The news of the week are the new procedures implemented at airports around the country in the name of security. Once again we are closing the barn door after the horses are gone and refusing to consider the fact that it is a broken latch that keeps letting them out. First there was 9/11 so the list of prohibited objects in an airport grew immensely. Then there was the shoe bomber so we all have to take off our shoes. Then there was the underwear bomber so now we have to endure the hands of TSA employees in places only our wives or husbands should see. There have already been terrorists who placed explosives in various body cavities, and drug smugglers have been doing that for years. Are we going to have to endure full body cavity searches next?
Our security procedures are a strange mix of political correctness and a total disregard for our rights to be secure in our persons. Political correctness because we are afraid of offending the terrorists who want to kill us, the overwhelming majority of whom are young, middle eastern men from specific countries. They are not toddlers, senior citizens or nuns. Disregard for our rights because no one should be subject to such intimate and invasive procedures just because they want to travel. 99.99% of airline travellers are not terrorists and those 99.99% should not be treated as potential terrorists or criminals just because they want to fly to see grandma over the holidays. Certainly we have the choice as to whether or not we want to fly but it should be our free choice to enter into a private contract with an airline to provide us a service and the government should not require we check our rights or our dignity at the door when we enter into that contract.
There are simple solutions to this problem and they involve getting the government out of the airline security business. That’s right, the government should not be involved in airline security at all. Here is the solution. Let every airline run its own security. Some will say that the airlines will not do a good job but here is where you are wrong. The purpose of an airline is to provide a service, in this case getting people from point A to point B, for a profit. If an airline is lax in its security or maintenance or the ability to provide reliable service, it will gain a reputation for not getting people to their destination in a safe and timely manner. Therefore, they have a vested interest in making sure their planes are safe and well maintained or they will go out of business, and if they are negligent, to jail.
The airlines will go about this in various ways. Some may follow the TSA’s example and provide security with invasive searches and scanners that radiate people. My guess is that these airlines will find fewer passengers once there are choices available to the traveling public. Some may employ bomb sniffing dogs or require prior background checks. Some may employ ex-military personnel like El Al in Israel. Some will reinforce their cockpits or hire sky marshals to ride on every flight. Some may choose to profile. All of these are valid security techniques that incur a wide range of costs. The point is that by allowing each airline to experiment with what works, there will be an equilibrium reached between security and fare that will meet the needs of a variety of passengers. Paying ex-military personnel will be more expensive than having everyone walk naked in front of some minimum wage employee but some may choose the indignity to save money. That choice, however, should be ours.
Choice is the key. Not the choice made for us by some government bureaucrat motivated by political correctness and a complete disregard for our rights but the choice to enter into a private contract. In this case the contract the passenger makes with an airline to utilize its service for a set price. Before we enter into that contract we will be made aware of the security measures that airline takes and if we are dissatisfied with them we should be free to make our contract with another carrier. Will the occasional terrorist slip through the cracks in some airlines that choose the wrong security procedures? Probably at some point but that will be no different than what we have now. After all the shoe bomber, the underwear bomber and the mail bombers all found holes in our current procedures and it was only their ineptitude and the actions of the passengers that prevented catastrophes. Ultimately, that is the key. We voluntarily take the risk when we fly and therefore we are ultimately responsible for our own security. If we see something suspicious, we must act. If a terrorist wants to try something on a plane, we have the right to defend ourselves and our government should not punish us for doing so. For all its attempts to protect us, the fact is that the government can’t. It can’t be everywhere, know everything and properly utilize the tools necessary to prevent every criminal or terrorist act on a plane, or in our neighborhoods. Nor do we want it to try because any attempt to do so will result in a police state where our God-given rights are completely disregarded. We cannot trade liberty for security. It is up to us, as individuals and as a society, to stand together against lawlessness, being willing and able to defend ourselves, our families and our society against those who have no respect for life, liberty, property or our pursuit of happiness.
Thursday, November 18, 2010
Wednesday, November 10, 2010
The day after the election the Federal Reserve announced it was going to engage in "Quantitative easing" to the tune of $600 billion dollars over the next eight months. Commodities have already reacted to this, with gold, oil and other raw materials rising rapidly. We are to expect inflation after supposedly going through an extended period without it. If we go though a time of even double digit inflation, we should consider ourselves very fortunate. If it were a different time in our history, perhaps that is what we could expect. We have, however, put ourselves into a very precarious position with our debt and liabilities. What I would like to give you is a short history lesson because nations have gone through this before and the causes are easy to determine.
Our more recent example is Chile which went through a hyperinflationary period in the early seventies. In 1970 Salvador Allende was elected. Allende was a hard core socialist and brought together other socialists, communists and hard leftists to begin implementing changes (transforming) Chile into a socialist workers paradise. Even though we have apparently rejected President Obama’s socialist/communist agenda, he and his leftist czars will still wield a lot of power and it is unlikely any of the damage he has done will be repealed.
Allende took the land from "the rich" and gave it to the workers. We have been redistributing wealth for years but President Obama and the Democrat congress doubled down on this, constantly demonizing the "rich". Allende nationalized companies and mines. While we certainly protest against the nationalization of the industries that have taken place, in America nationalization isn’t really necessary. Industries and companies can be controlled just as easily through regulation and tax policy, both of which are moving out of the hands of elected officials and into the bureaucracy, a bureaucracy controlled by the executive branch which is run by leftists, socialists and in some cases, admitted communists.
Allende chose who would run and work in these industries, rewarding his friends and punishing his "enemies." Enemies, sounds familiar... The purpose of this was to have control over production and distribution. Like which cars or light bulbs are produced or what restaurants are allowed to serve? Again, regulation and law accomplishes the same thing here. Next were the wage and price controls. We haven’t seen overt price controls yet but there has been a lot of noise for controlling wages, particularly for the "evil rich". Allende put these controls in place to placate the workers. We could look at it as a payoff to the unions.
Needless to say, all this government intervention distorting the free market caused the economy to tank. Companies couldn't make money because their prices were fixed and high wages were dictated by the government. They went bankrupt and were taken over by the government which made them even less productive. In order to pay the workers the government printing presses heated up and hyperinflation arrived on the scene. When the currency became worthless and there were no goods to buy, ration cards were distributed with political considerations and not need being the first criteria.
While hyperinflation will not be caused by paying union workers gobs of fiat currency in this country, the reason for the printing is irrelevant. The consequences are always the same. I recounted the history of Chile because the election of a hard core leftist and the rapid implementation of socialist policies preceded the economic circumstances that made the wholesale printing of money attractive to the ruling powers, just as it has here.
The other example I would like to cite is the Weimar Republic of Germany, the classic hyperinflationary example. I would like to state several causes of note. The first was that Germany was severely weakened after the Treaty of Versailles and reparations payments were a severe drag on the economy. We have not experienced a military defeat but we have experienced a severe economic downturn. We don’t have reparations but we do have a growing amount of interest on our debt, high domestic spending to alleviate personal suffering and social welfare obligations that are bankrupting us.
In the early years of the Weimar Republic, a lot of foreign investment came into Germany from those who wanted to profit from the rebuilding. When Germany was unable to make reparations payments in 1922, France took over the Ruhr Valley for the iron and coal, German workers went on strike and the economy took a further hit. It is only a matter of time before interest rates rise and we become unable to either make our interest payments or meet the demands of our entitlement system, or both. It is also an interesting parallel to consider Germany’s loss of the resources of the Ruhr valley and this administration’s policy of denying access to our own raw materials, particularly energy.
In response to the economic "crisis", the German government began printing money. Foreign investors pulled out at this point, cutting their losses, and things went into freefall. In early 1923 hyperinflation was in full swing with prices rising astronomically and the nation was effectively shut down due to the currency collapse.
I do hope is was noteworthy to consider that the printing of money was a response to a negative economic situation brought about by bad government policy, socialism in Chile and losing a war in Germany. I also hope you have seen that we have combined the worst of both of these situations along with a few other negatives of our own thrown in, like the fact that our currency is the reserve currency and its collapse will have consequences far beyond the German mark or the Chilean escudo which has forestalled its collapse up to this point. The laws of economics will not be denied forever, however.
I believe hyperinflation is inevitable, I have been talking about it for over a year, and that we need to prepare for it. I hope I will be proven wrong but we have been building toward this point for a long time and I think we have already sailed off the cliff, we are just waiting to hit the bottom of the ravine. The question for all of us is what will arise in America after the horrible two or three years that are coming. In Chile, Allende’s reign came to an end after three years, the military overthrew him and ended his socialist dream in Chile. Now Chile has a good and prosperous economy and a relatively free society, a happy ending. We all know what happened in Germany, they chose Hitler and the nightmare became infinitely worse. If we think government is the solution, there will always be men like Hitler who will take advantage of that. If we believe that government is the problem and the cause of our misery, we will stand up as free people and demand the return of our rights and liberties. Ten years from now our choice will be obvious. Are you ready to ensure we make the right one?
Our more recent example is Chile which went through a hyperinflationary period in the early seventies. In 1970 Salvador Allende was elected. Allende was a hard core socialist and brought together other socialists, communists and hard leftists to begin implementing changes (transforming) Chile into a socialist workers paradise. Even though we have apparently rejected President Obama’s socialist/communist agenda, he and his leftist czars will still wield a lot of power and it is unlikely any of the damage he has done will be repealed.
Allende took the land from "the rich" and gave it to the workers. We have been redistributing wealth for years but President Obama and the Democrat congress doubled down on this, constantly demonizing the "rich". Allende nationalized companies and mines. While we certainly protest against the nationalization of the industries that have taken place, in America nationalization isn’t really necessary. Industries and companies can be controlled just as easily through regulation and tax policy, both of which are moving out of the hands of elected officials and into the bureaucracy, a bureaucracy controlled by the executive branch which is run by leftists, socialists and in some cases, admitted communists.
Allende chose who would run and work in these industries, rewarding his friends and punishing his "enemies." Enemies, sounds familiar... The purpose of this was to have control over production and distribution. Like which cars or light bulbs are produced or what restaurants are allowed to serve? Again, regulation and law accomplishes the same thing here. Next were the wage and price controls. We haven’t seen overt price controls yet but there has been a lot of noise for controlling wages, particularly for the "evil rich". Allende put these controls in place to placate the workers. We could look at it as a payoff to the unions.
Needless to say, all this government intervention distorting the free market caused the economy to tank. Companies couldn't make money because their prices were fixed and high wages were dictated by the government. They went bankrupt and were taken over by the government which made them even less productive. In order to pay the workers the government printing presses heated up and hyperinflation arrived on the scene. When the currency became worthless and there were no goods to buy, ration cards were distributed with political considerations and not need being the first criteria.
While hyperinflation will not be caused by paying union workers gobs of fiat currency in this country, the reason for the printing is irrelevant. The consequences are always the same. I recounted the history of Chile because the election of a hard core leftist and the rapid implementation of socialist policies preceded the economic circumstances that made the wholesale printing of money attractive to the ruling powers, just as it has here.
The other example I would like to cite is the Weimar Republic of Germany, the classic hyperinflationary example. I would like to state several causes of note. The first was that Germany was severely weakened after the Treaty of Versailles and reparations payments were a severe drag on the economy. We have not experienced a military defeat but we have experienced a severe economic downturn. We don’t have reparations but we do have a growing amount of interest on our debt, high domestic spending to alleviate personal suffering and social welfare obligations that are bankrupting us.
In the early years of the Weimar Republic, a lot of foreign investment came into Germany from those who wanted to profit from the rebuilding. When Germany was unable to make reparations payments in 1922, France took over the Ruhr Valley for the iron and coal, German workers went on strike and the economy took a further hit. It is only a matter of time before interest rates rise and we become unable to either make our interest payments or meet the demands of our entitlement system, or both. It is also an interesting parallel to consider Germany’s loss of the resources of the Ruhr valley and this administration’s policy of denying access to our own raw materials, particularly energy.
In response to the economic "crisis", the German government began printing money. Foreign investors pulled out at this point, cutting their losses, and things went into freefall. In early 1923 hyperinflation was in full swing with prices rising astronomically and the nation was effectively shut down due to the currency collapse.
I do hope is was noteworthy to consider that the printing of money was a response to a negative economic situation brought about by bad government policy, socialism in Chile and losing a war in Germany. I also hope you have seen that we have combined the worst of both of these situations along with a few other negatives of our own thrown in, like the fact that our currency is the reserve currency and its collapse will have consequences far beyond the German mark or the Chilean escudo which has forestalled its collapse up to this point. The laws of economics will not be denied forever, however.
I believe hyperinflation is inevitable, I have been talking about it for over a year, and that we need to prepare for it. I hope I will be proven wrong but we have been building toward this point for a long time and I think we have already sailed off the cliff, we are just waiting to hit the bottom of the ravine. The question for all of us is what will arise in America after the horrible two or three years that are coming. In Chile, Allende’s reign came to an end after three years, the military overthrew him and ended his socialist dream in Chile. Now Chile has a good and prosperous economy and a relatively free society, a happy ending. We all know what happened in Germany, they chose Hitler and the nightmare became infinitely worse. If we think government is the solution, there will always be men like Hitler who will take advantage of that. If we believe that government is the problem and the cause of our misery, we will stand up as free people and demand the return of our rights and liberties. Ten years from now our choice will be obvious. Are you ready to ensure we make the right one?
The Beginning of the End
Last week’s elections were historic, there is no question about that. Voters were fed up with our lurch into socialism and with the rise of the TEA party movement, questions of government spending, control and intrusion were finally being discussed openly and honestly. Many people became involved in politics for the first time, recognizing that politics affects everything in our daily lives and if we ever want to regain some control over our lives (i.e. our liberty) politics can no longer be ignored or left up to the "political class." All this represents a good trend.
TEA partiers and conservatives who pinned their hopes on Republicans are likely to be very disappointed, however. There are two reasons for this. The first is that the new TEA party/conservative Republicans represent a small minority of the total number of Republicans in office, at all levels of government. Because of this, it will be very difficult for them to resist the pressure the establishment has on "public servants". The "system" has been in place for a long time and the beneficiaries of that system are not about to let these upstarts disassemble it. Even if they have the character to resist the pressure to conform, the radical steps necessary to save us from catastrophe will never move beyond their sparse numbers and may be beyond the imaginations of most of them.
What am I talking about? Here are some necessary steps for starters. Ending the Federal Reserve and pegging the dollar to gold. Ending all entitlement programs, a particularly difficult pill to swallow for Republicans who have been demonized for phantom proposals to do so in the past. Remove all the tax and regulatory impediments to businesses so we can return manufacturing to the United States. Eliminate public sector unions and approximately eighty percent of government jobs. Bring the military home from the vast number of places it is around the world and slim it down to a size that will ensure a devastating defense, not a costly and ineffective offense, or even less unsuccessful nation building. Can you see even one of those things happening the in next two years, or even four years with a Republican president and congress? I certainly don’t.
The problem is that we have already reached the point of no return and we have reached that point with the complicity of both major political parties. Allow me to explain. We are all familiar with the exploding federal debt which has reached around fourteen trillion dollars, greater than the entire Gross Domestic Product of the country. Then there are the annual deficits which add to that debt which were high under President Bush and have exploded under President Obama. All that is bad. However, because of the way our government fiddles with the numbers and has changed it’s reporting and accounting, this picture is rosy compared to the reality of our situation.
Businesses, when they make reports, must include their future liabilities on their balance sheet. If they only report profits and loans but do not include pensions or health care liabilities, we would say they are fudging the books to make them look better than they are. In fact, it would be dishonest and illegal. The government, however, does just that. Future entitlement liabilities, Social Security and Medicare in particularly, are not included in the deficit projections or in the current and future debt numbers. Allow me to give you those actual numbers. If we used the real, inclusive numbers, in 2008 the deficit was $5.1 trillion, not $455 billion and in 2009 the real shortfall was $8.8 trillion, not $1.4 trillion. Again, this includes the present cash based value of Social Security and Medicare liabilities.
That is a lot of money, more than we can actually conceive of. We know that government spending is out of control, we complain about it all the time. The fact is that we cannot bring the deficit under control without eliminating entitlement spending, something that is not going to happen until the system actually collapses. For example, if we taxed everyone, every business and every corporation in the county at 100%, something the president’s father suggested, we would still be running a deficit. If we stopped spending on everything except Social Security and Medicare, we would still run a deficit. These entitlements are like a bomb that has been ticking for a long time and now we are about to see it blow up in our face.
What will that mean? An economic situation that will make this one look like the "good ‘ol days." A collapse of the dollar which would bring most economic activity to a screeching halt. This will result in a complete realignment of our political and social structure in the next few years. The major political parties will finally receive the blame they are due for putting us in this situation although the apathy and complicity of the American people cannot be ignored. We do have the power of the vote although the stranglehold of the two party system on our country has mitigated against those of us who do not participate in either of those parties having a seat at the table. As someone who ran as a libertarian in the last election, I have seen this first hand.
There will be one of two results of this catastrophe. The first is that the establishment works with other establishment types around the world and they bring about a new world order, not the spooky kind of the conspiracy theorists but like the global realignment of power and structure that occurred after both World Wars. The United States, which has been moving toward a powerful executive-style government at all levels, may see the president, particularly this president, use the "crisis" to take complete control of the country, relegating the congress and judiciary to irrelevance as in Venezuela or the former Soviet Union.
The other possibility is this. We the people will build on what began as the TEA party and restore the individual liberty which was the bedrock of the American Experiment. Once the system collapses, we need to rebuild the vision of our founders upon the ashes. There is only one way that happens. First, we need to say "NO" to government solutions when they are offered because we need to recognize that government caused the problem and is the problem. Second, we need to rebuild the family and community ties that have been weakened or destroyed through government policy and cultural degradation. Finally, we need to rekindle that innovative, hard working American spirit that the socialism we have embraced has suppressed. We need to relearn self reliance as opposed to government reliance, community safety nets as opposed to government safety nets, cooperation with our neighbors as opposed to political division.
The second possibility is only viable if we prepare now. The establishment has contingency plans to implement their will in the case of a crisis. Most of us have just woken up and we need a crash course. We need to recognize the extent of the problem and prepare our families first. We also need to demonstrate our leadership in our communities. If we fulfill our role as the "watchman on the wall" to the extent that people recognize our foresight and the ability to provide solutions, we will put ourselves into a position to provide the leadership necessary to steer our country back to liberty and resist tyranny. Time is short, The Fed has already begun monetizing our debt, the last act of a desperate central bank before hyperinflation. Our time to prepare may now be measured in months instead of decades. But our future and that of our children remains in our hands. We need to roll up our sleeves and work even harder now.
TEA partiers and conservatives who pinned their hopes on Republicans are likely to be very disappointed, however. There are two reasons for this. The first is that the new TEA party/conservative Republicans represent a small minority of the total number of Republicans in office, at all levels of government. Because of this, it will be very difficult for them to resist the pressure the establishment has on "public servants". The "system" has been in place for a long time and the beneficiaries of that system are not about to let these upstarts disassemble it. Even if they have the character to resist the pressure to conform, the radical steps necessary to save us from catastrophe will never move beyond their sparse numbers and may be beyond the imaginations of most of them.
What am I talking about? Here are some necessary steps for starters. Ending the Federal Reserve and pegging the dollar to gold. Ending all entitlement programs, a particularly difficult pill to swallow for Republicans who have been demonized for phantom proposals to do so in the past. Remove all the tax and regulatory impediments to businesses so we can return manufacturing to the United States. Eliminate public sector unions and approximately eighty percent of government jobs. Bring the military home from the vast number of places it is around the world and slim it down to a size that will ensure a devastating defense, not a costly and ineffective offense, or even less unsuccessful nation building. Can you see even one of those things happening the in next two years, or even four years with a Republican president and congress? I certainly don’t.
The problem is that we have already reached the point of no return and we have reached that point with the complicity of both major political parties. Allow me to explain. We are all familiar with the exploding federal debt which has reached around fourteen trillion dollars, greater than the entire Gross Domestic Product of the country. Then there are the annual deficits which add to that debt which were high under President Bush and have exploded under President Obama. All that is bad. However, because of the way our government fiddles with the numbers and has changed it’s reporting and accounting, this picture is rosy compared to the reality of our situation.
Businesses, when they make reports, must include their future liabilities on their balance sheet. If they only report profits and loans but do not include pensions or health care liabilities, we would say they are fudging the books to make them look better than they are. In fact, it would be dishonest and illegal. The government, however, does just that. Future entitlement liabilities, Social Security and Medicare in particularly, are not included in the deficit projections or in the current and future debt numbers. Allow me to give you those actual numbers. If we used the real, inclusive numbers, in 2008 the deficit was $5.1 trillion, not $455 billion and in 2009 the real shortfall was $8.8 trillion, not $1.4 trillion. Again, this includes the present cash based value of Social Security and Medicare liabilities.
That is a lot of money, more than we can actually conceive of. We know that government spending is out of control, we complain about it all the time. The fact is that we cannot bring the deficit under control without eliminating entitlement spending, something that is not going to happen until the system actually collapses. For example, if we taxed everyone, every business and every corporation in the county at 100%, something the president’s father suggested, we would still be running a deficit. If we stopped spending on everything except Social Security and Medicare, we would still run a deficit. These entitlements are like a bomb that has been ticking for a long time and now we are about to see it blow up in our face.
What will that mean? An economic situation that will make this one look like the "good ‘ol days." A collapse of the dollar which would bring most economic activity to a screeching halt. This will result in a complete realignment of our political and social structure in the next few years. The major political parties will finally receive the blame they are due for putting us in this situation although the apathy and complicity of the American people cannot be ignored. We do have the power of the vote although the stranglehold of the two party system on our country has mitigated against those of us who do not participate in either of those parties having a seat at the table. As someone who ran as a libertarian in the last election, I have seen this first hand.
There will be one of two results of this catastrophe. The first is that the establishment works with other establishment types around the world and they bring about a new world order, not the spooky kind of the conspiracy theorists but like the global realignment of power and structure that occurred after both World Wars. The United States, which has been moving toward a powerful executive-style government at all levels, may see the president, particularly this president, use the "crisis" to take complete control of the country, relegating the congress and judiciary to irrelevance as in Venezuela or the former Soviet Union.
The other possibility is this. We the people will build on what began as the TEA party and restore the individual liberty which was the bedrock of the American Experiment. Once the system collapses, we need to rebuild the vision of our founders upon the ashes. There is only one way that happens. First, we need to say "NO" to government solutions when they are offered because we need to recognize that government caused the problem and is the problem. Second, we need to rebuild the family and community ties that have been weakened or destroyed through government policy and cultural degradation. Finally, we need to rekindle that innovative, hard working American spirit that the socialism we have embraced has suppressed. We need to relearn self reliance as opposed to government reliance, community safety nets as opposed to government safety nets, cooperation with our neighbors as opposed to political division.
The second possibility is only viable if we prepare now. The establishment has contingency plans to implement their will in the case of a crisis. Most of us have just woken up and we need a crash course. We need to recognize the extent of the problem and prepare our families first. We also need to demonstrate our leadership in our communities. If we fulfill our role as the "watchman on the wall" to the extent that people recognize our foresight and the ability to provide solutions, we will put ourselves into a position to provide the leadership necessary to steer our country back to liberty and resist tyranny. Time is short, The Fed has already begun monetizing our debt, the last act of a desperate central bank before hyperinflation. Our time to prepare may now be measured in months instead of decades. But our future and that of our children remains in our hands. We need to roll up our sleeves and work even harder now.
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