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August 09, 2009 – Comments (31)

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 

31 Comments – Post Your Own

#1) On August 09, 2009 at 12:22 PM, binve (< 20) wrote:

Great post David! Thanks for the thoughts!!

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#2) On August 09, 2009 at 12:28 PM, dbjella (< 20) wrote:

I am going to miss your posts :(  I await your return.  

Long live liberty! 

 

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#3) On August 09, 2009 at 1:11 PM, DownEscalator (< 20) wrote:

Nice read, +1 rec.  We disagree only in scope regarding the government.

To quote Richard Durbin:  "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

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#4) On August 09, 2009 at 1:17 PM, FinancialModeler (27.31) wrote:

The Fed already gets audited. What does not need to happen is the retrospective audit of the Fed's monetary policy which would essentially be political meddling in monetary policy, something that's not supposed to be politicized. The GAO already audits the Fed, the Fed publishes its meetings...the Fed used to not even announce an interest rate change. The Fed now from the Fed of the 1980's is much more transparent. This preoccupation with the Federal Reserve is comical...

As for this "libertarian revolution", i.e. Ron Paul Revolution, I and others will work to make sure such a "revolution" never gets off the ground, as it surely won't. The vast majority don't want a government that sits on its ass while the economy nose dives. These "teabaggers" would rail against the government for not doing anything while the economy tanks, and these "teabaggers" would rail against the government for doing something. Let's get to the heart of the "teabaggers". They're staunch ideological Republicans. There. No matter what the Democratic government did, they would be pissed off. If Obama walked on water, they would say he can't swim. It's nothing but partisanship. Nothing but complaining. No solutions other than laissez-faire capitalism which history has shown is a blantant failure.  

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#5) On August 09, 2009 at 1:39 PM, whereaminow (< 20) wrote:

binve,

Thanks! I enjoy your posts as well.

dbjella,

Long live liberty, indeed.

DownEscalator,

Thanks for the rec.

FinancialModeler,

Yeah, sure buddy.  I think you need to run down to Capitol Hill and let those 282 Congress persons and 75% of Americans know that they're mistaken and gosh darnit the GAO has it covered. 

As for making sure our revolution never gets off the ground, will this involve jackboots?

David in Qatar

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#6) On August 09, 2009 at 1:48 PM, kdakota630 (29.67) wrote:

Another excellent blog, as usual.

I thought your "What, you thought this was a government by the people for the people?  You must be an idiot." was a little over the top, but I'm sure I'll live.

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#7) On August 09, 2009 at 2:01 PM, whereaminow (< 20) wrote:

kdakota630,

Thanks brother.  You know I didn't mean any offence to you :)

David in Qatar

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#8) On August 09, 2009 at 2:02 PM, selfdestruct2 (35.85) wrote:

Great post.

Comrade FinancialModeler, wake up.

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#9) On August 09, 2009 at 2:22 PM, FinancialModeler (27.31) wrote:

whereaminow...

You put your faith in the American people? LOL. Most Americans don't even know what the Federal Reserve is! Of course they'r going to say yes, audit the Fed. They don't even know the Fed is already audited. Congressman included. 

"As for making sure our revolution never gets off the ground, will this involve jackboots?"

Most revolutions involve jack boots on the existing order, and even on themselves, so I'd have to ask you the same question to you. Most revolutions fail to bring about the "freedom" they promise. All I'm saying is, whatever level the Ron Paul brigades get to with their revolution, the rest of us will counter you. I will do whatever I can to make laissez-faire capitalism never becomes the status quo.

Most people want government involvement in the economy at some level. You gonna use jack boots on them? Obama was voted into office for a reason, and it wasn't on libertarian principles. 

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#10) On August 09, 2009 at 2:23 PM, FinancialModeler (27.31) wrote:

selfdestruct2

Wake up? LOL. I'm only awake if I agree with your radical libertarian agenda right?

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#11) On August 09, 2009 at 2:39 PM, whereaminow (< 20) wrote:

For those interested, here is what HR 1207 proposes:

Currently, section 714 of Title 31 subsection (b) reads:

Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing.

HR 1207 will change it as follows:

Under regulations of the Comptroller General, the Comptroller General shall audit an agency.

HR 1207 requires the audit to be completed before the end of 2010.

The report shall be made available to various members of Congress - minority and majority leaders, banking and finance committe members, etc.

The report shall include a detailed description of the findings and a summary, as well as recommendations from the Comptroller General.

That is all.

HR 1207

Section 714 of Title 31

I wonder what they are so afraid of?

David in Qatar

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#12) On August 09, 2009 at 4:00 PM, starbucks4ever (98.13) wrote:

If they do audit the Fed, I don't think they will find any irregularities. Why go Enron when you can steal more money than Ken Lay could ever dream of, and it will be perfectly legal?

 

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#13) On August 09, 2009 at 4:28 PM, angusthermopylae (40.24) wrote:

I'm an IT-type...not the CISSP, but I'm applying for Graduate School at Ohio University for a degree in Electrical Engineering-Computer Science.  If all goes well (and the GI bill will pay for enough), I'll continue on for my PhD in the same area.

Why that major, and why now?  First, because, despite arguments to the contrary, I think the IT realm still has some surprises....and it would be nice to be part of those surprises.

Second, the economy sucks (duh...no surprise there.)  Since the GI bill is going to pay for it, going to school for 1.5-3.5 years is not a bad idea.  By the time things turn around, I might actually have some training that will be useful on an upswing.

Third, and related to the second, I've always believed that IT is going to be a lot like being a car mechanic:  Everyone has a car/computer, very few people really know what's going on under the hood, and if you understand the guts and operations well enough, someone will be willing to pay you for it.

Good luck on the CISSP.

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#14) On August 09, 2009 at 4:33 PM, cthomas1017 (98.06) wrote:

David,

You wrote, "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."

Are you making the accusation that some Air Force or Navy higher up in the Pentagon is knowingly making a decision to murder a family of four - and that the "feet on the ground" suffer the consequences of such a decision?  f you know of a case where such a decision was made, then you are obliged by your code-of-conduct to report the incident.  A court marshall will necessarily ensue.

Other than that statement (and I will confess that perhaps I read it out of context), this was an excellent post.  I have yet to meet a bloodthirsty member of the US military who could be in a position to knowingly plot the bombing of an innocent family.  And if there is such a person, they deserve a much more derogatory term than "jerk".  Something more like "cold blooded killer" or "psychopath".  I've always enjoyed your commentary, so this one sentence stood out as being out of character for you.

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#15) On August 09, 2009 at 4:46 PM, whereaminow (< 20) wrote:

cthomas1017,

Yes, I am fully aware of members of the US military, particularly the Air Force, discharging their payloads without confirmation that the intended targets were actually bad guys.  This has happened on several occasions during the last 3 years.  The US government has performed investigations and done internal reprimands.  The State media has purposely buried this information.  You would need to read Al Jazeera or another Middle Eastern news feed to find out the truth (how sad is that?)

I referenced one specific incident here in a previous blog. Here is a story about the killing of a wedding party.

I am also aware of Marine Generals complaining vocally that the current Air Force attitude of engagement is leading to a backlash towards troops on the ground and putting them in harm's way. 

I don't believe that it is the purpose of any military officer to kill civilians, however I do believe that there is a tremendous disconnect between the attitudes of pilots and the realities of ground war. 

I will say no more beyond what is freely available through the news.

David in Qatar

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#16) On August 09, 2009 at 4:53 PM, whereaminow (< 20) wrote:

angusthermopylae,

LOL, if I wanted to know what the future of IT may hold, the last place I would look is the backward, unprofitable New York Times.  They were relevant commentary 70 years ago.

Good luck to you as well. Virtualization, information security, database management, software engineering, etc etc.  The IT field is so broad and there is so much that you can master.  If you enjoy learning new stuff all the time, it's the place to be.  It also pays well and is easy on the body :)

David in Qatar 

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#17) On August 09, 2009 at 5:35 PM, DaretothREdux (39.07) wrote:

I hope your wrong about Shiff and Rand Paul...other than that, great post.

Dare

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#18) On August 09, 2009 at 6:50 PM, whereaminow (< 20) wrote:

DaretothREdux,

Me too. Rand probably has a better shot, due to the state politics and name recognition. 

And thanks. 

David in Qatar

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#19) On August 09, 2009 at 11:46 PM, HighRisk41 (27.39) wrote:

http://www.campaignforliberty.com/

Join the tea party movement 

David,

  Wow, one of the best posts I've read on caps. Well done my friend!

I'll be in Washington on 9/12 and I hope the protest is peaceful and gets the point accross that Americans are tired of our government corruption and rampant spending. I also think it will be a few years before people like FinancialModeler realize how far our government has pulled the wool over our eyes. 

But kudos my friend and like Dare I hope your wrong about Peter and Rand too. 

Rand Paul

Peter Schiff

Good luck on your test and god bless. 

 

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#20) On August 09, 2009 at 11:51 PM, tonylogan1 (28.22) wrote:

Whereaminow - great post.

Still looking forward to the ignore feature for FM and other such nonsense posters.

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#21) On August 10, 2009 at 1:03 AM, ChrisGraley (29.77) wrote:

One of the best posts I've ever read David. You managed to convey my own thoughts better than I ever had.

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#22) On August 10, 2009 at 1:22 AM, LydiaVorst (< 20) wrote:

FinancialModeler

you wrote:

 Most Americans don't even know what the Federal Reserve is! Of course they'r going to say yes, audit the Fed. They don't even know the Fed is already audited. Congressman included. 

Here is what The Man who audits the Fed says about the US Economy.

Note the key comment, "we suffer from a fiscal cancer."

Here is the link to the video:

http://www.youtube.com/watch?v=OS2fI2p9iVs

 

 

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#23) On August 10, 2009 at 1:55 AM, FinancialModeler (27.31) wrote:

tonylogan1

 

Can't handle opposing points of view? Really shows how secure you are in your beliefs. 

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#24) On August 10, 2009 at 1:59 AM, FinancialModeler (27.31) wrote:

 HighRisk41

Where have I ever endorsed permanent government dificit spending? I haven't. What I don't tolerate too well is people who politicians to intrude on the Federal Reserve's monetary policy. The Fed is transparent. We can all read their minutes from their FOMC meetings, read their balance sheet, watch Fed Chairman's hearing before Congressional committees, etc etc. The idea that the Fed is some evil entity only out to enslave the nation has got to be one of the most ignorant points of view I encounter with any frequency.

I'm not saying that's what you believe because I don't know what you believe in regards to the Fed. What we can agree on is government spending needs to come down substantially when this economic recovery picks up. 

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#25) On August 10, 2009 at 2:04 AM, FinancialModeler (27.31) wrote:

LydiaVorst

What does that have to do with my point on the Federal Reserve? Fiscal policy and monetary policy are two separate things. I have already stated that I'm just as alarmed as anyone else with the federal government's fiscal policy. What I am not with anyone on is the Ron Paul Revolution to destroy our economy by shutting down the central bank and withdrawal from intranational governing bodies like the United Nations. 

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#26) On August 10, 2009 at 2:49 AM, uclayoda87 (29.29) wrote:

Nice post.

 Peter Schiff is raising money fast for his Republican Primary race and is ahead of his potential opponent.  If he gets past the Primary, he should have a good chance of defeating Dodd.  But if he gets into the Senate, he will somehow have to divest himself from EuroPac and I am not sure he is ready to seperate himself from his own company.

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#27) On August 10, 2009 at 6:36 AM, HighRisk41 (27.39) wrote:

FinancialModeler

I understand what your saying and believe each person has a right to their own opinion. It is true Ron Paul would love to get rid of the the Federal reserve but his current bill is just an update on the current audit policy over the Federal reserve. This is the kind of stuff that scares me about the Federal Reserve. 

 But like you my true anger comes from our current governments out of control spending and incompentance. I dont see anything wrong with government intervention but not like this. Thats is why I will be protesting. 

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#28) On August 10, 2009 at 9:23 AM, 34thdegree (< 20) wrote:

"Where is this Real Life, and how do I get there?"

Start by telling the bankers of the world to keep their worthless paper. Everyday, people "go to work" to earn worthless money. The only thing that gives money value is debt, which makes those people slaves to the banking system. To find real life, you must first free yourself from debt. Your next step would be to quit your job and start thinking for yourself. Become self-reliant and produce something beneficial to your survival.

"Does it involve living off the hard work others?  If so, count me out."

And this is where true wealth comes in. Wealth is determined on how lazy we want to be. How many people can I enslave by giving them worthless money for thier hard work? Example: I give worthless money to my enslaved telecom company so I can pick up the phone and give more worthless money to my enslaved pizza joint so they can bring me my favorite pizza to eat. All I had to do was pick up the phone and move my gluttoned body to the front door to receive a basic civic need; food. How many people did I enslave with worthless paper to make that happen? Think about that for awhile.

For the record; I've been unemployed for six months and haven't made a cent of income since the day I was fired. How do I do it? Simple; I have no debt and filled with enough knowledge to be self-sustaining. I will survive and flourish on the slaves that will be knocking on my door for something to eat. No income means no income tax. Oh well, I guess some govt employee will get laid off since I'm not paying their salary anymore.

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#29) On August 10, 2009 at 2:45 PM, Rehydrogenated (32.15) wrote:

Great post! And great replies as well!

We all know the air force takes a lot of crap from the other branches. It's important to think about how they have more power at the press of a few buttons than any one human should ever have. Mistakes are made. I know one of the men who decides what targets to bomb and how to aim the bombs so casualties are minimal. He has tried to replace himself with over 100 trainees, but none of them could take the pressure. How do you find a trustworthy, intelligence psychopath who is going to do that job? The truth is no one should have to. War is a racket. Enough said. 

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#30) On August 10, 2009 at 3:33 PM, DaretothREdux (39.07) wrote:

I just thought I would bump this post again since it was written over the weekend...in case someone has not got the chance to see it.

Dare

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#31) On August 10, 2009 at 5:32 PM, tonylogan1 (28.22) wrote:

FM - I've had "debates" with you in the past and have determined that your views are not just "opposing". I like learning from others, but your comments lack insight and are frequently just plain wrong. Replying to them results in a spiral down into a web of stupidity, and you know what they say about havin an argument with an idiot.

Since I do not have the time to continually entertain nonsense, I like the ability to ignore those who have proven they are either jerky, or useless, or fit into any other category I want to ignore.

There will be no replies to any subsequent posts for reasons delineated above.

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