When does it end

Right now, I've got 18 tabs open on my Internet browser (I use Firefox in case you're interested). This is a real rarity for me. I never have more than 3, possibly 4, open for any length of time. One is the window in which I'm typing this entry, one is iGoogle, one is Facebook, one is a news story about Timothy Geithner "extending" the deadline by which the U.S. Congress "must" raise the debt ceiling, and the other 13 are news stories devoted to Osama bin Laden. I first found out about bin Laden's death when my wife received a text message from her sister who had apparently been watching the news. I received the same text message a few minutes later. (Good work AT&T, delivering text messages to two phones 5 feet away from each other 5 minutes apart.) I have to admit that my first reaction was: so what?

It was immediately obvious to me that no troops would be coming home. No civil liberties would be restored. We would all continue to be forced to take our shoes off and be molested at the airport. I even commented sarcastically to a friend of mine: "Awesome, so the war on terror is over and we all get our liberties back?" In reality it would seem that just the opposite has turned out to be true. Secretary of State Clinton was quick to "reassure" the public that "battle to stop al-Qaeda and its syndicate of terror will not end with the death of Osama bin Laden." Moreover, major government officials and every major news source and pundit has told us that we are in even more danger now because of the possibility of retaliatory attacks. The NBA took the extra step of mandating metal detectors at playoff games. So, killing bin Laden made us less safe? If that's the case, then logic would dictate that he shouldn't have been killed.

After confirming my sister-in-law's text message, we changed the channel back to our "regularly scheduled programming". Before going to bed, we turned again to the news to see what, if any, additional information might be available. We were treated to clip after clip of video showing people dancing in the streets in places like Times Square and the White House. I was disgusted to see the very same people who denounced people who danced in the streets while burning American flags after the death of one of our soldiers acting in the exact same manner. The news feed on my Facebook account exploded that evening with people cheering on our government and our military for summarily executing another human being.

In dying, Osama bin Laden showed us that we're really not so different from the very people that we deride as war-mongers and who we believe are incapable of a peaceful existence.

He taught this country the consequences of operating an open, free society. Literally, he showed Americans the price of their liberty, how many of their principles they'd be willing to cast aside, and how quickly they would do it.

In other words, bin Laden showed American exceptionalists how unexceptionally they behave when faced with horrors most older nations have endured.

The writer is referring to our weak-kneed acquiescence to government intrusion on liberty here in the U.S., our paranoia at the thought that a terrorist is hiding around every corner, and our rampant xenophobia. His point is equally applicable to our reaction to the news of bin Laden's death, though. The overwhelming reaction, that of proclaiming America's strength and celebrating our actions in the streets, was no different than that of the people you see in other parts of the world dancing upon hearing the news of the killing of American soldiers.

I woke up the next morning to hear people on the radio explaining that it's different when American's celebrate. You see, Osama bin Laden killed innocent civilians on September 11th, 2001. Therefore he is evil, and not only was his killing justified but morally right. On the contrary, our soldiers are overseas doing good work, and when they are killed, that is wrong. Never mind that the "rebels" in Afghanistan see us as an invading and occupying force; never mind that America regularly kills civilians as part of its eternal war on terror; never mind that America locks up and tortures "militants", denying them any sort of access to a justice system to sort out their guilt or innocence; never mind that America has "peacefully" killed hundreds of thousands, if not millions, via sanctions of various kinds. Everyone wants to point to 9/11 as if bin Laden started this fight and America's hands are clean, but it's been going on for much, much longer. All of those American actions I just cited have been and continue to be used as justifications for Al Qaeda's actions. And regardless of how it started, it is only escalating.

But, there are likely those that remain unconvinced that America has any responsibility for the fight in which it now finds itself, but, nevertheless, it must see it through. That is, they believe that "we didn't start the fight, but we're going to finish it." So then, when does it end? If one truly believes that we are going to finish it, then the answer would be "when we've killed or captured all of the terrorists". As I pointed out, though, capturing terrorists and refusing to bring them to justice -- for those that have forgotten, justice means a trial in a court of law, not vigilante killings or indefinite detention -- or killing them, especially when unarmed, tends to drive more people into the fight. This so-called solution actually perpetuates the problem. Yet, it seems to be the solution America is intent on carrying out.

Attorney General Eric Holder sat in front of the U.S. Senate and had this to say about the whole affair:

The operation in which Osama bin Laden was killed was lawful. He was the head of al-Qaida, an organization that had conducted the attacks of September 11th. He admitted his involvement and he indicated that he would not be taken alive. The operation against bin Laden was justified as an act of national self defense.

Ah, national defense. Of course. I wish Mr. Holder would have gone on to explain exactly what our military was defending when it shot and killed an unarmed man. Apparently, bin Laden resisted, but I find it hard to believe that a team of highly trained and very well armed men were unable to subdue a frail, old man in regular need of dialysis, without killing him. Jeffrey Toobin explains that the U.S. had to kill bin Laden because messy details like whether bin Laden would be given a civilian or military trial, who would defend him, and where his trial would be held are just too difficult for us to sort out. That's right; when the government has a "difficult" problem on it's hands, killing people is the only way out. I'm not sure why that same principle didn't apply to Saddam Hussein or Khalid Sheik Mohammed.

But let me return to the idea of national defense brought up by Mr. Holder. Exactly what are we defending with our actions overseas? The knee-jerk answer is always "freedom". It's hard for me to believe that anyone can still respond this way with a straight face; I'm chuckling to myself a bit just writing this. Even if it were true, though, what will be left should we ever finish fighting this war on terror? We've abandoned the idea of innocent until proven guilty. We've abandoned the idea that people are entitled to a trial before being assessed any sort of punishment (including death). We've abandoned the idea that our government is subject to the same laws as the people. If the war on terror, by some miracle, ever does come to an end, we will find that we were busy throwing away our freedom, all the while claiming that our military was overseas fighting for it.

The truth is that we're not fighting for freedom. We're fighting for empire. We're fighting to bring the rest of the world under our control. Osama bin Laden understood this all too well. "We, alongside the mujaheddin, bled Russia for 10 years, until it went bankrupt," he explained.

The campaign taught bin Laden a lot. For one thing, superpowers fall because their economies crumble, not because they’re beaten on the battlefield. For another, superpowers are so allergic to losing that they’ll bankrupt themselves trying to conquer a mass of rocks and sand. This was bin Laden’s plan for the United States, too.

And that returns me to my original question: when does it end? I can't say for sure, but my money's on "soon". As for the "how" question, I'm not so sure that we're not about to follow in the Soviet Union's footsteps and those of every other major empire throughout history. Those who fail to learn from history are doomed to repeat it.

Gresham's law, extended by force

A few weeks ago, a man by the name of Bernard von NotHaus was in the news. If you Google the phrase "unique form of terrorism", you can read all about him. In short, he minted coins in a variety of metals and offered to "exchange" them for Federal Reserve Notes -- those pieces of paper you carry around in your wallet, usually referred to as "money". (His original site is here, but Wikipedia is probably the best place to start if you want to know more.) In 2007, the government arrested Mr. von NotHaus and charged him with a number of crimes amounting to "counterfeiting". He wasn't actually minting pennies, nickels, etc.; he was simply minting coins in denominations similar to U.S. currency that the government claims bears too close of a resemblance to official U.S curency. The government accused him of trying to "replace" the official currency of the U.S. He was eventually convicted of these "crimes", with the government going so far as to declare him a terrorist, and his case is now on appeal.

This whole episode seemed to me to be an interesting application of Gresham's law. Gresham's law is the idea that "bad" money chases out "good" money. What that means is that if there are both "bad" and "good" money in an economy, the good money will eventually disappear from that economy. Since anything could be money (as Lew Rockwell points out: shoes, shells, flash drives, or books) and people can assign whatever value they want to that money, how do we define good vs. bad? That's where the government comes in. Instead of the people assigning value to their money, the government has assumed that role (and the authority to occupy that role). Thus, Gresham's law is more accurately stated as (looking again to Wikipedia): bad money drives out good if their exchange rate is set by law.

Let me give you a personal example of how this is so. Just last week, I was cleaning up one of the bedrooms in my home when I came upon a container full of coins. They weren't particularly special in any way; it was just the type of accumulation that occurs when you come home at the end of the night and toss the change in your pocket into a jar. Thinking I might come across some rare coins -- I was hoping for some old pre-1964 silver coins -- I decided to sort through them. I happened to know that pennies used to be made of copper and nickels, of all things, of nickel and copper. A quick Internet search turned up the fact that pennies were made out of copper up until 1982 and that nickels are still made out of copper and nickel. It also revealed that copper pennies are currently worth approximately 3 cents each and nickels about 6 cents. These coins are worth more as metal than the value given to them on their face. You can probably guess what happened next. I put all of the nickels and pre-1982 pennies into a separate pile. The rest are slated to go off to the local Coinstar machine.

Let me give you another, more obvious example. Let's say the government issues two one ounce coins, one in silver and one in gold, and stamps $50 on their respective faces so that each can be exchanged for $50 in goods. Would you spend the silver coin or the gold coin? Hopefully, you answered, "silver". At current spot prices, an ounce of silver is worth just under $40 while an ounce of gold is a bit over $1,400. When a monetary unit's face value exceeds its intrinsic value, as the silver does in the example, it is "bad" money. It will be spent, i.e. stay in circulation, as the spender believes he/she is getting a "deal" since the seller is forced by law to value the unit greater than the worth that would otherwise be assigned to it by the "market". Gold, whose intrinsic value exceeds its face value in the example, would leave circulation as people would hoard it and/or try to sell it for its intrinsic worth (i.e. they could obtain it for $50 but sell it for almost 30 times as much). This would likely remain true so long as the gold's intrinsic worth exceeds the face value, no matter how slight that excess might be. Even if gold was intrinsically worth less than its face value but still more than the silver, you would still find the silver to be in much greater circulation than the gold for the reasons explained previously.

So, what does all of this have to do with Mr. von NotHaus's situation? Let's first (try to) understand exactly what it was he was doing. To the best of my understanding, a silver Liberty Dollar one-ounce coin would be minted with some denomination on it, let's say $10. It would be produced so long as the intrinsic value of the silver in the coin remained under $10 as denominated in official U.S. currency and sold/exchanged for $10 in official U.S. currency. When the intrinsic value of the coin exceeded $10 (in U.S. currency, due to inflation of the U.S. dollar), Mr. von NotHaus would mint one-ounce silver coins with $20 stamped on their faces (and sell them for the $20 in U.S. currency). He would also exchange existing $10 coins for $20 coins. Based on the previous paragraph and definition(s), Mr. von NotHaus was actually creating his own form of "bad" money, with one important difference. There was a limit to how bad his money would get.

Let me explain this with another example. Let's say that you have a $10 bill (official U.S. currency) and a $10 Liberty Dollar which, for the sake of argument, is accepted at the stores at which you shop. Let's further assume that the food you'll eat today costs $10. Now, let's say that you stick both the coin and the bill under your mattress and wait some amount of time, during which the dollar inflates due to the Federal Reserve's money printing processes. You dig your coin and your bill out from under the mattress and go to the store only to find that the $10 worth of food you want to buy now costs $20. The $10 bill will only buy you half of what you want. On the other hand, Mr. von NotHaus will exchange your $10 Liberty Dollar coin for a $20 version, and you can buy all of your food.

As I mentioned before, Mr. von NotHaus's Liberty Dollar is still "bad" money since its face value would always exceed its intrinsic worth. However, at the point at which it becomes "good" money, the holder would actually be able to exchange it for more "bad" money, i.e. when a $10 piece's intrinsic worth becomes worth, say, $12, it could be exchanged for a $20 piece, a much better option than selling the coin for $12. In this way, while "bad" by our earlier definition, this money is a "better" option than the official U.S. currency which always loses value over time.

If the Liberty Dollar was "better", wouldn't it have eventually been naturally forced out by the market via Gresham's law? It's hard to say; that's (unfortunately) the way markets are. Markets are made up of individual actors, or people. People may have seen the Liberty Dollar as a better preserver of their wealth since it could be exchanged for greater denominations as the U.S. dollar fell in value. Had that been the case, the Liberty Dollar may have taken off. And this would not necessarily have been a violation of Gresham's law. It turns out that "good" and "bad" money (under Gresham's law) can only be compared when their values are both fixed by (the same) law. While von NotHaus may be creating "bad" money in an absolute sense, it would likely have been viewed as "better" than the current U.S. currency. Since the exchange rates of both monetary units are not set/fixed by (the same) law, it may have been possible for the "better/good" money to chase out the "bad".

Thus, the U.S. government extended Gresham's law by force. If another monetary system -- one not controlled by the federal government -- took off, the federal government's ability to print money to pay off its debt and fund its operations would have been severely limited, if not outright destroyed. I'm not sure exactly how to sum up the idea that challenges to a government-created fiat money system will be put down with force in a neat "law" like Gresham's, but if you have any ideas, feel free to share them in the comments.

***

Lew Rockwell wrote about this particular issue and had a few choice quotes:

A nation that is confident about its money’s future would not fear currency competition. A nation with a dying money uses every possible means to crush the competition.

and

[...] when the dollar became all paper, there has been a sense that its viability needs the backing of federal guns in order to thrive. This attitude is inconsistent with freedom. The right of private coinage is an essential part of free enterprise. Currency competition, especially in a digital age, is something that every country needs.

***

Bill Rounds also wrote about this issue. I think he makes a good case that Mr. von NotHaus drew the ire of the federal government, not necessarily by competing with the government, but by making his coins look a little too similar to real U.S. currency. He points out:

There are all kinds of alternate currencies in circulation in the US. Ithaca Hours, Potomacs, gift certificates, and Chuck E. Cheese tokens can all be used to barter and transact instead of legal tender coins and bills.

None of those coins have been or are being forced out of existence by the federal government. Arguably, they aren't trying to compete with the government, either, though.

It's not clear to me, from what I've read, that Mr. von NotHaus intended to defraud people or imply that his coins were legal tender or official U.S. currency. From what I can tell, he was simply trying to give them the same value as U.S. currency to make them easy to understand and trade. In the end, I have to agree with Lew Rockwell when he points out that the U.S. Constitution nowhere prohibits private coinage and even points out that it was commonplace during the settling of the West. Mr. Rounds even acknowledges that the law is, at best, nonsensical:

[...] the state of monetary law is almost nonsensical. Court opinions, federal statutes and the Constitution are logically inconsistent with one another.

***

Finally, I hope that the example I gave of a $10 Liberty Dollar round being exchangeable for a $20 round as the U.S. dollar depreciates drives home the idea of the inflation tax. By depreciating the dollar, the government is essentially stealing money from people who hold cash. This is why our economy is driven by consumption instead of saving. If your dollar is worth less tomorrow than today, then it makes sense to spend it instead of saving it.

"Saving" capitalism

[I wrote the following in response to a friend who posted this article on his Facebook page. I apologize for the lack of annotated links in this post.]

The article starts by blaming Bush for a declining market. That's not really fair. Obama is doing exactly what Bush was doing when he left office (stimulus/bailouts). That is, if Bush had been President for two more years, the economy would likely be in the exact same place it is today. 9/11, coupled with the bursting tech bubble, is what originally sank the economy. Greenspan then held interest rates down, and the Dow Jones was back up to around 14,000 in late 2007. (How's that for one-sided reporting on the author's part... only pointing to the Dow at 8,500 on Bush's last day.) Greenspan's plan backfired, though. The low interest rates created a bubble in the housing market leading to all kinds of crazy gimmicks on the banks' parts. These fell apart in late 2007, and the market tanked again.

In response, the government began bailing out banks, the auto industry, anyone who could get get their hands into the proverbial cookie jar. Bush and Obama both did it, and it was a bad idea both times. Neither of them "saved" capitalism. The problem is that neither of them (or anyone in the government) has the backbone to let capitalism do its job. Capitalism means failure for those who can't compete and for those who do it fraudulently. The bailed out auto companies fall into the first category; the banks and insurance companies subsidizing their schemes fall into the second. Of course GM and Chrysler are making cars again! The government gave them the money to do it, and the government did it because it was politically better to try to save jobs (or at least that was the thinking at the time). Nothing about that investment other than the perceived political upside was a good thing at the time. To argue now that the fact that the government made (or possibly will make) money means the investment was a good one is to argue that the ends justify the means. That is the last argument anyone should apply to the state in any of its dealings.

The problem with the economy now is that Bernanke is making the same mistake(s) that Greenspan made. He's holding interest rates down at zero. (Remember the housing bubble? Why does no one see that Bernanke's cure is actually more of the poison?) Bernanke's got huge problem, though. The low interest rates aren't working. Banks are hoarding the cash because they still have more toxic assets on their books. What's his solution? He's turned on the printing presses and is using the new money to buy U.S. Treasuries in the hopes of bringing down long term interest rates. He claims he can do this because inflation is tame. That's because banks are hording the cash he's printing. Gold is continuing to rise in price, though; the market knows what is going on. Look also at other commodities like cotton, oil, etc. They're fairly stable now, but that's because producers hedge their bets by buying futures. Come Spring/Summer of next year, prices of those items are going to skyrocket (the same effect could probably be achieved by banks finally beginning to lend again all at once), and Bernanke won't be able to stop it. He can't raise interest rates like Volcker did, because unemployment is already high. (Volcker had the luxury of being able to drive unemployment up with interest rates so he could tame inflation.) The other alternative is that China stops buying up U.S. Treasuries (it's already making noises about doing that very thing) or the entire market just loses faith in the entire system (i.e. the government's ability or intention to repay its debt). When, not if, one of those things happens, the economy is going to collapse, not just tank. Think hyperinflation like in Chile in the 70's.

Yes, it would have been bad if the government had not intervened in the economy, but the government's "saving" of capitalism makes each attempt by the market to flush out the bad stuff even worse than the previous one because it (the government) won't actually let the bad stuff be flushed out. The government isn't saving capitalism. It is destroying it by making everyone think that what we have is capitalism.

[Here are some other witticisms that I sprinkled later on in the thread.]

In response to a comment that Democrats lost the midterms because Obama/they failed to get the message out:

Getting the message out is not leadership. It's politics. And we don't need either.

And in response to a comment that Americans "got it right" in this most recent election:

Americans never get it right in any election. The government keeps getting elected.

News roundup

I haven't posted much this week, but I've been saving a number of news stories throughout the week that I found interesting. Without further ado, here they are:

Fear of Government

Reason posts excerpts from a couple of authors about this chart. One says that not everybody is afraid of the government as the general feeling seems to be; it's only Republicans. The other argues that Democrats are equally susceptible to this fear when their party is out of power. I didn't find this chart so interesting, as what it shows is fairly obvious. What it did for me though, was highlight exactly how blind (read: partisan) Democrats and Republicans are when their party is in power. If one could take a step back and see the forest for the trees, as it were, one would find that the government acts pretty much the same way no matter which party is in power. They just focus their attention slightly differently.

Flag Burning

Talk about statist. The flag deserves respect? It's an inanimate object, for crying out loud. Justice Stevens thinks that the "U.S. flag and the symbol of liberty it represents" are too important to allow it to be burned in protest. Alright, you bring back the liberty, and I won't burn the flag.

We suck... less!

Pajamas Media explains why the Republicans are going to make big gains in the midterm elections. The story's byline says it all.

Because in the Democratic land of epic, mega, ultra, apocalyptic levels of sucking, those who kinda suck are king.

TSA scanners

The TSA was in the news quite a bit this week after an airline pilot last week decided to stand up to a TSA officer and refuse a pat down after refusing to allow them to look at his naked body with their AIT scanners. The first link there is to a CNN story which talks about how the TSA is planning to institute full body pat downs across the country. The woman who wrote the article was reduced to tears after being groped, and she is a regular traveler.

The second link is to a story written by a woman who thinks that the best way to fight for our civil rights (with respect to illegal searches by the TSA) is to begin writing letters to corporations whose businesses will be hurt if people refuse to be groped and stop flying, altogether. At first, I didn't think this approach had any merit, but after seeing the TSA steel their resolve in the face of that pilot standing up to them, I think the corporations who control the government might be our only chance.

Economic destruction

I have written a little bit about inflation and hyperinflation. Well, this article says that it (hyperinflation) is already taking hold and will be in full swing by spring of next year. The author makes a pretty compelling argument. I'm of the mind that collapse of the U.S. currency and economy are a matter of when, not if, and I suspect sooner rather than later. I don't know if it's going to happen as the author suggests, but I'm also not going to argue that it's not.

Just... hold on a second

I came across a number of weird/wacky news stories this morning, and since I didn't really feel like writing very much, I was going to just post a few links with some commentary to accompany them. Then a friend of mine posted a link to an opinion piece entitled "Just Stop" over on the Mesa Democratic Club's website. Well, I loves me some politics, so I went over to read it. The article started out well enough (read: I agreed with it), but then it lost me. Since this friend of mine and I have agreed not to discuss politics over our social network of choice, I decided to write this post.

The article starts out pointing out that Sarah Palin is not a "political outsider", that the Tea Party is not an independent group, and that John McCain no longer has any discernible political positions outside of whatever it takes to get elected. These are all excellent points with which I could not agree more. It's at this point that our respective positions diverge.

Stop pretending that the deficit we’re all facing is the fault of President Obama and the Democratic Congress. During the Bush administration, we went from a surplus to a massive deficit, largely thanks to two wars that were never (until Obama) added to the federal budget—wars, in other words, fought entirely on credit. We compounded the problem with tax cuts that largely benefited the wealthy, and a huge Medicare increase, and all those were also on credit. When the economy tanked in fall 2008, Bush quickly pushed through the TARP bailout, adding to the deficit (but pulling the economy back from the cliff).

President Obama is not entirely responsible for the deficit. He is quickly adding to it, though. Yes, Obama added the wars to the federal budget, but that does not change the fact that they (along with the much of the rest of the budget) are still paid for on credit. And while Bush may have pulled the economy back from the cliff, he did not change it's direction; it is still headed that way under Obama.

Stop pretending that the near-ruinous economic crash that we’re still reeling from was Obama’s fault, too. The root causes stretch back decades, to a continued process of deregulating financial institutions, allowing them ever more leeway to prey on the vulnerable, to sell mortgages to people who couldn’t afford them, and to manipulate financial products that were ultimately guaranteed to fall apart.

And stop pretending that Obama and the current Congress should have been able to fix the two above problems in 18 months, when it took eight years to create the first one and literally decades of foxes guarding financial henhouses to create the second.

Again, the author is correct that the economic crash was not caused by Obama, and that it is unrealistic to think that the government would be able to fix it (I would argue, in any amount of time). The author implicitly places the blame on the private sector, however, when he talks about mortgages and financial products. Those mortgages that people couldn't afford were promoted and backed by the government in the form of Fannie and Freddie and FHA and VA loans. Obama has continued this process with the homebuyer tax credit and the HAFA and HAMP programs. For non-mortgage related financial instruments, look no further than the Federal Reserve serving as the "lender of last resort". Even though the Fed is nominally a private entity, it's ludicrous to think that they really are, and when banks get into trouble, the Fed bails them out via the power of "printing" money, a power that Congress abdicated to it long ago.

Stop pretending that saying “No” is the same as governing. We pay our legislators good money to go to Washington and make difficult decisions that keep the country moving. By voting “No” on every bill, by refusing to negotiate in good faith, by deciding that short-term political advantage was more important than the everyday lives of Americans, the Republicans set back our recovery, made needed reforms fall short, and put our lives and our economy at unnecessary risk.

I hate the idea that governing means "doing something". Saying "no" is a legitimate act, one in which all politicians engage because nobody can agree on the exact role of government. In this way, saying "no" is doing something. That is not to say that Republicans are not being obstructionist for political gains; however, the author would be better advised to point out Republican hypocrisy on things like expanding Medicare under Bush but railing against the PPACA, now.

Stop pretending that the economy is magic. You can’t continue to give millionaires and billionaires huge tax cuts, make tiny, cosmetic cuts at the margins of things, and still reduce the deficit. You can’t create jobs without spending money. Tax cuts for millionaires and up are not stimulative because those people don’t spend the money from the cut—it’s not like you’re giving them a wad of cash and sending them to the store. When you put an unemployed person to work or give a tax cut to a poor or middle class family, that’s exactly what it’s like—they go buy things they need and those dollars flow through the economy, creating jobs and wealth everywhere they go.

I'm not sure anyone is pretending that the economy is magic; however it is far more complex than most imagine. Not only that, but the government via regulation or the Fed often arbitrarily moves the market in ways that could only be predicted by magic. The author is correct that tax cuts (to anyone) won't balance the budget. He is mistaken, though, if he thinks that tax increases will do the job, either. Federal spending is out of control, and the only way to save this country's economy, over the long term, is to start cutting Social Security, Medicare, the military, everything.

And stop talking about stimulus. It's too bad that people believe that Keynesian economics preaches deficit spending. Keynes, mistaken as I believe his theories to be, spoke of stimulative spending out of savings. Yes, it takes money to create jobs, but it also takes money to keep those jobs. To think that the government (or anyone) can throw a one-time bucket of cash at the economy to "unstick" it is ridiculous. It will only lead to the government having to throw ever increasing amounts of money at the economy. It's amazing to me that most people agree that easy credit was the proximate cause of the economic conditions in which we all now live and at the same time believe that if the government just borrows more from China that that will fix the problem. We will end up back in this very situation again, only it will be much, much worse.

The things that Pelosi and Reid have supported these past 18 months have been programs that will help America move into the 21st century. Health care reform, in spite of great efforts at pretending, is not a “government takeover” of health care—it institutionalizes, in law, the presence of the health insurance industry, and gives that industry millions of new clients.

Whoa! Stop right there! Did you catch that? The government, under Democratic control, via the coercion of law, just delivered millions of customers to the health insurance industry. It's not just the Republicans that are in bed with big business.

It will, in the long run, reduce the deficit and create a healthier nation, by allowing more people to get preventive care and long-term care and keeping the sick and impoverished from turning to emergency rooms when there’s a crisis.

This entire problem was created by the government in the first place, though.

Stop pretending that “lifelong politician” is some kind of curse. Most people who hold public office do so because they genuinely want to help people, they genuinely want to make government responsive to the needs of their fellow Americans, and they’re willing to put themselves on the line every few years to get the chance to do so.

Here's a thought experiment: If "most" people who hold public office genuinely want to help people and make government better, why hasn't it happened?

Stop pretending that “big government” is the problem. When’s the last time you were seriously inconvenienced or injured by something that big government did?

Gay rights, TSA body scanners, highway checkpoints, the PATRIOT Act, warrantless wiretaps, extra-judicial assassinations, indefinite detentions, inflation, etc. Don't tell me that (some of) these don't affect me. When one person's rights are trampled, everybody's are, and that's just at the federal level. Not only that, but all of this ignores the fact that every year I have to fill out a number of forms figuring out, on the government's behalf, how much money they want from me, and then send them that amount under the threat of force if I either figure wrong or don't send the right amount.

Stop pretending that anybody’s going to come and take your guns away. [...] There’s no truth to it, there’s never been any truth to it, and if you actually believe it, you just might be so simple-minded that you shouldn’t be trusted with a firearm.

They may not be trying to take them away, per se, but the laws (at least in CA) are clearly not conducive to gun purchases or ownership. One must wait 10 days to purchase any gun, even if one already owns one or one hundred of them. AB962, once in effect, will make the mail-ordering of handgun ammunition illegal and require fingerprints be taken of law-abiding citizens when they do purchase ammunition. It is illegal to actually carry one's gun in a manner that would actually allow it to be used effectively in self-defense, and many counties around the state deny CCW applications to all but the wealthy and connected.

Perhaps the author can explain to me why the BATFE and the state of CA keep records of gun sales if not to retain the possibility of rounding up guns in the future. I realize that that has a bit of a "tin foil hat" sound to it, but it is a legitimate question.

The author goes off the rails at this point with a lot of name calling. He tries to bring it home at the end, though.

Finally, stop pretending that voting doesn’t matter, and don’t let the 2010 Class of Crazy take office and convince you otherwise.

A variation on the previous thought experiment I proposed is apropos here: If voting mattered, why is government the way that it is? Perhaps it's because we've gotten the very government for which we voted. Voting doesn't matter and arguably does more harm than good. A voter is statistically more likely to be killed going to or coming from his/her polling place than to cast the deciding vote in an election. I refer the reader my previous posts on voting and the nature of government.

Government bailout turns a profit

According to Bloomberg news:

The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than they could have made buying 30-year Treasury bonds

I'll be honest; my first reaction to this was, "Oh no, I'm going to be forced to admit that the government did something right". Indeed, according to the article, the government invested $309 billion in Wall Street bailouts via the so-called TARP program, of which, about $200 billion has been repaid. Not only that, though. The government has also earned $25 billion on its investment. What's not to like?

How about the fact that the bailouts didn't actually work? Unemployment actually skyrocketed while the government was supposedly making this profit. These unemployment numbers are "official" ones, by the way. "Real" unemployment is actually nearly twice as high, and even that number doesn't paint a totally accurate picture of the economy. It fails to account for falling wages, part time workers who had and/or want full time work, and those who simply are no longer looking.

Here's the real reason to be upset about the bailout, though, and Bloomberg, to its credit, points it out.

One of those subsidies [to the banks] is the $350 billion that savers forgo each year because the Fed keeps interest rates near zero, according to Petzel’s calculations. While banks can borrow at close to zero from the Fed, they lend to consumers and corporations at almost 5 percent, or to the Treasury at 2.5 percent, and they get to keep the difference.

Take a second to do the math. The American taxpayers have given up over $700 billion (so far). That is more than double what the government originally invested and gained via that investment. So, we have the taxpayers, the government, and the banks. Government comes out $25 billion ahead. Banks come out $700 billion ahead. (This is debatable since the banks also took losses. However, those losses are mitigated by this $700 billion). Taxpayers come out $700 billion behind plus the wrecked economy.

It doesn't end there, though.

According to Prins’s tally, the money plowed into the financial system to prop it up peaked at $19.4 trillion. Banks have benefited from that cash, which helped keep prices of mortgage securities, house prices and other assets overvalued, Prins said in an interview. Even though some of the support has been withdrawn, part of it will likely be lost, such as the hundreds of billions of dollars put into Fannie Mae and Freddie Mac, she said.

"These are all indirect subsidies the banks got," Prins said. "So the TARP gains touted by the Treasury are only true if you ignore all the other costs."

Keep these other costs in mind the next time someone tries to tell you that the bailouts worked or that the government (and supposedly, by extension, the taxpayers) actually made money on the deal.

The state just can't win

I'm not sure how to feel about this:

The state [of California] announced Monday it is selling 24 government office buildings — including the Ronald Reagan State Building in Los Angeles and the San Francisco Civic Center — to a group of private investors for $2.3 billion.

One the one hand, I'm glad to see the state getting serious about trying to pay its bills, and all the more so because it is doing so by putting the land into private hands where it can be used to boost the economy:

"This sale will allow us to bring in desperately needed revenues and free the state from the ongoing costs and risks of owning real estate." Gov.Arnold Schwarzenegger and lawmakers included the sale as part of the state budget last week.

On the other hand, this only helps the state once and unfortunately it appears that the forest is being obscured by the trees:

The Associated Press reported earlier this year that the deal would end up costing the state $5.2 billion in rent over 20 years, perhaps saddling taxpayers with costs beyond whatever the state would net from the sale.

[...]

The nonpartisan legislative analyst's office also warned that selling the properties then renting back the space could cost the state an additional $1.5 billion, based on a 35-year projection.