The Young Austro-Libertarian

Idiots Screaming at Idiots

2010-02-25T18:24:00.000-08:00

"I confess, for my part, that it greatly delights me. I enjoy democracy immensely. It is incomparably idiotic, and hence incomparably amusing. Does it exalt dunderheads, cowards, trimmers, frauds, cads? Then the pain of seeing them go up is balanced and obliterated by the joy of seeing them come down."
-H.L. Mencken

Since nothing even remotely interesting or controversial came out of the "Healthcare Summit" this week, I had to look back a few days for some comedy from the House Floor. Representative Anthony Weiner is seen here furiously screaming at republicans who he claims are "wholly-owned subsidiaries of the insurance industry". There are some long silences in the clip (whoever edited the footage did a terrible job), but the parts where Rep. Weiner is screaming are priceless:

News Flash, Anthony:

You are all wholly owned subsidiaries of the insurance industry, and the most enertaining part of all this is that you don't even seem to know it. Sure the insurance companies are going to take some severe penalties from this new legislation, and sure, some of them may be forced out of the market by the government "competing" public option, but the truth of the matter is that the insurance giants will gain one massive benefit from all of this: They get upwards of thirty million new customers without having to spend a dime to entice them with advertising, or by offering a legitimately good medical plan. They get thirty million American's who will now be required by law to buy health insurance.

Anyone who believes that this 2400 page bill was written, let alone read, by anyone in congress, is living in a childish fantasy world. All this is, is corporatism. It is more of the same, and it is the problem. With every subsequent government intervention into the medical care industry, with every law passed that was supposed to bring prices down, healthcare has only become more and more expensive. The solution to this entirely government created problem does not lie in further government intervention, it lies in the complete opposite direction.

I am going to give this to you straight: The only way that the current corporatist nightmare can end is through the repeal of all healthcare related legislation that does not have to do with prosecuting fraud. Eliminate all healthcare and social insurance legislation and the healthcare crisis will have vanished in no time.

I am going to write a series of articles in the coming weeks dissecting the issue of healthcare reform, and demonstrate why only the repeal of existing laws can help the situation. I will also demonstrate that any additional laws that restrict the freedom of individuals in their healthcare choices will be detrimental to the prosperity of the American people.

It is because of people like Rep. Anthony Weiner that we are in this mess in the first place, and why we are even less likely to get out of it. We can however take some small consolation in the fact that things are getting very tense in congress. Although I am disgusted by the fact that these men and women are sabotaging the prosperity of the American people, it brings me a great deal of pleasure to see them screaming at each other. There really is nothing more entertaining than a shouting match between morons.

Hooray for intellectual property protectionism!

2010-01-15T01:51:00.000-08:00

I read. A lot.

Most of the content that I read is acquired digitally, and read on a computer screen. Anyone who stares at a back-lit computer screen long enough can attest to the fact that it can give you severe eye-strain, a problem that is being addressed with some interesting new technologies. The most obvious of these new innovations has been the invention of the e-reader.

E-readers are electronic book reading devices that allow people to read digital content without eyestrain. They accomplish this task through the use of non- back lit screens made with "e-ink" that mimics the look of actual paper. A good e-reader is essentially the Holy Grail to someone like me, but I have yet to find one to my liking.

The most popular and well known device of this kind is the Amazon Kindle. Last year, Amazon released a larger version of the Kindle, known as the Kindle DX (or deluxe), that can read full size pdf files, and was marketed as a device for university students who didn't want to carry around text books every where they went, or who wanted to be more environmentally conscious. Some universities jumped all over the new tech and started to promote them to their students. Now I have issues with government institutions promoting any technology over another, as I believe it is just another way in which the state interferes with the economy, but luckily, the market has spoken, and students have summarily rejected these state sponsored add campaigns for a number of reasons. The e-reader as text book replacement sounds great on paper (no pun intended) until you realize that not only does the device cost almost $500, it is extremely limited in its capabilities as a text book replacement. The refresh rate on the screen is annoyingly slow, and the lack of page search features and note taking ability basically killed the device's marketability. So why, after this particular device failed to catch on, are universities now refusing to promote these green devices on their campuses? The idea of replacing text-books with electronic media doesn't sound so bad (even if this particular device was ill-suited to the task), so why the sudden opposition from academia?

Certain academic institutions are citing the Americans with Disabilities Act as the prime reason for refusing to continue promoting the devices. They claim that the Kindle DX doesn't provide the same capabilities to blind students as it does for those with full sight. Although the device does have a full text to speech feature, the speech feature does not work on the menu functions and therefore puts the blind at a disadvantage. The Department of Justice has gone further to say, ""Under the agreements reached today, the universities generally will not purchase, recommend or promote use of the Kindle DX, or any other dedicated electronic book reader, unless the devices are fully accessible to students who are blind and have low vision. The universities agree that if they use dedicated electronic book readers, they will ensure that students with vision disabilities are able to access and acquire the same materials and information, engage in the same interactions, and enjoy the same services as sighted students with substantially equivalent ease of use."

I would at this point like to point out the fact that it is a physical impossibility for blind people to enjoy the same interactions and services as sighted individuals due to the fact that they cannot see anything. We may as well stop promoting the use of computer screens, projectors, and cameras at universities until these devices can be appropriately adjusted to accommodate individuals who are physically incapable of experiencing their benefits. The absurdity of this line of argument should make anyone question the real motives behind these measures.

Having recently finished my schooling with memories of the university book store still fresh in my mind, I can say without a doubt that I know the real reason behind these measures, and it rhymes with shmintellctual shmoperty.

That's right kids, intellectual property, a mercantilist hold-over from the 17th century, is the reason behind academia's newly found hatred of the e-reader. Digital media readers are threatening to loosen the strangling financial grip that campus book stores have over their students, and will in all likely-hood destroy the text-book cartel that keeps many intellectuals employed several editions past their prime. When digital media finally takes over, and print media is a thing of the past, why on earth would students pay $250 for a chemistry text when they could simply download the entire university bookstore with a bit-torrent client at no cost? The idea is absurd.

The real question lies not if this will happen, but when. The reality is that it will happen sooner rather than later, especially with certain new technologies that are emerging in the field of electronic displays. One such new technology is being developed by Taipei based Pixel Qi, a company who has managed to take standard LCD screen technology and turn it into the bullet that will probably put e-ink out to pasture. The LCD's being manufactured by this company can function in a full color mode with the back light turned on, or in a black and white mode that relies on ambient light. This fully reflective mode mimics e-ink and eliminates eye strain. In addition to competing with e-ink in this respect, in reflective mode, this technology still retains its ability to display high definition video. Pop one of these screens into a netbook or tablet pc, and you have a fully functional computer with an e-reader screen.

University elites who have bothered to investigate these technologies know what it means for them, but it remains to be seen whether or not they will follow the model of MIT and the Mises Institute, and go totally open with programs like itunes University, or if they will move in the other direction (re: suicide) and try to control their educational materials with more draconian methods such as trying to copyright lectures and student note taking.

I am going to go out on a limb here and say that the MIT/Mises Institute method is going to win out against these terrible protectionist policies. Due to the unjust nature of copyright laws, and the complete inability of the state to enforce them, the legally protected professoriate is just going to have to become a whole lot more creative with how they sell their ideas.

Review: Boundaries of Order

2010-01-12T13:43:00.000-08:00

What constitutes ownership? This is the central question which all individuals in a given society must answer. Is ownership of material property a god-given right, or natural right? Is it purely the invention of men seeking power over others, or does the answer to these questions lie in a more fundamental, primordial concept? These are the questions that Butler Shaffer seeks to answer in his marvelous new book, Boundaries of Order: Private Property as a Social System.

This treatise covers an enormous amount of ground in its 325 pages, but remains focused like a laser on the core issue of what property is and how private ownership of resources is essential to the survival of our species, and indeed, all life itself! Professor Shaffer argues that property is not something that exists because of any “natural law”, but is in fact a part of reality itself that manifests in the struggle of life to exist. Not only is life subject to physical boundaries in that it must occupy space to the absolute exclusion of all other entities, but in order to sustain itself, life must also exclusively control and consume scarce resources. This is a biological fact that cannot be denied.

It is from this basic fact of life that the property principle can be derived. Property is life’s expression of its autonomy. Modern man has created the most complex social systems ever known, and in so doing has muddled its own understanding of the property concept. Cutting through the confusion in his crystal clear prose, Professor Shaffer demonstrates that in human society, the concept of property can be boiled down to three specific elements: Boundary (what can be owned), Claim (the will to own), and Control (authority and decision making power). Having dedicated a full chapter to each of these elements, the author clearly demonstrates that all questions of rights are defined in terms of property, with any political question boiling down to, “Who has the authority to do what with what?” Liberty is an idea that can only be defined in terms of property and decision making power. As Shaffer puts it, “To the degree control over property is decentralized among individuals, we can be said to have a free society. Liberty, then, is defined not in terms of how much property you own, but how much authority you exercise over what you do own,” (Shaffer, 128).

The idea of ownership is not revolutionary to libertarians; however, the basis for such a principle is often overlooked or misunderstood. As Butler Shaffer demonstrates, the legitimacy of the ownership claim need not rest on ideological commitments to “natural law” or “god given” rights, but that, “ the need of all living things to occupy space and ingest energy from their external world offers an adequate explanation, and justification, for their assertion of exclusive interests in property,” (Shaffer, 133). This property principle can be observed in all levels of nature, with organisms of every levels of complexity staking out territorial claims for themselves. Far more important than the simple fact that members of each species have developed means of claiming territory, has been the fact that members of each species will respect these claims, and allow the exclusivity of control over resources. Furthermore, the fact that these claims only seem to apply to members of the same species should be enough for humanity to realize that the social rules of the property principle are a natural phenomena, not a quasi-mystical moral code invented by men. In the author’s words, “In a culture that dotes on material values, the ‘claim’ element appears to have mystical qualities. It has certainly been the most difficult concept for my students to fathom. But there is nothing any more mysterious about human beings proclaiming themselves to be the owners of things than there is for wolves to urinate, birds to sing, or elk to bellow their respective territorial claims,” (Shaffer, 133).

While the property concept is grounded in the fundamental facts of reality, it is not a law of nature. It is a social code of conduct that can only exist if species respect ownership claims. Central to all political issues is whether or not the claim of self-ownership can be legitimated. Self-ownership is a claim of authority by the individual to the exclusive control of his or her body and actions. It is a claim of individual self direction, a principle that institutionalized legal organizations reject outright. At the core any political issue lies the question of whether authority and decision making power is to be exercised by the individual or the state. The state, by very nature of its coercive function, is a de-civilizing institution that makes a claim to exercise control over the autonomous individuals within its “jurisdiction”. It is only due to the fact that humankind has been so quick to deny claims of self-ownership that the state can exist. By hierarchically structuring decision making authority in a given society, and using coercion and force to violate claims of the principle of self ownership (a principle clearly demonstrated in the life act itself) the state sabotages the ability of humankind to adapt to the constant flux of changing circumstances in the world. The state therefore, is necessarily an anti-life institution. Statism represents the suppression of the life process itself, and the destruction of humanity. The reader need look no further for evidence of this simple fact than taking a short survey of the history of the 20^th century; a century in which states across the world managed to end the lives of more than 170,000,000 human beings during peace time.

Statist ideology, and the denial of the self-ownership principle are premised on a model of reality based upon reductive materialism; a theoretical model of reality which states that all things are composed of fundamental building blocks (say, atoms) which simply move and react to one another, and are predictable and controllable. This idea has given legitimacy the vertically oriented, or pyramidal, power structures that state authority uses to enforce its will on societal groups, and has been the core foundation of all such organizations the world over. Fortunately, scientific discoveries in the fields of quantum mechanics and complexity (chaos) theory have thoroughly shattered this reductive, mechanistic, outlook of the universe. The very foundations upon which we view the functioning of the universe are being fundamentally challenged, and a new model is replacing the old. Mechanistic laws of motion are no longer the basis for the formation of order; rather, spontaneity, and unpredictability, seem to be the foundational elements in its emergence!

These new discoveries have a profound impact on the way in which we must now come to view the world. Pyramidal power structures which are by their very nature slow to react to changes in the world, are rapidly giving away to decentralized, informal forms of societal governance. Shaffer argues that the pyramidal model is being replaced by a more holistic model represented by a spherical, or holographic, shape in which decision making authority is no longer structured in a top down method, but through laterally defined social relationships. This decentralization is happening so quickly due to technological advances, that people are less and less defining themselves in terms of nationality only, but by other, informal relationships. The spontaneity and complexity of human civilization has reached a point where states can no longer even hope to control it. The more that state institutions try to regulate and control human society through processes of standardization of social conduct, the more they destroy the very foundations for the order they seek to establish. Through violence, states inhibit the free expression of the life process, a process that can only flourish under the liberty of private property relationships. Until individuals realize that the respect of self-ownership claims is essential to the foundations of an orderly society, institutions such as the state will continue to murder and enslave people across the world. Only by refusing to participate in such violent and destructive acts will human-kind, the planet, and all life flourish.

The conclusions of this incredible book are crystal clear. It is up to all individuals to decide whether or not they will accept the liberating idea of self-ownership and autonomous direction, or whether such authority over the lives of individuals will lie in the hands of others. The character of a society can never rise above that of the individuals that comprise it, and if society wishes for peace, then all people must disengage from exercising coercive authority over others. Rejecting the property principle is rejecting the very basis for the proliferation of life itself, and can only end in the destruction of everything that we hold dear.

I cannot stress enough the importance of this book. As Jeff Tucker, editor at the Mises Institute put it, “It is the treatise on liberty and property for the digital age.” This master work of property theory will become a lens through which you view the world, and is the kind of intellectual challenge to collectivism that only comes along every few decades. I tried to take quotes from the book to include throughout the review, but I found myself pulling content from entire pages and trying to work it into the body of this post. I failed to include much of Professor Shaffer’s own words because of the sheer volume of quotes and material I found. Every sentence of this book is important. And the best part of all? The entire text has been made available for free online through the publisher.

Simply put: Boundaries of Order: Private Property as a Social System is one of the most important books I have read in my entire life. This work belongs on the shelf right next to Human Action.

Coming back online.

2010-01-08T03:03:00.001-08:00

Haven't updated in ages. Will post again in a few days. Working on something good.

Peter Schiff and the Dollar

2009-10-16T20:49:00.000-07:00

Afghanistan: A War of Lies

2009-10-12T21:57:00.001-07:00

This article is great. Don't miss it.

The economy is not recovering...

2009-10-12T01:08:00.000-07:00

Once again, CNN has managed to simultaneously enrage and terrify me with its pro-state economic garbage. There latest gem of reporting is on the likely recovery that the economy is now entering. It shouldn't baffle me that pundits in the mainstream media are claiming the economy is in recovery. I should be used to the idiocy by now, but I am shocked almost daily by the moronic things that these people say. Every single aspect of the supposed economic 'recovery' has me shaking in my boots.

The establishment is treating a rise in housing prices as a sign of recovery. They are treating a weakening dollar as good for trade. They assume that a rising stock market in the face of a zero (and possibly negative) growth in productivity is a sign of good things to come.

Society is running full speed ahead toward a cliff.

Housing prices need to continue to fall. The market absolutely needs to discover the true value of these assets, and any attempt to artificially raise the price will only lead to further miss-allocations of resources. The same applies to the stock market. There has been no real growth in the economy, and the rise in stock prices is a direct symptom of credit expansion and easy money. Rising prices simply mean that the purchasing power of our money is falling. We are becoming poorer, not richer.

We have seen several months of rising prices in commodities and consumer goods, and this is supposed to represent greater prosperity for the nation. The unprecedented monetary inflation created by the FED has been slow to show up in consumer prices, but that is simply because the banks are not making loans at the moment. Once there is a little confidence in the market and the banks start making loans again, the value of the dollar is likely going to fall through the floor. All that cash that the FED has created out of thin air is just waiting to be multiplied through fractional reserve banking. On top of that, the bulk of the stimulus money is going to be put to use by the government in 2010, further decreasing the value of the dollar, and bidding enormous amounts of resources away from private enterprise.

This depression is just getting started, people. Wake up and smell the inflation.

The Fallacy of Limited Government

2009-10-10T13:32:00.000-07:00

At what point has government action simply nullified the constitution? This post is not in response to any particular thing that the government has done lately, but simply about the totality of unconstitutional laws and actions that the Federal Government has engaged in over the last two hundred or so years. When can it be said that the Federal Government has completely violated and nullified its "contract" with the people it "serves"?

I understand that as long as people continue their support for government by supplying it with votes and money the parasites will continue to operate under the guise of legality under the sacred "social contract", but after repeatedly violating nearly every clause of the very document that gives the government any right to exist at all, how can it possibly be said the government has any legitimacy whatsoever? The idea is absurd.

While I firmly believe that a government that operated within the confines of the constitution would be better than what we have now, I cannot help but remember the words of Lysander Spooner in his legal epic, No Treason: The Constitution of no Authority,

"But whether the Constitution really be one thing, or another, this much is certain—that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist."

Spooner hit the heart of the issue; There is no such thing as limited government. It is ridiculous to think that a piece of paper could ever stop the expansion of the State. The very idea of giving one group of individuals a legal monopoly on the use of force is absurd in the extreme. To think that they will confine themselves to a set of written rules is outright insanity. The only real solution to this problem is to end the monopoly. Legal institutions evolved out of social cooperation under the division of labor. They existed before the State, and they will continue long after its decline. Returning legal authority (and more importantly, responsibility) to the hands of all people is the only way toward lasting peace.

Economic Systems and the Concept of Property

2009-09-24T15:34:00.000-07:00

I was just watching filmmaker Michael Moore give an interview on CNN pertaining to his new film, "Capitalism: A Love Story". Wolf Blitzer asked him whether or not he was a socialist or would want socialism to replace the capitalist system in America, and Moore gave an interesting response. I don't have a direct quote as to what he said, but he basically claimed that he was not a socialist or a capitalist, but wanted to see an economic system based on democratic (not Democratic) principles, where decisions about the economy were put back in the hands of the people, and not the wealthiest one percent of the population. He went on to say that Capitalism was a sixteenth century idea, socialism was a nineteenth century idea, and we should construct our economy based on a twenty-first century idea.

While I agree with Mr. Moore that I would like to see an economic system that put decision making power back in the hands of the people, I realize that there is only one way to do that. The only way in which the people of the United States can possibly hope to achieve this kind of power is to get the government out of the private economy in every way. Contrary to what Moore suggests, there is no third option in economic systems, there is only the free and competitive market economy, or the state controlled socialist method.

What people don't understand is that economic systems are based entirely upon how societies treat the concept of property. Even communist states (who's economies were socialist in nature) are entirely based on how property rights are administered. What characterizes a market economy as such is that it is based upon the protection of private property rights, and the fact that entrepreneurs are allowed to pursue private profits to be owned and controlled by them, and them alone. Decisions about production are made by private individuals, and not by the state. On the other hand, the socialist system is based upon collective property rights, where the state owns and controls all property. Collective ownership (i.e. control) of property by all people in a nation, is impossible in practice, as it is not feasible for millions of individuals to simultaneously exercise absolute control of any scarce resource. This task falls upon the state, as the state supposedly represents the interests of the people it governs. This is simply the nature of collective ownership.

There simply is no third method of organizing economic action. Either production decisions are made by entrepreneurs seeking profits based on their ability to serve consumer demand, or they are made by the state who's actions are not based on profit seeking.

Now what of the so called "mixed" economy? There is no such thing. As long as people are still allowed enough freedom in exercising control over their property that they may seek profits through entrepreneurial action, there still exists a market economy. It may be severely hampered by government intervention, but it still retains the fundamental core of the market economy, and that is the pricing system.

Absolute state control of the economy destroys the price system, as pricing relies upon the free exchange of property titles. Under state control, their exists no such freedom, and no prices can be formed. Without prices, people are flying dark, and all production decisions are entirely arbitrary. Society suffers as the result of this.

Currently, the economy is in tatters, and people are looking for a solution to the crisis. "The market has failed!" has become the mantra of the day, and many are looking for the government to intervene further in private markets to solve the crisis. Anyone advocating the protection of private property rights as the solution to the crisis is deemed a nut (and more often than not, a "right wing extremist"), but it is precisely that the concept of property has become so removed from our daily lives that these problems exist in the first place.

Private property is based upon the idea that individuals bear all the consequences of their actions with regard to the things that own. This does not simply mean enjoying the fruits of your labor, it also means bearing the full consequences when your decisions produce unfavorable results. As our society has moved deeper and deeper into the regulatory age and diminished the right to exclusive control of our property, we have also diminished the responsibility that our actions carry.

The bailouts of the banks, GM, and AIG, are prime examples of this. After having been subsidized and protected by the government and the Fed for decades, these industries were finally going to collapse under their own weight and stop pulling the economy down. The market was providing the solution to this mess by forcing these monsters of phony-capitalism into the economic graveyard. There would have been economic pain to be sure, but the failure of these giants would have left the economy fertile for real growth.

However, we have virtually thrown the idea of property to the wind, and these industries were able to socialize their losses. They are still in business and have avoided the consequences of their actions. The five biggest banks in America have gotten bigger. Those who failed as entrepreneurs are still getting enormous, tax funded bonuses, that have nothing to do with their ability to serve consumer demand, and everything to do with who they know in the government. To blame the market for the continued fortune of these industries would be absolutely ridiculous.

There are only two paths that we can take at this time, as the status quo is universally recognized to be unacceptable. We can either:

A). Add more state intervention/political-favors into the system and further collectivize property rights, thereby helping to distribute unfavorable consequences of decisions onto others instead of those who made the decisions; or

B). Remove state intervention/government-guarantees and enhance the rights of private property, thereby letting individuals bear the consequences of their decision making on their own, whether the consequences be good or bad.

Their simply is no third solution. Their is no "twenty-first century idea" that can solve this problem. There is only the choice between privatizing or collectivizing ownership as the basis for society. After seeing the total failures of fully collectivized property in socialist nations in the twentieth century, it is obvious that moving further in that direction would be economic suicide. This is precisely why most socialist nations rapidly moved away from collectivized property rights, and further into that of private ownership. Private ownership is the only reason that the material misery of these nations has subsided. The gargantuan growth of the economies in China and India ought to be proof of this. Both countries have their problems, but the standard of living of their peoples has improved immensely since they started allowing free enterprise. They have fewer restrictions in their economies, and they are going through modern day industrial revolutions.

If the government were to stop propping up failing industries, and limit its activity in the economy to enforcing contracts and prosecuting fraud (for which we already have effective laws), our economy would grow so immensely that we would once again be the most prosperous nation in the world, and not the biggest debtor in the history of mankind. The only way to accomplish this is through the protection of the right of individuals to own property, and allowing them to bear the full consequences of their actions.

Review: END THE FED

2009-09-22T11:38:00.000-07:00

Throughout the 2008 presidential election, Ron Paul was demeaned as a reactionary, and sometimes labeled insane. His critisims of the warfare-welfare state, coupled with his devotion to restoring constitutional government, brought massive opposition to his message from both sides of the political spectrum, and he was effectively shut out of any serious debate in the Republican primaries. His (correct) predictions as to where the economy was heading were laughed at, and most of all, his critisism of central banking and monetary inflation were widely ignored. That was 2008. Things have changed considerably.

Where as Ron Paul was ignored and effectively shut out of the media during the election cycle, he has gained considerable attention across all forms of media since the economic collapse, (just type his name into youtube). Most importantly, Ron Paul's message about the corrupt monetary system in the United States, is finally being listened to. The Federal Reserve System (central bank, and monopoly creator of money in the United States) is the target of Doctor Paul's incredible new book, END THE FED.

At just over two hundred pages, this book can be read in an afternoon, and lays out arguments for the dismantling of the Federal Reserve on the grounds of sound economic principles, constitutional law, as well as deep ethical considerations. Perhaps what makes this little book so convincing is Ron Paul's understanding of exactly how the Fed operates, and how central banking has impacted the history of the twentieth century.

Although this book is short, it covers a large amount of ground, and gives a broad, yet deep analysis of Fed policies and history. The rise of paper money and the warfare state have gone hand in hand. Writes Ron:

"It is no coincidence that the century of total war coincided with the century of central banking. When governments had to fund their own wars without a paper money machine to rely upon, they economized on resources. They found diplomatic solutions to prevent war, and after they started a war they ended it as soon as possible." [page 63]

With the ability to create as much money and credit as it could possibly want, the government has enjoyed a means of financing war without having to deal with direct taxation of its people. With no check on its ability to fund wars, the United States government has been all to eager to commit troops to foreign entanglements, and expand its influence in countries around the world. After FDR dealt a massive blow to the Gold Standard through the confiscation of all privately owned gold, and loosened the restrictions on the Fed's power to inflate the currency, foreign military intervention by the Federal Government has been almost continuous. As Doctor Paul aptly states:

"Since World War II, the U.S. government has expanded its reach with a shocking voraciousness both at home and abroad. It's been one war after another, the building of killer weapons of mass destruction, the construction of a huge welfare state that covers all classes in society. There was the Cold War, the Korean War, the Bay of Pigs, an invasion of the Dominican Republic, Vietnam, and endless involvement in the Middle East, in addition to wars on Nicaragua, Salvador, Bosnia, and Haiti, as well as all the wars around the world conducted in the name of the War on Terror." [page 69]

Furthermore, it is not simply the power to directly pay the bills through the printing press that allows the Fed to fund the war; it is the fact that it backs the banking system and bond dealers as the lender of last resort:

"Even when the Fed is not providing the direct infusions of newly created money, it stands ready to back endless creations of debt year after year, none of which would be worth anything on the free-market bond market if the Fed were not there to guarantee it all." [page 70]

It is only through the continuous debasement of the dollar, and the power of the Fed to guarantee bond holders against default that the government can fund its military adventurism around the world. Consequently this debasement of the dollar is also the root and cause of the economic calamity that the world now faces.

Through massive arbitrary credit expansion, the Fed has the power to lower interest rates below what the free market would set. The Fed claims that it does this to stimulate the economy, but the reality is that tampering with interest rates in the loan market distorts the ability of entrepreneurs to calculate in a rational manner.

When a commodity currency like gold is the unit of account in a market economy, and there is no central planning of the money supply, interest rates develop according to consumer time preference. When people save more money, and bank cash reserves increase, the "price" of loaning it out decreases. These lower interest rates are a signal to entrepreneurs that they should engage in longer term production processes as consumers are foregoing consumption now, so that they can consume at a later date. By saving money, and not claiming the resources that they are entitled to by the cash that they hold, consumers make available the material resources needed to complete production processes engaged in by entrepreneurs. Consequently when people spend more of their savings, and there is a greater scarcity of loanable funds in the banks, credit tightens up, and interest rates increase. Entrepreneurs are discouraged from long term investment projects by the higher cost of obtaining loans, and they engage in shorter term projects that readily satisfy consumer demands.

Since no such commodity money exists in our society anymore, interest rates are arbitrarily set by the Fed. By forcing interest rates down by flooding the banking system with newly created credit out of thin air, the Fed introduces dis-coordination to a coordinating production process. Lured by low interest rates, entrepreneurs take out loans to fund projects that will not be profitable in the end. Meanwhile, consumers also take advantage of easy credit and spend way beyond their means so that there is little to no real savings in the banks. By claiming the resources they are entitled to by their money, consumers remove available materials from the economy, and when the credit expansion finally ends, the whole system collapses. Interest rates spike up as credit contracts, and projects that seemed to be profitable at their start cannot be completed. They lack both the resources necessary to complete them, and consumers can no longer afford to buy anything. The result is enormous amounts of unsaleable goods, collapse of industry, and the laying off of many workers. The artificial credit induced boom comes to an end, and the market enters a recession. The recession is the necessary outcome of credit expansion, and it is the process through which debt is liquidated, and resources are reallocated to productive purposes.

Unfortunately the Fed sees the boom years as a time of prosperity, and not that of economic dis-coordination and waste. Their solution to the recession is to further expand credit and prop up the errors and mistakes of failing industries. This prolongs the agony of the recession and further dilutes the purchasing power of the dollar.

Ron Paul's proposed solution to this crisis is not a half measure, nor is it a minor reform. The conclusion is crystal clear, and essential to saving the American dream. It is time to completely abolish the Fed and all central banking, and return to sound money. This cannot be done by returning to a "standard" of any kind, it requires that legal tender laws be repealed, and allowing freedom to take its course in the economy. By allowing people to freely choose what they use as money, the size and scope of government would decrease dramatically, and the endless cycle of war and economic instability would come to an end.

Aside from a devastating economic analysis of the Fed's intervention in the market, Doctor Paul makes it expressly clear that the current monetary system is absolutely illegal under the Constitution:

"The Constitution is clear about no paper money. Only gold and silver were to be legal tender. Since the states caused themselves harm when they issued their own paper money, the states were prohibited as well from issuing paper currency under the Constitution. Article I, Section 10: "No state shall... make anything but gold and silver coin a tender in payment of debts." So there you have it, plain and simple: paper money is unconstitutional, period." [page 165]

Not only does the paper money system give the government a means to wage unlimited war and cause the boom bust business cycle, it is expressly forbidden under the Constitution of the United States.

Simply put, this is the most important book of 2009, and the ideas contained within are essential to protecting the freedom and prosperity of the country. It is time to make a choice. Do we allow the Fed to inflate the currency until it is totally worthless? Do we allow the Federal Government to continue machine gunning children around the world? Do we allow inflation to crush what is left of the private economy?

I say its time to make Andrew Jackson proud and kill the monster.

End the Fed!

What is an Austro-Libertarian?

2009-09-17T13:40:00.000-07:00

A libertarian is someone who believes in maximum freedom for the individual, and that private property rights are the basis for all human cooperation. The libertarian also believes that property rights are the only rights that we as humans can possibly posses, and that law exists to protect these rights.

An Austro-libertarian is a libertarian who combines the teachings of the Austrian School of Economics with libertarian political ideas for a unified system of social philosophy. For the most comprehensive Austro-Libertarian library available, visit www.mises.org and enter their literature section. Most of the books that Mises Institute sells are available for free (legally) in .pdf form, and it is a treasury of incredible ideas.

However, the purpose of this blog is not simply to advertise for the Mises Institute [although their will be plenty of of that ;) ], it is to offer the perspective of an intelligent young libertarian on current events, politics, economics, and art.