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Paper Money – Part 1 (Guest Post)

Most people have heard of the federal reserve. It’s the branch of government that prints our money. They keep us above bartering like inefficient, savage cavemen. Right?

A couple years ago, that is what I believed. In actuality, the above statement is completely false. The federal reserve is a private bank that is given a monopoly on printing/creating American dollars.

Do you see a problem?

To start, according to the constitution, the power of coinage rests in the hands of congress. In the status quo, this power belongs to a small group of insiders who are free to print as they like, practically picking money off a tree.

So if we let congress print our money, now we are following the constitution. But that just means we are giving the power to an elected group of insiders who have little qualms about bribery/lobbying. They still hold the power to control inflation rates. And this means a discreet tax on all money held in cash and bank accounts. When a new dollar is printed, all other dollars are worth a smaller fraction of the economy. This means over time a stash of cash decays in value, until it is worth only the paper it is printed with.

Therefore it is in the interest of the people to use a system of currency such as the gold standard, where the currency is valued by the markets, not a select group of violence-backed insiders.

No Inflation? Look Around

Proponents of the Federal Reserve’s QE (Quantitative Easing) program are quick to dismiss the reality of inflation in the US. Most point to the CPI (Consumer Price Index), which increased by a “mere” 1.7% over the past year. And most say the Fed has done an extraordinary job keeping the inflation rate in check. Yet, few fail to realize that the figure has been skewed to create the illusion of monetary stability. Look around you. Can you honestly attest to an inflation rate of 1.7%? As someone who found the Frontega Chicken at Panera had soared over a dollar in price the other day (unless I was somehow being swindled), there’s no possible way inflation stands so low.

How does the government get away with a 1.7% inflation rate? Well, it all depends on the method of calculation. In the 80s, government introduced a scheme to make the inflation rate seem lower than it is, through adjusting for “changes in quality”. Explains economist John Williams:

“Up until the Boskin/Greenspan agendum surfaced, the CPI was measured using the costs of a fixed basket of goods, a fairly simple and straightforward concept. The identical basket of goods would be priced at prevailing market costs for each period, and the period-to-period change in the cost of that market basket represented the rate of inflation in terms of maintaining a constant standard of living.”

In the late 80s and early 90s, however, there was an uproar over the supposedly “overblown” inflation rate. Instead of comparing virtually the same products with one another and noting their differences in price, the Bureau of Labor began “accounting” for changes in quality. Williams discusses this through the example of someone switching from steak (more $) to hamburger (less $):

“The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that.”

As it turned out, the inflation rate became grossly understated, as the initial comparison of an identical basket of goods turned into something completely and utterly perverse. Here’s a chart of what inflation actually looks like in relation to how it’s purveyed.

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So inflation’s nearly at 10%. That would explain a gold price of $1600 an ounce, or oil at $90 a barrel. And that would actually explain the soaring prices we see all around us, from tolls to groceries to gasoline to my Frontega Chicken at Panera.

If you think about it, doesn’t it make perfect sense? A distortion of the inflation rate would allow for incredibly expedient measures on part of the politicians. Properly adjusting social security checks for inflation becomes a thing of the past. GDP growth suddenly starts looking relatively good. And people are able to lose money through erosion of their savings without actually knowing it. Isn’t it a brilliant ruse? All it takes is a skewed inflation figure, and financial problems of enormous caliber become non-existent.

I just hope people are smarter than this. 1.7% inflation? Give me a break.

Video

A “Conversation” with a Typical Mitt Romney Supporter

Just saw this. Romney must be proud.

The Obama Paradox

At least somebody has guts in America:

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Truth hurts, don’t it?

When Seconds Count, the Paramedics are Only 30 Minutes Away

Can you believe this? Yahoo News reports:

“On the police radio transmissions, officers said they lacked sufficient medical support for about 30 minutes after the 911 calls came flooding in around 12:39 a.m. and that medical teams didn’t report getting inside the theater for about 24 minutes.”

I sure hope this opens people’s minds to the reality of government. No it’s not magic. Nor is it immune from the standards of morality or the laws of economics. Like all coercive monopolies, it’s inefficient, incompetent, immoral, and wrong.

I’m always blown away when I think of the unplanned, uncontrolled nature of the free market. You have thousands of entrepreneurs organizing and coordinating all sorts of labor, raw materials, and machinery for the benefit of society, without an inkling of coercion. And it’s completely spontaneous. Apparently, when you leave people alone, they work and cooperate and transact with one another. The fear of competition keeps everybody on their feet, growing and innovating to the likes we have yet to see.

Government is the absolute antithesis of the above description. It relies on coercion as opposed to cooperation. It thrives on monopolization, rather than competition. It operates by shoving things down people’s throats as opposed to reciprocation. Is it any surprise government isn’t competent enough to devise a safer road network, or a simpler tax code, or an expeditious court system? No, these things are just the consequences of the laws of the human nature. If you give people power, they will abuse it. If you take away incentives to work hard, people will slack off. If people aren’t responsible for their mistakes to the extent they should be, they’ll make more of them. It’s common sense.

Once again, government has defied the worst of my expectations. My hopes and wishes go out to the victims who suffered as a result of such government ineptitude. 10 minutes would’ve been too long. 30 minutes, for those unfortunate enough to be helped last, is abominable.

Surprise! Obama Proposes Stricter Gun Control

Yes, that’s what Yahoo news is reporting. Quick breakdown:

Obama’s calling to reimpose the assault weapons ban. Never mind that the AR-15 used by James Holmes wasn’t even an assault rifle, as I covered in a previous post.

The funny thing is that we’ve tried the assault weapons ban before. After it expired in 2004, the murder rate dropped by 3.6%, which was accompanied by a drop in violent crimes (source). Maybe people aren’t the ruthless, barbaric savages the left makes them out to be. Maybe if you give people the ability to protect themselves, they’ll do a better job of warding off criminals than the police. And maybe, a country founded on the principles of individual liberty shouldn’t resign to the encroaching nanny state, just yet.

Good comments on the article today; I’m pleased:

– “Well Mr. President, the battlefield could be anywhere at any given time. This is why we should have these weapons available if and when the battlefield ends up being in our own soil. So your point, as usual, is pointless.”

– “Obama would rather arm the Mexican drug cartels than American citizens..”

– “Six million Jews learned what happens when you give your government gun control!!”

– “Prez, Got it. Assault rifles, blah, blah, ONLY on battlefields, ONLY in the hands of soldiers. Assuming then, by executive order, our boyz at Homeland Security, SWAT, TSA will immediately be switching to saner, more appropriate weapons.”

– “The government never misses an opportunity to exert more control over us.”

– “Hey, Obama… you do know the difference between an AK-47 and an AR-15, don’t you? Guess not.”

Long live the brilliant commenters on Yahoo News.

Why Obama Will Prevail in 2012

Actually, I made this prediction about 6 months ago. Let’s look at what brought me to arrive at such a somber conclusion:

1. Obama inspires passion; Romney doesn’t. Remember the days when Obama could pack a stadium with fervent, highly motivated zombies, blindly chanting his name? Romney can’t do that. He’s not as passionate when reading from a teleprompter.

2. Obama didn’t have to waste money on a primary. More money equals more outreach. And as we know, more outreach means more voting, brain dead loonies touting Obama rhetoric.

3. Obama has more connections. As it turns out, spending four years with some of the most powerful people on Earth gets you some very benevolent friends. Friends that are willing to “tweak” the system for the desired result.

4. Obama has an edge when it comes to the swing states. Although public opinion can change, I think it’s an accurate reflection of what’s to come. With Obama blanketing the airwaves, Romney’s going to be stuck in the water.

5. Obama’s black. Don’t forget the race card – it’s sure to come in handy.

6. The federal reserve will do it’s part in creating the illusion of economic prosperity. Whatever it is, they’ll make people think things are getting better. It’s happened in the past, so there’s no reason to think it won’t happen again.

7. .I’ve learned to be pessimistic when it comes to politics. Obamacare, Libya, NDAA – you name it. As the years go by, I have yet to notice anything that would alter the ominous trend of American civilization, whether it be on the legislative or political front.

So there you have it. Although many of you won’t want to hear it, this election is Obama’s to lose.

There is some good news however. At the very least, when the economic system comes crumbling down and we find ourselves in shambles, it’ll be (for the most part) a condemnation of Obama. Not somebody who supposedly believes in the private sector. With people sick and tired of government “solutions”, the stage will be set for a libertarian-friendly political arena. And under such favorable conditions, the free market gospel will be easier to preach.