Wednesday, November 4, 2009

Inconsistency is a luxury Americans and the world can no longer afford.

The humorist and political pundit Bill Whittle came up with some excellent commentary about the ACORN child prostitute scandal, which can be found at the website below.

Now here is my personal reply below. Sometimes conservatives are bad about inconsistency in applying the lessons of history to policy. Few people seem to think about history much, or the limitations of public spending when making policy. Be it as it may, the small mistakes of wise men are always more injurious then the same mistakes made by known fools. Here is my attempt at a correction in the video below. I apologize in advance if the video itself is not syncing properly with the sound.

Monday, July 20, 2009

Freedom's Next 20 years

Fear is rampantly scrawled along the pages of our media from newspapers to websites. I am NOT the first to admit that the next decade will be a dangerous one for freedom. Lets sit down and take stock of recent events. Much has been written to put everyone face to face with the ugly troubles of the new world economy. A clear eyed appraisal of the worst that is likely to happen in the next 10-20 years, will allow all living now, to face up to the future with bravery and self possession. Before delving into what the facts of today mean for your freedom and money over the next 10 years, lets review where we are right now.

1.The United states has temporary become Japan, complete with zombie banks, massive government bailouts, government takeovers, higher marginal taxes, plunging property values, and rising unemployment. What is true of the United States is also effecting nearly every other democratic republic on this planet. You should not take my word for it but please don't use the governments numbers.

2.Without the high savings rate of Japan the United States must soon morph into a Zimbabwe or Weimar Germany hyper-inflationary style disaster. True recovery or a Japanese “lost decade” are highly unlikely for the United States. Fed Chairmans Alan Greenspan & Ben Bernanke, have created more money then has been printed in America in the previous 200 years before they took office . (no I am not joking, this is as real as your life gets) Ask yourself what the word TRILLION means next time you hear about the USA planning its finances.

Gold & Silver Investments from Conspiracy of the Rich on Vimeo.

3.Chinese and Russian governments are both hostile to human/property rights, real elections, or any checks and balances. Both illiberal autocracies are buying up massive quantities of oil, rare earth elements, to become rich in a post-dollar world. Much aid has been given by the worlds 2 “flagship autocracies” to small resource rich nations with very poor human rights records.

4.The entire world financial system is bloodied, with philosophically antagonistic autocracies playing creditor to “mixed economy” republics, stumbling under mountains of welfare state debt. The net creditors of the world have been attempting to create a new reserve currency based on precious metals and energy. Normally I would support such a measure, too bad China and Russia are unlikely to include convertibility of paper money into such metals. Some governments will grow richer while most individuals are fleeced via inflation.

5.Sovereign Wealth funds, state owned companies, and massive bailouts are pushing private enterprises to the margins of economic life in many countries. Governments are creating their own coercive monopolies funded from bottomless wells of newly printed money. Clearly freedom could be smothered under the “invisible foot” of government funding and regulations. A nightmare world where America becomes as socialist as France and China backtracks to full state ownership of any large enterprise. World economic growth and output is likely to suffer badly as it always has, when governments start choosing winners and losers. Prepare for more scarcity.

So with all that bad news, is their any hope for a future that includes freedom and its necessary roots in the soil of free enterprise? My answer is yes, more then ever. I am not saying the next ten years will be a sunny picnic, but a closer look at history shows opportunities and even hope. Make no mistake that massive numbers of individuals will have to relearn the art of private independence/interdependence, re-impose limits on their governments run wild, rewrite regulations to be simple and understandable to all (not just legal/finance professionals) and effectively resist every malignantly insecure politician or military commander, yearning lustfully to impose tyranny in an uncertain world.

Real Free markets could return, after an absence of 96 years.

Beyond a certain point, complexity is fraud-- PJ O'Rourke

Brief video history of humanities republics.

The world has not had anything resembling a fully free market anywhere on the globe since 1776- 1913. Those politicians, bureaucrats, and “corporatacracies” who think a new socialist future are of advantage to themselves, are becoming overconfident. Overconfidence is the norm when trends favor your views. Advocates of free markets, had been correctly warned by Francis Fukuyama, that differing cultural perceptions about skill, luck and who to trust, would limit capitalism's triumph after the breakup of the Soviet Union. Many central banks, subsidized corporate giants and politicians have been posing as advocates of free markets for nearly a century, while the actions of each suggest far different values.

Now lustful autocrats are puffing their chests out, despite credible evidence that the controlled parts of mixed economies caused the massive failures we see today. One of the best examples of governmental overconfidence goes as follows: Ian Bremmer the president of the Eurasian group, was recently asked this loaded question by a Chinese senior level official: “Now that the free market model has failed , tell me what you think the appropriate role is for the state in the economy?” Questions like this pre-suppose that we were living in anything remotely resembling a laissez faire market to begin with. Worst of all is that this Chinese official probably believes that the free market model has indeed failed. Nothing could be further from the truth.

Don't get me wrong the years 1989 - 2000 were better years for libertarians then any we have seen in the last 50 some years. Trends were swinging very slowly back to free markets and men. However it must be stated that the “deregulation” of the 90's was mainly for the well connected rich and consisted of.... Massive amounts of printed regulation, that few would or could ever become expert in according to a search of financial terms at the US governments archives and records department. As bad as US regulations are most other nations have much more excessive regulation then we do.

*Tax loopholes that can only be found with the help of very highly paid professionals. Salaried employees lost their ability to plan their taxes in the 40's and the middle class lost most of their tax planing privileges after the 1980's S&L crisis, as Robert Kirosaki (see vid above) has explained in the best selling “Rich Dad” book series. Tax codes in most advanced countries slap the young upstart capitalist with heavy taxes while the large companies have learned to avoid such extortion via high priced professionals and creative accounting. It seems reasonable to demand this state of affairs be abolished or reversed. Small and mid sized private enterprises are being crushed underfoot by the partnership of mega-corporations and politicians.

*It was natural for Alan Greenspan to predict an “Age of Turbulence” (the title of his book), his Federal Reserve was still acting as a senior counterfeiting and price fixing committee in the open, with full legal sanction, and Greenspan largely responsible for the “turbulence” he himself predicted. All banks were forced to give uneconomic loans via years of negative real interest rates, (rates lower then the rate of inflation). The only profit center left for banks was transaction fees. A powerful perverse incentive for every financier, to have the highest transaction volumes/leverage possible and leave the obvious coming defaults to sleepy taxpayers. Bad management, even by the low standards of a Central Bank has been the 9 decade status quo. (Note modern central banks are a criminal organization, illegal under a proper reading of article 1 section 10 of the US Constitution, or any other law preventing price fixing or counterfeiting)

*At this time the US Fed and the Bureau of Labor Statistics were spitting out inaccurate (or possibly fraudulent) data on which the investment community was basing its decisions. (as explained and demonstrated by John William at Bad numbers have a similar effect to outright socialism, as information is short circuited by disinformation.

*Despite a brief drive to balance the federal budget after the 1994 “House Republican surge” the same congressmen were back to pork-barrel spending by early in the year 2000. Politicians who want free markets but also want pork to buy votes, are more of a threat then those who are forthrightly against economic freedom. Politicians like Hugo Chavez or Ted Kennedy are clearly eligible for the insanity/stupidity defense but the house republicans have absolutely no excuse for that chapter of history.

Those parts of the economy thoroughly controlled by government supported corporate cartels, succeeded in wrecking the system of finance that reputable business needs to plan for the future and pay their staff. Is this the same era that the mainstream media, and government officials world wide, so bizarrely describe as free market and capitalist? In what alternative universe can any of the corrupted situations above be included in the words, “free market captalism”?

Yet again free markets are taking the blame for the sins of politicians and the monopolists that couldn't endure, without constant bailouts, congressional pork, murky central bank secrecy and various other forms of malicious mischief. Markets did not fall off a cliff on their own. Free markets were pushed off.

All market shakeouts before the creation of the Federal Reserve, were swift with fast recoveries. Until governments allowed central banks to do things EXTREMELY illegal for private citizens to do, economic breakdown was reserved for long wars with worthy opponents. Government officials created the deflation and (future) inflation we suffer and will continue to suffer under. Politicians are our employees and the current crop are poor performers. Direct your anger at the political incumbents who caused all this by voting for the challenger every single year. Voting for third parties if your in a state that never votes your way, is also a very good idea.

Its harder to lie to citizens with good memories

The malaise of the 70's was another era when the causes (Keynesian economics) and the effects (rampant inflation, bankrupt governments, third world revolt) could almost be seen side by side. Despite separation in time between friendly political legislation and unfriendly disaster, the public slowly became dimly aware of excess government as a problem to be solved.

Moving forward to 2009, search engines like are making the memories of citizens superhuman and uncensored. Opportunistic politicians will not be able to confuse or mis-match cause and effect with the Internet open to all and youtube clips of Ron Paul + various Austrian school economists, warning us of the future we now live in, so many years ahead of time. Even in China hackers have so compromised the “green dam firewall” the government is considering abandoning the project. Likely the Chinese government will try summary executions next, but if executions worked, the Mongol Khanates and the wicked dark ages version of the Catholic Church, would have maintained world empire and prevented protestant movements.

Any technology or institution that increases public memory about what politicians said years ago, is not good for politicians, not good for socialism, but helpful to free debate. The possibility of genuine freedom movements in China or Russia or at very least massive continuing social unrest inside the BRIC nations (minus India) could give the free world some maneuvering room. Successful censorship in the Neo Feudal China/Russia would allow the west + asian tigers/India to remain far ahead of any autocracy in terms of information technology. I wouldn't bet on successful censorship in the long run however. Youth is a restless condition, especially in politics.

United States economic collapse and China's choices

When powerful commonwealths (like the United States) fall, navigating the power vacuum and maintaining freedom will be both difficult and dangerous. The fall and aftermath of the Soviet Unions fall gives us many clues of the shape of things to come.

Russia from 1989 through most of the 90's was for a brief period a “non-power” in world politics. Sadly its true that the coming hyperinflation in America is likely to paralyze the US military and economy for between 4 to 10 years. China will likely take the oil rich Spratly islands, send more military units to Africa/South/Latin America, step up aid to other autocracies and the republic Taiwan is of course doomed without the assistance of the US fleet. China will use violence more often to solve its problems while the US Armed Services are mothballed for lack of funds. Russia for its part will hold Europe in a sort of “energy ransom” while biting off tiny chunks of its “near abroad” as opportunity allows.

However this is likely as far as China/Russia can go. Thailand, Australia, S.Korea, Japan and India together, surely have enough power to curb Politburo adventurism. I expect America will sell some of its advanced armaments/techniques to the aforementioned, to generate “hard currency”, much as the Russians did in the Soviet Union's immediate aftermath. The difference is that republics faced with hemming in China/Russia, could end up with better military tech then China, on a unit for unit basis. No single country however (with a possible exception of India), will have anything like China's military size or ability to replace losses in a large scale “proxy war” style situation. Its inevitable that China will use more force on pacific and African nations when the American Security umbrella collapses. However Chinese expansionism might not be as successful as many strategists fear.

Military theorists speculate that missile technology is already making surface ships obsolete, but in submarines the United States (and by extension any ally who can purchase a few Los Angeles class boats) will have a very large advantage in any undeclared conventional warfare, on or under the high seas.(similar to the quasi war between America and France in 1789-1800) China might become the largest operational navy in the pacific, but its ability to resupply surface forces or land troops on any island is still at the mercy of American designed undersea and stealth air assets. Expect occasional small scale sea engagements (reported as mishaps) as China tests the extent of its control of the sea lanes until the Asian tigers + India and Australia become determined to better coordinate their response, to the emerging power.

China may do less muscle flexing during American financial paralysis then we might fear. Chinese culture is autocratic, but not inherently expansionist. More reliable then the “good intentions” of the worlds last remaining Politburo, is the fortunate un-intended aftermath of the communist parties one child policy. Simply put, China like Japan is running out of young military age men and women to use as pawns of the state. Much of Chinas land army is mainly trained/equipped to quell internal rebellion, suppress ethnic minorities and ensure that rural western Chinese do not migrate to the cities in numbers larger then eastern city governments can absorb.

Contrast this to America with little net demographic change (thanks to young immigrants) and India with an explosion of the young military age population. “China will grow old before it grows rich” according to investment demographer Harry S Dent.(who's recent book I recommend) A combination of military deterrence, careful diplomacy and a proper settlement of debts could convince China to to act responsibly. What is true of China is far worse for Russia, as the male population has an average lifespan of 59&1/2 years and falling.

The economic/military future of the world is fairly manageable, so long as America avoids becoming an autocracy, during its (likely) future period of total currency collapse. What shape American politics will take during or after a hyperinflation are largely unpredictable. The historical landscape however is littered with the bodies of democracies, republics, empires and tyrannies who tried to redistribute funds or fight economic crisis with the excessive printing of money. The American Empire is likely doomed but the Constitution and individual freedom world wide, may re-emerge stronger then ever. Unpleasant lessons of history will be forcefully refreshed in the minds of sleepy citizens. If free peoples can preserve representative forms of government in the next 10 years, the next 20 years could see some truly beautiful times for those born today, yearning to genuinely breath free.