Mr. President What About Foreign Policy?
By Warren Cooley Platinum Quality Author
Our Foreign policy is antiquated and driven by economics and our dependence on energy from foreign soil. We are beginning today to reconcile our policies with the conditions as they exist in the world today. Huge centers of population, namely China and India are emerging as modern strong economies. Nearly half of the world’s population stands at the edge of rapid economic development. The pressure this will put on the earths natural resources can not be calculated with any measure of accuracy. However, we can already see that a foreign policy that seeks to dominate is no longer workable. Our foreign policy must be centered on cooperating, innovating, and trading for the resources required to sustain wealth and our standard of living. It is only by pulling the emerging economies up we can sustain our leadership in the world.
The tradition of these United States is as a beacon of hope, liberty and freedom for countries around the world. A foreign policy that seeks to allow this beacon to shine into the dark corners of the world can only do so by example. Our foreign policy should shift from being one concerned with exerting influence to one that influences by example. Clearly more freedom and liberty promotes the emergence of human potential. Our foreign policy should reflect our interests in the growth of freedom and liberty but never seek to impose these values on another nation. Our foreign policy must be consistently constrained to withdrawing support from nations, regions or groups that do not share our interest for the growth of human freedom and liberty. At the same time, we should seek always to keep open official pathways for dialogue and negotiation. It makes sense to withdraw from trade and exchange relationships but maintain diplomatic channels for discourse.
Where we have allowed our nation to fall into unhealthy relationships because of a dependence on foreign material resource or goods we should seek to immediately rebalance these relationships and rehabilitate ours selves from unhealthy dependence. This should be done not just to curb an unhealthy dependence but more to reclaim the freedom and liberty that we have given over to poor judgment. If for example, we choose to drastically cut our imports of oil from the Middle East or consumer goods from China. It is not because we do not want trade and relationships with these countries. It is because we want back the freedom and liberty that was ours before we became dependent on their goods and resources.
By demonstrating how valuable our freedom and liberty are to us. Other countries and people all over the world will be inspired to fight for their own freedom. Yes, there will be costs in this new approach to foreign policy but, could they possibly be greater then the costs we are now incurring. This path is sustainable our current path is not.
The Secretary of State has been directed to open conversations with every government that has fallen out of diplomatic favor. The Secretary of Commerce has been directed to review the entirety of our trade and economic relations. Immediately both of these departments will begin to adjust to a new chapter in foreign policy relations. We will be a country that talks with everyone about growing freedom and liberty and begins to withdraw from trade and economic relationships that do not serve the growth of our own freedom and liberty or the growth of freedom and liberty for others. We will be open to everyone but trade only with those we can trust.
About the Author: Warren Cooley is a teacher, writer, thinker and web entrepreneur. He is currently focused on clearing the cultural and social misunderstanding about the nature of love and offer a deeper more profoundly useful notion of the power of love. He invites you to visit http://www.loveaha.com. He is also beginning what he refers to as “open source research” aimed at solving the world’s energy problems by inventing a new fusion energy source and engine. Occasionally he also writes on politics and education. If you would like to contact him directly email: warcooley@comcast.net.
Article Source: http://EzineArticles.com/?expert=Warren_Cooley
Alexis D'Tocqueville
Observer of America
Sunday, April 27, 2008
Saturday, April 26, 2008
On Liberty
One of the great works written about liberty, what liberty is, and how liberty is preserved was penned by Bastiat, whose "broken window" lesson we read about in the post on economics. The "broken window" scenario is what is also referred to in economics as "opportunity cost". Bastiat here in his book The Law educates us on liberty.
Walter Williams, famed economist at George Mason University, wrote in his foreward to The Law:
Many philosophers have made important contributions to the discourse on liberty, Bastiat among them. But Bastiat’s greatest contribution is that he took the discourse out of the ivory tower and made ideas on liberty so clear that even the unlettered can understand them and statists cannot obfuscate them. Clarity is crucial to persuading our fellowman of the moral superiority of personal liberty.
The Law , by Frederic Bastiat
Walter Williams, famed economist at George Mason University, wrote in his foreward to The Law:
Many philosophers have made important contributions to the discourse on liberty, Bastiat among them. But Bastiat’s greatest contribution is that he took the discourse out of the ivory tower and made ideas on liberty so clear that even the unlettered can understand them and statists cannot obfuscate them. Clarity is crucial to persuading our fellowman of the moral superiority of personal liberty.
The Law , by Frederic Bastiat
Federalist , No. 5
In Federalist ,No. 5 John Jay continues with his analysis of the benefits of a unified union and the dangers of a divided country and people.
The audio is here:
Federalist, No. 5
The audio is here:
Federalist, No. 5
Monday, April 21, 2008
On Economics
When I first began to consider politics and how politics in action is related to and affects liberty , I had never before considered the third piece of the politics-liberty puzzle: economics.
As I began to search the web for information about politics and liberty , I came across libertarianism , or classical liberalism. The more that I studied libertarianism , the ideas of voluntary exchange and maximum personal liberty , the more that it became clear to me that economics plays a central role in consideration of the other matters. They are all intertwined. For most of you this might not be a new revelation. But to me , at that time , it was.
Among the places that I landed in my searchings for subjects about politics and liberty was the Cato Institute. After reading a bit on that site , I enrolled in the Cato University; shortly thereafter , I received study materials. Among readings on liberty and libertarianism was included a book on economics. That book was Economics in One Lesson by Henry Hazlitt.
I have linked to it here at the Foundation for Economic Education website :
Economics in One Lesson
While it is available for purchase at F.E.E. , you can read the entire book at the website for free. I receive nothing from it if you should choose to purchase the book , as I am in no way affiliated with F.E.E. I have provided the link merely because I feel that it is important information for all to consider within the realm of politics , liberty , and economics. This is true of all other books that I will link to for your enjoyment at the F.E.E. site.
For those who would rather hear an audio-book reading of Economics in One Lesson it is presented in two parts.
You can listen here :
Part One
Part Two
As I began to search the web for information about politics and liberty , I came across libertarianism , or classical liberalism. The more that I studied libertarianism , the ideas of voluntary exchange and maximum personal liberty , the more that it became clear to me that economics plays a central role in consideration of the other matters. They are all intertwined. For most of you this might not be a new revelation. But to me , at that time , it was.
Among the places that I landed in my searchings for subjects about politics and liberty was the Cato Institute. After reading a bit on that site , I enrolled in the Cato University; shortly thereafter , I received study materials. Among readings on liberty and libertarianism was included a book on economics. That book was Economics in One Lesson by Henry Hazlitt.
I have linked to it here at the Foundation for Economic Education website :
Economics in One Lesson
While it is available for purchase at F.E.E. , you can read the entire book at the website for free. I receive nothing from it if you should choose to purchase the book , as I am in no way affiliated with F.E.E. I have provided the link merely because I feel that it is important information for all to consider within the realm of politics , liberty , and economics. This is true of all other books that I will link to for your enjoyment at the F.E.E. site.
For those who would rather hear an audio-book reading of Economics in One Lesson it is presented in two parts.
You can listen here :
Part One
Part Two
I have posted another Federalist : Federalist , No.4
I realize that I've been remiss while posting these important works. I haven't provided a subject-matter description of these numbers. Numbers 2 through 5 cover a very important subject ; that is , the dangers to the Union from foreign force and influences , and in this Number as is pointed out, against the American people , by the actions of their government , provoking the same. War-making and allowing foreign influences a place within the U.S. , or inviting aggression from other nations , have a profound and negative influence on the American people in all aspects of things relating to politics , liberty , and economics.
John Jay wrote in Federalist Number 4 :
"But the safety of the people of America against dangers from foreign force depends not only on their forbearing to give just causes of war to other nations, but also on their placing and continuing themselves in such a situation as not to invite hostility or insult; for it need not be observed that there are pretended as well as just causes of war....
There is great wisdom here. One mostly thinks of the U.S. going to war as a purely self-defense reaction ; a reaction to violence done against us. Here , Jay warns that not all attacks on us may arise from the natural aggressive natures of other peoples and nations. Rather , we may bring violence on ourselves.
The Law of Nations holds that each nation among the society of nations has certain rights it can claim for itself , just as there are rights among individuals within the society of his/her own nation. However , just as with individuals , if a nation will claim for itself a right it also has duties it then owes to other nations. A nation has the right to safety from aggression by other nations , so long as that nation itself remains a non-aggressor against her neighbor nations.
Nations have a duty to forebear using violence against other nations , with self-defense being an exception. If a nation will expect that no other has a right to attack her then she must give every other nation that same respect and refrain from violence and interference in the affairs of every other nation. Whatever permission one nation gives itself to do among other nations , every other nation may claim that same permission for itself to do also. Thus , if the U.S. interferes in the internal affairs of other nations or uses violence against a non-aggressor nation (as in the case of Yugoslavia a few years back)then every other nation may claim the same right of action against other nations...even against the U.S. This is the kind of "blow-back" that Ron Paul mentions.
Jay continues.....
"It is too true, however disgraceful it may be to human nature, that nations in general will make war whenever they have a prospect of getting anything by it; nay, absolute monarchs will often make war when their nations are to get nothing by it, but for the purposes and objects merely personal, such as thirst for military glory, revenge for personal affronts, ambition, or private compacts to aggrandize or support their particular families or partisans."
These forms of action are spoken of in the language of politics as "National interest." , or "National security." But, what is really meant by them is commercial interests ; interests in controlling other nations' resources. The real object behind such forays is cloaked in terms of nationalism , such that the people will not only not object to such action in behalf of private commercial interests , but will , out of a sense of either national pride (patriotism) or fear of the demonized nation against whom we must guard our "national interest" , actively and enthusiastically support or even encourage such use of violence.
I have included below links to the Federalist numbers in written form in case anyone would rather read them instead of listen to the audio book segments in my blog.
Federalist , No.1
Federalist , No.2
Federalist , No.3
I realize that I've been remiss while posting these important works. I haven't provided a subject-matter description of these numbers. Numbers 2 through 5 cover a very important subject ; that is , the dangers to the Union from foreign force and influences , and in this Number as is pointed out, against the American people , by the actions of their government , provoking the same. War-making and allowing foreign influences a place within the U.S. , or inviting aggression from other nations , have a profound and negative influence on the American people in all aspects of things relating to politics , liberty , and economics.
John Jay wrote in Federalist Number 4 :
"But the safety of the people of America against dangers from foreign force depends not only on their forbearing to give just causes of war to other nations, but also on their placing and continuing themselves in such a situation as not to invite hostility or insult; for it need not be observed that there are pretended as well as just causes of war....
There is great wisdom here. One mostly thinks of the U.S. going to war as a purely self-defense reaction ; a reaction to violence done against us. Here , Jay warns that not all attacks on us may arise from the natural aggressive natures of other peoples and nations. Rather , we may bring violence on ourselves.
The Law of Nations holds that each nation among the society of nations has certain rights it can claim for itself , just as there are rights among individuals within the society of his/her own nation. However , just as with individuals , if a nation will claim for itself a right it also has duties it then owes to other nations. A nation has the right to safety from aggression by other nations , so long as that nation itself remains a non-aggressor against her neighbor nations.
Nations have a duty to forebear using violence against other nations , with self-defense being an exception. If a nation will expect that no other has a right to attack her then she must give every other nation that same respect and refrain from violence and interference in the affairs of every other nation. Whatever permission one nation gives itself to do among other nations , every other nation may claim that same permission for itself to do also. Thus , if the U.S. interferes in the internal affairs of other nations or uses violence against a non-aggressor nation (as in the case of Yugoslavia a few years back)then every other nation may claim the same right of action against other nations...even against the U.S. This is the kind of "blow-back" that Ron Paul mentions.
Jay continues.....
"It is too true, however disgraceful it may be to human nature, that nations in general will make war whenever they have a prospect of getting anything by it; nay, absolute monarchs will often make war when their nations are to get nothing by it, but for the purposes and objects merely personal, such as thirst for military glory, revenge for personal affronts, ambition, or private compacts to aggrandize or support their particular families or partisans."
These forms of action are spoken of in the language of politics as "National interest." , or "National security." But, what is really meant by them is commercial interests ; interests in controlling other nations' resources. The real object behind such forays is cloaked in terms of nationalism , such that the people will not only not object to such action in behalf of private commercial interests , but will , out of a sense of either national pride (patriotism) or fear of the demonized nation against whom we must guard our "national interest" , actively and enthusiastically support or even encourage such use of violence.
I have included below links to the Federalist numbers in written form in case anyone would rather read them instead of listen to the audio book segments in my blog.
Federalist , No.1
Federalist , No.2
Federalist , No.3
Thursday, April 17, 2008
Show Me the Money ; Part II
In yesterday's post I wrote that people would be ill-advised to stuff their mattresses with cash in order to protect its value. Today , I provide a like to and article which shows the definite interconnectedness between politics , liberty , and economics.
As the article shows , the safest place to put your present money , given an out-of-control central bank and failing economy is in things of real value , like a home, or any other tangible good that will aid you in living when the time comes that your cash has been devalued to the point where it has more value as firewood than as a currency. When that time comes you may be very glad that you stuffed your mattress with cash ; not because you now have a ready supply of cash you can use to buy things with , but because you at least have filling for your mattress to make your bed more comfortable.
When it comes down to it , when your cash is worthless , when it takes a wheelbarrow full of dollars just to buy a slice of bread , when the wheelbarrow you use to carry the dollars in is more valuable than the sum total of all the dollars in it , you have to ask yourself ,"How will I survive? Where should I put my money now so that when that time comes I will not starve to death , or freeze to death in the streets when I am made homeless?" Well , how will you? And should you?
In my opinion , while cash has the value it does , you should be paying off your houses , paying off your credit cards , storing a supply of food and water , investing in a power generating system (solar and wind generated) , learning to grow and preserve your own food , have a wood burning stove , and the like. When the cash you earn , or have stored in your mattresses , falls in value such that you can't buy food , or pay your mortgage , or pay your electric bill , you will need to be able to live without cash. You will have to live without it. If you have a place to live , food to eat , water to drink , produce your own energy , grow your own food , etc. then the fact that the dollar is worthless and the most basic goods are priced in the trillions of dollars won't make a difference to your very survival.
Will you be able to live in luxury? Probably not. But , you will be able to live!
Is all this gloom-and-doom nothing more than an alarmist fantasy? The cogitations of a conspiracy theorist nutjob? Can it really happen? Well , my friends , it has already happened ; and , it happened to a people who didn't see it coming ; who didn't believe it was possible. But , it did come , and it was possible , and it was devastating. We are on the same road to devastation...believe it or not.
As the article shows , the safest place to put your present money , given an out-of-control central bank and failing economy is in things of real value , like a home, or any other tangible good that will aid you in living when the time comes that your cash has been devalued to the point where it has more value as firewood than as a currency. When that time comes you may be very glad that you stuffed your mattress with cash ; not because you now have a ready supply of cash you can use to buy things with , but because you at least have filling for your mattress to make your bed more comfortable.
When it comes down to it , when your cash is worthless , when it takes a wheelbarrow full of dollars just to buy a slice of bread , when the wheelbarrow you use to carry the dollars in is more valuable than the sum total of all the dollars in it , you have to ask yourself ,"How will I survive? Where should I put my money now so that when that time comes I will not starve to death , or freeze to death in the streets when I am made homeless?" Well , how will you? And should you?
In my opinion , while cash has the value it does , you should be paying off your houses , paying off your credit cards , storing a supply of food and water , investing in a power generating system (solar and wind generated) , learning to grow and preserve your own food , have a wood burning stove , and the like. When the cash you earn , or have stored in your mattresses , falls in value such that you can't buy food , or pay your mortgage , or pay your electric bill , you will need to be able to live without cash. You will have to live without it. If you have a place to live , food to eat , water to drink , produce your own energy , grow your own food , etc. then the fact that the dollar is worthless and the most basic goods are priced in the trillions of dollars won't make a difference to your very survival.
Will you be able to live in luxury? Probably not. But , you will be able to live!
Is all this gloom-and-doom nothing more than an alarmist fantasy? The cogitations of a conspiracy theorist nutjob? Can it really happen? Well , my friends , it has already happened ; and , it happened to a people who didn't see it coming ; who didn't believe it was possible. But , it did come , and it was possible , and it was devastating. We are on the same road to devastation...believe it or not.
Wednesday, April 16, 2008
An Illustrated History...Part I
Here is a video series I came across which addresses money creation and banking :
Show Me the Money! Ok , Where is it?
Here is an article I came across that I though might be of interest:
Stash The Cash
By Christopher Klein
The following is an excerpt from SafeHaven.com
Bold is my emphasis
Printing Money to Avoid Immediate Banking Collapse
"According to the Federal Reserve Board website, U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that's not a typo) in the last month. We have been discussing this with Sitka Pacific Capital's Mike 'Mish' Shedlock for the last two weeks. He concludes: "Banks in aggregate have now burnt through all of their capital and are forced to borrow reserves from the Fed in order to keep lending." Simply put, the U.S. banking system has no reserves. In addition, the FDIC has recently begun modernizing large-bank insurance rules. We hope this is a wake-up call to everyone as to the extent of the credit crisis. Bank account balances should be used only for transactions. Instead cash should be held in the form of U.S. Treasury Bills at a conservative brokerage or trust. Under the mattress is also perfectly acceptable (your parents or grandparents had to do it!). For investors, we advised last year to sell the banks. Banks will be soon forced to sell assets (yes, even 10 year Treasury Bonds) at deeply discounted prices to pay depositors."
These guys are actually recommending that you keep all your money in either CASH in your house, or by short term treasuries. Only use a bank account to pay your bills, i.e. checks or card transactions.
Also, pay attention to the first part...
"U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that's not a typo) in the last month."
This is an actual Federal Reserve statistic, and is quite alarming. What this means is that in the entire federal banking system, according to the Federal Reserve, banks ONLY HAVE 199 MILLION of "cash". Banks are required to keep a percentage of their assets as "reserves" which used to mean actual cash in the vault so that in the event of a run on the bank they have money to hand out to their depositors. The Fed regulates this percentage and it varies (slightly) day to day. If a bank does not have the required reserves, it must borrow them by either going to another bank (the overnite, or fed funds rate) or borrowing directly from the Fed. (the discount rate).
The fact that the entire banking system has now borrowed over 90 percent of it's reserve requirements from the Fed or other banks is absolutely Orwellian. It signifies more than a credit crunch. What it means is that the banking system is currently damn near out of money.
This is NOT a good sign. This is bad bad bad. I am seriously considering the mattress cash.
For this and other great commentary about the state of our economy, follow Chris Klein at Wreckonomics
---------------------------------------------------------------------------------------------------
Now, personally, I can't in good conscience advise people to either put their cash into U.S. Treasuries or stash it under their mattresses. The former course of action might be something to consider only from the standpoint that U.S. Treasuries are backed by "the full faith and credit of the United States"--for whatever that's worth. The mattress method "seriously" advocated may well be tongue-in-cheek ; I don't know. But , if it is a serious suggestion it is, in my opinion, the absolute worst thing someone can do.
In the world of economics, where money is concerned, people tend to act according to certain basic principles relating to the value of money(the medium of exchange). In the face of the declining value of money people will tend to want to use the money while it has a higher value ; they will want to use it before its value decreases below its present value.
As an example , a couple of weeks ago I had to fill up my car's gas tank. This was when the price of a barrel of oil was "sky-rocketing" and gold was over $1,000 an ounce. I thought to myself, "Should I fill up the tank or only fill it half-way to save myself some money , since gas prices had gone up a bit?" I decided to fill it up all the way. Why? Because I thought, "If I fill up only half-way at today's price and prices are higher the next time I go to put gas in the tank , even if I only fill up half-way again , the same amount of gas will cost me more money."
In the face of higher future prices , I decided to buy(spend) all the gas (good) I could now because I thought prices would go higher in the future and my money would buy less of the same good then. Had I decided to only fill up the tank half-way I would have , in effect , been stashing money(the money not spent in filling up the second half of the tank)under my mattress--assuming I did not spend the money saved on some other good. And this is the reason that , in the face of the declining value of a dollar , people are ill-advised to stuff their mattresses with cash!
According to the laws of supply and demand , when you have a high demand for a good and a small supply of the good the price of the good will increase ; when you have a low demand for a good that is in great supply then you will have a decrease in the price for buying the good. When demand for and supply of a good are equal then the price of the good will remain constant--this is called equilibrium. But , in the case where a good is in a state of price equilibrium can something other than the supply of, or the demand for, the good itself cause prices to rise? Yes! The supply of money (cash)...in our present situation, as the Federal Reserve prints more and more, the increasing supply of money.
As the supply of money goes up the value of each unit (dollar) of money goes down. As the value of each unit of money goes down it takes more units of money to buy a good. If I have one dollar now and the Federal Reserve prints and circulates enough additional dollars to decrease the value of the dollar I now hold in my hand by ten cents then the current value of the dollar I hold is now 90 cents. The supply of a certain good in equilibrium has not gone up ; the demand for that good has not gone up ; but , because my dollar is now worth 10% less than what it was before , it will take more money to buy the same good! The price of the good , in terms of money , will be greater! This is inflation. Inflation (higher prices for goods) happens because the value of money goes down.
You can't protect the value of your cash (its buying power) by hiding it in your mattress. Why? Because all the time that your cash in sitting there the Federal Reserve is printing and circulating more and more into the system--more importantly ,thanks to fractional reserve banking , banks are creating more and more money from thin air--devaluing the buying power of your cash. Let's say that you stash the cash for three years ; all the while the Federal Reserve is printing and printing cash , which devalues the dollar at 3% each year. At the end of the three years you dig out some cash from your mattress to buy some food. What once cost you $1 three years ago now costs you $1.09! To your astonishment , you find that you now have to pay 9% more for food than you did three years ago! This is inflation on a small scale!
In Part II of this post (coming tomorrow) take a look at a real world example of what a central bank , like the Federal Reserve , can do to the value of money in a very short period of time.
Stash The Cash
By Christopher Klein
The following is an excerpt from SafeHaven.com
Bold is my emphasis
Printing Money to Avoid Immediate Banking Collapse
"According to the Federal Reserve Board website, U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that's not a typo) in the last month. We have been discussing this with Sitka Pacific Capital's Mike 'Mish' Shedlock for the last two weeks. He concludes: "Banks in aggregate have now burnt through all of their capital and are forced to borrow reserves from the Fed in order to keep lending." Simply put, the U.S. banking system has no reserves. In addition, the FDIC has recently begun modernizing large-bank insurance rules. We hope this is a wake-up call to everyone as to the extent of the credit crisis. Bank account balances should be used only for transactions. Instead cash should be held in the form of U.S. Treasury Bills at a conservative brokerage or trust. Under the mattress is also perfectly acceptable (your parents or grandparents had to do it!). For investors, we advised last year to sell the banks. Banks will be soon forced to sell assets (yes, even 10 year Treasury Bonds) at deeply discounted prices to pay depositors."
These guys are actually recommending that you keep all your money in either CASH in your house, or by short term treasuries. Only use a bank account to pay your bills, i.e. checks or card transactions.
Also, pay attention to the first part...
"U.S. non-borrowed bank reserves have gone from $37B to $199M (nope, that's not a typo) in the last month."
This is an actual Federal Reserve statistic, and is quite alarming. What this means is that in the entire federal banking system, according to the Federal Reserve, banks ONLY HAVE 199 MILLION of "cash". Banks are required to keep a percentage of their assets as "reserves" which used to mean actual cash in the vault so that in the event of a run on the bank they have money to hand out to their depositors. The Fed regulates this percentage and it varies (slightly) day to day. If a bank does not have the required reserves, it must borrow them by either going to another bank (the overnite, or fed funds rate) or borrowing directly from the Fed. (the discount rate).
The fact that the entire banking system has now borrowed over 90 percent of it's reserve requirements from the Fed or other banks is absolutely Orwellian. It signifies more than a credit crunch. What it means is that the banking system is currently damn near out of money.
This is NOT a good sign. This is bad bad bad. I am seriously considering the mattress cash.
For this and other great commentary about the state of our economy, follow Chris Klein at Wreckonomics
---------------------------------------------------------------------------------------------------
Now, personally, I can't in good conscience advise people to either put their cash into U.S. Treasuries or stash it under their mattresses. The former course of action might be something to consider only from the standpoint that U.S. Treasuries are backed by "the full faith and credit of the United States"--for whatever that's worth. The mattress method "seriously" advocated may well be tongue-in-cheek ; I don't know. But , if it is a serious suggestion it is, in my opinion, the absolute worst thing someone can do.
In the world of economics, where money is concerned, people tend to act according to certain basic principles relating to the value of money(the medium of exchange). In the face of the declining value of money people will tend to want to use the money while it has a higher value ; they will want to use it before its value decreases below its present value.
As an example , a couple of weeks ago I had to fill up my car's gas tank. This was when the price of a barrel of oil was "sky-rocketing" and gold was over $1,000 an ounce. I thought to myself, "Should I fill up the tank or only fill it half-way to save myself some money , since gas prices had gone up a bit?" I decided to fill it up all the way. Why? Because I thought, "If I fill up only half-way at today's price and prices are higher the next time I go to put gas in the tank , even if I only fill up half-way again , the same amount of gas will cost me more money."
In the face of higher future prices , I decided to buy(spend) all the gas (good) I could now because I thought prices would go higher in the future and my money would buy less of the same good then. Had I decided to only fill up the tank half-way I would have , in effect , been stashing money(the money not spent in filling up the second half of the tank)under my mattress--assuming I did not spend the money saved on some other good. And this is the reason that , in the face of the declining value of a dollar , people are ill-advised to stuff their mattresses with cash!
According to the laws of supply and demand , when you have a high demand for a good and a small supply of the good the price of the good will increase ; when you have a low demand for a good that is in great supply then you will have a decrease in the price for buying the good. When demand for and supply of a good are equal then the price of the good will remain constant--this is called equilibrium. But , in the case where a good is in a state of price equilibrium can something other than the supply of, or the demand for, the good itself cause prices to rise? Yes! The supply of money (cash)...in our present situation, as the Federal Reserve prints more and more, the increasing supply of money.
As the supply of money goes up the value of each unit (dollar) of money goes down. As the value of each unit of money goes down it takes more units of money to buy a good. If I have one dollar now and the Federal Reserve prints and circulates enough additional dollars to decrease the value of the dollar I now hold in my hand by ten cents then the current value of the dollar I hold is now 90 cents. The supply of a certain good in equilibrium has not gone up ; the demand for that good has not gone up ; but , because my dollar is now worth 10% less than what it was before , it will take more money to buy the same good! The price of the good , in terms of money , will be greater! This is inflation. Inflation (higher prices for goods) happens because the value of money goes down.
You can't protect the value of your cash (its buying power) by hiding it in your mattress. Why? Because all the time that your cash in sitting there the Federal Reserve is printing and circulating more and more into the system--more importantly ,thanks to fractional reserve banking , banks are creating more and more money from thin air--devaluing the buying power of your cash. Let's say that you stash the cash for three years ; all the while the Federal Reserve is printing and printing cash , which devalues the dollar at 3% each year. At the end of the three years you dig out some cash from your mattress to buy some food. What once cost you $1 three years ago now costs you $1.09! To your astonishment , you find that you now have to pay 9% more for food than you did three years ago! This is inflation on a small scale!
In Part II of this post (coming tomorrow) take a look at a real world example of what a central bank , like the Federal Reserve , can do to the value of money in a very short period of time.
Sunday, April 13, 2008
War , What is it Good For?
The expansion of government power and control , that's what!
The ideals of liberty deal with many subjects ; but, one of the most important subjects in human relations is that of the use of violence against others. It is so because when this right is violated it can deprive each of us of the most basic right--life--which when trespassed renders all other rights useless. Stating the obvious , when you are dead neither politics , liberty , nor economics matter.
Without going into too much detail about the law , of course violence when used by one individual against another is justified , even when death results , when the person using the violence is doing so in defense of his own life , or in defense of another's life. It used to be the case , and is still absent government , that people could use violence against others to regain property stolen from them. This is called "private justice". The nature of some humans , being what it is , where people are left without government and everything is based on voluntary exchange , there are those who will take by force-rob. Absent government the "victim" of the robbery was left with two choices : 1. Forget about his stolen property , or 2.Use whatever force he needed to (private justice)in order to get his property back. While it certainly was a right , the use of private justice in society isn't necessarily a good thing. Not only does it put society at risk of constant private feuds , acts of revenge and retaliation , but the victim (whether he is weaker or stronger than the offender) has to put his life or health at risk in exercising private justice while trying to get his property back. That is where men (ok , and women) thought that it would be best for government to step in.
Jefferson wrote about government in the Declaration of Independence , writing "That to secure these rights,...(life , liberty and the pursuit of happiness)..." Governments are instituted among Men, deriving their just powers from the consent of the governed,..." Rather than expose themselves to the risks of exercising private justice , men instituted government to secure to themselves these rights , among other things , in property ; they gave over their rights to private justice by consenting to give that power to the government they instituted for that purpose. The government now exercised public justice , employed courts of law and justice to settle matters in dispute , and established its own institutions to employ force to carry out its judgments when a violator of another's rights would not yield. The government also necessarily was given the power to extend its use of force in our defense against other nations.
In giving government this power to employ force we not only gave away a right in ourselves of using violence in private justice , but we most certainly set ourselves up for the government to be able to use force in others ways , both against ourselves and other nations , that we surely did not intend. This is why the Founders tried to make it very clear that the government was to one of limited powers , that war must be declared , that the branches of government were to be divided , and that the government was put on notice in the ten amendments to the Constitution that the People's fundamental rights were to be respected. It wasn't enough!
As government is made up of human beings , many for whom power and control over their fellows is an aphrodisiac , the potential always exists for the fatal error to come to pass in giving over our rights to these individuals , who act as agents government. The danger is that individuals who might , absent government , be the very ones trespassing against the rights of others may get elected to government office and now have the force of the state at their beck and call to help them carry out their private ambitions. Rather than employing force in the defense of the governed , these individuals now employ force at the expense of the liberty and security of those who gave up their right to private justice in exchange for government protection.
What has been the result? The men and women--not some faceless creature called the "Government"--have employed force in ways that we did not intend , and that to our detriment. In his book Libertarianism : A Primer David Boaz tells us how government uses fear and violence to take from us our liberty , not just in the area of politics and economics , but control over our very lives.
Judge Andrew Napolitano has quite a bit to say about government's expansion of its power over us during times of "war" in the following 3 part video series. The series actually consists of 4 vids , but the first really isn't content specific rich so I just included the relevant parts. :
The ideals of liberty deal with many subjects ; but, one of the most important subjects in human relations is that of the use of violence against others. It is so because when this right is violated it can deprive each of us of the most basic right--life--which when trespassed renders all other rights useless. Stating the obvious , when you are dead neither politics , liberty , nor economics matter.
Without going into too much detail about the law , of course violence when used by one individual against another is justified , even when death results , when the person using the violence is doing so in defense of his own life , or in defense of another's life. It used to be the case , and is still absent government , that people could use violence against others to regain property stolen from them. This is called "private justice". The nature of some humans , being what it is , where people are left without government and everything is based on voluntary exchange , there are those who will take by force-rob. Absent government the "victim" of the robbery was left with two choices : 1. Forget about his stolen property , or 2.Use whatever force he needed to (private justice)in order to get his property back. While it certainly was a right , the use of private justice in society isn't necessarily a good thing. Not only does it put society at risk of constant private feuds , acts of revenge and retaliation , but the victim (whether he is weaker or stronger than the offender) has to put his life or health at risk in exercising private justice while trying to get his property back. That is where men (ok , and women) thought that it would be best for government to step in.
Jefferson wrote about government in the Declaration of Independence , writing "That to secure these rights,...(life , liberty and the pursuit of happiness)..." Governments are instituted among Men, deriving their just powers from the consent of the governed,..." Rather than expose themselves to the risks of exercising private justice , men instituted government to secure to themselves these rights , among other things , in property ; they gave over their rights to private justice by consenting to give that power to the government they instituted for that purpose. The government now exercised public justice , employed courts of law and justice to settle matters in dispute , and established its own institutions to employ force to carry out its judgments when a violator of another's rights would not yield. The government also necessarily was given the power to extend its use of force in our defense against other nations.
In giving government this power to employ force we not only gave away a right in ourselves of using violence in private justice , but we most certainly set ourselves up for the government to be able to use force in others ways , both against ourselves and other nations , that we surely did not intend. This is why the Founders tried to make it very clear that the government was to one of limited powers , that war must be declared , that the branches of government were to be divided , and that the government was put on notice in the ten amendments to the Constitution that the People's fundamental rights were to be respected. It wasn't enough!
As government is made up of human beings , many for whom power and control over their fellows is an aphrodisiac , the potential always exists for the fatal error to come to pass in giving over our rights to these individuals , who act as agents government. The danger is that individuals who might , absent government , be the very ones trespassing against the rights of others may get elected to government office and now have the force of the state at their beck and call to help them carry out their private ambitions. Rather than employing force in the defense of the governed , these individuals now employ force at the expense of the liberty and security of those who gave up their right to private justice in exchange for government protection.
What has been the result? The men and women--not some faceless creature called the "Government"--have employed force in ways that we did not intend , and that to our detriment. In his book Libertarianism : A Primer David Boaz tells us how government uses fear and violence to take from us our liberty , not just in the area of politics and economics , but control over our very lives.
Judge Andrew Napolitano has quite a bit to say about government's expansion of its power over us during times of "war" in the following 3 part video series. The series actually consists of 4 vids , but the first really isn't content specific rich so I just included the relevant parts. :
An Introduction to Ludwig von Mises
In the areas of liberty and economics there are two great , yet disparate , schools of economic thought : The Keynesians (proponents of the theories of John Maynard Keynes) and those of the Austrian School (followers of the theories of Carl Menger , and later Ludwig von Mises). In our present environment in the U.S. the Keynesians hold the upper hand , and it is , by and large , the theories of the Keynesian school we see in operation. The main theory of the Keynesians is that the government could inject itself into economic activities via policies and regulation such that it could stimulate demand , keep unemployment and deflation in check , and make things all-around hunky-dory. Government can do these things in just the way we see it , through the Federal Reserve (which is not a federal agency) and through governmental departments , being done today.
The Austrian School thought runs counter to the Keynesians in that it looks to individual human action (praxaeology , as Mises called it) in which it is entrepreneurship , among other things , absent government interference in the activities of exchange between individuals , which makes for a truly free and health economy. This is a rather incomplete and simplistic explanation of things , but it is a start.
I've included a video biography introducing Ludwig von Mises here :
The Austrian School thought runs counter to the Keynesians in that it looks to individual human action (praxaeology , as Mises called it) in which it is entrepreneurship , among other things , absent government interference in the activities of exchange between individuals , which makes for a truly free and health economy. This is a rather incomplete and simplistic explanation of things , but it is a start.
I've included a video biography introducing Ludwig von Mises here :
The Beginning
First of all , welcome to my blog!
This is a new adventure for me , as I have never tried blogging before. Though I am late to the game , I am excited about giving this a try and sharing my thoughts about politics , liberty , and economics here with all of you who share the same interests. Although these may seem disparate subjects , as you know, all of these are intertwined and interrelated.
A very brief bit about my own journey is seen in my profile " about me" segment. As time goes on , I will sparingly interject my own thoughts and opinions about the subject matter of my blog , but rather than trying to re-invent the wheel it is my intention to post here articles and subject matter already addressed by the giants in these respective areas. These men and women of throughout the ages have already expressed these ideas far more capably than I ever could. I think it is wisdom to let them do the teaching , while my object will be , for the most part , to merely present them to you here for your edification.
Here you will find free e-books , links , and video on various subjects related to politics , liberty , and economics. I will certainly be engaged in writing about my own impressions of these things , of current events , and in reply to your comments. I look forward to your comments and input here and hope that we can have some interesting , informative and lively discussions here.
Lastly , all are welcome here. The exchange of differing ideas is what makes life interesting ; though I am of a classical liberal mind-set , I am very much welcoming of my "liberal" friends of the "left", with the hope that I can teach you a thing or two to bring you around to the right way of thinking! Still , in the interest of being "fair and balanced" , among the links here you will find one to my sister's blog " They Get Letters". Julie is what I call "A flaming liberal" , but I still love her...and even agree with many of her views!
Warning: Julie can sometimes be very colorful with her language (viz. , she sometimes swears like a drunken sailor!).
With this said , let the beginning begin!
This is a new adventure for me , as I have never tried blogging before. Though I am late to the game , I am excited about giving this a try and sharing my thoughts about politics , liberty , and economics here with all of you who share the same interests. Although these may seem disparate subjects , as you know, all of these are intertwined and interrelated.
A very brief bit about my own journey is seen in my profile " about me" segment. As time goes on , I will sparingly interject my own thoughts and opinions about the subject matter of my blog , but rather than trying to re-invent the wheel it is my intention to post here articles and subject matter already addressed by the giants in these respective areas. These men and women of throughout the ages have already expressed these ideas far more capably than I ever could. I think it is wisdom to let them do the teaching , while my object will be , for the most part , to merely present them to you here for your edification.
Here you will find free e-books , links , and video on various subjects related to politics , liberty , and economics. I will certainly be engaged in writing about my own impressions of these things , of current events , and in reply to your comments. I look forward to your comments and input here and hope that we can have some interesting , informative and lively discussions here.
Lastly , all are welcome here. The exchange of differing ideas is what makes life interesting ; though I am of a classical liberal mind-set , I am very much welcoming of my "liberal" friends of the "left", with the hope that I can teach you a thing or two to bring you around to the right way of thinking! Still , in the interest of being "fair and balanced" , among the links here you will find one to my sister's blog " They Get Letters". Julie is what I call "A flaming liberal" , but I still love her...and even agree with many of her views!
Warning: Julie can sometimes be very colorful with her language (viz. , she sometimes swears like a drunken sailor!).
With this said , let the beginning begin!
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