Monthly Archives: September 2008

Welcome to the U.S.S.A.

For those of us who value the concept of life, liberty, and property, there doesn’t seem to be much reason to be optimistic for America’s future. Last week we saw one government (taxpayer) bail out after another. The price tag seems to grow a couple of hundred billion dollars each day (depending on which figures one chooses to believe); by some estimates the taxpayers will be on the hook for over $1 trillion. According to the Libertarian Party, $1 trillion could buy the following:

• To buy everybody living in Los Angeles at least one Lamborghini Gallardo.
• To buy 88,052, 394′ custom mega yachts; enough to stretch around ¼ of the world.
• To buy everyone living in Belize and Malta a Manhattan apartment.
• To get half of the Democratic Party into a fundraiser for Barack Obama at the $28,500 admission price.
• To give one out of every two men in the United States a Men’s Presidential Rolex watch.
• To buy every woman in the United States a Tiffany Diamond Starfish Pendant.
• To get two Mitsubishi 73″ HDTVs for every household in America.
• To buy four copies of The Office: Season Four on DVD, to every person on earth.
• To send everybody in America on an all-inclusive vacation to Tahiti (and some people can stay a few extra days).

Anyway you want to look at it, $1 trillion is a lot of money ($3, 278 for every man, woman, and child in America).

And how do our so-called leaders wish to ultimately “solve” this problem which they have created? More government, of course! Joe Biden is calling on “the rich” to do their “patriotic duty” to pay more taxes, not only to pay for the already bloated federal government (which grew by leaps and bounds under the so-called compassionate conservative George W. Bush) but also to pay for the government programs that he and Barack Obama wish to impose on us (programs such as fighting global poverty among others).

But it gets even worse than that. The current Secretary of Treasury Henry Paulson has proposed that he should have the absolute authority to purchase any mortgage-related assets as he sees fit (obviously with our money). Section 8* of the proposal reads as follows:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Section 9 puts a time limit on this absolute power provision but even placing this much power in the hands of one person for a two-year term is a very frightening thought. Perhaps the one good thing about having power hungry politicians in congress in both parties is that they would likely not support this measure as it would take power away from them.

Welcome to the U.S.S.A. What’s left of our free market system is all but dead. While one can make a libertarian case for both John McCain and Barack Obama in certain aspects of their policy proposals, neither are what I would call champions of capitalism (to put it mildly). Personally, I don’t find the arguments for McBama to be persuasive. I will proudly support Bob Barr knowing full well that he will not win this election and knowing full well that whomever wins, we will be in for difficult times.

Is America’s best days behind her? Is there any way that we can restore our Republic to what it once was?

As always, the answer will depend on how “We, the people” will respond.

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Quote Of The Day — Treasury Bonds Lose AAA Status?

Well, that’s what the S&P rating service is discussing, but they do point out one crucial point allowing them to retain their place:

“As an advanced economy with almost no foreign currency debt — and with the ability to continue to borrow in its own currency — the U.S. ratings face little threat in the foreseeable future.”

That must be nice. I wish I could simply print money to pay off my debts…

A little lesson about government– If I could print money to pay off my debts, I’d worry a lot less about my spending habits. That incentive doesn’t change just because Congress makes the decision.

Quote of the Day: The “Don’t Say You Weren’t Warned” Edition

Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out.

Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

[…]

I hope today’s hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

Ron Paul in the House Financial Services Committee, September 10, 2003

Hat Tip: Classical Revolution

Dr. No — Or How I Learned To Stop Worrying And Love The Fed

If I had photoshop skills, I’d be putting out a picture of Ron Paul smiling up* at Ben Bernanke throwing money out of helicopters… Unfortunately, I’m not an artist. So this will have to do…

Perhaps my predictions in early 2007 are starting to come true? We’re in an election year, and our next president (whoever it is) is about to walk into a shitstorm of 1930s proportions. The next President will be forced to “do something”, and to expect that President to do something positive instead of politically-palatable-but-destructive is naive at best.

More to come when I get a chance, because my initial predictions didn’t quite account for how difficult it would be for our economy to deleverage… A lot of people don’t understand what’s actually happening, so I’m going to do my best to explain it in simple terms– and try not to get it wrong, as it’s complex enough to make my brain hurt…

* No, Ron Paul wouldn’t be smiling up at Bernanke out of respect, it would be more out of a fatalistic delirium that all of us might be facing in the near future. Ron Paul was just prescient enough to see it coming and try to warn us.

Happy Anti-Federalist Day!

So, today is Constitution Day, a day to celebrate the ratification of the Constitution. Aptly, then, I’ve been reading John Ferling’s A Leap In The Dark, a history of the American Revolutionary period beginning in the 1750’s and ending with the peaceful transfer of power to Jefferson in the 1800 election. Over the last few days, I’ve been through the chapters on the battle to create and ratify the Constitution.

The book, which I recommend heartily, gives a strong human feel to the Revolution. Contemporary high-school history classes teach the Revolution as if it were a foregone conclusion, a natural progression of the transgressions by King George III on the colonies. In reality, it was always in doubt, and divergent factions within the colonies could have scuttled the Revolution at any point between the Stamp Act in 1765 and Yorktown.

Enter figures such as Samuel Adams and Patrick Henry, two true radicals committed to independence. Adams in particular was masterful during the days of 1770-1773– a time with little new development from the Crown to cause popular outrage– when he worked to keep the situation simmering. His leadership in the Boston Tea Party directly forced the British hand into the Coercive Acts, likely the point of no return for both sides. Henry entered the national scene thereafter as a Virginian delegate to the First Continental Congress, and his alliance with Samuel & John Adams helped to win his fellow colonists towards independence rather than reconciliation.

The American Revolution was a truly incredible feat, both for having defeated the British and for having ushered in a society unlike any of those in old Europe. Gone were the days of imperial government, of a titular nobility, and of subservience to faraway central governments who could rule with a heavy hand over the individual colonies’ (now States’) matters. Under the Articles of Confederation, thirteen independent States worked to decide matters of importance to all, but with the ever-present assumption that each was– and ought to be– independent of the others.

But although commerce was booming, and the life of the average American in their respective States was improving, not all was well. The Congress (and several States) had racked up enormous debt to fight the war and were vulnerable to outside attack by the powers of Europe. The nature of a one-State-one-vote Confederation between northern mercantilists and southern agrarian planters allowed those European powers to divide-and-conquer to get what they wanted from our national policy.

Several people, such as Samuel Adams and Patrick Henry, recognized that the Articles of Confederation were not working and needed to be revised. They understood that the American States were in jeopardy and would have trouble banding together against regional invasion if a change was not made. They were not, however, looking for a new central government with widespread power.

Enter James Madison, and his ideological cohort, Alexander Hamilton. “The Father Of The American Constitution” was sent as a delegate from Virginia to revise the Articles of Confederation, but he had other designs in mind. He wanted a national, centralized, sovereign government that would supercede the States, binding them into a singular entity. The “United States of America”, per his plan, would be more aptly described as the “United State of America”. He found himself with many like-minded souls at the convention (such as Hamilton) to “amend” the Articles. They moved far beyond the proposed revision of the Articles, and a completely new Constitution was written.

The battles between the Federalists and Anti-Federalists was joined. The Federalists suggested that without a new Constitution, the States would become client-states of Europe, severely limited and unable to protect their own interests from the European monarch’s divide-and-conquer tactics. The Anti-Federalists, on the other hand, saw the birth of a new government that would have the same sort of arbitrary and remote power against which they had just fought a war of Independence. Hamilton wanted a European-style government, destruction or complete subservience of the States, and widespread national powers. Patrick Henry disagreed:

If we admit this Consolidated Government it will be because we like a great splendid one. Some way or other we must be a great and mighty empire; we must have an army, and a navy, and a number of things.

When the American spirit was in its youth, the language of America was different.

Liberty, Sir, was then the primary object. We are descended from a people whose Government was founded on liberty.

Our glorious forefathers of Great-Britain, made liberty the foundation of every thing. That country is become a great, mighty, and splendid nation; not because their Government is strong and energetic; but, Sir, because liberty is its direct end and foundation.

We drew the spirit of liberty from our British ancestors; by that spirit we have triumphed over every difficulty.

But now, Sir, the American spirit, assisted by the ropes and chains of consolidation, is about to convert this country to a powerful and mighty empire.

If you make the citizens of this country agree to become the subjects of one great consolidated empire of America, your Government will not have sufficient energy to keep them together.

Such a Government is incompatible with the genius of republicanism.

The Liberty Papers bills itself as written by the heirs of Patrick Henry. Each contributor to this blog, of course, would have to determine for himself how much that description applies, but it is rather clear that the end result of the American republic was Hamiltonian, not what Henry would have wanted.

Much like Frost’s The Road Not Taken, the American Revolution was driven by radical men, blazing the path less traveled. The ratification of the Constitution was the true point at which the more conservative “governmental” members of the movement regained control and put it down the path well worn.

Today is a day to officially cheer the Madisonian/Hamiltonian vision of a great American empire, a vision today fulfilled by men like John McCain and the Washington set. Instead, I suggest you pause and ask yourself whether the Splendid government those men have produced is worth it. Ask yourself whether you would rather follow the path of Samuel Adams and Patrick Henry, or of a man like Hamilton who worked tirelessly to enhance and increase the power of the central government. Today, I will be cheering the Anti-Federalists.

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