Paper bugs are in denial

Some people just refuse to accept reality.

Why is the price of gold increasing? “Because everyone is buying it,” some will say. Okay, but that still begs the question.

Why are they buying it? “Um, um, dunno. It must be a bubble, people are entering into the market under speculative intentions.” First of all, this mainstream regurgitation completely ignores the fundamental facts surrounding metal stocks. They are very undervalued. Nothing about the gold surge says “bubble.” The price of gold will inevitably be subject to corrections in the next ten-plus years of this gold bull market. Smart savers will see these corrections not as a time to run scared, but as an indication to buy more of the stuff at a discount.

Paper bugs are simply denying what gold bugs have known all along.

Gold is real money. It is rare, it is valuable in and of itself, it is easily divisible and it has been the most constant store of value throughout all of human economic history.

What fiat currency can claim to have lasted more than a mere few decades, let alone for thousands of years? Fiat currencies are a joke. Paper bugs refuse to admit what a joke they are. They think fiat currencies are “the next best thing,” the inevitable result of civilization advancement. “Modern economies can only function on a fiat currency of paper money,” they regurgitate. What a laugh. Do they offer any economic justification for this? Or do they just assume that you will take those phony words as gospel just as they have?

How real money works

Fiat currency is paper. Paper is paper. What kind of value is that? Paper is made from trees in abundance with no regard to the price level of the currency being produced. See, with a real money, the more valuable it becomes the more incentive there is to produce it. That leads to increased production, and an increase in supply. Econ 101 students can surely understand what an increase in supply leads to. That’s right! Increased supply leads to a decrease in price. This decrease in price leads to a decrease in production, and on and on.

This whole process establishes an equilibrium between money production and its value. Hence, the value of gold remains constant.

If you saved an ounce of gold in the year 1750 then it will be just as valuable in 1800–and 2010 for that matter. In fact, increased efficiency over those 50 years would lower production costs and ultimately your ounce of gold will buy more after those 50 years than it would when you had saved it (as it happens, those efficiencies are brought about by investment which was made possible through your saving that ounce of gold).

This equilibrium is maintained solely by the marketplace, meaning it happens naturally. It leads to a stable price level and incentivizes saving, which leads to economic growth.

Fiat currency

But what happens when money is dictated by fiat? That is, what happens when government passes legal tender laws declaring that you must use the money they want you to use, which happens to be the money that they–and only they–can produce? Well, first they are going to want to produce lots of it so that they can spend it on programs that will keep their constituents happy. These are things like retirement benefits, paving roads, keeping us safe from terrorists and providing low-interest loans for education, homes, cars, etc.

These services keep politicians in office. They want to stay in office because it’s easier to provide services when you are forcing your financiers to give you their dough. The other option for politicians is to quit office and get a job where they can only be compensated through the free will of the other party in an exchange (this is known as the private sector). They don’t want to do this. They are incapable of dealing with such a challenge. They must stay in office as long as possible.

The plethora of programs is the key for receiving votes and ultimately remaining in office. But they can only provide programs through tax revenue as the political class doesn’t actually generate wealth of its own.

Remember, though, the primary goal for the politician is to keep his ass in office and out of honest work. Raising taxes, even if it is to administer cozy programs, will not sit well with constituents. The politician is faced with a dilemma: how can you provide programs while keeping taxes low? Finding the answer to this question would be like finding the holy grail for the politician.

It turns out that the holy grail is money itself. If the politician holds a monopoly on money production, while forcing everyone to use that money, then they can spend as much as they can produce without burdening their unsuspecting voters with high taxes. In order to produce more they will surely want that money to be made of paper. Brilliant!

This is called fiat currency.

Fiat currency does not last. When Roman bureaucrats needed more money they simply debased metal coins by mixing more valuable metal with less and calling it the same coin.

American political money-producers have done the same with the penny, converting it from a copper coin to a much cheaper nickel coin coated in copper to give it that color. They then claim it is the same coin and holds the same value. But a penny in 2010 does not buy what a penny could buy in 1900.

So who are they fooling? Answer: plenty of people. Enough anyway to keep the party going until it all collapses around us and we one day realize that the “money” we have been using actually has no value. American politicians have done this with pennies, nickels, dimes and quarters (which used to contain silver).

More recently, currency production has forged ahead with the development of our financial digital network. This allows politicians to produce currency by simply typing a few keys on a keyboard. Market forces leading to monetary-price-equilibrium and price stability are completely disconnected from this process.

Disaster is inevitable all because politicians seize the power they need in order keep their jobs. They force compliance to their money rules and are allowed to kick the can and while neglecting the economically absurd policies that will end in disaster only once they are safely out of office living in their vacation home in the Caribbean.

What’s more, we further empower them through our ignorance–nay, our willingness–to support their crackpot ideas.

Paper bugs are everywhere

The paper bugs that I have run into of late happen to be New Zealanders. I live in New Zealand. These paper bugs echo the rallying cry of the New Zealand government and believe the same half-truths that socialists and statists the world over have succumbed to.

This proves the point that most people are easily seduced by the State, not matter where they are from. It also suits my purpose well because many of us have already seen the various charts and read the data showing the drop in the value of the U.S. dollar since the inception of the Federal Reserve System. It’s time for something new.

Paper bugs in New Zealand, like all paper bugs, are in denial. They refuse to accept the reality that paper currency will constantly–if not always consistently–be debased so long as a centralized authority, answerable to nobody, controls the production of money.

It doesn’t just occur in during a gold bubble (not that we are experiencing this now). Rather, debasement is a constant theme over the course of the short lifespan of a fiat currency. It simply cannot hold up to the time-tested value of real money.

The value of NZD has consistently diminished over the course of the last 40 years. The recent acceleration is not a bubble phenomenon. It is not a craze. It is a direct result of an accelerated inflation of the money supply by New Zealand's central bank. This is the same thing that has driven the decline in the value of the NZD for the last 40 years. It is only more pronounced today because the root cause is more intense.

The two year anniversary of the TARP bailout is today.

Two years ago we were told that the end of the world was near and would be upon us if we didn’t give bankers $700 billion dollars of taxpayer money.

The outcry from ordinary Americans against this bill was immense. Calls poured into congressional offices demanding that it be voted down. But not enough representatives cared about the wishes of their constituents. It is almost as if the recipients of the TARP funds are their real constituents. Either way, the lawmakers felt that their wisdom–the very same wisdom that got us into this mess–was superior and that those against the bill should just save their breath and shut up.

The following is an email exchange between myself and Senator Barbara Mikulski of Maryland following her yes vote on this massive bill of thievery veiled in subjective legality.

Senator Mikulski,

I appreciate you taking the time to respond to your constituents on account of the Emergency Economic Stabilization Act and specifically in regards to their overwhelming disapproval of it. It would be a treat for me (and only fair) to hear your thoughts on my reply.

To address a few of your points, and excuse me as fear does not cause me to cast aside the principles of sound economics:

You mention your desire to increase regulation while at the same time claiming to fight against the “lead” in our bureaucracy. To say nothing of the contradiction inherent in this sentiment (you either support the bureaucracy or you don’t), the fact that the existence of the bureaucracy is itself what causes the “lead” seems to have escaped you. In our current system, bureaucratic agencies are funded by a perpetual flow of inflationary Federal Reserve cash. It does not go unnoticed to me that you consistently fail to mention this, and in so doing fail to connect the dots to arrive at the true cause of our lead-ridden, bloated bureaucracy.

An obese bureaucracy is a byproduct of this fraudulent, illusory creation of cash (note: not the creation of wealth) as are the irresponsible lending practices that you claim to be against. You are either corrupted or unenlightened when you claim that “time and time again we have seen the consequences of loose regulations and wimpy enforcement,” when in fact, time and time again we have seen the consequences of an inflationary policy that can only benefit those engaging in counterfeiting and the industries they hand-select.

You are right; this credit crisis will affect many people. But the bubble needs to deflate and prices must drop. There is no viable solution that calls for propping up prices. You clearly do not understand this, which is why you voted for this legal increase in new Federal Reserve counterfeit. And it is why you have lost my confidence, and should not count on my vote for your representation in Maryland.

Thank you for your time,

Jeremy Alexander

>
>
> Dear Mr. Alexander:
>
>
>
> Thank you for getting in touch with me about the Emergency Economic
> Stabilization Act (P.L. 110-343). It’s good to hear from you.
>
>
>
> I know that taxpayers are mad as hell, and so am I. They’ve watched Wall
> Street executives pay themselves lavish salaries. They’ve watched
> irresponsible lending practices. They’ve watched Wall Street gamble on
> risky investment mechanisms. Now those very same Americans who’ve worked
> hard and played by the rules are being asked to pay the bill for those
> who didn’t.
>
>
>
> Time and time again we have seen the consequences of loose regulations
> and wimpy enforcement. Time and time again I voted for more teeth and
> better regulation. I voted to get the lead paint out of toys and the
> lead out of the bureaucracy at the Consumer Product Safety Commission. I
> voted to strengthen Federal Drug and Administration (FDA) to make sure
> it didn’t approve dangerous drugs. I also worked to stop predatory
> lending and flipping in the mortgage market.
>
>
>
> I remember back in 1999 when this banking mess got started. I was one of
> the nine Senators who voted against the bill that got rid of the
> division between investment banks and commercial banks. It lowered the
> bar on regulation and allowed for casino economics.
>
>
>
> Now, we are facing a credit crisis that affects everyone – from people
> getting loans for college, to the small business owner who depends on
> credit to buy inventory. If we do not deal with this credit crisis, I
> believe that the Main Street economy will have to pay the bill for the
> bailout and pay the bill again in lost jobs, and in shrinking retirement
> and pensions.
>
>
>
> Regrettably, this rescue is necessary to restore confidence and
> stability in our economy. The final version that passed is vastly
> improved from the three page bill that President Bush and Secretary
> Paulson originally sent to Congress. It protects tax payers, provides
> oversight and transparency, and rejects using tax payer dollars to
> finance golden parachutes for Wall Street CEOs. That’s why I voted for
> it. This legislation was necessary to protect our economy, our middle
> class, and our way of life. But I heard the taxpayers loud and clear.
> Much more needs to be done to provide for rigorous reform and
> retribution against those who broke the law.
>
>
>
> The Emergency Economic Stabilization Act was passed by both the House
> and Senate, and was recently signed into law by the President. Knowing
> of your views was very helpful to me, and I will keep them in mind. If
> you’d like to read more, I encourage you to visit the “News Room” page
> of my website at
> http://mikulski.senate.gov/Newsroom/PressReleases/index.cfm
> where you
> can read the transcripts of my three floor statements on this issue.
>
>
>
> Again, thanks for contacting me. Please let me know if I can be of help
> to you in the future.
>
>
> Sincerely,
> Barbara A. Mikulski
> United States Senator
>
>
> P.S. If I can be of further assistance in the future,
> please visit my website at http://mikulski.senate.gov
> or call my Washington D.C. office at 202-224-4654
>
>

Two years later, America’s public and private debt are off the charts. The United States is by far, the most indebted nation in the history of the world. Our downfall will be all the more spectacular thanks to TARP.

During the last two years a slew of corporations and organizations–from vehicle manufacturers to the porn industry–have since lined up at the government trough to get a suckle at the TARP teet in order to support their respective unproductive, resource-squandering activities.

Our true colors really have been shown in the last few years: we are socialist, government teet-suckling whining bitches intent on steering clear of honest work. Our individualist, hard-working origins have given way to a universal mad rush for government plunder–we are all after it. It’s pathetic. And it will end in ruin.

Statism, in all its various forms has destroyed America: Where fascism has taken hold, socialists have been too dumb to diagnose it; where socialism has been victorious, business interests pushed back and used the state for their own fascist ends. It has been a tug-of-war for state resources, which are always resources plundered from the productive class.

In America, the past century or so has seen the pendulum swing from the evil fascists to the misguided, ignorant socialists. Plunder prevailed. And now is when we pay for it.

A survey says that American workers work the first three hours every day just to pay their taxes. So that’s why we can’t get anything done in the morning: We’re government workers!–Jay Leno

Nevermind that federal employees, especially lawmakers and the paper-pushing peons who occupy their office-space can’t cut it in the private sector.

Nevermind that federal bureaucracies are a complete drain on resources.

Nevermind that it takes no real ability to write tax laws and no real ability to drive an economy off a cliff.

Yeah, I can let all that go for now; They are topics for another day. What concerns me right now is the revelation from The Washington Post that these losers–who make double what private sector workers make–are writing tax laws that they think don’t apply to them.

Capitol Hill employees owed $9.3 million in overdue taxes at the end of last year…The debt among Hill employees has risen at a faster rate than the overall tax debt on the government’s books.

The average unpaid tax bill is $12,787 among the Senate’s delinquent taxpayers and $15,498 among those working in the House.

Only those who are arrogant enough to think that they can manage such a complex society would also be arrogant enough to think that they do not need to abide by their own immoral code that they force the rest of us to accept.

Back in 2007, Ron Paul supporters organized a tax protest “tea party” that immediately picked up momentum among libertarians. The demonstrations were geared around small government, sound money, humble foreign policy and individual liberty.

I began to notice some time in 2009 that neo-conservative constituencies were trickling into the tea-party. I didn’t think much of it in a negative light at all. Because I assumed that the entire world took it as a given that the neo-cons ruined America in so many ways during the presidency of George W. Bush, I figured that these individuals who were now claiming allegiance to the Ron Paul movement were simple reevaluating their principles and realizing how wrong they were. I thought it was great that these people were understanding how foolish they had been and were returning to the true Republican roots of small government and liberty. I naively assumed that their ranks in the liberty movement represented an apology for their unyielding support all those years for lies, theft, corruption, monetary inflation, bloated government, attacking of sovereign nations, the trampling on liberty and all the rest that made the Bush presidency the most disastrous eight years in America’s history. I was, more or less, willing to accept this implicit apology.

It didn’t take long for me to see that this was all a farce, and an implicit apology is no longer enough, although I won’t be holding my breath for that apology as America is made up of some seriously hypocritical dumbasses.

I suppose the realization started with the infiltration of the Ron Paul movement by the neo-conservative leadership personalities. In classic political-opportunistic-scumbag fashion, they hijacked the movement for themselves and replaced the libertarian Ron Paul with the likes of Sarah Palin, Sean Hannity and Glenn Beck.

Now it is 2010. The Ron Paul movement has been supplanted by the Tea Party: Sarah Palin professes her commitment to liberty while she campaigns for and endorses John McCain, the warmongering socialist. Sean Hannity and Rush Limbaugh cling onto the liberty movement like pathetic little homeless barnacles. They have since perverted the movement into one which supports the harebrained neo-con policies of preemptive war, torturing, invasion of private lives, socialist dribble that got us into this mess and that is currently being carried out by the current administration which they claim to oppose.

Lew Rockwell describes the Tea Party and what we should expect from it to a tee,

You might as well know right now, however, that the Tea Party, no matter how successful it is at the polls in November, will certainly betray the party of liberty. There are several reasons for this, but the fundamental one is intellectual. The Tea Party does not have a coherent view of liberty. Its activists tend to be good on specific economic issues like taxes, spending, stimulus, and health care. They worry about government intervention in these areas and can talk a good game.

But just as with old-time conservatives, there are many issues on which the Tea Party tends toward inconsistency. The military and the issue of war is a major one. Many have bought into the line that the greatest threat this country faces domestically is the influx of adherents of Islam; in international politics, they tend to favor belligerence toward any regime that is not a captive of U.S. political control.

On immigration, the Tea Party ethos favors national IDs and draconian impositions on businesses rather than market solutions like cutting welfare. On social and cultural issues, they can be as confused as the Christian right, believing that it is the job of government to right all wrongs and punish sin.

The talking heads that hijacked the party are after television ratings and journalistic cash perks. They have no principles and know nothing about liberty. The real problem in my eyes, though, is not that these pitiful book-salesmen have infiltrated the tea party, it is that they have proven in the past that their rhetoric can pervert the notion of liberty in the minds of millions of Americans.

These Americans are easy to spot; As I said, there are millions of them. They call themselves conservative and claim allegiance to liberty. Then the bright lights of Fox News come on and they easily dismiss the torturing of human beings by our government.

These Americans have no real principle. Their assertions are subject to their own whim on any particular day, depending on the weather and on who exactly is involved, what religion they belong to, or what party affiliation check-box they tick. They talk a big game about property rights, but when a man purchases land with his money and decides to build a religious center there, Sean Hannity can easily talk these Americans down from their stance.

They claim allegiance to sound money and limited government, but an ever-expansive empire does not bother them and any reason we can find for attacking and killing people is okay.

Their track record on liberty is also pathetic: It is only Obama and Democrats who can offend them with warrant-less wiretapping. If a Republican did the same–as they have–they wouldn’t make a peep. The violation of our liberties by the TSA is only offensive when Democrats are in office. The TSA’s service is only incompetent when Obama is giving the orders. When the land is ruled by Emperor Bush, or what ever other Republican puppet is installed the TSA is a godsend and any society who is without it is foolish and primitive (including our own, for hundreds of years of our incomparably successful history).

The only thing that is reassuring in all of this is that the true believers in liberty were fighting against the neo-cons all along; It is nothing new for libertarians to battle the warmongering, socialist Republicans and at the same time the warmongering, socialist Democrats.

I guess I am just once again discovering how much more I hate the neo-cons than the Democrats. See, at least with the Democrats you get an honest angle. Obama and Pelosi will come right out and say “we are oligarchists, that’s us. We are the elite, we know what’s best for you, we will rule your lives and organize society the way we see fit.” The lie that they tell is hidden in the ideology of socialism/oligarchism/fascism/statism itself–whatever you wanna call it. That is, statism just simply does not work. It can hardly be called a lie, it is just a fundamental failure of the system they tout; Statism’s promises of utopia can never be realized because the system is fundamentally flawed. But at least the American socialists don’t dress up as capitalists. They call themselves Democrats and they run on a platform of socialism, there is simply no deception going on.

Republicans, on the other hand, bear sole responsibility for the fact that the free market is blamed for our current economic crisis. Anyone who knows anything about economics knows that the American economic system of the past few decades has been getting progressively less capitalistic to the point where it bore way more resemblance to socialism than capitalism quite long ago. If you don’t realize this then you don’t know what capitalism is.

Alan Greenspan operated the Fed like a statist but his rhetoric made everyone think he was a capitalist. George W. Bush claimed that he was a believer in the free market, but he barreled ahead down the road of statism more quickly than any other president before him.

Even the Sean Hannitys, Rush Limbaughs and Glenn Becks of the world talk about liberty until they are blue in the face. But if we believe these clowns then we are believing that “liberty” means attacking sovereign nations who have done nothing to us. “Liberty” to them is maintaining a worldwide empire. “Liberty” to them is torturing people, allowing an ever-expansive state to disregard the constitution, to bail out failing private enterprises, and all the rest. They know nothing of liberty, but they are more dangerous than the Democrats because they tell all the suckers who listen to them that their way is the way of liberty.

In this situation is it any surprise that half of the suckers tout a desecrated form of liberty while the other half of the suckers think that liberty stinks? These neo-con morons caused the gravitation of Americans towards Obama and the anti-liberty socialists because they fooled everyone into thinking that the George W. Bush dynasty was what they get when liberty reigns supreme.

As for the Tea Party. It stinks so bad of neo-con that there were even Tea Party candidates running against Ron Paul when he was up for reelection in Texas!

The fact that the Government runs the schools is the one overarching problem with the entire education system. Government run schools do three things.

1. Most estimates for the cost PER STUDENT-PER YEAR are around $13,000 nationwide. Some studies have a much higher figure but we’ll be “conservative” with that number for now. In order to pay for this “education” the Government drains families of their money through property taxes and other forms of legal plunder. This overpriced and unjustified expense is one of the reasons both heads of house are forced to work full time jobs. In turn, there is less time for parents to spend teaching and nurturing their children.

2. “Perception equals reality.” Since the parents are not writing a check directly to the school there is a perception that the Government run school is free. The idea that parents are not paying for this service detaches them from taking responsibility and truly owning the results.

3. Government run schools essentially have what amounts to a monopoly on the education industry in the United States. Private education does exist but it is faced with unfair competitive advantages held by Gov. run schools. Government run schools don’t pay taxes which reduces their costs. They also have the Government printing press at their disposal. Also, the perception of being “free” attracts more suckers to put up with their miserable results. One RULE that ALWAYS applies when a monopoly has taken hold applies here: “Lack of competition will lead to a reduction in quality of service while increasing the cost.” It’s that simple. This monopoly must end so the free market can facilitate a level playing field which would drive down the prices for alternative forms of education.

The Solution: Let families keep the $13,000 which they’ve been flushing down the toilet of Government education. Here’s why:

1. Parents will have the financial means to choose the education they want: home school, private school, boarding school, GOVERNMENT SCHOOL (if they want).

2. This education families choose will yield better results and cost less. To paraphrase Milton Friedman, “When you spend your own money on yourself you will get the best value while maximizing results.” As I’ve discussed Government schools are a colossal waste of money and have yielded shameful results. If these families are writing a check to an educator of their choice they will make sure the child is getting a proper education for their money.

3. Parents would work less and be home more. The positive results of this will be immediate. In the current climate the window for families to spent time together is between 7-8 am and 6-10 pm. Parents and kids don’t become strangers. Parents will have a better opportunity to keep their kids out of trouble. Last but not least: Less expense ($13,000) = less work = less stress = happier family.

4. The social climate around the country will improve. There is way too much fighting over what is taught in public schools. Should our kids learn creationism? Is health class too graphic? Should we focus on alternative life styles? What bull shit fable are we going to learn in “history” class? It’s ridiculous! If people are choosing who educates their children these would not be issues. This has become more troublesome with the introduction of Federal standards and Federal curriculum. Basically a suit in Washington decides what EVERY CHILD IN AMERICA can and can’t learn. **See Ref. Below**

5. The “exceptional” will excel and the average will get what they paid for. This is related to #3 and #4. Government run schools are a place where MOST (not all) great brains go to die. They are dragged down by the monotony and “neutrality” of public schools. They are not challenged they are “drugged.” The exceptional are the ones who will one day drive forward civilization with their ability to solve problems, innovate, invent and produce greatness. By holding them back we are hurting the future.

The average will maximize their ability: see #3.

6. We will save hundreds of billions of dollars. The government is broke!!!!! It has gone broke with failed attempt after failed attempt to adequately replace what the free market could provide. This point ALONE should end all arguments. If you have NO MONEY stop SPENDING MONEY.

___________________________________________

**Ref#4:**

“…a suit in Washington decides what EVERY CHILD IN AMERICA can and can’t learn.”

There is a reason people don’t know what the Federal Reserve is when they graduate: They don’t want you to know that money is literally created out of thin air.

There is a reason people don’t learn to manage their money when they graduate: Debt, Borrowing and Spending drive this house-of-cards economy so the more people in debt the better.

There’s a reason States Rights are not brought up in MOST civs/government classes: They want the President to userp unconstitutional powers, control industry, and dispense favors to their political allies.

There’s a reason books by Freidric Bastiat, Henry Hazlitt, and Murray Rothbard are never discussed: They want to shut out alternative thought. They want to produce obedient lemmings with homo-genus ideologies who do not question the All Mighty State.