Thursday, December 31, 2009

Anatomy of a Myth II – The Racist Constitution.

Maybe it’s just me, but I was taught that the Constitution counted black people as 3/5ths of white people. It was just something we were told was due to the racism of the times. That’s how it was in those unenlightened days, after all, what could you expect from a bunch of rich white slave owners? Those founders may have been learned wise men, but they were also flaming racists, or so we were told. Fortunately for the Constitution and the Founders, the 3/5ths language in Article 1, Section 2 is not what we were taught.

Critics use the 3/5ths enumeration language to justify all sorts of anti-founder, anti-American, sentiment. If the Constitution itself can be viewed as a racist document, does that not cast doubt on the holiness of the whole enterprise of these United States? Isn’t that what some have preached for years? Does that not sound familiar? There’s only one problem with this argument; the premise is flawed because the 3/5ths language in Article 1, Section 2 is not about race or racism.

Oh, I’m not claiming that racism didn’t exist among the founders and in colonial America. I can’t imagine an economy based on forced African labor as anything but racist. But the Constitution, and in particular the 3/5ths provision in Article I, Section 2 studiously avoids that issue. The framers were pretty aware that history would be looking over their shoulder and accordingly chose language that would not be harshly viewed by future generations. They were doing what they could, in their way, to plot a course in the direction of their founding dream of a society in which “all men were created equal”, and were treated that way.

So, what about that 3/5ths thing; what does it really say in Article I, Section 2? The founders enumerated non-free Persons as 3/5ths of a free Person. In other words, it was about slavery not race. Free blacks, of which there were many by 1787, were enumerated exactly as free whites. Moreover, the constitution refers to all men, free and “other” as “Persons”. This is no accident. Incidentally, white slaves would have been enumerated exactly as black slaves, at 3/5ths. That’s right, there were occasional white slaves too!

So why the distinction and the 3/5ths thing in the first place? Madison explains in Federalist #54 that enumeration served two purposes in the constitution: representation and taxation. The more Persons you had, the more you were taxed and the more representatives you could send to the federal govt. Slaves didn’t pay taxes or vote but did swell the population of a state, therefore the 3/5ths thing was arrived at as a compromise for calculating taxes and representatives. Of course, free blacks were fully enumerated before they could vote; just like women.

Article 1, Section 2 never mentions race or slaves, only “free Persons”, “Indians”, and “other Persons”. Indians, who also paid no taxes and couldn’t vote, were enumerated as “zeros” presumably because they didn’t contribute economically like slaves did. Again, none of this precludes the reality of racism among the people of the time, but it does point out the lack of a racial aspect to Article 1, Section 2.

Thomas Sowell, one of my favorite economists, and incidentally a black man, tells a story in one of his books where he was questioning a professor and asked where slavery came from. The professor responded that that was the wrong question. The right question was, where did freedom come from, because slavery was woven into the human fabric from the outset; it is only in modern times that freedom has become the norm. We have abolitionists and philosophers around the world to thank for the freedom that we all enjoy today. Among them were the wise men who wrote our founding documents and made it clear, if you look closely, where they expected us to end-up.

Sunday, December 20, 2009

The Irony of Keynes

If I were to ask you to name the single biggest ideological struggle of our time what would you say? Capitalism vs. Communism? Liberalism vs. Conservatism? Democrat vs. Republican? Sure, those are all big ones, but to me the struggle at the root of all those is an economic one; Supply Side Economics (SSE) vs. Demand Side Economics (DSE). As John Maynard Keynes (1883 – 1946), the man most associated with DSE said about economics: “In reality, the world is ruled by little else. Practical men (and women), who believe themselves quite untouched by any such intellectual influence, are usually slaves of some dead economist." Wow, talk about irony!

For most of the last 100 years we have oscillated between these two economic theories. In the 30’s it was pure DSE. In the 60’s and 80’s it was mostly SSE. Often it’s been a blend of the two. But now we are back to pure DSE and not since the 30’s have we put so many eggs in that basket. In fact, the experiment we are conducting right now is a historic case study in economics and the result will determine our economic future. One possibility is that everything will work out just fine  Then again, it could be an epic and profound human disaster! Have I got your attention?

Now, if you’re like me, you’ve heard these terms over the years and have a basic understanding of them. But, speaking for myself, I sometimes get confused by the language of economics. A further source of confusion enters in when economists let their unrevealed political bias color their explanations. Not being an economist, but as someone who has studied this stuff on my own gives me a perspective that might help others get to the essence behind SSE and DSE. In that spirit, the following is a summary of the big poli/economic debate of our time using simple language which absolutely reflects my bias.

Here are my boiled-down definitions of SSE and DSE:
  • Supply Side Economics is the theory that people will enthusiastically SUPPLY their efforts and capital if they are free to realize the rewards. 
  • Demand Side Economics is the theory that people will enthusiastically DEMAND goods and services if they are subsidized to do so.

Supply Side Economics is all about freeing people to create and produce.

Demand Side Economics is all about re-distributing wealth to get people to consume and spend.

Politicians use terms like “targeted spending”, “deficit spending”, and “investment”, instead of "wealth redistribution".  But those terms violate double-entry accounting rules; they only show one side of the ledger. Where does the spending or investment come from?   It has to come from someone, right? Are we really gaining anything by taking a dollar from one person and giving it to someone else? Well, yes in a sense we are: as the old saying goes, “If you rob Peter to pay Paul, you’re guaranteed to gain Paul’s vote!” And the vote tally goes up exponentially when Peter has yet to be born! In fact, this is the politician’s favorite funding source. Politicians get elected time and again by re-distributing wealth from the unborn to active voters. It’s a classic heads I win, tails you lose scenario where the winners never have to face the losers in an election. This has become the essence of DSE today.

DSE or “Keynesian Theory” when associated with John Maynard Keynes usually refers to targeted re-distribution exemplified by short-term “stimulus” designed to minimize a dip in the “business cycle”. Cash for Clunkers, the 787 Billion Dollar Stimulus Bill, and TARP are recent examples of the original intent of DSE re-distribution. But that is a small part of total DSE. Most wealth re-distribution is done to achieve political or social goals and not for specific economic benefit. Social Security, Medicare, Medicaid, and Obamacare are all re-distributive programs and are social and political programs first and foremost. But regardless of the intent, the economic effects are the same. Thus all re-distribution behaves as Demand Side Economics.

So, what is the difference between wealth re-distribution and “normal” government spending? I maintain that any fiscal expenditure for a reason other than the essential roles of government is a form of wealth re-distribution. Neither SSE nor DSE questions the need for essential government services, or the idea that taxes must be collected in order to fund them. But of course, the devil is in the details.  In this case the detail is how a society defines the “essential roles of government”.  In our case we can start with the US Constitution and call anything in that document essential. Anything we have added above and beyond our constitution is, I would contend, wealth re-distribution.

This definition helps answer one of the big questions surrounding Supply Side Theory: What is the optimum level of taxation which will promote prosperity? The answer: Just enough to fund the essential roles of government.  Anytime we spend government money on things not explicitly enumerated in the Constitution, we are choosing DSE re-distribution over optimum prosperity.

Again, there are often compelling socio/political reasons for a society to engage in wealth re-distribution. But what often is obscured is the economic damage and deceit involved in this choice. Unfortunately, the underlying premise of DSE is flawed as is the generational theft which accompanies it.

So, what is the big flawed premise of DSE? In short; Supply can satisfy Demand, but Demand can never satisfy Supply. Put another way, all the Demand in the world can never Supply food for the hungry unless there is a reason for producers to Supply food. Demand alone does no good. Remember the old Soviet Union? Was the Demand for groceries any less in the Soviet Union than in the US - yet who could forget those pictures of the Soviet food stores with empty shelves? Naked Demand is like the person wandering through a desert dying of thirst; they have infinite Demand for a drink but it does them no good without a Supply of water.

The theory is that Demand alone will stimulate producers to Supply more. But the flaw in that thinking is that the re-distribution of wealth works exactly in the opposite direction in two ways: first, by taking money from producers it reduces the reward for them to create Supply, and second, it disincentivizes Demanders to contribute their labor. It’s a classic lose-lose scenario.

Socio/political reasons aside, engaging in DSE in the name of helping the Economy is nonsense. And this is not just a critique of Obamanomics. George W Bush is often mistakenly called a “Supply-Sider” for lowering taxes, and yes he did lower taxes which aided prosperity. But his record is much more complicated than that, for while lowering tax rates, he also engaged in plenty of DSE, especially in his last two years with the Pelosi/Reid Congress. Ultimately, he was both a Supply-Sider and a Demand-Sider and thus he was neither.

The current course we are on is as close to a pure Demand Side Economic model as we are likely to ever see. That makes this a watershed moment in the debate over economic theory. Too bad for us we may end up, as the father of DSE John Maynard Keynes famously said, “slaves of some dead economist”. If that isn’t ironic enough for you, consider this; we are being led into this servitude by our First Black President.

Tuesday, December 15, 2009

Deja Vu All Over Again

Yesterday, Barack Obama summoned the heads of the country’s biggest banks to the White House for a good tongue lashing about how they were the villains who caused the financial panic and now it’s their job to fix the economy... by making reckless loans again… No seriously, that’s exactly what happened!

Well, at the risk of confusing you with facts, I’d like to remind you of a little history; the history of a certain Community Organizer, the Community Organization he worked with, and the banking regulation called The Community Reinvestment Act (CRA) which forced the banks to look the other way when writing mortgages.

The Community Organizer, the young Barack Obama, as you’ve guessed by now, was not the lead singer at the time but rather another voice in the chorus. But there he was with Project Vote and ACORN (Association of Community Organizations for Reform Now) in Chicago while they were agitating for looser lending standards by banks so that minorities with poor credit could get mortgages and buy houses. It was a two pronged effort: first, get the government to force the banks to make the loans and second, get the government to purchase the dubious loans from the banks. The second part was to happen through Fannie and Freddie, the giant Government Sponsored Entities (GSEs) who wind-up owning most mortgages in the end.  This is ACORN's own website on the CRA:

The strategy started off slowly in the 70s under Carter but by the 90s, when Barack Obama was in the thick of it and Bill Clinton was trolling for votes in the inner city, it was a match made in heaven! Together, ACORN with their army of Community Organizers including the young Barack Obama and Bill Clinton, tweaked the CRA just enough to really get the ball rolling and shook-down the banks to not just make the risky loans, but they also made it almost risk free by making it super easy to unload the paper onto the unsuspecting public through the GSEs. This is what lit the fire we all know as the Subprime Mortgage Crisis of 2008/2009. If you have doubts about any of this, try finding any mention of Subprime Mortgages prior to the CRA. Good Luck.

To repeat, this is just the history of what lit the fire. The rest was done by a host of other factors which are beyond the scope of this brief history. But this author would contend that once the fire was lit, the damage was done and all the other factors just determined the precise timing of the blaze.

Now that you have been reminded of this history, does it not strike you as a tad comical that Obama is now lecturing the bankers on their responsibilities for both the Subprime Mortgage Crisis and getting back to the important business of making reckless loans once again? Admit it, you are laughing a little... I can see the tears running down your cheeks…

Friday, December 11, 2009

Follow the Money

Everyone with an interest in such things is wondering; "Are we still a private-enterprise free-market economy or are we now socialist?" After all, the government now owns or virtually controls the car companies, the banks, most of the healthcare industry (soon to be all), the biggest insurer, education, a chunk of the media (think about it), the mortgage market, energy exploration, everyone’s basic retirement plan, passenger trains, airport screeners, the postal service, and on and on and on… But I think all this misses the point. If we were still a private-enterprise free-market economy, we could easily reverse all this with one election. Unfortunately, that is not very likely even with 2010 shaping up to be a big win for smaller government, and to understand why, all one needs to do is “follow the money”; in this case, the tax money.

We have now reached the tipping point where half of the US population either pays virtually no taxes or perceives that they pay no taxes. (Source: US Gov.),,id=133521,00.html

Thanks to 100 years of progressivism, a massively progressive income tax, the Earned Income Tax Credit (EITC), entitlements galore, and stealth taxes which no one is aware of paying, only a minority of Americans are openly paying the tab. That doesn’t mean that the others are paying nothing. They are paying plenty, but they do so in ways that are hidden from them. Payroll taxes are matched by the employer but no worker ever thinks of that money as theirs; it is. Corporate income tax is added to the price of everything we buy, but no one thinks of that money as theirs; it is. The costs of business regulation are built into the prices of goods and services but no one realizes it is a tax. When the Fed pumps out money and deficits skyrocket, no one thinks of that money as theirs: it is and when inflation hits, they learn it. The bottom line is that a majority of Americans now embrace socialism (although they don't recognize it as such) because they believe someone else will pick up the tab; they won’t.

The political reality is that we are no longer a reliable private-enterprise free-market economy. Majorities rule in a democracy and as long as a majority of Americans perceive they are getting a free ride on someone else’s dime, they will continue voting for entitlements, earmarks, socialism, re-distribution, and big government. We will not travel this path towards socialism in a straight line as history has already shown, but travel it we will! Just follow the money…

Wednesday, December 9, 2009

Live by the Sword, Die by the Sword

"Live by the Sword, Die by the Sword"  Ever hear that one?  It's an oldie but a goodie.  Well, I got a new one for ya  (I probably didn't invent it though) "Live by the Dollar, Die by the Dollar".

Watching the actions in Washington these last 11 months and knowing our "Shadow President" (George Soros, and I am not saying that with tongue in cheek!) we are being hacked to death by fiscal and monetary policy aimed directly at our currency.  Conveniently, the Shadow President is a world renowned currency trader who has made billions shorting the dollar.  I'm not a conspiracy guy, but isn't it interesting that gold has been signaling a major devaluation, the 12 Trillion dollar debt with the 100 Trillion dollar unfunded liability grows exponentially, Fed rates are near 0%, and there's ample evidence that all roads in ObamaLand  lead back to George Soros?

At this point there are a few things one can do to hedge this scenario:  1.  Buy gold on the dips.  2.  Borrow dollars (mortgage-up responsibly) and enjoy the low rates and devalued debt service.  3.  Take out a hefty life-insurance policy on Glenn Beck and Andrew Breitbart.  And number 4.  Impeach Soros!  

Well, at least some of those are practical!

Saturday, December 5, 2009

Anatomy of a Myth

If I were to bet you a million dollars, could you tell me which President famously asked Americans to fight terrorism by “going shopping”? (Please email me immediately if you want to take this bet and don’t read on!)

Of course I’d win this bet because no American President including George W Bush ever said those words and the reason you think he did is because of Time Magazine.

Here is the line from the Time Magazine article from September 21, 2001 analyzing Bush’s speech from a few days earlier:

And for God's sake keep shopping — "I ask your continued participation and confidence in the American economy" — and keep praying:

Time Magazine said “keep shopping” not George W Bush. Notice where the quotes are.
Here's the whole enchilada:,8599,175757,00.html

Bush did once utter the words "I encourage you all to shop even more!" But this was in 2006 while he was ribbing reporters during the Christmas shopping season and the context was the economy and the early Christmas retail numbers!

I bring this all up because I hear this lie repeated constantly and it stuck in my craw when I heard it this week from a big Democrat in the context of how great Obama was compared to Bush “who just asked Americans to go shopping!”

But this is nothing new. Much of what we know, just ain’t so when it comes from indirect and filtered sources. So much of what we're fed by the pop-media is little more than agenda driven propaganda.  Constant repetition keeps the “myth train” rolling on and on and on. I’d have much more faith in our Democracy if fewer people were sucked-in by these tactics.

One other thing I’d add to this subject is a speech Bush made to airline employees also in September 2001 where he asked Americans to continue flying for business and tourism and to "go to Disney World", etc. Remember that between the 9/11 attacks and the anthrax attacks, the whole economy including retail and tourism came to an abrupt standstill. There were even widespread reports of anthrax being introduced into mall air systems! What President would not use the bully pulpit to ask Americans for “continued participation and confidence in the American economy”? Think about it…
UPDATE:  Oh, and you owe me a million dollars.

Wednesday, December 2, 2009

Magic Bullets Part V - Health Care (plus Climategate)

I like this little video I saw on PajamasMedia today.  It goes well with Magic Bullets Part III...

Also, while at Instapundit, I saw this on Climategate.  PajamasMedia is doing great work every day!
Please support them by joining...
PajamasMedia, Hide-The-Decline! Video

Monday, November 30, 2009

Magic Bullets Part IV – Jobs

President Obama and his top economic advisors are flummoxed by the high unemployment rate. Puzzled, baffled, confused they are at joblessness which has been building since 2007 and has accelerated under this president to 10.2%. (See this dramatic animated map for the full effect: )

In order to nip this situation in the bud once and for all, the Obama administration has mobilized it’s best and brightest and is taking bold concrete decisive steps by……calling for a meeting…..a “Jobs Summit”!

Save your breath guys, here’s how government can create jobs:  stop destroying them!

That’s right, President Obama and the Democrats are destroying jobs in unprecedented numbers and unlike the “saved or created” ones, these are in real congressional districts. The truth is, government can’t create jobs or economic activity of any sustainable kind - all it can do is shuffle things around and misallocate resources. Every penny spent by government must be coerced away from the populace one way or another. There can never be a net gain, despite what partisan academics might tell you (remember the “Keynesian Multiplier”?), and this is what the framers knew when they designed a “limited government” focused only on the essentials of the state. The magic bullet for jobs is simple: stop destroying jobs; then and only then, can government save a single one.

The natural state of things is essentially full employment. The economist Adam Smith pointed out in 1776 that ancient hunter gatherers were essentially at full employment. Every member of society was busy running around getting food, making clothes, fashioning tools, defending the clan, etc.; just doing what they could to make it to the next day. The equilibrium in a healthy modern society is different from that of cave-dwellers, but the logic holds: it takes an imbalance to screw things up. So what has changed recently which could cause such an imbalance?

In November 2006 (3 years ago already!) we had an election and put both houses in the hands of the anti-growth, high-tax, big-spending Pelosi/Reid Democrats. Of course, they won the job thanks to Republicans who had lost their way, but the Democrats actually ran on a job killing platform: raising taxes, imposing huge new costs on doing business, and re-distributing wealth. Oh, and they also wanted to “roll-the-dice” on Fannie and Freddie (remember that one?)!

Then along came candidate Obama and his agenda of Unprecedented Uncertainty. One example:  First he said he’d raise the Capital Gains Rate from 15% to the same as ordinary income (soon to be 45% ish).  Then he reversed that a bit and dialed it back to 28% ish.  I think the latest plan is around 20% but I can’t keep up and that’s just the point; no one can! Much of the Credit Crisis of 2008/09 was about uncertainty and what would Obama really do? The markets didn’t actually tank until after the conventions and polls showed “Obama-The-Uncertain”, the clear leader.

That’s how you destroy jobs; raise uncertainty, raise regulation, raise inflation, raise taxes, and raise insecurity. This just about describes the Obama agenda! Stop the agenda, and jobs will be created. But as anyone paying attention knows, economic strength is not even on this President’s radar; no, he’s interested in the re-distribution of wealth, not its creation.

Don’t despair though, there actually is one politician creating jobs today and Barack Obama and the Democrats could learn a lot from this economic powerhouse. The one politician who has emerged as a one-person national job-creation machine is none other than bestselling author Sarah Palin.  Drill Baby Drill!

Tuesday, November 24, 2009

Report from NJ's 14th Congressional District

(Thanks to the phantom congressional districts and jobs cited on Obama’s 18million dollar boondoggle known as, several cynics have announced candidacies for fake congressional districts. I don’t have the patience for a campaign so I have appointed myself to the 14th Congressional District of New Jersey and the following is a progress report, or State of the District Address.)

"I want to offer my sincerest thanks to the people of The Fourteenth Congressional District of New Jersey. Thank you for putting your faith in me and choosing me to represent you in the 110th Congress. I will never let you down. Since being seated in January, I have worked hard to accomplish the agenda we laid out during the campaign and the following is a partial list of accomplishments saved or created since taking office.

1. 50,000,000 jobs have been saved or created in the 14th Congressional District and most of them have been good green jobs. This number is verified by every single economist and jobs expert in the district. In fact, there has not been a single person in the 14th Congressional District of NJ who has even disputed this number.

2. Unanimous support for Obama/Reid/Pelosi Healthcare legislation has been saved or created. Every single person, doctor, and insurance company in the district is 100% for the bill. I speak for all of us in the district when I say we look forward to passing this historic new free entitlement which will save money and create lower deficits.

3. Global Warming solved as lower temps are saved or created. Temperatures in the 14th district have been cooler than average and in some cases have even broken records that stood for years. Just today, the temperature dropped significantly from 4PM to 8PM!

4. Voter registration is at an all time high as fresh voters are saved or created. Here in the 14th Congressional District, we have partnered with our friends at ACORN (Association of Community Organizations for Reform Now) and managed to create 50,000,000 new voters. Not only that, but turnout has been running 120% of registered voters in every election since partnering with ACORN.

5. We’ve been holding the line on taxes and spending thus saving or creating billions in revenue. Taxes and spending in the 14th Congressional District of NJ have actually gone down since I took office. I made a pledge and I’ve kept it.

6. Higher housing prices have been saved or created in the 14th District! Housing prices in the 14th have bucked national trends and thanks to our efforts, have actually gone up!

That’s it for now. I’ll save or create more accomplishments as I serve my term as your Congressman from the 14th District of NJ!"

Thursday, November 19, 2009

Magic Bullets Part III – The Health Care Gecko

Here’s a question for you; why is there no healthcare Gecko? Wouldn’t it be great if 15 minutes could save you 15% or more in health insurance? For that matter, where is the Progressive girl with the red lipstick selling health insurance? Is it possible that this is the real problem with healthcare? In other words, is it possible that the real problem with healthcare is that there is no such thing as a true individual market? The fact is, only 5% of the insured buy their own health insurance. 95% get insurance from the government or their employer. For car insurance, the numbers are reversed and there is no similar crisis in car insurance. The difference is the Gecko. Give us a healthcare Gecko, and the crisis dissolves like magic.

Now I know what you’re saying, “Healthcare is way more expensive than transportation so there is just no comparison.” Consider this; Americans spend on average four times more on transportation than they do on healthcare. (Source: US Government, BLS)  Is your car more important than your life? Given this, why is there no demand for a public option in car insurance? Simple. There is a functioning free market (although regulated to the gills) in car insurance. Ever hear of Warren Buffet? He is a car insurance capitalist among other things; a slick profiteer making obscene amounts of money off the backs of innocent Americans who just need a little car insurance mandated by their government. Now I don’t buy into the tone of that last sentence, but that’s what the rhetoric about health insurance companies amounts to. It’s nonsense and it’s leading us down a Marxist class-warfare path.

Here’s the magic-bullet way out led by the Gecko, and the best part is, it is cost-neutral to employees, employers, and the government: Eliminate the deductibility of health insurance for employers and offset the difference with a reduction in payroll taxes. That’s it. Employers would instantly transfer their health insurance plans to employee ownership and increase wages to offset the costs. Tax implications for all parties would be neutralized by lowering payroll taxes across the board. End of story. It’s simple to explain and would set in motion all the other market forces like portability, availability, and cost which will solve this government-made crisis. Shouldn’t we try this before re-making one sixth of the economy in the image of the IRS and your local DMV? The only difference is there will be a healthcare Gecko within hours of this magic bullet. In Gecko we trust. Maybe Warren Buffet could explain this to the President?

(Remember, we’d still have a nifty public option called Medicaid for those unable or unwilling to “Go Gecko”.)

Saturday, November 7, 2009

Arrogant Association of Retired Persons

I attended the health care rally in Washington on Thursday where some 10 to ?  thousand people showed up, and stood in the bright sunshine cheering and waving signs as an endless parade of speakers came to the microphones in opposition to government-run healthcare.  The rally was pretty amazing on several levels but for me the most amazing thing was what I over-heard on the train ride home.  Sitting across from me was a woman who apparently worked at AARP which had just held a press conference announcing their support for the 2000 page bloated house bill and she was explaining to the person on the other end of the phone -venom dripping from her tongue- about how "those tea party people" were in Washington sucking oxygen from the AARP.  I couldn't help wondering how many of the thousands at that rally, many of whom were of an advanced age, do business with the AARP and are dues paying members.  If only they could see the arrogance and condescension of the very organization purporting to represent them...

Tuesday, November 3, 2009

Margin of Fraud?

Honest elections are so rare in New Jersey that we refer to close polls as being within the "Margin of Fraud".  Well, not that close - 5%! 

Again I have to remind anyone who sees this post, (both of you) that your tax dollars are funding this fraud through groups like ACORN, which are blatantly political but somehow recieve massive amounts of federal money.  If you agree with the agenda and tactics of these groups, pay your taxes.   If you disagree with ACORN's agenda and pay taxes, know that they are stealing your precious right to vote - with your money.

Saturday, October 31, 2009


"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." -Ludwig Von Mises
Why do I think we are going to get both? 

(Nod - I lifted the Mises quote from a comment on a Bruce Bartlett Forbes piece.)

Thursday, October 29, 2009


When Bill Clinton strayed too far from the principles on which our country was founded or acted like an ass, criminal, or dunce, he had a compliant pop-media to cover for him with few exceptions.  Chief among the dissenters was Rush Limbaugh who fulminated for 3 hours every day on national syndicated radio to millions of listeners.  I'm sure Limbaugh was a thorn in Clinton's side, but he was not as effective as he could have been due to his sometimes offensive style.  Even when I agree with Rush, I have a hard time getting past the pointless self promotion, unnecessary bravado, and dark moods.  I'm sure this acts as an impediment to "closing the sale" with fence-sitters. 

I won't even elaborate on Bush 43's situation since he had no compliant pop-media and critics in every corner on the right.  (See: Steel tarrifs, NCLB, Medicare Part D, Immigration, Meyers, Patriot Act, etc. and that doesn't even get to the war issues!)

Now we get to President Obama who is by all appearances leading a vigorous Marxist Coup in Washington in broad daylight with the willing consent of the pop-media, his own ruling party, the powerless Republicans, and a good chunk of the American Sheep Herd.  Standing in his way is talk radio including the aforementioned Rush Limbaugh, an enlivened Fox News, and the Wild Wild Net.  One Fox commentator, Glenn Beck,  has stood above the rest and acted like a clearinghouse for all the pieces of the puzzle which together prove the case that we are living through a Marxist Coup the likes of which have never been seen before in America.  And he's doing it artfully, humbly, sincerely, emotionally, and with a methodical approach which builds the case brick by brick, night after night.  Moreover, he is building a cadre of feeder sources from the Net and others which provide him the leads which comprise his wall of evidence.  He's become the most powerful, articulate, entertaining, and effective spokesman and clearinghouse for exposing this Marxist Coup.  No wonder Obama is lashing out like a cornered bully. 

In retrospect, Bill Clinton had it soooo much easier...

Corruption in New Jersey?

Is this even possible?  Corruption in New Jersey?
What next...

Corruption Sting Hits NJ Democrats

Just for once I'd like to see systemic fraud be bi-partisan.  I mean, if it's always one party fighting against voter IDs, electronic voting, signature checking, fraud detection, absentee ballot anti-fraud, ACORN registration supervision, etc., one could get the idea that there is a political party that actually SUPPORTS fraud!  I for one would much prefer neither party support fraud, but if one party insists, what are the risks of unilateral disarmament???

Tuesday, October 27, 2009

Microwave Government

Ever try to cook a steak in a microwave oven? Most likely you’ll end up with a ghastly grey slab that has the consistency of shoe leather and is about as appealing as road kill. Some things are better done the simple way; slowly over an open fire. Consider the case of our federal government: We declared independence in 1776 but didn’t ratify a constitution until 1788. That document was debated ad nauseum by it's authors in voluminous print before the colonies voted it in.  Wasn't that effort worth the time to get it right? Now Washington votes on major legislation running 2000 pages long which radically transforms the very essence of our republic that not a single member of the legislature has even taken the time to read.  Moreover, these bills are comprised almost entirely of venal political favors and payoffs. We are cooking all our laws including those concerning banking, health care, business, energy, environment, and defense in a giant dirty microwave oven. Supper anyone?

Monday, October 26, 2009

Optional Option???

Now that the so-called "public-option" is "optional" what's not to like?  Oh, I don't know, maybe all of it?   Let me get this straight; the helpful folks in Washington who have bankrupted Medicare, Medicaid, Social Security, Fannie Mae, Freddie Mac, Amtrak, The US Post Office, and every other entity they have ever meddled in, are going to avoid making the same mistakes by socializing medicine but allowing states to "opt-out" of this wonderful benefit?  Is Harry Reid serious?  Have you ever heard of a federal tax that you could "opt-out" of?  In other words,  the taxes and devalued currency to pay for this boondoggle will be mandatory for all Americans, but not-to-worry, the subsidized benefit is strictly optional.   Think of it like Mafia thugs coming to you and shaking you down for "protection money".  To stop the beatings, you pay up and as they are leaving, they wink and inform you that the payments must continue but you have the right to "opt-out" of the "protection" part of the deal.  Hey, "That's the Chicago Way"...  

Saturday, October 24, 2009

Saved or Created!

Reporter: “Coach, care to comment on your season so far?”

Coach: “Sure. I’m proud of my performance as well as that of my team. Together we saved or created thousands of points. Of course we always want to improve, but I think saving or creating thousands of points is pretty darn good, don’t you?”

Reporter: “Sure coach, but what does that mean “saved or created thousands of points”?”

Coach: “It means exactly what it sounds like! We all know what the worst case looks like so we just compare our performance with the worst case and call the difference “saved or created”, and as you all know, thousands of points are not just growing on trees in this league, right?”

Reporter: “Right you are coach, but as it happens, you are currently in last place and have yet to win a single game!”

Coach: “Sure you can look at it that way, but I prefer to look on the bright side and think how much worse it could have been if I hadn’t been such an awesome coach!”

Reporter: “Riiiight…Thanks coach. By the way, are you currently making any career contingency plans?”

Friday, October 23, 2009


I constantly hear stories about how well cellular phones work in other parts of the world versus the typical dropped calls and spotty broadband here in the US.  Part of the reason, I’m told, is the phenomenon of leapfrogging technology and that our ubiquitous copper-wire phone network slowed our jump to wireless. I think something like that is happening to our democracy, or more accurately, our democratic republic.

I live in NJ where we now have a competitive three way gubernatorial race winding down and it is extremely likely that our next governor will win with a narrow plurality, much less than a majority. Such is potentially the case with 3 way races in most elections in the US. But many parts of the world have learned this lesson and provide for a runoff in the case of a plurality. After all, if you were designing a democracy from scratch, wouldn’t a runoff law make perfect sense?

Under our system, the actual election is designed to be the “runoff” and the primary is how we narrow it down to a dichotomy. Unfortunately, we never fully accounted for the fact that not all candidates would want to slog it out in the primaries, and some would just keep their powder dry to run on third party tickets. (Remember Ross Perot and Ralph Nader?) I don’t have a problem with 3rd parties at all, provided we have a good runoff provision of some kind.

Another area where we may have been leapfrogged is in voter fraud. How is it that we know for certain there were fraudulent votes in Afghanistan but we have no idea what’s happening in, say, Chicago graveyards? We can’t even get a voter ID law passed in any state without endless court challenges. On what planet does this make sense? Has no one ever heard of ACORN or Mickey Mouse the Voter?  Why is it that we trust Diebold with our money at ATMs everywhere but not our electronic vote?  Why is it that absentee paper votes have mushroomed wherever electronic voting has taken hold?   

So I ask, without strong runoff laws and trustworthy fraud-free elections, are we not setting ourselves up for a very messy democratic future? Stay tuned…

BTW: Wikipedia has a very good explanation of the various “Two-Round” voting systems used around the world:

Thursday, October 22, 2009

All Hail The Mighty Pay Czar!!!

I know many people have bought into the Obama/McCain/Pop-Media explanation of the "Community Credit Crisis" and can see the logic of limiting the pay of reckless and greedy executives who got billions in government bailouts.  Problem is, that's not what happened!  In my upcoming best-selling book and companion Oscar-winning documentary, "The Community Organizer, The Community Organization, The Community Re-Investment Act, and The Community Credit Crisis" I carefully document that it was in fact Washington's policy of making home ownership an entitlement, through tax policy (mortgage deduction, etc.) legislation (Community Reinvestment Act, ACORN, etc), GSEs (Government Sponsored Enterprises like Fannie and Freddie), and monetary policy (FED easy money and then too tight) that caused the crisis and not greedy bankers.  Limiting the bankers pay is populist TYRANNY plain and simple.

Besides, what if hypothetically it was the bankers fault?  Shouldn't Obama just fire all the old greedy ones and hire a bunch of new "smart" ones and let them earn whatever the market will bear?  After all, they just inherited the mess!  Don't hold your breath...

Farewell to Divisive Politics!

I'm so glad Obama has ended the shallow divisive politics of the past...

Wednesday, October 21, 2009

Advice from Dad...

(Hayden leaves for Army Basic Training in 2 Weeks.  This letter was written last April long before the Obama Justice Department elicited an even more strident and spontaneous protest by every living former CIA director from both parties.)

Dear Hayden,                       4/20/09

This is a very difficult letter for me to write. Ever since you announced your intent to become a Marine your Mom and I have been supportive of your decision despite our protective instincts. After all, how could any parent be anything but proud of a son (or daughter) who volunteers to defend our nation? That said, I must tell you that I have new concerns about your decision and while I will continue to support you regardless of what you do, I must advise you to not enter the military at this time.

Last week, President Obama ignored the advice of four former CIA Directors and the current Director (his own appointee) and de-classified top-secret material pertaining to the interrogations of terrorists in captivity. It is my belief that President Obama has willfully made this country less safe by providing top-secret intelligence to our enemies and apparently five CIA directors agree. I can not and will not try to explain the President’s motivation, and it is certainly within his power to determine the classified status of any information. All I can do is warn you that our country and its military are now in greater danger as a result of these actions.

I’ll never forget going mountain biking with you on 9/12/2001 when we thought the fresh air would do us good only to find that the dark plume of smoke from ground zero was clearly visible whenever we looked up. One of the big lessons we learned from 9/11 was that our failure to prevent those attacks was in large part due to self-imposed restrictions on the sharing of intelligence between federal agencies. Will we look back on the exposure of top-secret interrogation information with the same regrets? Five CIA Directors think the risk was not worth taking and I am not qualified to disagree with them.

I consider the military’s relationship with our civilian government one of the founders great achievements. Throughout our history, the military has kept up its end of the bargain and honorably served the Commander in Chief regardless of political considerations. Likewise, most Presidents have gotten high marks for keeping up their end of the bargain. In my judgment, President Obama’s actions show that his interests lie elsewhere and I don’t want you entering the Marines with a Commander who is not looking out for you. Once you put on that uniform you will be defending us against deadly enemies and the last thing you need is a Commander aiding them!

Hayden, you are an adult and can make your own decisions about whether to volunteer or not. But I know you are busy graduating from college and don’t always have the time to keep up with the constant flood of information today. All I can do is what parents always do; inform their sons and daughters, and equip them to make good decisions.

My advice? Stay out of the Military until we have a Commander in Chief who will protect and defend this country and do everything in his power to not dull the “point-of-the-spear” that defends us all.

Love, Dad

Tuesday, October 20, 2009

First They Came For...

First they came for the capitalists, and I did not speak out—because I was not a capitalist;

Then they came for the conservatives, and I did not speak out—because I was not conservative;

Then they came for the critics, and I did not speak out—because I was not a critic;

Then they came for Fox News, and I did not speak out—because I watched MSNBC;

Then they came for me—and there was no one left to speak out for me.

(Apologies to Pastor Martin Niemöller (1892–1984))

Thursday, October 15, 2009

Dow 10,000!!!

Yipee!  The economy is fixed and the Dow is back at 10,000!  We sure dodged that bullet.  All hail the fabulous geniuses in Washington.  They cleaned up Bush's mess in only nine months!  All those bad mortgages have magically gone away!  The banks that wrote the mortgages are in great shape since they gave all the downside to the government!  The people who bought those homes have all refinanced and been "modified" with government guarantees!  Home values are shooting up thanks to free government money flooding the banks!  Goldman Sachs is paying bonuses again with Fed money!  The car companies are back and guaranteed by Uncle Sam!  Even gold is up showing, of course, that there is huge demand for bling!  So big deal, some people can't find work, not to worry, the government is paying unemployment benefits forever!  Isn't this great!  Yipee!  Aren't we great?  What's that, you say, there's a big bulge under that rug?  I'm sure it's nothing and I wouldn't worry about it for a few years anyway...

Wednesday, October 14, 2009

Food Reform Now!

Are you not sick and tired of the food industry making obscene profits and denying people the very food they need for survival?  Think about it; in order for greedy food companies to make the outrageous profits they do, they must constantly deny hard working Americans the very food they want and need.  How many times have you heard someone complain that they wanted a big steak, salad, potato, and an apple pie only to be told that their "plan" only included a burger and fries.  That's fine for the average person but what about a 300 pound person who needs more calories just to stay alive?  Should they be punished just because their genetic make-up makes them big? 

Now,  I'm not one of those people who think the government should do everything for everyone, but I think our government needs to take a close look at how the food industry denies food all the time to hard working Americans just to make obscene profits.  Just think how much better it would be if we all had a single-payer non-profit government option to bring efficiency to the food business.  And make no mistake about it, food is big business in America.  Food dwarfs healthcare in terms of numbers of people who profit from it and the numbers of people who must pay for those profits by paying more than they should to do something that is necessary for everyday survival! 

Experts estimate that some sellers of food are profiting by up to 20% on the sale of food which would indicate that if we eliminated the greed in food with a public option, we would have enough money left over to fund healthcare for all American citizens, documented and undocumented alike!  Chew on that...


A is A

Ayn Rand's masterpiece philosophical novel "Atlas Shrugged" was ostensibly a dissertation on the simple axiom  that "A is A".   Following the news in October 2009 I question how long we can pretend that "A is not A" before something gives a la Atlas Shrugged.  Can the government do something it has never done before; take-over huge parts of the economy, increase access, lower cost, increase quality, and make huge advances in technology?   Can the government make us safer by alienating our allies and appeasing our enemies?  Can we break every law of economics and build a stronger economy?  Can we criminalize intelligence and become more intelligent?  Can we fill our government with Marxists and not end up with a Marxist government?    Can we print money without restraint and not debase our currency?  Can we force the redistribution of wealth without destroying the engine that creates wealth?  Can the government make the sun cooler by taxing energy? Can we burn food to run our cars and not end up with less food?  Can "A not be A"?  Somethings gotta give and all I know is it's just a matter of time.  But timing is everything...

Monday, October 5, 2009

Magic Bullets - Part II - New Constitutional Ammendments

Again, in response to The Lovin' Spoonful, I do believe in magic!  Magic Bullets that is.  Today's magic bullets are a trio of constitutional ammendments that would do an end-run around the run-away government that has slipped through the cracks of the Commerce Clause and other overly broad parts of our founding documents which clearly were not intended by the authors as curently construed.   Read on if this kind of thing interests you and please comment: 

28th ammendment -  All domestic federal revenue must be collected directly from the people. 

This ammendment would eliminate all stealth taxes and fees and reveal the true cost of our government to the people.  One big change would be the elimination of all corporate and payroll taxes.  So, you say, corporations get a free ride???  Not at all.  Corporations don't actually pay taxes!   But they do collect and remit taxes which are stealthily taken from their employees and customers.  Stealth taxes are how the government is able to fool the populace into thinking they are getting good value from their tax dollar.  This is a magic bullet which would quickly lead to honest, right-sized government.

29th ammendment - Federal Representatives, Senators, and Judges including SCOTUS, may serve no longer than 12 years.

Don't really need to explain this one 'cause the logic is exactly the same as term limits for the President.  A no-brainer magic bullet.

30th ammendment -  Any activity (legislation, regulation, financing, goods, services, etc) of the federal government must meet three tests:  1. the activity must be of direct and equal benefit  for potentially all US citizens, 2.  the activity must not be obtainable from the private sector, 3.  and the cost of the activity must be borne by all citizens in like proportion, after an exemption for poverty.   

This would drive a stake through the heart of pork spending and earmarks while making sure everyone had "skin-in-the-game".   Could we socialize medicine after this?  No, because it would fail the second test.  Could we even have Medicaid or Medicare?  Sure, as long as it was strictly a financing activity which all citizens could obtain if they qualify.  Could we have a space program?  Sure, as it would meet all 3.  Could we have National Parks?  Sure.  Could we have a bridge to nowhere?  No.  Could we have wealth re-distribution?  Sure, as long as it passed the third test (which would limit it severely).  Could we go to a national sales tax or keep the income tax?  Sure, but the income tax would be flat after poverty and the sales tax would have a pre-bate.

How would our country look after these 3 ammendments?  Think about it....              

Thursday, October 1, 2009

Magic Bullets - Part I - Healthcare

What if there really are Magic Bullets?  "Experts" always say, with thoughtful pauses, "Well, of course this is a complex problem we have with (insert problem here) and there are of course no Magic Bullets, but I think with the right mix of policy changes...blah, blah, blah, etc. etc. etc."  You get the idea.  I reject that notion in many areas because I do believe in magic bullets and I can see them working throughout history.  Unfortunately, they can work both good magic and bad. 

Let's take for example the "black-magic" bullet that first caused our Healthcare mess; a freeze on wages during WWII which led companies to provide health insurance as a dodge around the wage freeze.  From that point on, there was an imbalance in the tax treatment between employer provided (tax deductable) and individually owned (fully taxed) health insurance.  In other words, that wage freeze caused a cascade of unintended consequences which has tragically led us to our current mess.  Today only about 5% of the population pays for their own health insurance leaving almost everyone in the US in a situation where someone else foots the bill.  No wonder healthcare is considered an entitlement! 

So what is the magic bullet fix?  Writing in the Wall  Street Journal a couple of  weeks ago, noted economist Martin Feldstein said  that (and I'm paraphrasing), virtually every economist he knows believes that tax changes are the key to bringing down costs.  After all, isn't this ultimately about cost?  If catastrophic insurance was affordable to everyone, everyone would buy it, right?  So the magic bullet is to make the tax changes which would re-establish an individual market for health insurance and once established, that would obviate a government takeover.  This could easily be done by giving individuals the same tax savings as employers and that would mean re-fundable tax credits for those who pay no income tax or are in low brackets.  The effect would be revenue neutral to the government and a true market would emerge for health insurance. 

So why not do it?  The answer is simple; this is not about fixing the problem but rather about political power and permanent electoral majorities forever for the entitlement class, which just happens to be another "black-magic" bullet.         

Wednesday, September 30, 2009

Defund this War!

"Defund this War!"  Ever hear that one?  In this case I'm referring to the "War on Me" taking place in Washington today.  That's right, I think there is a Coup currently taking place in Washington and it is among other things a war on me and people like me who believe in private enterprise, economic liberty, the US Constitution, and the very political liberty which has set this country apart. 

As citizens we only have one direct weapon against a democratic Coup d'etat and that is our right to vote.  But what if our vote is systematically stolen from us by a government funded voter-fraud machine wholly owned by the Democrat Party?  I'm referring of course to ACORN and organizations like it which have been in the news lately for various other trespasses.  But what of  the billions already in government funding and it's role in delivering filibuster-proof majorities to one party so it can prosecute this war? 

I cannot in good faith fund this un-constitutional use of taxpayer money for blatant and fraudulent political purposes.  That's it, I'm going all tax free.  I'll give up yield, but I'll sleep better.  This is not a simple disagreement with my government.   That happens all the time and I've never avoided a tax at the expense of yield.  This however is an obvious breach-of-contract on the government's part.  I'm supposed to have the right to vote and in return, the government is supposed to honor that vote according to the laws; not negate it by funding it's own self-sustaining vote-fraud machine!  Enough.   Will this cost me some return and isn't this risky?   You bet; but so was the Declaration of Independence and this is even more serious!  I'm de-funding this war and so should you...    

Tuesday, September 29, 2009

Forget Two Americas. Try Two Universes.

John Edwards (insert laugh track here!) was famous for his Two Americas line but I believe the bigger problem is the Two Universes.  After spending some time with the extended family it occurred to me that our individual media universe is determinant of what information we recieve and without good diverse information, good decision making is impossible.  How we process that information is another matter (through our own filter, Duh!),  but I find the discrepency in what information people are seeing is disturbing in itself.  Most everyone these days has strong opinions, but most of the folks I run into have never heard of the Van Jones story, the Acorn pimp stings, the kids chanting for Obama, The Valerie Jarrett connection to the Chicago Olympic Village, let alone the Acorn connection to subprime mortgages and Obama's connections to Acorn!  And these are folks who read the New York Times daily!  They live in a Universe with an information vacuum and that can't be healthy.      

Sunday, May 3, 2009

IBDST about one party rule...

One Party Rule? I love it! For years all I heard was "I hate both parties and they're just the same anyway", or "There's not a dimes worth of difference between the Democrats and Republicans". Well apparently there's like ten trillion dollars worth of difference! All those who babbled on about excessive spending during the Bush years (and I was among them!) have gotten a real schooling as Obama makes just about every other President look like a model of fiscal responsibility. But spending is just part of it. The differences on national security have been another huge wake-up call for the intellectually lazy "dimes-worth" crowd. Still think both parties are the same after Obama ignored the advice of 5 CIA Directors and de-classified the Top-Secret files on terrorist interrogations? For brevity's sake, I'll only mention one more all-encompassing difference that has been highlighted of late; "philosophy". I ask the "dimes-worth" crowd, can you see the difference between how Republicans view your property and how Democrats view your property? How the GOP views the constitution and how the Dems see it? How each party views free markets and the rights of the individual to participate in them? The longer we are a one party country the more damage will be done. The education though will be priceless!