The Liberty Blog
August 09, 2009
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Thoughts on Stagflation, the Fed, a libertarian revolution, the stock market, "Real Life", rent seekers, the State, and the future all rolled into one long blog.
How many times can a school of thought get discredited?
By the 1960's nearly all academic economists (read: overpaid math geeks) had fallen in love with something called a Phillips curve - a graphical representation of the past relationship of unemployment and inflation. This relatively worthless model, developed by a New Zealand economist in 1958, proved to Keynesian economists that stagflation was never a possibility. Stagflation is a period of high inflation and high unemployment. When these events occurred simultaneously in the 1970s the Keynesians were supposedly discredited. So why are they running the show again? I suppose government moves very slowly in reacting to information.
So here's the rub. You have a government that enacts the same policy (theft) to a varying degree based on the amount of fear (oh no! It's deflation!) that it can foist upon the public every time. You have a group of discredited overpaid financial modelers and mathematicians that have never risked a penny of their own money on an entrepreneurial endeavor screaming deflation while trillions of new money has been created. You have a banking cartel that is a giant Ponzi scheme with you as the backstop.
Now you have the stock market going up. Well duh. I don't understand what it is so hard to figure out. I really don't. You have people betting (read: gambling) significant amounts of money on a stock market drop when they can't answer one simple question: What happened to the $2 trillion to $9 trillion ($2 trillion reported by the Fed, $9 trillion reported by Bloomberg) in off balance sheet market transactions that the Federal Reserve has engaged in over the past six months? What happened to all that new money? And what happened to all the money created by all the other central banks around the world? Riddle me this....
Here are some options:
1. They stuck it in their mattress.
2. They bought flat screen TV's for everybody.
3. They paid their debts. (lol, yeah right)
4. They put it in foreign stock exchange and American stock exchanges.
I realize there are plenty of possibilities, but we've seen the stock market rise 50% while fundamentals have continued to deteriorate at worst, and stopped sucking so bad at best. Foreign stocks have performed even better. So much for deflation. I guess one can be a deflationist if one believes two things:
1. That deflation is bad for the people. It's not. It's a blessing. Deflation is bad for governments and their financiers (read: thieves). Hence, governments will avoid it at all costs. Deflation is never a possibility because governments never allow it to be a possibility. Deflation is Liberty.
2. That the stock market is not subject to the bidding up of asset prices caused by excessive monetary base expansion. You give trillions of dollars of new coin to bankers, investment houses, and foreign creditors. What did you think they were going to do with it?
So I expect stagflation, but with a little more juice than the 70s. I expect because once again the academic Keynesians don't see it coming. How many times can a school of thought be discredited?
75% isn't enough
According to a recent Rasmussen poll, 75% of Americans support an audit of the Federal Reserve. Wow! Word is getting out that the supposed "independence" of the Fed is pure nonsense. It doesn't exist. 282 Congress people and 23 Senators have now co-sponsored the two respective bills to audit the Fed (HR 1207 and S 604.) So it's a sure thing right? Ha! What, you thought this was a government by the people for the people? You must be an idiot. This is a government by rulers and bankers and you keep your money at their whim. Ron Paul's bill will never see a vote despite have a majority of co-sponsors. Barack Obama believes in transparency only when it doesn't interfere with his agenda. I wrote a blog a while back about the forces aligned against the Liberty movement's attempt to End the Fed. A lot of State functions depend on the ability to fleece Americans by altering the money supply. The people who suffer most at the hands of these inflationary policies are the poor and the elderly on fixed incomes. I would love to hear some noble Progressive defense of stealing from Grandma in order to finance a government to provide for her welfare.
The Audit the Fed bills will die in Barney Frank and Nancy Pelosi's committees on orders from their superiors at the Federal Reserve.
The Great Unmasking
Perhaps the most misunderstood movement in America surrounds the Tea Party protestors. It is in the State's interest to paint these people as extremists, whack jobs, nut cases, yadda yadda yadda and reassure the good State-loving sheep on America that all is well. What I find curious is that no one can explain what political affiliation these folks have. The Democrats, when rudely interrupted during their talk-down-to-Americans-cause-they're-too-simple-to-understand-the-issues-townhall-meetings, blame Republicans. But what happens when Republicans get shouted down by the Tea Baggers? Silence from the media. Why is that, do you think?
The Tea Party Tea Baggers are just people that are fed up. They have witnessed the great unmasking. No longer do they see the government as the benevolent overlord and protector, but rather as it really is: a system of coercion that provides no economic benefit and is set up for the sole purpose of fleecing its citizens. The entire justification for the State is fear: fear of terrorists, fear of deflation, fear of retirement, fear of "insert Asian virus here." fear of unemployment, fear of medical costs, fear fear fear. The State survives on Fear. Even when something arises that is worthy of legitimate fear, either Hussein or Ahmenijad or Bin Laden or medical costs or crime or drug use, you find out that the State played a big part in its creation and exacerbation.
Remove the Fear and you have a chance at a libertarian revolution. This process is the great unmasking. Show the State for what it is. Don't mince words. Don't apologize for individuality and liberty. Don't apologize for Capitalism and the free markets. Unmask them. Show them for what they are, a highly refined and complex form of organized crime.
It's too early for a libertarian revolution. Peter Schiff and Rand Paul will lose handily in 2010, and there will be no serious contender for president in 2012. Not enough people have witnessed the anatomy of the State yet. Give it time. Their candidacies are important on their own, a step in the right direction. Get the word out: unmask the State.
Lessons from Motor Liquidations Company
How many times have you bought stock in a company that you love, that you think is underpriced, and that you are certain to make money on, and then it drops 15% the next day? Don't fret. Just remember that GMGMQ went up 37% the day that the company's management announced the shares to be worthless. These investors (read: gamblers) didn't even take the two seconds to check Google for news stories or read the news feed on their broker site before they bought shares in a worthless stock. Why did they buy it? Because it was going up. One idiot creates twenty. But eventually all of the idiots come to their senses (well, almost all.) So when you purchase a stock, keep in mind that the next round of buyers and sellers are probably those same idiots that drove GMGMQ up 37% that day. What else did I learn? That Efficient Market Hypothesis is a crock of you-know-what. But I didn't waste my money on a worthless MBA taught by EMH proponents and overpaid math geeks, so I already knew that.
Rent Seekers make a comeback
A rent seeker is someone that seeks an economic benefit by imposing a tax or regulation on another group in society. As it happens during every downturn, this activity is making a grand comeback. Just read through the CAPS blogs and whenever the subject of taxation or regulation comes up, you will find a handful of rent seekers looking to exploit productive people. Outside of murderers and rapists, there are few people that I hold in lower regard than rent seekers. They disgust me.
Where is this Real Life, and how do I get there?
Perhaps the most amusing accusation of anti-libertarians is that we don't live in the real world. Fancy that! Well, if that's true, can you give me directions? My life needs some reality. I've been in the Middle East for half of the past decade and this fantasy land is too much for me. I really can't stand watching the American government cover up the obliteration of Afghan wedding parties, the destruction of unidentified targets that may or may not contain civilians or terrorists or Allah himself by some cockpit cowboy. I can't stand the Air Force's continual lack of compassion for boots on the ground, you know those troops that actually put themselves in harm's way and suffer the repercussions of some jerk's decision to drop a bomb that kills a family of four.
Please, I need some real life.
On a serious note, real life does beckon after all. Any other IT professionals here? Any of you passed the CISSP exam? Then you understand what I'm in for. I've been working on this one for a month and I need to turn it up a notch. I may be CAPS incognito for a while as a man has to have priorities. It's a very difficult test.
I just wish I could get a dose of whatever real life my antagonists claim I'm unaware of. Does it involve living off the hard work others? If so, count me out.
So wish me luck. I'm sure I'll be back here from time to time. I love this community. For those of you that Facebook, you can find me here.
David in Qatar
