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UrbanRenewal wrote:

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If you want efficiency and lack of corruption, then you have to educate yourself and vote accordingly. Not rail on for five hours about how taxes are evil and we need no government because you sound like a crazy person.

And I don't care how efficient a government is in providing the basic services of living in a civilization, it's still going to cost something in the way of taxes.

Yes, I agree with you: I have never said that proper government services ought to be free. I have said that they should be paid for by voluntary methods of payment.

Taxes ARE evil. They are wrong, bad and should be outlawed.

I have also never said that we need no government. I have always said that paying for proper government services CAN and OUGHT TO BE uncoerced.

You all want to be coerced to do the right thing, is that it?

Destroying Liberty

by Walter E. Williams

Supreme Court Justice Louis Brandeis warned, "The greatest dangers to liberty lurk in the insidious encroachment by men of zeal, well meaning but without understanding." The freedom of individuals from compulsion or coercion never was, and is not now, the normal state of human affairs. The normal state for the ordinary person is tyranny, arbitrary control and abuse mainly by their own government. While imperfect in its execution, the founders of our nation sought to make an exception to this ugly part of mankind's history. Unfortunately, at the urging of the American people, we are unwittingly in the process of returning to mankind's normal state of affairs.

Americans demand that Congress spend trillions of dollars on farm subsidies, business bailouts, education subsidies, Social Security, Medicare and prescription drugs and other elements of a welfare state. The problem is that Congress produces nothing. Whatever Congress wishes to give, it has to first take other people's money. Thus, at the root of the welfare state is the immorality of intimidation, threats and coercion backed up with the threat of violence by the agents of the U.S. Congress. In order for Congress to do what some Americans deem as good, it must first do evil. It must do that which if done privately would mean a jail sentence; namely, take the property of one American to give to another.

According to a Washington Post article (6/22/05), there were nearly 35,000 highly paid registered lobbyists in Washington in 2004 who spent $2.1 billion lobbying the White House, Congress and various agencies on behalf of various interest groups. Political action committees, private donors and companies give billions of dollars to political campaigns. My question to you: Do you think that these people are spending billions of dollars to assist presidents and congressmen to better perform their sworn oath of office to preserve, protect and defend the U.S. Constitution? If you do, you're a fine candidate for a straitjacket. For the most part, the money is being spent to get politicians and government officials to use their coercive power to create a favor or special privilege for one American at the expense of some other American.

If we Americans didn't give Washington such enormous control over our lives, I doubt whether there would be 10 percent of the money currently spent on lobbying and campaign contributions. This enormous control that Congress has over our lives also goes a long way toward explaining much of the government corruption that we see in Washington.

If the average American were asked whether he wishes to return to mankind's normal state of affairs featured by arbitrary abuse, control and government dictates, I am sure he would find such a suggestion repulsive. But if you were to ask, say, the average senior citizen whether Social Security, Medicare and prescription drug subsidies should be continued, he would probably answer yes. The same would be true if you asked a college professor whether higher education should continue to be subsidized, or a farmer or a dairyman whether their products should be subsidized, or a manufacturer whether there should be tariffs and quotas on foreign products that compete with his product. The problem with congressmen producing favors and privileges to all interest groups is that it creates what none of us wants: massive control, numerous dictates and micromanagement of our lives.

There is no question that if one were to ask whether we Americans are moving towards more liberty or more government control over our lives, the answer would unambiguously be the latter -- more government control over our lives. We might have reached a point where the trend is irreversible and that is a true tragedy for if liberty is lost in America, it will be lost for all times and all places.

Urban, here is an interesting article in answer to your claim that the financial crisis is the result of "deregulation" or "lack of oversight."

by Tom deSabla.

Many sage commenters have claimed the bailout plan is a bad idea. It's been described as "Socializing Risks while Privatizing Profits." True enough, but that description apparently doesn't carry much weight, especially since the term "socialization" doesn't bother many people these days. Other folks say that the free market has failed, and new regulations are needed - but they don't satisfactorily explain why the existing regulations weren't enough - after all, we had plenty of them. Closest to the mark are those who say the plan "threatens the dollar" but even they don't explain what that means.

Bailout proponents have sympathized with all the above, but they still say we must have the bailout to prevent a financial meltdown, or "systemic risk" to our financial system. Theirs is a potentially fatal misunderstanding. The main risk from doing nothing is that many banks and financial concerns will take huge losses and maybe even go bankrupt, possibly all of them. That, we are told, is the systemic risk, which must be prevented at all costs. I don't agree at all. It is the very costs of prevention that are the real risk.

Although the more savvy observers are pointing to the lurking problems with derivatives, particularly the 62 trillion in credit default swaps, it seems to me that if these derivatives were to become worthless, the threat to the real economy is overstated, unless they were somehow transformed into claims on goods and services. Unfortunately, that is exactly the process that is well underway, with mortgage-backed securities and other worthless or illiquid paper being traded for, or used as collateral for loans of, liquid instruments - cash for trash - some have called it. This is, of course, the huge underwater portion of the iceberg that the government hasn't even acknowledged yet; but I'd like to step back and look at the whole mess from yet another angle.

The primary misconception I'd like to focus on is the underlying assumption that our financial institutions essentially ARE our economy, and that it cannot function without them. We are told that without this bailout we may suffer another Great Depression. What our limited imaginations cannot conceive is that risks exist that are far greater than that. Recall, we were given the Fed in 1913, ostensibly to prevent bank failures like the panic of 1907. Of course, within 20 years we had even more bank failures, followed by massive government intervention. Contrary to popular belief, that intervention fixed nothing and made things worse. By contrast, the 1907 crisis, during the gold standard era, and prior to the Fed's existence, lasted only two years.

Also contrary to popular belief, there was no real systemic risk either in 1907 or during the Great Depression. The linchpin of any economic system is the quality of the money; and unlike now, the dollar was never at risk then - it actually gained purchasing power during the Depression. This notion that our entire economy depends on financial institutions is a myth promoted by bankers and their enablers. The main support for this myth is the claim that producers are dependent on the financial institutions for the credit they need, and without a ready supply of that credit, the entire real economy may grind to a halt along with the financial economy.

If we would just stop and think about it for a second, this should not be the case at all, because whether banks fail or not, nothing has really happened to producers' ability to produce, because they still have their factories, tools, skills, and inventory. Also, bank failures do not really affect the needs of real people for those goods. Yes, banks and financial institutions are a bigger part of the economy than they used to be; and producers and consumers are more dependent on them than they used to be. However, history reminds us that this outsized role for financial institutions was not needed for a healthy economy in the past, and it isn't needed now either.

Here is where Antal Fekete's and Bill Koures' research on the mostly-forgotten Real Bills Doctrine re-enters the picture. They are the missing link in this discussion of how and why these modern financial institutions have attained such a large and, we are now told, indispensable role in funding our real economy. Now, what we are really seeing with this crisis is not just the results of abandoning the gold standard itself, but also the results of the deliberate usurpation of the complementary role that Real Bills of exchange were playing in our pre-Fed economy. The central banking community didn't like these bills of exchange because they were, as Koures points out, an emergent market phenomenon.

They evolved, without being planned, independent of the control of bankers, to supplement the gold standard as a means of funding the production of consumer goods. This was unacceptable to the bankers and their statist supporters, who desired central control of the money supply, and central control of the economy. So, as a result, first the discounting of the bills of exchange was taken over by the central bank through the "discount window" and then the bills themselves were systematically discredited, and bank lending to support all goods production was substituted in their place. Now, at long last, despite all the years of delay, despite the spreading of their false doctrine of fiat money and central banking all over the globe - the inevitable results are clear.

Central banks and their debt-based fiat money simply cannot properly fund production for a stable real economy. Their methods are too crude, and do not allow for the proper transmission of supply and demand signals between producer and consumer. They can only suck a society and a government into debt so deeply that they cannot get out. That is where we are, and why. This crisis is nothing more than the preordained failure of their attempt to substitute central planning for the free market. Central banks have usurped control over aspects of the economy that were none of their business - aspects that the free market was already handling - and they have totally blown it.

And, of course, like all statists, they won't admit their failures, and instead blame the results of their system instead of the system itself. That's why they focus on secondary effects such as the "housing boom" and "reckless lending" and even "insufficient oversight," instead of the root of the problem. As they twist and squirm, looking for excuses, they desperately want to keep their flawed process going instead of ending it. This cannot be done without infecting and destroying more and more of the real economy by more central control, and by debasing the currency in order to bail them out from the consequences of their failed ideology.

To get out of their trap, all we need to do is remember that the real engines of economic prosperity are and always have been the producers of real goods and services, and the people at-large, and that all these engines have ever really needed is a stable currency to conduct their business in. Ironically, currency stability has never been a concern of big-government central bank defenders and enablers and that stability is exactly what this desperate, ill-conceived bailout is putting at serious risk. By attempting to get themselves out of the frying pan, they are willing to throw our entire society into the deadly fire of currency debasement.

What is the real meaning of currency risk, and why are we subject to it now? As to the former, in Weimar Germany the entire society was turned upside down, with life savings destroyed, putting rampaging gangs of youths on an equal economic footing with solid German citizens who had worked and saved their whole lives. The resulting chaos cleared the way for Hitler as no other economic crisis ever could. The same thing is happening in Zimbabwe now, with London School of Economics graduate Robert Mugabe presiding over the whole thing. Never mind the financial sector; their entire economy is in ruins.

The reason we are at risk is that 95 years of central banking and debt-based currency have left us with a ten trillion dollar national debt; 99 trillion of unfunded obligations; no national savings; and leaders who do not acknowledge the foregoing facts. We continue to require 60 billion dollars a month in outside funding. Another little-understood complication is that there are trillions more dollars around the world, both piled up in central bank "reserves" and in the hands of the world community for many purposes, most notably the purchase of oil, which the Bretton Woods agreement required.

These conditions already cry out for higher interest rates, and funding this bailout will force our creditors to finally demand them. Also, if the government admits to 700 billion now, history tells us the real amount will be far greater. Remember, talk of "spending" by Congress ignores the fact that our government has no money. Any money we need, we must borrow. Alternatively, we could just print up the money we need, but either way the dollar will be devalued. But that's just the beginning. If foreign creditors get the idea that their holdings are at serious risk, they will liquidate those holdings quickly, greatly compounding the devaluation. Rumblings in the foreign press indicate they are finally figuring this out.

In sum, no matter how badly the government may want to make the mistake of propping up housing prices, they cannot be maintained at current levels in a high-interest-rate environment. Unfortunately, the inflationary consequences of borrowing the trillions actually required will discourage creditors from further lending and also encourage the repatriation of foreign-held dollars before they lose their value. Both of these results will necessarily drive up interest rates - thereby canceling out the intended effects of the bailout. In fact, these factors will do much more than cancel out the bailout; they will reverse it with a terrible vengeance. Once that process begins in earnest, the velocity of money will increase so much that hyperinflation will be inevitable.

Currency risk is the worst systemic risk of all, dwarfing the pain of any depression we have ever experienced. And we're making it happen.

SurvivorArctic wrote:

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AllMenAreIslands wrote:

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My, my, you are very hostile today. Then again, you're always hostile. Didn't your mommy and daddy love you at all? Is that why you are so mean & nasty & wretched? Is that why you're incapable of having a civil discussion even if we disagree?

Hypocrisy, is it? I disagree with taxes, yet I do continue to live in this society, all the while trying to explain to people why the tax system is wrong, and how getting rid of it would be the best thing we ever did.

Wow. You really have no class or intelligence. You tell people who rationally disagree with you that they 'aren't smart enough to converse with you', but when the tables are turned you revert to your usual shell of passive agressive cuntiness. Don't you have a book *gigglesnort* to write? Don't you have your own board to rant and rail at? I've tried having a rational conversation with you, but soon discovered it wasn't worth my time.

I have yet to hear a rational argument disagreeing with me. A lot of screeching & yelling & name-calling, but nothing rational yet.

And you, Ms Arctic, claim that it isn't worth your time, but you keep coming in here to argue with me. So, why don't you just accept that you are interested, and drop the shit-stirrer routine already. Put your views on the table, if you dare.

Miles Edgeworth wrote:

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Good luck getting someobody to read that wall o text.

Both articles are very interesting reads. If you are truly keen on the topic, then it's worth the time for your own sake.