Saturday, November 15, 2008

Extreme Moderation

The next time you hear someone denounce the 'greed' of the extreme *free* market, of capitalism, try to remember that this is NOT what we have. The US economy was close but not entirely free during the early parts of the industrial revolution. Now, even the term 'mixed' economy is starting to be strained by the overwhelming pervasiveness of the American government in regulating, pressuring, tweaking, pulling, and adjusting all aspects of the economy.
At times you will hear a leader of a big business disparage laissez faire capitalism or the free market. Do not be misled into thinking that, well, if a big business man thinks the free economy is unfair or ill suited to producing a just, profitable economy for all, then surely we are justified in fiddling with it. Without exception, this will be a businessman whose interests and competitive advantage depends on PULL in Washington. The very presence of the innumerable Congressional lobbyists and the billions poured into their efforts stands as an objective testament to the fact that we have nothing close to a 'free' economy. (What do you think those lobbyists are lobbying for? And why would they continue if our representatives were beyond influence?)

Rather, what we have is sadly, a politico-economic landscape aptly foretold by Rand in the 60's -- a situation maintained by (among other things) the 'virtue' of moderation preached in our compulsory schools, and ingrained in our uninformed populace.

The safely undefined, indeterminate, mixed-economy, ‘moderate’ middle—with a ‘moderate’ amount of government favors and special privileges for the rich and a ‘moderate’ amount of government handouts for the poor—with a ‘moderate’ respect for rights and a ‘moderate’ degree of brute force—with a ‘moderate’ amount of freedom and a ‘moderate’ amount of slavery—with a ‘moderate’ degree of justice and a ‘moderate’ degree of injustice—with a ‘moderate’ amount of security and a ‘moderate’ amount of terror, and with a moderate degree of tolerance for all, except those ‘extremists’ who uphold principles, consistency, objectivity, morality, and who refuse to compromise.

Wednesday, November 12, 2008

A Mostly Correct Frenchman

Though Alexis de Tocqueville’s analysis of democracy in America in the 1800’s included a variety of misunderstandings, some of his insights deserve revisiting, for they were sadly prophetic of how a government founded on individual liberty could be poisoned and destroyed from within.

  • Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.
  • The man who asks of freedom anything other than itself is born to be a slave.
  • The American Republic will endure, until politicians realize they can bribe the people with their own money.
  • After having thus successively taken each member of the community in its powerful grasp and fashioned him at will [via a compulsory collectivist, revisionist education], the government then extends its arm over the whole community. It covers the surface of society with a network of small, complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence: it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.
  • It is easier for the world to accept a simple lie than a complex truth.

Great Googlely-Mooglely

There is a real danger in reading this post. Your eyes will likely cross, gloss over, and a bit of spittle will possibly begin to trickle from the corner of your mouth. In my attempt to understand the causes of the recent financial crisis, I, by necessity, undertook what has turned out to be self torture - the attempt to understand the mechanisms and definitions of the "shadow banking system." Mortgage backed securities are the most well known component of this shadow system. The least painful exposition of some of these instruments has been provided by Mr. Holloway. Read his article "Is this complicated, or What?," by scrolling to the last article on the page.


This bit from Eugene Holloway aptly describes the picture of our government, the few who presume to speak for society rather than defend individuals, as they try to control what is beyond control.

Recent decades give ample evidence of the disastrous futility of the Fed’s attempts to use its crude tools to repair the damage of its own previous actions. Injections of liquidity to stop the meltdown in the wake of the failure of Long Term Capital Management fueled the internet bubble. Injections of liquidity to avoid a market crash when the internet bubble burst fueled the housing bubble. Now, following the bursting of that bubble, the Fed is making historically huge amounts of credit available to keep the economy afloat. But the size of each of the bubbles grows progressively. If this were only a game of whack-a-mole, it would be amusing. But money is ubiquitous, and whatever moves the Fed makes can, and do, affect anyone and everyone. The human consequences of Fed-generated boom-and-bust cycles can be, and usually are, tragic.

Tuesday, November 11, 2008

A Beginning

This blog is intended to articulate what made this country great, and why and how that greatness is disintegrating. In the broadest of strokes, this country became great by doing what no country had done, and no country has done since - setting out to defend the rights of the individual (life, liberty, pursuit of happiness) as SUPERSEDING the rights or demands of government, or society as a whole. Based on a Christian worldview, the founders of the United States created a government that saw each man and woman as AN END IN THEMSELVES, and NOT as the means to the ends of society or government. They conceived the government as a policeman, protecting the products of each man and woman's minds and efforts from the clutches of other men, other groups, government, and most importantly from the community as a whole. Men and women were NOT to be slaves. This was historic in the most awesome sense. It led to the greatest period of economic growth, increase in living standard, wealth creation, and technological innovation the world has ever seen. Sadly, the idea, once started, was soon infected and poisoned by the philosophies of collectivism. The painful story of this country's turning back on its vow to protect the individual can be traced through government entrance into railroad markets, non-objective anti-trust laws, the elimination of the gold standard, the establishment of the federal reserve system, law upon law establishing the welfare state, the social security system, the medicare/aid system, the income tax system, etc., etc., In each of these cases, the life of the individual is step-wise, taken from him or her. In each case, by either direct action or through more complicated steps of money exchange, the product of individual thought and labor is confiscated from some men, and given to others, by NO right, but that of force, of a gun (for this is the nature of all government action - if you don't believe me, stop paying your income tax, and then continue to refuse; refuse to go to jail; you will see the gun.) In each case, YOUR property - the product of your effort and mind - your LIFE, is taken from you by force. When the individual elects a representative, by the nature of the relationship, protection of the individual's rights is foremost. But it hasn't been. For the past 100 years, the betrayals have been perpetrated ever more brazenly, and for at least the last 50 years, criticism of this practice of forced enslavement has dwindled in the face of collectivist forces exerted in the media, the compulsory education system, and confused pop-culture. As a result of this deterioration and obfuscation, we have reached a state in which the latest government caused economic disaster can not only occur, but be BLAMED on the people who were coerced into poor business practices by the government, and worse, paid for by the individual taxpayer. During the Clinton administration, collectivism in the form of 'politically correct' criteria were forced on the lending institutions of this country. This was not corrected by the Bush administration. Lending institutions were, by law, PENALIZED for following tried and true lending practices like denying loans to those without sufficient assets. Lending institutions were rewarded with financial incentives for making risky loans to marginal and even outright poor candidates, particularly if they were to a "minority group." The result was a housing and investment BOOM since capital could be had by nearly ANYONE. (Think back now to the 1920's when there was an investment BOOM following the institution of federal reserve practices to make investment capital readily available purely on the backing of congressional taxing ability, since the gold standard was gone.) Now look at the result today when the government infuses essentially 'free' money into the market, not by MARKET forces, but by "let us 'do good' by giving loans to the minority and 'unable to pay' groups." When those who could obviously not pay, don't pay, the market trembles, then halts, then values fall, and the panic begins, as the loans - those "IOU's" become worthless. Think back to when the same thing happened in the late 1920's, when all that easy federal reserve investment money was poured into countless risky investment schemes, poorly run businesses, and unwise loans. Recall the crash of 1929 when REALITY was realized by the forefathers of today's foolish collectivists. Recall the response of the government to try to infuse TAXPAYER money into first the failing British economy and then our own. This response made it worse, by taking a problem that would have financially ruined SOME, and spread that misery to the entire country (and the world). The government created the problem by making tax payer money the backer for run away loaning practices in BOTH cases (and designed the loaning practices in this case). Then, when values fell, what was the collectivist response? It was to take MORE of the taxpayer money (the effort and labor of you and me) and, in essence, give it to the institutions which made the poor decisions. Today's evil is worse, in that it was the government's policies which coerced the financial institutions into following such insane (but pc) lending practices. Now, instead of learning from policies of the US government after the '29 crash, policies which for years worsened the Depression, we, in the same collectivist spirit, are doing the EXACT SAME THING -- throwing good taxpayer money (your effort and my effort) after bad. It is not possible to expect a better result. Now, businesses can not get necessary and well secured loans. Thank you, Bill Clinton, for making the United State's lending practices **fair** for all. It is sickening that not one of the supposedly "conservative," or republican, or even libertarian parties can stand up and clearly articulate and denounce this crime, and more importantly the evil philosophy behind it - the philosophy that the rights of the individual are superseded by the interests of the collective, of society--- which only means in the end that the rights of SOME men are superseded by the interests of others. And so we have the men who legislated poor business practices in the name of political correctness, causing a financial disaster, then increasing the harm by forcing the American taxpayer to cover the losses of the companies crippled by their legislation, and THEN - then to BLAME the **FREE** market and the supposed 'greed' of that system for the problem!! What the HELL was free about the movements of lending institutions pressured by legislation? Free men running successful lending institutions DO NOT make insanely risky loans out of *greed* freely -- They didn't become successful by being freely STUPID. They did it because legislation rewarded them for doing so, made it financially harmful to do otherwise, and reassured them that the government’s taxing power would back them up. And the collectivists, the "liberals", have the audacity to blame "the greed of the *free* market?" It is nauseating. Does no one see that this collectivist, liberal attempt to redistribute wealth did just that? – take from the group creating the bulk of government confiscated revenue, the so-called middle class, and give to whom? – to the very lending institutions which were legislatively coerced into insane policy, to the same lending institutions tacitly ‘backed’ by the actions of the legislature, a legislature which is LOBBIED BY these institutions (notably our new president), to, in fact many of whom the liberals would (and did) loudly denounce on TV as ‘the rich.”

This sort of evil must be fought in every way possible. That is the purpose of this blog, to be one more (admittedly small) voice of the people - the American individual, who was and still is the suffering, condemned, abused, motive power for this country and the world, shackled by the collectivist looters, and bled by apathetic parasites. This individual deserves a defense.

(For a real life example of this individual, read this letter.)