Oriented Policing Services program
  • $1 billion for NASA
  • $300 million to purchase scientific instruments for colleges and museums
  • $400 million for equipment and facilities at the National Science Foundation
  • $3.7 billion to conduct "green" renovations on military bases
  • $375 million for Mississippi River projects
  • $10 million for urban canals
  • $5 billion for weatherizing buildings
  • $2 billion to develop advanced batteries for hybrid cars
  • $3.4 billion for fossil energy research
  • $5.1 billion for environmental cleanup around military bases
  • $5.5 billion for "green" federal buildings
  • $300 million for "green" cars for federal employees
  • $20 million for IT upgrades at the Small Business Administration
  • $200 million to design and furnish Department of Homeland Security headquarters
  • $98 million earmarked for a polar icebreaker
  • $210 million for State and local fire stations
  • $125 million to restore trails and abandoned mines
  • $146 million for trail maintenance at National Park Service sites
  • $140 million for volcano monitoring systems
  • $600 million for the Environmental Protection Agency Superfund environmental cleanup program
  • $200 million to clean up leaking underground storage tanks
  • $500 million for forest health and wildfire prevention
  • $25 million for the Smithsonian Institution
  • $50 million for the National Endowment for the Arts
  • $1.2 billion for "youth activities" (for "youth" up to 24 years old)
  • $500 million earmarked for National Institute of Health facilities
  • $1 billion for Head Start Program
  • $32 million for home-delivered nutrition services
  • $160 million for volunteer programs at the Corporation for National and Community Service
  • $500 million earmarked for the SSA National Computer Center in Maryland
  • $220 million for the International Boundary and Water Commission, U.S. and Mexico
  • $8 billion for high-speed railways (This amount is 4 times higher than the one voted on Tuesday in the Senate bill)
  • $1.3 billion for Amtrak
Veronique de Rugy of provides some more insight into the bill here and concludes:
It's a terrible bill, in other words, both on its face and in the details. For the reasons I detailed here, it won't stimulate the economy. It violates many of President Obama's promises. Most of the deals that created it were made behind closed doors, meaning that there is virtually zero transparency and no real way to track where, how, or why money is being spent. On top of that, the bill is still packed with items that any vaguely impartial observer would call pork.

Understanding Booms & Busts

"The Austrian approach to understanding what has happened to the economy holds far greater explanatory power than does any competing school of thought." So says Thomas Woods in his latest book, Meltdown. I received my copy two days ago and just completed it. In my opinion, everyone needs to read this book, and more importantly, understand Austrian business cycle theory. It's not difficult to understand and it explains exactly the reason why the economy has boom periods, followed by a bust period. Contrary to popular opinion, these periods are not inherent in a free-market economy. They are the direct result of intervention into the economy by the government, specifically a country's central bank. The Federal Reserve is the central bank of the United States.

Numerous articles on Austrian business cycle theory can be found here and here on the Ludwig von Mises Institute website. For an introduction to the Austrian school of economics, and why it matters, read this essay written by Mises Institute founder Llewellyn Rockwell.

Here are a few links to reviews of Thomas Woods' book:

Why the Downturn? - Introduction to his book by Thomas Woods
Tom Wood's Meltdown - Chris Byrnes via
Meltdown: New Book by Thomas Woods -
Meltdown by Thomas Woods - Customer Reviews

Wednesday, February 11, 2009

Obama's First Press Conference III

A friend of mine has made a lengthy response to my Obama press conference post that I'd like to address here. My responses will be in bold brackets:

I can tell that there are going to be times where we are in agreement. There are also going to be times were we are not going to be in agreement. I think that on this issue, you and I are going to vehemently, but respectfully disagree. I'll layout my observations my responding to yours.

[Thank you for writing this lengthy response. This is the type of thing I hope my blog accomplishes, real dialogue on important issues. Everyone grows that way. I understand you're on the liberal left of the political spectrum. As a libertarian, there are many issues that we can agree one, especially when it comes to personal freedoms. Those that we disagree on, most likely on certain principles of economic freedoms, libertarians find themselves allied with the conservative right. Libertarianism, I believe is the only logically consistent position when it comes to liberty and freedom. I really appreciate your thoughts below. Now to address them.]

1. Didn't Bush do the same thing with that lovely piece of legislation, the Patriot Act

I don't think that we disagree on the premise that in times of political and civil tumult, there is a tendency on the part of government to act hastily. There have been many times when the citizenry have not been well-served by the legislation that comes from a legislative knee-jerk reaction. On the other hand, there are times when potentially good ideas suffer "paralysis by analysis." Consequently, we lose out when goverment fails to act in a timely manner. Ultimately, the moderating force between these two extremes is an involved citizenry. Unfortunately, in the best of times, most people care enough to get involved. Burke stated that the people have the government they deserve. The unfortunate truth is that our government sucks because the people suck. It's one thing to pass legislation. It's another thing entirely when citizens know that it's a bad law and yet they do nothing to stop it. For those people who are unhappy about the current stimulus package, I say that they need to hound their representatives. They need to get involved with grassroots efforts. I think that these posts of yours are great in that they get people thinking about the issues. My hope is that their thoughts will spur them to action.

[I agree that we have the government we've asked for. Unfortunately, I also view a pure democracy as tyranny by the majority. I'm sure you'd agree. Of all the flaws our current system has, it's easy to say it's the best on Earth. Currently, I'd agree with that, but historically that hasn't been the case. Ireland had a libertarian-based society for a thousand years that served them well. Even on matters of security, the factional nature of their society made it very difficult for invaders to conquer them. When it comes to our government, I believe it is no longer based on constitutional rule of law. There is good evidence to support this view. When this type of thing happens, government grows as liberty yields. My foremost concern and fight is for liberty. Anything that diminishes that for anyone, accomplished by the threat of aggression, is illegitimate and unjust. I believe the foundational basis for any type of government is aggression. It must be for government to exist. For that, I don't believe that government is ever the answer to life's problems, and I won't give up my liberty for any degree of security.]

2. What a great way to start, appeal to emotion, that'll really get the tears flowing for him.

Empathy is never bad thing. Today, I have a job that I love and leaves me very fiscally comfortable. However, I grew up very poor. My mother, who was working as a school teacher, had to work two other jobs in order to keep food in my mouth and a roof over my head. Those years were lean. I will be eternally grateful to those people who showed us a monicum of kindness during those years, for they were few and far inbetween.

[Empathy is a bad thing when it's designed to distract. If his stimulus package had true empirical merit, he wouldn't need to appeal to our emotions, first. Politicians are experts at saying things and using words which at first hearing sound good, but under closer scrutiny, are found to be pretty baseless. I'll be happy to dig up several examples of this if you'd like.]

3. I agree this is a full blown crises, but is Obama going to concede that the very government he now presides over is responsible for creating it? Unlikely.

In what sense? With the exception of Freddie and Fannie, I see a bunch of private business who failed because they were over-leveraged. What responsible bank would give you a mortgage of a property that was THIRTY times your salary? I believe that the root of this crisis is unadulterated greed.

[You are right, not only Fannie and Freddie. For starters, the Federal Reserve is also a major player an monetary and economic instability. A complete analysis of this can be found on Thomas Wood's new book, Meltdown (of which I've only read reviews, my copy is in the mail). For a quicker introduction, I suggest browsing through the articles found here at]

4. I'm not sure that it will save or create 4 million jobs. How can he know that? How can he possibly predict that? The truth is he can't. He has no idea how the market will react. It's only a guess. And if/when 4 million jobs are not created, wait for the reason to be explained as they didn't spend enough.

It sounds like you think he pulled the number 4,000,000 out of his butt. I've worked in the sciences. I am an engineer. I'm telling you that we make accurate predictions based on math model all of the time. Now, I will concede that some models and approaches have a higher confidence interval than others and I will concede that at the end of all things, the result from these methods is a guess. However, it's not a blind guess. It's a guess based on the availible data. Economists do the same thing all of the time. One of the ways in which we perfect these methods is to make a prediction based upon them and then to do a post-mortem on what worked, what didn't work and why didn;t it work. You've posted articles from people who are sure that this stimulus package won't work. I could say that they don't know and it's only a guess. However, they believe that they have very sound reasons for their position.

[They believe they have very sound reasons because those reasons are based on empirical evidence. See the link above.]

5. He is correct here, only the private sector can create true wealth. Government only spreads existing wealth around.

I can't really address this point because I don't know what you mean by "true wealth"

[What I mean by true wealth is that which is created. As can be easily observed, the amount of wealth Americans enjoy has grown substantially over the last century. This can be measured in two ways. One is the standard of living that we enjoy, from the poorest Americans to the wealthiest. The other by how much of our labor is required to obtain that standard of living. When the government takes resources out of the market and spends them less efficiently then the market would, what would be true wealth creation is hindered or even destroyed. Of all invention and innovation and economic progress, where has government contributed? In my view, it's in spite of the government that we've managed climb to level of economic progress we have today.]

6. He seems to believe here that the government has resources of it's own. He's incorrect. The only resources the government has are those it firsts extracts (by force) from the private sector.

Can you give me an example of what you mean? The Constitution gives Congress the right to levy taxes for all of those things that we expect it to do like build roads or have an army. Every state government agrees to these terms. While I would enjoy not being taxed so much, I don't mind paying my taxes.

[Wether or not the government has been given permission to collect taxes or not is irrelevant. The only way the government can spend a dollar is by first collecting that dollar. This can be accomplished through direct or indirect taxation (indirect meaning borrowing and inflating). When politicians talk about having resources or making investments, it's important to remember that those resources and investments are backed by the money first pulled out of the market. Everyone, including businesses, will spend their money more carefully than politicians will. Isn't it peculiar that when a private business struggles, it fails and goes away. It's resources are released to find more efficient uses. When a government bureau struggles, it's usually justification to receive more money. Public education is a case in point. I don't believe that throwing even a million dollars per child into public education is going to improve it. Only competition will.]

7. This was the thinking pioneered by Hoover and Roosevelt. The thinking that lead to massive government spending and interference in the market. The thinking that led to the Great Depression of the 1930s, and Japan's depression of the 1990s. Wait for the part where he admits he believed Roosevelt's actions were beneficial.

There are several points I dispute based on fact. Firstly, the idea that goverment should have a role in market regulation came with Roosevelt. This came as a result of the Great Depression, which in turn, was caused the absence of regulation of any kind on the markets. Once again, people are greedy. While I think WWII is what pulled us out of the Depression, more than Roosevelt's programs, I think that his programs, in the short-term, helped hungry people to eat. I don't think that many of his programs should have been continued to present-day. It's unfortunate that they have.

[Each point that you have made above is false and has been thoroughly refutted. For a compact introduction to the real reasons for the crash of 1929 and prolonging of the depression of the 1930s, read the article I introduce and link to here:]

The running thread that I see through out your commentary is the idea that the market is large, powerful and if left alone, will be self-correcting. I feel that in many instances this true. However, my running counter-thread is been the idea that people are inherently greedy. The market is nothing more than a bunch of people who swap goods and services and capitol. The idea that the market is self-correcting only holds in you believe the idea the a person will act in his own best interests. Since this is not the case, I don't believe that the market can always be self-correcting. However, I definitely don't support the other extreme of having the government do it all.

[I'm glad to hear that you don't believe the government should do it all. But I'm sad to hear that you don't believe the market is self-correcting. I believe it is because a truly free market is self-disciplining. Businesses (those in a truly free-market are not politically connected) live and die at the whim of their consumers. Demand for their products allows them to make profits, but competition by other firms keeps them honest and innovative. Can a new business be started, the only one in it's industry, and misbehave? Of course, but not for long, so long as other businesses are not hampered by public policy to start up and replace or compete with the misbehaving business. What is often seen as the market being unfair is usually the players in the market acting in kahootz with the government to distort the market. Saying the market is powerful is somewhat misleading. A free market only exists by the voluntary actions of it's members. It is government, that has the monopoly on the use of force, that is truly powerful. And what is greed? I agree that greed effects everyone. An interesting but short analysis on this by Milton Friedman can be seen here: As for self-interest, I know that self-interest is the basis for anything anyone ever does, including having faith in God. To make my point in regards to the market, I give you Adam Smith, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."]

Tuesday, February 10, 2009

Obama's First Press Conference II

I've received a comment made on the first post about Obama's press conference. It was made by Anonymous and reads:
Skyler, wow my friend, wow. That's all I have to say. A desire to see him fail. Just what we need from the citizens of our great nation. A desire to see the leader of the free world fail.
I'm not sure who left it but it doesn't matter, I'm happy to respond. What the person did was either misread or miscontrued what I said here:
But truly, although his plan is fundamentally flawed and won't work, I'll be happy to see it fail so that the world will see once again how futile socialistic attempts such as these really are, and we can return to creating real wealth via the free market.
Obviously, nowhere did I say that I wanted Obama to fail. What I said, as you can see, is that "I'll be happy to see it (refering to the plan) fail..." Clearly, what I meant is what I wrote, that I'll be happy to see Obama's stimulus package fail. And I will be. There's no question in my mind that it will. I believe it will and I believe it must. What I want is for Obama to succeed. But what Obama wants and what I want are obviously two different things. I would like Obama to abandon his stimulus package, cut taxes and spending substantially, and allow the market to adjust and resume. This stimulus package won't accomplish that.

What I hope it will accomplish, when it fails, is to serve as a lesson to those who believe the government can actually do anything (other than staying out of the way) to "jolt" the economy, as if it were a car battery, through printing money and deficit spending. It can't. The sooner we can correct our thinking, by learning and understanding the principles behind the reasons it will fail, the sooner we can all move forward, creating true wealth and progress.

Obama's First Press Conference

Since I caught most of his opening remarks to his first press conference while driving around town last night, I thought I would post it here and splice in my reaction to what he said (in bold brackets):

First Presidential Press Conference
East Room, The White House
Monday, February 9th, 2009

Good evening. Before I take your questions tonight, I’d like to speak briefly about the state of our economy and why I believe we need to put this recovery plan in motion as soon as possible. [Didn't Bush do the same thing with that lovely piece of legistlation, the Patriot Act?]

I took a trip to Elkhart, Indiana today. Elkhart is a place that has lost jobs faster than anywhere else in America. In one year, the unemployment rate went from 4.7% to 15.3%. Companies that have sustained this community for years are shedding jobs at an alarming speed, and the people who’ve lost them have no idea what to do or who to turn to. They can’t pay their bills and they’ve stopped spending money. And because they’ve stopped spending money, more businesses have been forced to lay off more workers. Local TV stations have started running public service announcements that tell people where to find food banks, even as the food banks don’t have enough to meet the demand. [What a great way to start, appeal to emotion, that'll really get the tears flowing for him.]

As we speak, similar scenes are playing out in cities and towns across the country. Last Monday, more than 1,000 men and women stood in line for 35 firefighter jobs in Miami. Last month, our economy lost 598,000 jobs, which is nearly the equivalent of losing every single job in the state of Maine. And if there’s anyone out there who still doesn’t believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside down because they don’t know where their next paycheck is coming from. [I agree this is a full blown crises, but is Obama going to concede that the very government he now presides over is responsible for creating it? Unlikely.]

That is why the single most important part of this Economic Recovery and Reinvestment Plan is the fact that it will save or create up to 4 million jobs. Because that is what America needs most right now. [I'm not sure that it will save or create 4 million jobs. How can he know that? How can he possibly predict that? The truth is he can't. He has no idea how the market will react. It's only a guess. And if/when 4 million jobs are not created, wait for the reason to be explained as they didn't spend enough.]

It is absolutely true that we cannot depend on government alone to create jobs or economic growth. That is and must be the role of the private sector. [He is correct here, only the private sector can create true wealth. Government only spreads existing wealth around.] But at this particular moment, with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life. [He seems to believe here that the government has resources of it's own. He's incorrect. The only resources the government has are those it firsts extracts (by force) from the private sector.] It is only government that can break the vicious cycle where lost jobs lead to people spending less money which leads to even more layoffs. And breaking that cycle is exactly what the plan that’s moving through Congress is designed to do. [This was the thinking pioneered by Hoover and Roosevelt. The thinking that lead to massive government spending and interference in the market. The thinking that led to the Great Depression of the 1930s, and Japan's depression of the 1990s. Wait for the part where he admits he believed Roosevelt's actions were beneficial.]

When passed, this plan will ensure that Americans who have lost their jobs through no fault of their own can receive greater unemployment benefits [read, government dole] and continue their health care coverage. We will also provide a $2,500 tax credit to folks who are struggling to pay the cost of their college tuition, and $1000 worth of badly-needed tax relief to working and middle-class families. [Yea, $1000, that's really going to help.] These steps will put more money in the pockets of those Americans who are most likely to spend it, and that will help break the cycle and get our economy moving. [Where's the part about putting more money back into business? Business is what creates jobs, after all, not the government.]

But as we learned very clearly and conclusively over the last eight years, tax cuts alone cannot solve all our economic problems – especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it has only helped lead us to the crisis we face right now. [Is that the only thing we learned over the last eight years? I thought we learned about how government intervention into the market is a doomed endeavor. At least, that's what I learned.]

That is why we have come together around a plan that combines hundreds of billions in tax cuts for the middle-class with direct investments in areas like health care, energy, education, and infrastructure – investments that will save jobs, create new jobs and new businesses, and help our economy grow again – now and in the future.

More than 90% of the jobs created by this plan will be in the private sector. These will not be make-work jobs, but jobs doing the work that America desperately needs done. Jobs rebuilding our crumbling roads and bridges, and repairing our dangerously deficient dams and levees so that we don’t face another Katrina. They will be jobs building the wind turbines and solar panels and fuel-efficient cars that will lower our dependence on foreign oil, and modernizing a costly health care system that will save us billions of dollars and countless lives. [Has he considered whether or not this is an efficient way to spend our money? If it is, then the free-market will find a way to provide investment in these areas.] They’ll be jobs creating 21st century classrooms, libraries, and labs for millions of children across America. [Throwing more money at our education problems is certain to fix them. Right.] And they’ll be the jobs of firefighters, teachers, and police officers that would otherwise be eliminated if we do not provide states with some relief. [More ignoring the unseen uses of the money being taxes from the private sector.]

After many weeks of debate and discussion, the plan that ultimately emerges from Congress must be big enough and bold enough to meet the size of the economic challenge we face right now. It is a plan that is already supported by businesses representing almost every industry in America; by both the Chamber of Commerce and the AFL-CIO. [Big Labor loves Big Government, this is no surprise.] It contains input, ideas, and compromises from both Democrats and Republicans. It also contains an unprecedented level of transparency and accountability, so that every American will be able to go online and see where and how we’re spending every dime. What it does not contain, however, is a single pet project, and it has been stripped of the projects members of both parties found most objectionable. [Of course if you consider what the Constitution allows the federal government to spend money on, most of the stimulus bill is pet projects and special interest spending.]

Despite all of this, the plan is not perfect. No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans. [Probably the best way to insure the plan, in case it doesn't work.] My administration inherited a deficit of over $1 trillion, but because we also inherited the most profound economic emergency since the Great Depression, doing too little or nothing at all will result in an even greater deficit of jobs, incomes; and confidence. That is a deficit that could turn a crisis into a catastrophe. And I refuse to let that happen. As long as I hold this office, I will do whatever it takes to put this country back to work. [This is exactly the fallacious thinking of every president that has interefered in the market, an failed.]

I want to thank the members of Congress who’ve worked so hard to move this plan forward, but I also want to urge all members of Congress to act without delay in the coming week to resolve their differences and pass this plan. [And ignore the hundreds of economists from all parts of the country, including Nobel laureates, that believe the government should do more to get out of the way to solve this crises.]

We find ourselves in a rare moment where the citizens of our country and all countries are watching and waiting for us to lead. It is a responsibility that this generation did not ask for, but one that we must accept for the sake of our future and our children’s. [Something tells me that creating bigger deficits and inflating or fiat money supply is not really thinking about the future or our children.] The strongest democracies flourish from frequent and lively debate, but they endure when people of every background and belief find a way to set aside smaller differences in service of a greater purpose. That is the test facing the United States of America in this winter of our hardship, and it is our duty as leaders and citizens to stay true to that purpose in the weeks and months ahead. After a day of speaking with and listening to the fundamentally decent men and women who call this nation home, I have full faith and confidence that we can. And with that, I’ll take your questions. [End]

One part I heard he commented that he was under the impression that what Roosevelt did was beneficial and couldn't believe there are actually people who think other wise. Talk about ignorant. Also, that those who believe the government should do nothing are (paraphrased) small in number and unimportant. As I listened to him speak, I actually began to understand what this writer is saying in response to the question "What does it feel like to be a libertarian?" But truly, although his plan is fundamentally flawed and won't work, I'll be happy to see it fail so that the world will see once again how futile socialistic attempts such as these really are, and we can return to creating real wealth via the free market.

The President vs. Economists II

At the end of January, I linked to the then released full-page ad by the Cato Institute denouncing Obama's stimulus plan as something that would help the economy. Here is a video highlighting the coverage that it received. It is worth the watch:

Opposing "Stimulus" - Hundreds of Economists Sign on to Cato's Ad

Monday, February 9, 2009

An Interview with John Stossel

John Stossel, co-host of ABC's 20/20, usually finds himself as the interviewer. In this case, he's the interviewee. Ted Balaker interviews Stossel for They talk about such topics as bail-outs, Obama, and Stossel's journey to libertarianism:

John Stossel: The Interview

Friday, February 6, 2009

Obama's Stimulus Plan Here

The embedded widget below will show you everything in Obama's "stimulus" plan. In reality, only about $71 billion is for any type of job creation. The rest is good 'ole fashion pork.

Click here to go to the original page.