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October
06, 2008 This week, after two weeks of screaming, panicking, and whining and a brief, short-lived victory, the Congress and President have panicked to a degree unheard of even in the days after Pearl Harbor or Bloody Tuesday (9-11), and have taken "action" to "solve" the problem. It is, you have to admit, their normal way of "solving" problems - they threw money at it. I admit, the amount of money is pretty staggering. Here is a summary I put together: BEAR STERNS $ 29B FREDDIE/FANNIE $200B AIG $ 85B "Bank" Credit package $150B Money Market obligation $ 50B Proposed "RESCUE" $700B++ TOTAL $1200 BILLION ++ (in basically a MONTH!) Congressman Ron Paul reports that in the last three years, the Federal Reserve has created over $4 trillion in new money. The result of all this "money-out-of-thin-air" fraud is never-ending inflation. This new $1+ trillion just makes it that much worse. Of course, the NORMAL Federal budget is enough to gag a maggot: federal outlays are running just shy of $3 TRILLION EVERY YEAR. That amounts to $10,000.00 for every single man, woman, and child, in the country, each year. Of course, since about half the population doesn't pay any income tax, that is really $20,000 on average: try sucking THAT out of even a $40,000/year income, not counting local and state taxes. Those, directly, probably increase the tax burden by at LEAST 50% to $30,000 average; they may double it - and that does NOT count the indirect cost of taxes. In a $17 billion economy, the cost of government is probably approaching half - $8 billion dollars. And that is just immediate, current costs: NOT the future costs. THE CURRENT "CRISIS" The history of this immediate fiasco goes back to FDR in 1938, when Fannie Mae (the Federal National Mortgage Association) was created to finance home loans. In 1970, Richard Nixon created Freddie Mac (the Federal Home Loan Mortgage Company) to buy mortgages from local lenders, which were packaged into bundles and sold to big investors with an implicit federal guarantee. These "companies" are actually "government-sponsored enterprises" or GSE. Back in the early 1960s, the UN pushed what is often known as the Racial Discrimination Treaty, which established a worldwide "right" to housing. This treaty was supported by both JFK and LBJ, but didn't get ratified until 1994 (under Clinton). With this "authority" Clinton ordered these two GSE to expand loans to low-income borrowers, and created the "sub-prime" market. Government guaranteed loans were give to millions who couldn't qualify for mortgages in the real world of the free market: this is socialism, pure and simple. Companies that didn't play ball and make the loans to bundle and sell to the GSEs were actually sued to force them to do so, claiming that they were being racially bigoted. Many companies, including the big investment banks (Morgan Stanley, Bear Sterns, Goldman Sachs) insurance companies (like AIG), and "regular" banks like WaMu and Wachovia, put their "reserves" into these government-sponsored, government-forced, government-guaranteed bundles of loans. And everyone loved it - these were "safe" investments AND they paid great interest - at least compared to the insanely low interest rates the Federal Reserve has been allowing to keep the economy "going." As predicted, housing for low-incomes exploded, home-building boomed, real estate went nuts, and everyone made tons and tons of money. Until the market, twisted beyond recognition at last by the layers upon layers of government intervention, still followed basic economic laws - and became saturated. In 1999, some people, some prominent people, tried to sound a warning and were called doomsayers, by both Demos and GOP. In 2003, the Bush Administration tried to create a government agency to regulate this mess and reduce, somehow, the risk, and was blocked by the Democrats. In 2005, several GOP Senators attempted to reform things with S.190, which was blocked by Democrats with some GOP help. When the market became saturated, home values stopped rising in much of the country. Inventories went up and - supply and demand - prices began to drop. Variable interest rates (remember ARMs?) and other economic woes caused a lot of people to suddenly not be able to pay mortgages, which is WHY they were subprime borrowers. So foreclosures started, homebuilding slowed down, and more people suddenly started flipping burgers instead of pounding a hammer... Energy prices spiked and things got worse: we were on the merry-go-round, and it was speeding up. All those lovely "bundles" of FM twin securities suddenly lost a lot of weight: all these outfits (WaMu, AIG, Bear Sterns, etc.) suddenly found themselves holding empty paper bags - and what few bills they could pick up or out were losing value like a leaky tire on the freeway; their "profits" had already been looted by the management or donated to the "engine" of their prosperity: those Congressional baboons. So naturally they turned to the baboons, and to this Administration for succor. Concerned about the nastiest election yet in this cycle that started in 1992, Bush and Pelosi and Reed, and then McCain and Obama, tried to give them what they wanted and "needed" - a bailout so that their party doesn't end - even while some more of them have made their latest move through the swinging door between government and "business" - just two slightly different forms of looters - with millions more of increasingly worthless dollars. So these plans have hatched to create ANOTHER $1.2 TRILLION of funny money -increasingly worthless "Continentals" which have value based on the trust placed in the United States government... It immediately became a political football, but on Monday, a majority of Congress (at least for now) balked at it and now, everything is in chaos. Actually, there ARE a few smart baboons in the Congress, and some of them (Pence, Paul, a few others) are standing up and screaming about this deal that combines the worst of the New Deal, State Capitalism, pork, and neo-Conservative tripe. A few Conservative Republicans queered the whole deal for a while (in alliance with, strangely enough, a bunch of anti-Wall Street socialists) because they DON'T think the government should be doing this. But neither the conservatives NOR the socialists go the whole way and say that the GOVERNMENT is the cause of the mess to begin with. Of course, the Democrats are bald-faced liars who say that the government IS the cause, but only because it doesn't "regulate enough." Never mind that they've been writing the regulations for 60 of the last 70 years. What I find interesting is that the Demos have enough votes in the House and in the Senate (given the RINOs) to ram this bailout through, but didn't until after a week's squabbling and breast-beating. It is hard to say why: is it that they have so little real non-ideological economic knowledge that they have to have a lot of the minority GOP on their side to feel at least somewhat comfortable about passing even this piece of trash, or did they simply view this as another convoluted way to trash the GOP in Congress and Bush in the White House? What caused this crisis? 1. Inflation, caused by government taxing more and more, and spending more and more - but spending even more than it taxes. When you have more money chasing the same amount of goods and services, and increasing at a faster rate, you get INFLATION: look at the price of gold for the past decade. 2. Government interference: It was Congress (with approval by the President) that created the entire idea of subprime mortgages and other financing; it was government that created Fannie Mae and Freddie Mac with the implied (and now demonstrated true) government guarantee. Government did not actually FORCE mortgage companies to give mortgages to people who had no business getting them, on property that was overpriced even before inflation, but government DID force those who wanted to sell mortgages to ignore decades if not centuries of experience and offer mortgages to people who were too risky, creating bad debt. 3. More government interference: It was again Congress, and state and local governments, that skewed the markets in several ways, including making it harder and harder to get permits to build - and even remodel - houses by various regulations, including land use, environmental, workers regs, and everything else, and thus drove the cost of new construction up, in turn inflating housing prices still more, and doing the same thing to land prices. It is no accident that most housing built in urban areas these days are McMansions of 4,000 SF on a 10,000 SF (or smaller) lot: government regulations did that. 4. An incestuous co-dependent relationship between the baboons of Congress and the mortgage and finance companies, with a few Administration types (Bush AND Clinton) sprinkled in: just as it is easier to succumb to the temptation of the hooker who dresses provocatively and stands or sits in a certain way, so Congress made it easier for the management class of the financial institutions to become whores just like the baboons were. Look at the prices paid from managers to Congress. Look at the profits to the banking companies for the last decade to see the other side of the coin. 5. Fiat money, as institutionalized by the Federal Reserve. Closely tied to inflation, in fact. Fiat money makes inflation easier - indeed, it makes inflation inevitable. Once upon a time, money was inflated physically: the debasement (adding of base metal to precious metals) of coinage. With paper, and now electronic money, the creation of such "money" is tremendously easier. A free market's natural condition SHOULD be "deflation" -prices of all goods and services drop constantly as more efficient production methods (yes, even of services) develop and are deployed. In this country, for periods of many years, the free-market's natural deflation has been able to counter the inherent inflation of fiat money. But, none of these are the illness: again, they are merely symptoms. The crisis is NOT in the credit markets, the housing market, or the banking system. If a dozen more banks go under and write off another 500 billion in loans, the houses, the factories (shucks, even the DVD players and iPods) won't suddenly vanish in a puff of smoke - what will vanish is a whole bunch of profits that were only on paper to begin with, a whole bunch of overpaid jobs held by people who probably can't make the right change in a convenience store, and the careers of a whole bunch of scummy politicians who (as usual) were buying power with YOUR money. No, the real crisis is much, much worse. THE REAL CRISIS The current "crisis" and all its causes are almost certainly nothing more than symptoms. The illness that causes these a far more serious one than most of us are willing to accept. There are many alternate ways to describe it but they are really just methods of identifying that government is too powerful and too intrusive (into markets and everything else). Fiat money, insane tax policies, crazy spending, lack of discipline in Congress, and many other symptoms, including this current mess, are just manifestation of the underlying and probably fatal illness. Government is too powerful. Therefore, it has the power (ability), the "need," and the motive for sticking its nose into EVERY aspect of life, including before and after. This is a problem that began developing in 1787, it increased at a slow pace until 1860, picked up speed in the last decades of the 19th Century, and then began galloping across the 20th Century. Now in the 21st Century, it seems to be speeding up still more, even as it seems to reach a point at which it cannot really expand anymore, having taken control of everything and gained all human power possible. "Big government" is not the cause, it is the evidence of government having too much power. The more powerful it has become, the less likely any "reform" is possible: it may be that even restoration of the status of 1787 or 1776 is not possible. But let us pretend that reform or restoration IS possible. WHAT COULD BE DONE? *STOP GOVERNMENT INTERFERENCE IN THE MARKET* We have a hideous example and object lesson in the evils of social engineering: not content to do it with taxes and subsidies (welfare), Congress and a long list of bipartisan Presidents had to fiddle with already dangerously corrupt institutions like the Federal Reserve and the international investment system. When even some of THEM couldn't stomach what the baboons wanted them to do, they were FORCED to do it with regulations, legal actions, and other pressure. This has to stop. Indeed, ALL government interference with the market has to stop. Everything, from mortgage deductions to the income tax itself. IF there is any justification for government funding that can't be done truly voluntarily, it needs to be something like a transaction tax or excise that applies equally across the board with NO exemptions, NO exceptions, and NO opportunity for the baboons to tinker with it. IF there is any justification for government regulations, it needs to be enforcement of basic common actions like prevention of fraud, full disclosure of details, written contracts, and standard weights and measures - INCLUDING money. This also means campaign finance reform - very SIMPLE reforms like full and open disclosure of ANY money from ANYONE or ANYBODY within 24 hours coupled with term limits or a flat-out prohibition on the reelection of ANYONE to ANY Federal office. (Or better yet, go back to having legislatures elect Senators, with ZERO campaign contributions needed or allowed.) *TAX AND SPEND MUST COME TO AN END * Money is power. Like a six-year-old in a candy store with a pocket full of dollar bills, Congress's baboons ALWAYS overspend and overeat: they play their power games in DC and around the world with OUR money. Any money they have didn't come from them in the first place, they took it from us. They use OUR money to do two things: get more MONEY and get more POWER. We have to take BOTH sides away from them. For instance, what would happen if each Congressman (baboon) had to bring the tax money with them to Washington, to deposit, and it were equally divided out among the 436 congressional districts (and counting the District of Columbia) by population. That would mean (for an average district of about 700,000 population - Vermont, Wyoming and other small states get to suck dirt) each House baboon would need to deposit a check for just under $7 BILLION in the Capitol Bank on January 4th each year. THEN they could appropriate the money. (Yeah, that is a staggering amount: for South Dakota, that amounts to $10 grand per man, woman, and child - including Indians (all taxed, technically, nowadays). I figure that they could go around and collect it in November and December, after Election Day. People are more generous during the Holiday Season, anyway, aren't they? I can picture the speeches in town after town as the Congressman and his family in their plain cloth coats and rather worn shoes and hats (it IS fall, after all) stand up with a big tanker truck parked behind them, to make an appeal for the money to run the government and police the world, and then everyone in a line moving forward to deposit their dollar bills and checks into slots in the top of the piggy-tanker-truck... But the SMART Congress critturs would have bake sales and special donation boxes at their crackerbarrels... year-round. The really good ones would get Jerry Lewis to host their telethons, just before the PBS ones each season. But in the meantime, watch the federal budget collapse in on itself. No way most of us, either individually or through our companies or employers, can give $10,000 ON AVERAGE to support the Federal government. Of course, even DREAMING about either of these reforms is soon likely going to be illegal. And these reforms will not happen under our current Constitution, whether it is in effect or just used as an object of lip service. Congress will NEVER allow its power and our money to be taken away from it in any way. Frankly, there is no magic bullet. THE REAL SOLUTION In the past few days, I have heard popular and nationally-known radio talk show hosts both come VERY close to calling for the solution, and I have heard some of their callers even more explicitly call for the solution. It is a scary thought, and it will soon sink in to the Congress that just nationalized another large segment of our economy that this solution will occur to enough people to have some chance of succeeding. And then they (the baboons in Congress) will once more panic - and hopefully, make the kind of choices that will trigger the very thing that they are seeking to protect themselves from. That solution is something that perhaps should only be whispered, but the votes of many senators and representatives in the West and South perhaps indicate that it is not impossible to contemplate. That solution is at last the answer to a question a friend asked a long time ago: "Is it time yet to..." Yes, Claire, it is time. It is time to resist the counterrevolution that has been destroying the results of the First American Revolution for the past 240 years. It is time to resist the growth in the power of government that caused the stillbirth of at least one more American Revolution, 140 years ago. Indeed, it is time to stop the growth, period. Government is, in many ways, in this year of our Lord 2008, a cancer. You do not "reform" cancer, you do not urge cancer to get on a diet, you do not negotiate with cancer. You kill it, or it is going to kill you. Sometimes the treatment necessary to kill cancer is so severe, so drastic, that the treatment itself might kill you. But you do not "live with it." Government - this federal government, and the state governments that tolerate and enable and support it, and the local governments that cooperate with it - is a cancer, and it has just demonstrated its malignancy. Immediate and decisive, drastic action is necessary: it is no longer a matter of adjusting diet, or a biopsy here, or an excisement there. It is no longer even a matter for chemotherapy or radiation therapy or some other therapy by itself. The cancer must be killed. Now. If we do not wish to see our nation, our community, our liberty dead - dead and buried, we must kill the government before it kills us. There is no choice. I do not know how this will be done. But it must be done. Now, not later. It is not rebellion. It is not even revolution, except in the broadest sense. I fear that it IS armed action. There is nothing else left to do. In November, we will see the ballot box fail, once again, to solve anything. After the two votes in Congress this week, in a just society, no more than 100 congressmen would even be returned to office: the remaining 335 would be instead escorted to jail to await trial. Virtually every one of the 20 or so senators up for reelection (yes, there are 33 or 34 races, but many (like Wayne Allard of Colorado who voted AGAINST the bailout) are not running for reelection) would be turned out, and most of the other 66 or 67 would be prevented from ever returning to Washington, somehow, someway. But the universe is not fair. So we can expect this ballot to fail - and don't even get me started on the presidential race. (I can see Ron Paul's frustration now, I guess - even Ralph Nader would be preferable to Obama or McCain and business as usual for another four years - even Gus Hall might be better.) The Courts have again demonstrated in hundreds of cases (notwithstanding the Heller case) that justice does not lie in them. Getting up on our soapboxes has once again proved to be a waste of breath and calories. There is nothing left. Nothing... the choice is liberty or slavery: the "middle road" is just a chance to adapt to slavery.
Nathan Barton is writing this from a wonderful place in the West, which might be in the Black Hills of South Dakota or Wyoming, or might be in one of the Four Corners States. Exactly where it is, the breezes blow with the scent of liberty, and the sound of the pines or the pinions is the sound of freedom. For thousands of years, people have fought and died for the liberty that Americans in the great spaces of the West enjoy, and he writes these commentaries in the hopes that continued generations will be able to do so, until the end of Time. Visit the blog: The Gospel Sower |
Gun-Free and Proud: a new tactic for a new generation Palestinian Suicide Bomber - Fact or Myth? The First Great Railroad Fight of the 21st Century Counting Our Blessings On Liberty Day More Victims Disarmed By OSHA Regulation "Islamist Terrorism" and the US Role: a response to Ivan Eland Science and Economics Vs Green (And Other) Nonsense Bogus Cell Phone Fire Warning Email Armed and Ready To Defend - The Greater Love The Inherent Contradiction of Government The New Bogeyman: Worldwide Hunger and Biofuels A Baker's Dozen - Meditations On The Scripture and Our Right To Defend Ourselves The Russo-Georgian War of 2008 to date: a libertarian view Complete Archives for Nathan Barton
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