The Manchester Free Press

Wednesday • May 24 • 2017

Vol.IX • No.XXI

Manchester, N.H.

Syndicate content
Ruminations of a New Hampshire Republican with decidedly libertarian leanings
Updated: 1 min 29 sec ago

Why Good Economics Matters Now More Than Ever

Mon, 2017-05-15 04:41 +0000

The following article was written by Sound Money Defense League Assistant Director Jp Cortez.  It was originally published at www.soundmoneydefense.org.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

In a newsletter published in 1970, economist Murray Rothbard wrote, “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

This is an oft-quoted platitude within circles of libertarian philosophy and Austrian economics.

Today, we are seeing the embodiment of Rothbard’s fears. The woeful state of economic understanding has reached a critical mass. Economics has taken a back seat to issues deemed more important. What’s worse is that when economics is discussed, millennials tend to lean socialist.

I have a vested interest in seeing economics and sound money flourish as I work in the field. Yes, I believe that tying a nation’s currency to gold keeps government spending in check. This is hardly professional bias though, as we all have a vested interest in seeing economics and sound money championed, many just don’t recognize it. This piece is aimed at anyone with a vested interest in maintaining a standard of living higher than that of the depression-era breadline vagabond. Economics transcends race, gender, and political identification.

Let’s begin by examining the first of two reasons that good economics is paramount.

Good Economics Is Important Because We Are Seeing a Rise in Bad Economics

Despite the corruption and backhanded actions of Hillary Clinton’s 2016 campaign to win the Democratic nomination, Bernie Sanders experienced a meteoric rise reminiscent to that of Ron Paul’s, whose 2008 presidential campaign trained his supporters’ focus on economics. Paul championed policies in the spirit of economists that I personally revere: Ludwig von Mises, Murray Rothbard, and Nobel Prize Laureate Friedrich Hayek, among others.

Bernie Sanders’s 2016 campaign had an equal but opposite effect. From teenagers to senior citizens, many loved Sanders’s critique of the broken system that favors the wealthy and stifles the poor. His “solutions” are abysmal, yet despite the countless examples of current (and more importantly, collapsed) socialist-Marxist/Leninist calamities, a self-described socialist found a foothold in the United States.

The revolution inspired by Sanders is anti-intellectual. The “economics” that stemmed out of the Sanders campaign was not economics at all. His school of economics was built on people shouting about their feelings and promoting egalitarianism for the sake of egalitarianism.

Good economics is grounded in axiomatic truths and empirical facts about the world around us. Sound money keeps governments and central banks (called the Federal Reserve in the US) from endless money printing and devastating inflation. Yes, that means the government won’t be able to provide every service that one desires. That is a good thing. Government is the bastion of inefficiency and the epitome of waste. Strictly from an economics standpoint, the market is far better suited at providing products and services.

The espousal of socialist policies in economics is dangerous and irresponsible. Fortunately, it doesn’t take much intellectual firepower to write off socialism as wildly inefficient. But it does take some. Socialism falls apart quickly when one understands the economic calculation problem, which explains the importance of prices based in subjective value in a free market system and explains how centrally planned economies, devoid of market prices, are doomed to suffer from inefficiencies in the form of widespread shortages and surpluses. Without these rudimentary economic blocks, “free college, health care for everyone, and massive taxation on the 1 percent to pay for these policies” sounds desirable.

We must learn, though. We must strive for intellectual growth. We must take the lessons we’ve learned from history and apply them to the word we live in today: socialism does not work. Socialism kills. (Even Scandinavian socialism isn’t as great as socialists say it is).

Socialism has been proven to be a terrible economic policy repeatedly. At some point, the value of human lives outweighs the desire for a politician to conduct a social experiment on how quickly he or she can rid their country of any and all valuable resources. That point is now. We must understand that socialism is an exercise in futility and inefficiency. Understanding good economics kills off the allure of central planning that continues to be peddled by politicians on the left. In fairness, understanding good economics helps wade past the bad economics posited by the right as well.

For a multitude of reasons, it’s a good idea to take a politicians’ statements with grains of salt. As far as economics goes, economist Thomas Sowell said it better than I ever could.

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.

Sound economics based in sound money policies make it possible to eat reasonably priced meals because inflation tends to be lower in countries that practice these policies. Sound money policies make enacting socialist policies difficult. Understanding fundamental economics is the lynchpin to cultivating an environment conducive to having meaningful debate on other social issues. Which brings us to the second reason why economics is crucial.

Economics Is the Most Important Social Issue of Our Time

We should start by understanding that economics is a social issue. In fact, economics is the social issue. No issue influences individuals (read: all the individuals) within a society more than its economic practices.

Living in the United States in 2017 means exposure to all sorts of social issues including – but not limited to – same sex marriage, police brutality, safe spaces, drug legalization, and firearms ownership. To be sure, these issues are important and should be examined with sober eyes. But the issue of economics supersedes this list and every other list.

I believe consenting individuals should be allowed to do whatever their hearts desire so long as they aren’t violating the rights of another. I stand in solidarity with those who favor legalized same-sex marriages. I stand with those who want to see marijuana legalized nationwide and those who want to own automatic weapons.

But herein lies the danger of ignoring economics at the expense of other issues: Being “allowed” to smoke marijuana legally seems insignificant when a loaf of bread costs a month’s salary and your loved ones are dying of starvation, doesn’t it? I concede the subjective nature of this evaluation, but if I had to choose between the legality of same sex marriages and economic stability, I would choose economic stability without pause. Not because I don’t value personal freedom to do as one wishes, but because I understand that with economic stability comes the ability to fight another day for other issues.

Brazil, according to Bloomberg, was the second-worst economic performer of 2016. The other side of the coin is more uplifting: Brazil recognizes same-sex unions; allows same-sex marriages; allows adoptions by same-sex couples; allows individuals who identify as LGBT to serve in the military; and so on. Brazil’s removal of the proverbial shackles on homosexuals to live as they see fit is a big win for personal liberty, undoubtedly.

But one can’t help but wonder if the married same-sex couple in Brazil suffering from the terrible economic policies enacted by their country thinks, “13.2 percent of our entire country’s population is unemployed. That’s close to what the US faced between 1930-1931 as the Great Depression destroyed their economy. We can’t afford to feed ourselves or our family and we’re subjected to danger and crime as others are desperate to obtain food and money. But hey, at least the government recognizes our marriage!”

Greece is another example of the result of poor economic policies. Riots and crippling tax hikes to pay for irresponsible economic policies are commonplace in Greece, but hey, at least small amounts of cannabis have been decriminalized, right?

I don’t mean to belittle the importance of issues such as these. But as millennials, as members of the citizenry, and as people with a stake in the economic health of the nation we inhabit, our efforts are often misplaced. Sound economic policies should be pursued with at least the same amount of fervor as the myriad issues that don’t potentially end in economic collapse, death, crime, and general hysteria.

America finds itself on the cusp of revolution, but not necessarily the kind you might imagine. The revolution we are headed towards is an intellectual one. Good economics lies at the heart of this revolution.

Without good economics, we are powerless against the abuses of the Federal Reserve, the central bank that intentionally devalues the money in your bank account while it finances foreign wars and domestic programs that the government wouldn’t have the means to pay for otherwise. Without good economics, we are defenseless against the bad economic policies that lead to extreme levels of pillaging that socialists lovingly refer to as taxation. Without good economics, we subject ourselves to tangible, real-life danger and lose the opportunity to bring about the changes we wish to see.

Categories: Blogs, United States

America's Ruling Class...

Fri, 2017-05-05 14:19 +0000

Angelo Codevilla's article in The American Spectator, America’s Ruling Class — And the Perils of Revolution, describes the stark political divide in America.  (My emphasis below.)

Important as they are, our political divisions are the iceberg’s tip. When pollsters ask the American people whether they are likely to vote Republican or Democrat in the next presidential election, Republicans win growing pluralities. But whenever pollsters add the preferences “undecided,” “none of the above,” or “tea party,” these win handily, the Democrats come in second, and the Republicans trail far behind. That is because while most of the voters who call themselves Democrats say that Democratic officials represent them well, only a fourth of the voters who identify themselves as Republicans tell pollsters that Republican officeholders represent them well. Hence officeholders, Democrats and Republicans, gladden the hearts of some one-third of the electorate — most Democratic voters, plus a few Republicans. This means that Democratic politicians are the ruling class’s prime legitimate representatives and that because Republican politicians are supported by only a fourth of their voters while the rest vote for them reluctantly, most are aspirants for a junior role in the ruling class. In short, the ruling class has a party, the Democrats. But some two-thirds of Americans — a few Democratic voters, most Republican voters, and all independents — lack a vehicle in electoral politics.

As Codevilla observes, our ruling class wants power.  Everything — every policy, every crisis, everything — is contrived or manipulated to increase ruling class power.

Our ruling class’s agenda is power for itself. While it stakes its claim through intellectual-moral pretense, it holds power by one of the oldest and most prosaic of means: patronage and promises thereof. Like left-wing parties always and everywhere, it is a “machine,” that is, based on providing tangible rewards to its members. Such parties often provide rank-and-file activists with modest livelihoods and enhance mightily the upper levels’ wealth. Because this is so, whatever else such parties might accomplish, they must feed the machine by transferring money or jobs or privileges — civic as well as economic — to the party’s clients, directly or indirectly. This, incidentally, is close to Aristotle’s view of democracy. Hence our ruling class’s standard approach to any and all matters, its solution to any and all problems, is to increase the power of the government — meaning of those who run it, meaning themselves, to profit those who pay with political support for privileged jobs, contracts, etc. Hence more power for the ruling class has been our ruling class’s solution not just for economic downturns and social ills but also for hurricanes and tornadoes, global cooling and global warming.

Donald Trump threatens our "ruling class" grip on supremacy.  Democrats were taken in when Trump launched his bid for the presidency.  They thought he would be the patsy, the walkover candidate, the doormat, the path of least resistance on Hillary's pre-ordained stroll to the White House.  But he won.  The ruling class is outraged.  All you have to do listen to Stephen Colbert.

Whether Trump can successfully halt the American decline and return power to the American people remains to be seen.  But he, like Codevilla, understands what we are up against.  It's no accident that laws and taxes have gotten enormously complex.

By taxing and parceling out more than a third of what Americans produce, through regulations that reach deep into American life, our ruling class is making itself the arbiter of wealth and poverty. While the economic value of anything depends on sellers and buyers agreeing on that value as civil equals in the absence of force, modern government is about nothing if not tampering with civil equality. By endowing some in society with power to force others to sell cheaper than they would, and forcing others yet to buy at higher prices — even to buy in the first place — modern government makes valuable some things that are not, and devalues others that are. Thus if you are not among the favored guests at the table where officials make detailed lists of who is to receive what at whose expense, you are on the menu. Eventually, pretending forcibly that valueless things have value dilutes the currency’s value for all.

Laws and regulations nowadays are longer than ever because length is needed to specify how people will be treated unequally. For example, the health care bill of 2010 takes more than 2,700 pages to make sure not just that some states will be treated differently from others because their senators offered key political support, but more importantly to codify bargains between the government and various parts of the health care industry, state governments, and large employers about who would receive what benefits (e.g., public employee unions and auto workers) and who would pass what indirect taxes onto the general public.

Fixing health care and reforming taxes are key first steps on the road to America's recovery.

Read the whole thing.

Categories: Blogs, United States

The Comey-Fitzgerald Playbook

Wed, 2017-03-22 11:46 +0000

Citizens for Responsibility and Ethics in Washington (CREW) are calling for a special counsel to get to the bottom of Boris Badenov's fiendish plan to corner the market in upsidasium.  I made that up, but it's not far from the truth.  Norman Eisen and Noah Bookbinder are calling for the appointment of a special counsel to investigate possible Trump campaign ties to Russia.  It so happens that Noah Bookbinder is Executive Director of CREW.  Eisen and Bookbinder write:

Attorney General Jeff Sessions announced on Thursday that he is recusing himself from “any existing or future investigations of any matters related in any way to the campaigns for president of the United States.”

Good for him. But it’s not enough.

...

[I]t is important here that the investigation be strictly independent, which may require additional measures. For example, in 2003, Attorney General John Ashcroft recused himself from the investigation of alleged unauthorized disclosure of the identity of a CIA employee. Because Ashcroft recused, then-Deputy Attorney General James Comey (now director of the FBI) had authority over the matter; Comey in turn appointed a special prosecutor, then-United States Attorney Patrick Fitzgerald, to handle it. Comey initially appointed Fitzgerald under the special counsel regulations, but later felt the need to give him even more independence than the regulations provide. So Comey extended Fitzgerald’s authority in a pair of letters, one in 2003 and again in 2004.

The fairy tale about Russia "hacking the election" was dreamed up for just such a purpose — to justify an "independent" investigation of the Trump administration.  But there are two big reasons to doubt the validity of the Russian hacking story.  First, according to reports, no one in our intelligence agencies got to see any physical evidence that Russia was involved in hacking Democratic National Committee servers.  Since the DNC denied FBI access to them, agents were forced to accept the word of an outfit that was hired by the DNC, who said that the servers were hacked by Russians who wanted to help Donald Trump get elected.

According to one intelligence official who spoke to the publication, no U.S. intelligence agency has performed its own forensics analysis on the hacked servers.

Instead, the official said, the bureau and other agencies have relied on analysis done by the third-party security firm CrowdStrike, which investigated the breach for the DNC. “Crowdstrike is pretty good. There’s no reason to believe that anything that they have concluded is not accurate,” the intelligence official told BuzzFeed.

The second reason to doubt the validity of the Russian hacking story is the utter preposterousness of the notion that Russia would prefer President Donald Trump to a President Hillary Clinton.  As Peter Schweizer describes, Hillary Clinton, through the Clinton Foundation, was the one who had business dealings with Russia, not Donald Trump.

Then there is the glaring fact that the Clinton Foundation also scored $145 million in donations from nine shareholders in a Canadian uranium company called Uranium One that was sold to the Russian government in 2010. The deal required the approval of several federal government agencies, including Hillary Clinton’s State Department. The deal allowed Rosatom, the Russian State Nuclear Agency, to buy assets that amounted to 20 percent of American uranium. Rosatom, by the way controls the Russian nuclear arsenal.

Equally troubling: some of those donations were hidden and not disclosed by the Clintons. President Obama required the Clinton Foundation to disclose all contributions as a condition of Hillary Clinton becoming Secretary of State. But that did not happen. The only reason the hidden donations ever came to light is because we uncovered them by combing through Canadian tax records.

Lest anyone be tempted to dismiss Schweizer as an unreliable source, this uranium story was reported by the New York Times in great detail in April of 2015.

As the Times reported, the deal that Hillary's State Department approved gave the Russian government control over "a sizable portion of America’s uranium production capacity."   During her campaign Hillary also touted her opposition to completion of the Keystone Pipeline, supposedly for environmental concerns.  By these actions Hillary stood in opposition to America taking full advantage of two of its key energy resources, uranium and oil.  Unlike Hillary, Trump promised American energy independence through development of all American energy resources, especially oil and natural gas.  So we have to ask, how will Russia benefit from the election of Donald Trump when it means increased worldwide supplies of oil and natural gas and the attendant downward pressure on world energy prices.  Vladimir Putin and the Russians are heavily dependent upon oil and gas revenues.

Also consider that Trump has promised to rebuild the U.S. military, and in spite of all his bluster about NATO, his administration has declared its firm support, asking only that NATO member nations begin picking up their fair share of the cost.  

To sum it all up, with Trump as president Vladimir Putin and Russia are looking at lower revenues from sales of their own oil and gas, a modernized and unified NATO on the Russian border, an upgraded U.S. military, increased American defense spending, and the possibility of an arms race with America that the Russians can't win.  Again, the idea that Russia would prefer dealing with President Trump over a President Clinton is absurd.

Absurd though it may be, the Russian hacking story provides a rationale — a flimsy one — for launching investigations.  By providing the example of James Comey and Patrick Fitzgerald and their work in the special investigation during the Bush administration, we can glean a sense of how Eisen and Bookbinder would like a special prosecutor to investigate the Trump administration.  The case of I. Lewis Libby is quite instructive.

Let's begin with the New York Times column by Joseph C. Wilson which was said, by opponents of the Iraq War and critics of President George W. Bush to refute one of the claims the president made in his 2003 State of the Union address.  In making his case for the invasion of Iraq Bush told the American people, "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."

A year earlier Joe Wilson was sent to the African country of Niger by the CIA to check out a forgery that falsely documented the sale uranium to Saddam Hussein's Iraq.  Wilson returned to report that no such transaction took place, and in his view, it was unlikely that such a transaction was even possible.  He said as much in his New York Times column.  But Wilson's column did not include all of the information that he passed on to his CIA debriefers.  He left out this from a July, 2003 statement by CIA Director George Tenet. 

He [Wilson] reported back to us that one of the former Nigerien officials he met stated that he was unaware of any contract being signed between Niger and rogue states for the sale of uranium during his tenure in office. The same former official also said that in June 1999 a businessman approached him and insisted that the former official meet with an Iraqi delegation to discuss “expanding commercial relations” between Iraq and Niger. The former official interpreted the overture as an attempt to discuss uranium sales.

In the view of the Bush White House, this part of Joe Wilson's report to the CIA confirmed rather than refuted Bush's claim that Saddam Hussein made an attempt to acquire uranium in Africa.  All the while, White House officials wondered, who is Joe Wilson and why did he go to Africa?  Robert Novak answered their questions. 

"Wilson never worked for the CIA, but his wife, Valerie Plame, is an agency operative on weapons of mass destruction. Two senior administration officials told me that Wilson's wife suggested sending him to Niger to investigate the Italian report."

Novak's column set off the firestorm that ultimately engulfed Scooter Libby.  Critics accused the Bush White House of vindictively and illegally leaking the identity of a covert CIA agent, Valerie Plame.  The CIA would neither confirm nor deny that Ms. Plame was covert.  Under pressure the Bush administration agreed to the appointment of a special prosecutor to investigate the source of the leak.  Acting Attorney General James Comey appointed his friend Patrick Fitzgerald to head the investigation.

Fitzgerald learned pretty quickly that Plame's identity was leaked by Richard Armitage, deputy to Secretary of State Colin Powell.  Fitzgerald also decided at that time that no laws were broken, but rather than shut down the investigation, Fitzgerald sought and received permission from acting AG Comey to continue the investigation to look into potential mishandling of classified information.

The fishing expedition was under way.  Fitzgerald zeroed in on a discrepancy between the testimony of Libby and that of NBC's Tim Russert.  Libby testified that in his recollection he first heard the name of Valerie Plame in a phone conversation with Russert.  Russert's recollection disagreed with Libby's.  Later, away from the grand jury room, Libby consulted his notes and found that Plame's name appeared in notes of his that were dated earlier than his conversation with Russert.  He went back into the grand jury to correct his testimony, but Fitzgerald said Libby's original testimony was a deliberate lie, not a case of faulty memory.  Fitzgerald indicted Libby for perjury, obstruction of justice and making false statements.

With no crime having been committed, what was the point, you may ask?  It was political.  Patrick Fitzgerald was really after Vice President Richard Cheney, and he wanted Libby to reveal or manufacture evidence that would convict Cheney — of something.  Victoria Toensing explains in an April, 2015 article. 

Consider that Special Prosecutor Patrick Fitzgerald knew from the beginning of his investigation that Deputy Secretary of State Richard Armitage—not Scooter Libby—had “leaked” Plame’s name to Novak. Consider that Valerie Plame was not “covert” as defined by the criminal statute or Armitage would have been indicted. Thus, there was no underlying crime. Consider that in announcing the charges, Fitzgerald violated rules of professional conduct for prosecutors by going outside the words of the indictment by claiming that Libby had thrown “sand…in his eyes,” thus falsely insinuating that Libby had prevented him from knowing the leaker. Consider that Fitzgerald told Libby’s attorneys twice that unless he could “deliver” the vice president to him (i.e. provide evidence of Cheney’s criminal conduct), Libby would be indicted. Libby had no such evidence and so he was indicted.

Now we know from Judith Miller, former New York Times reporter, in her new book, “The Story: A Reporter’s Journey,” that Fitzgerald corrupted her testimony, which was key to Libby’s conviction. Miller says that Fitzgerald withheld critical information. As a result, she “misremembered” what she had discussed with Libby and testified falsely at trial, mistakenly incriminating him.

Democrats would once again like to execute from the Comey-Fitzgerald playbook.  As with the case of I. Lewis Libby, there is no underlying crime to investigate, only a lot of partisan hyperventilation about ordinary and proper contacts, such as those between then Senator Jeff Sessions and the Russian ambassador.  The element of intrigue is introduced only by the ridiculous and farfetched story that Russia interfered in the November election in order to help Donald Trump become president, and that the Trump campaign colluded with them.  That fantasy hangs on because without it there is no rationale for conducting an investigation, and Democrats are desperate to investigate.

They are not really after Attorney General Sessions, though they would welcome his forced resignation if they could get it.  They want Trump.  He is their worst nightmare.  Obnoxious and rude, he seems to blunder into what should be scandalous and fatal gaffes, but instead of suffering a political knockout, there he stands.  When the bell rings at the end of the round, the Democrats slink back to their corner realizing they've punched themselves into near exhaustion and they're worse off for it than he is.  He's something they've never seen — a politician inviting them to take their best shot on the chance that it will give him the opening to deliver a knockout of his own.  And a knockout is what he intends.

Trump aims to strip power from the administrative state and restore it to the American people.  If he is successful, he will also have stripped much of the power from the party of big government — the Democrats.  The Democratic party will survive, of course, even if Trump is successful.  But it will have to reform to do it.  It will have to actually stand for things that help real American people.  The old corrupt leadership, endlessly promoting politically correct platitudes solely to increase their own power, will have to go.

But they will do anything to survive and hang on.  Players in the administrative state are at risk as well.  The leaks that forced the resignation of General Flynn as Trump's National Security Adviser were very likely illegal.  If the leakers are caught it could mean jail time.  Washington wants Trump gone, and an investigation by special counsel is just the ticket.

Updated March 6, 2017, 8:33am

Categories: Blogs, United States

States Consider Removing Income and Sales Taxes from the Monetary Metals

Tue, 2017-03-14 19:15 +0000

The following article was written by Mike Gleason, Director at Money Metals Exchange.  It was originally published at www.moneymetals.com.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Precious metals markets can certainly be volatile from week to week, but over time they are a more reliable store of value than Federal Reserve Notes. Gold and silver remain the world’s most enduring and most widely recognized form of money. And, as spelled out in the U.S. Constitution, gold and silver coins are legal tender. Individual states thus can formally recognize gold and silver coins as legal tender alternatives to Federal Reserve Note dollars.

Both Utah and Oklahoma have passed legal tender laws in recent years recognizing gold and silver as money. The metals can be used freely as a means of payment and are free from all state taxes. More than 20 states have already removed sales taxes from precious metals transactions, with Alabama, Tennessee, and Maine now considering their own proposals to do so as well.

Other states, including Arizona and Idaho, are moving forward on legislation to exempt gold and silver bullion from capital gains taxes. Since Money Metals Exchange is located in Idaho, we would be particularly excited to see it become a haven for sound money.

Last Thursday a bill to eliminate capital gains taxes on precious metals passed the Idaho House Committee on Revenue and Taxation. Money Metals President Stefan Gleason testified before the Committee. Here is some of what he had to say:

Stefan Gleason: Our mission is to educate people also about precious metals and help them diversify into this reliable and more stable form of money, really truly a Constitutional money with tremendous history going back to the founding of our country. Gold and silver have been chosen for thousands of years as money because of their qualities as financial insurance, as a store of value, and its practicality as a medium of exchange. The bill I want to talk about today is a straightforward bill. Basically, we don't want to tax money in Idaho. Idaho already does not tax precious metals with its sales tax, and we're asking for it to be removed from the calculation of income tax in Idaho.

The Founders of our nation dealt with the collapse of the un-backed continental dollar, and that was fresh in their minds when they created our monetary system and established gold and silver as our nation's money. In fact, the dollar was defined as a fixed amount of silver, and even in the Constitution the Founders restricted states from making payment in anything other than gold and silver coins for payment of debt. For the first hundred years, our nation's money gold and silver coinage maintained its purchasing power pretty much consistently, except for a small period of time during the Civil War when we went off the gold standard.

But then about 100 years ago the Federal Reserve was created, and since that time we've seen a dramatic decline in the purchasing power of what is now considered the dollar but really is called the Federal Reserve Note. Of course, the last link to gold was severed officially in 1971, and that has led to an acceleration of this devaluation in purchasing power and an explosion in federal government debt during that same period of time.

The people that are most harmed by inflation are wage earners and savers. When the dollar goes down in purchasing power, they lose. Fortunately, an increasing number of citizens are recognizing that owning gold and silver as an alternative form of savings is a good way of protecting some of their wealth, protecting some of their purchasing power, and standing against this ongoing devaluation. It's also something that helps in periods of financial turmoil, which seem to be increasing under our current system. Gold and silver are a safe haven.

Under current law, however, when a taxpayer sells their precious metals, they may end up with a capital gain because it's measured against the Federal Reserve Notes that they sell it for. Now it may not be a real gain. In most cases, it's not a real gain. It's a nominal gain. It's an illusory gain. Yet it's still something that triggers taxation at the federal level, and a taxpayer has to include that in their taxable income if they sold gold and silver bullion or coins.

It's even taxed at a discriminatorily high 28% rate for long-term capital gains... It's 15 and 20 for other types of assets. Then Idaho in the calculation of Idaho taxable income essentially carries forward that income number, and then there's some adjustments that are made on various things according to Idaho statutes to arrive at the Idaho taxable income.

This legislation simply would back out the federal income or loss that somebody reports on precious metals out of their Idaho taxable income. This is something that Idaho can do. Obviously, we can't mess with federal tax laws, but Idaho decides what it's taxing as income, and we propose with this legislation that precious metals be removed, because it's money.

Also, weighing in on behalf of Idaho’s bill to free precious metals from state taxation was an executive of a freedom minded group in the Gem State.

Fred Birnbaum: My name is Fred Birnbaum, with the Idaho Freedom Foundation and I'm here to speak in support of this bill. I'll be very brief. I think Mr. Gleason covered just about everything. But I'll make a parallel point. Recently, actually this week, there was a lot of debate about a constitutional amendment, article five convention. I'm not going to re-open that debate. But I think it's relevant, to some extent, to this bill. I certainly don't want to overplay that point. What came up and one of the central issues was the unbalanced federal budget, if you will.

And the fact that we've accumulated about 20 trillion of federal debt and I think sometimes it's hard to think of the inflation that we currently have as inflation. It certainly varies. It hasn't been very significant, say in gasoline. It is in property. But the potential for inflation is huge because the Federal Reserve has now issued about 4 trillion dollars of digital money into the economy. It's pushed it since the recession. So, I think what this bill does, in many ways, is it's a prospective measure in that those folks who either own gold or silver now or may in the future, if we do have a real bout of inflation, this will protect them from that.

One of the challenges in getting this and similar bills passed is educating legislators on why gold and silver, being constitutional money, are different from other asset classes. Some politicians just don’t grasp the fundamental distinction.

Committee Chairman: Questions for Mr. Gleason? Representative Gannon?

Rep. Gannon: Thank you Mr. Chairman. Sir, one question I always have asked of me is, if we pass a bill like this, is, well are we picking winners and losers? What about if I invest in a gold stock and I make money on my gold stock or what about oil companies? If we open up the door to one particular kind of investment for a tax break like this, how do I explain to constituents that their particular investments don't get the same kind of tax break?

Committee Chairman: Mr. Gleason?

Mr. Gleason: Okay. Mr. Chairman. Representative Gannon. It's a good question. The key distinguishing characteristic here is that gold and silver are money. They're not a stock, they're not a piece of property and when it comes to mining stocks and things like that, obviously, that's not covered here.

We're talking about taking away taxation on the exchange of one form of money with another. So, people are not unfortunately able to deduct the loss that they take when they have Federal Reserve Notes and they dramatically decline in their value. There is no deduction for that. The deduction is basically everyone is paying the inflation tax and they are not able to recoup that or protect themselves against that, so gold and silver is another alternative form of money. It's actually much more stable and an historic form of money, and so that's how I distinguish this. This is about sound money and preserving people's savings and not giving any kind of special break for an investment class.

Fortunately, there are politicians who understand that not taxing money in any form is a matter of consistency. Idaho State Representative Ron Nate made a strong case for treating gold and silver the same as the Federal Reserve Note when it comes to taxation.

Rep. Nate: Thank you Mr. Chairman.

(I’m) in favor of the motion, this isn't just an investment. This is a money. And so, Federal Reserve Notes are the nationally recognized money, but according to Article I, Section X of the Constitution, the only thing that the states can declare as money, we can't coin our own money, the only thing we can use as money is we can declare silver and gold as money.

So, it's the only real state money that we have control of. And if holding money becomes something that is subject to taxation, then we have – I think – a perverse incentive in our government here, that the money that they declare, that the government declares is legal tender suddenly becomes a tax instrument for them as well.

This makes sense for consistency. If gold and silver coin are money, then we should not tax it when it increases in value. If you argue that we should tax it when it increases in value, then you should also argue that Federal Reserve Notes, when they diminish in value because of inflation, we ought to be able to declare capital losses on those on our tax forms as well.

But because we don't allow that, we shouldn't be taxing either capital gains or losses on gold and silver coin. This is a matter of consistency with regards to currency and the tax treatment of it. Thank you.

We’ll certainly keep you updated on the progress of the Idaho bill as it makes its way through the legislative process. In the meantime, the Arizona legislature looks poised to send similar legislation to its governor’s desk.

On Wednesday, the Arizona Senate Finance Committee heard testimony from none other than former Congressman Ron Paul. Dr. Paul was the leading voice in the U.S. Congress for sound money issues during his tenure there. He turned the once obscure idea of auditing, reforming, and ultimately ending the Federal Reserve into a national campaign issue when he ran for President in 2008 and 2012.

Here’s some of what Ron Paul had to say this week in support of Arizona’s bill to eliminate taxes on gold and silver:

Dr. Ron Paul: It would be legalizing competition in a constitutional fashion. It isn't like saying, "Okay, Arizona wants to print their paper currency again." Because you're not allowed to do that. On the monetary issues, the states are talked about in the constitution and they have restrictions, they can't print money but they also have been told in The Constitution that they can only use gold and silver as legal tender. So, the responsibility is one the states to follow the rules and that meant nobody was supposed to use anything other than silver and gold as legal tender. We've had a mess, it's gotten worse, it started in 1913, there was a climactic end in 1971 but the problems have continued.

If you look at some of the charts, things have been really rocky since ‘71, with the destruction of the value of the money. Since 1971, we've lost 95% of the value of the dollar. Believe me, the Gold Standard was invented a long, long time ago, from the beginning of recorded history. Five thousand years ago they used gold and silver, biblically gold and silver, real weights and measures, that's what they count it by. So, this is not brand new, it's the governments and the people who seek power are always undermining the restraints placed on governments by honest money. So, I congratulate you for hearing and dealing with this bill, because I think if you do pass this bill it will be a great step forward for a lot of people to understand the money issue and the freedom issue. Thank you very much.

Chairman: Thank you very much Dr. Paul.

If the bills in Arizona and Idaho become law, you can bet similar sound money efforts will spring up in other states. Of course, states won’t be able to abolish the discriminatory federal taxation of precious metals. But state level reforms will catch the attention of members of the U.S. Congress. Sound money victories at the state level will help build political momentum for sound money legislation at the federal level.

Groups such as the Sound Money Defense League are advancing the sound money movement by educating the public on the problems of our inflationary monetary system as well as working with allies in elective office to enact reforms. Setting gold and silver free as competing currencies to Federal Reserve Notes won’t be easy and it won’t happen overnight, but real progress can be made and is being made one step at a time.

Mike Gleason is a Director with Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.

Listen to the Podcast Audio: Click Here

 

Categories: Blogs, United States

Russian Hacking

Sat, 2017-03-04 11:31 +0000

The current fixation on "Russian hacking" by the Democrats and the media has always seemed farfetched to me.  It sounds more like Boris Badenov's fiendish plan to corner the market on upsidasium.  Nonsensical.  If the Russians really had the chance to pick the next U.S. President, why on earth would they prefer Donald Trump over Hillary Clinton?  After all, it was Hillary Clinton's Department of State that approved Russia's acquisition of 20 percent of American uranium production. 

And Hillary was running as Obama 2.0.  If you're Russia, what's not to like about that?  Obama was the guy caught on an open mic asking Medvedev to assure Vladimir Putin that he, Obama, would be a much better friend with much greater flexibility after the 2012 election.  It would be his last election.  Obama was the guy who all but invited Vladimir Putin to expand Russian influence into Syria when he, Obama, backed away from his own "red line."  Bashar Assad didn't go after all, in spite of what Obama said earlier.  Obama is the guy who partnered with Russia to put together the Iran deal, giving the number one state sponsor of terrorism a path to eventually acquiring nuclear weapons.  Obama was the guy who stood passively by while Russia took Crimea and moved into eastern Ukraine.   Putin had his way with Obama, and there is no reason to think he wouldn't have his way with Hillary.

By promising to make America energy independent, Donald Trump will promote development of our own oil and gas resources.  How will the increased supply of oil and natural gas and the attendant downward pressure on world energy prices benefit Vladimir Putin and the Russians when they are so dependent on oil and gas revenue?  By canceling the Keystone Pipeline, and restricting drilling operations, Obama and Hillary were much more considerate of Russian ambitions.  In spite of all the bluster, the Trump administration has declared its firm support for NATO, with only the desire that other NATA members begin picking up their fair share of the cost.  Is a modernized NATO on the Russian border something that Putin might find attractive?  Trump's America first strategy calls for rebuilding our military.  Is it reasonable to believe Vladimir Putin wants to risk an arms race like the one that brought the Soviet Union to an end?  The notion that Russia would prefer Donald Trump to Hillary Clinton doesn't pass the laugh test.   

So why are Democrats and the media humping this dumb Russian Hacking story like a two-dollar whore?  Mark Levin has put together a timeline that clears up some of the mystery.  It involves FISA, and it's political.

Radio host Mark Levin used his Thursday evening show to outline the known steps taken by President Barack Obama's administration in its last months to undermine Donald Trump's presidential campaign and, later, his new administration.

Levin called Obama’s effort “police state” tactics, and suggested that Obama’s actions, rather than conspiracy theories about alleged Russian interference in the presidential election to help Trump, should be the target of congressional investigation.

Drawing on sources including the New York Times and the Washington Post, Levin described the case against Obama so far, based on what is already publicly known. The following is an expanded version of that case, including events that Levin did not mention specifically but are important to the overall timeline.

1. June 2016: FISA request. The Obama administration files a request with the Foreign Intelligence Surveillance Court (FISA) to monitor communications involving Donald Trump and several advisers. The request, uncharacteristically, is denied.

2. July: Russia joke. Wikileaks releases emails from the Democratic National Committee that show an effort to prevent Sen. Bernie Sanders (I-VT) from winning the presidential nomination. In a press conference, Donald Trump refers to Hillary Clinton’s own missing emails, joking: “Russia, if you’re listening, I hope you’re able to find the 30,000 e-mails that are missing.” That remark becomes the basis for accusations by Clinton and the media that Trump invited further hacking.

3. October: Podesta emails. In October, Wikileaks releases the emails of Clinton campaign chair John Podesta, rolling out batches every day until the election, creating new mini-scandals. The Clinton campaign blames Trump and the Russians.

4. October: FISA request. The Obama administration submits a new, narrow request to the FISA court, now focused on a computer server in Trump Tower suspected of links to Russian banks. No evidence is found — but the wiretaps continue, ostensibly for national security reasons, Andrew McCarthy at National Review later notes. The Obama administration is now monitoring an opposing presidential campaign using the high-tech surveillance powers of the federal intelligence services.

Barack Obama, notorious for putting government agencies to work punishing his enemies and helping his friends, wanted wire taps on the Trump campaign in June 2016, but the FISA Court wouldn't authorize it.  Who would have dreamed a joke — “Russia, if you’re listening, I hope you’re able to find the 30,000 e-mails that are missing.” — would be enough to get the intelligence agencies involved in tapping an opposition party presidential candidate?  But that's the most sensible explanation for the popularity of the "Russia hacked the election" fantasy. Andrew McCarthy has more and National Review.

From the three reports, from the Guardian, Heat Street, and the New York Times, it appears the FBI had concerns about a private server in Trump Tower that was connected to one or two Russian banks. Heat Street describes these concerns as centering on “possible financial and banking offenses.” I italicize the word “offenses” because it denotes crimes. Ordinarily, when crimes are suspected, there is a criminal investigation, not a national-security investigation.

According to the New York Times (based on FBI sources), the FBI initially determined that the Trump Tower server did not have “any nefarious purpose.” But then, Heat Street says, “the FBI’s counter-intelligence arm, sources say, re-drew an earlier FISA court request around possible financial and banking offenses related to the server.”

Again, agents do not ordinarily draw FISA requests around possible crimes. Possible crimes prompt applications for regular criminal wiretaps because the objective is to prosecute any such crimes in court. (It is rare and controversial to use FISA wiretaps in criminal prosecutions.) FISA applications, to the contrary, are drawn around people suspected of being operatives of a (usually hostile) foreign power.

Mr. McCarthy concludes by giving the feds the benefit of the doubt.  It's too early, he thinks, to accuse the Obama administration of "pretextually using its national-security authority to continue a criminal investigation after determining it lacked evidence of crimes".  As for me, after eight years of President Obama, four of them with Hillary as Secretary of State, I'm way past giving them the benefit of the doubt.  I think the Obama administration used national security as a pretext to spy on his political opponent, Donald Trump.  I will continue to believe that until there is real evidence that proves otherwise.

Updated March, 4 2017, 6:30am

Categories: Blogs, United States

An Emerging Political Order

Thu, 2017-03-02 15:27 +0000

Donald Trump's address to the Joint Session of Congress was his best, so far.  Almost all pundits and commentators agree, Trump was presidential, and he needed to be.  But hardly anyone expected the grand slam homerun that he delivered, and hardly anyone seems to have missed how the political ground has shifted.

Investors loved the speech.  The Dow Jones Industrial Average returned to its winning ways one day after its string of record closes ended at twelve consecutive days.  On the day following Trump's speech the Dow closed with a gain of over 300 points, blasting through the 21,000 mark.  This ties a record for the shortest number of days, twenty-four,  between 1,000-point milestones, matching a record set in 1999 when it went from 10,000 to 11,000.

The president's speech energized and united Republicans.  Purpose has replaced doubt, even as they recognize that there are areas where they disagree with the president and disagree among themselves.  Republicans resolved to work towards compromise and deliver on legislation that was promised.  That includes repeal and replacement of ObamaCare, border security, and tax reform.  Failure to deliver will be fatal.

The Democratic leadership is in denial.  Senate Minority Leader Chuck Schumer predicted that Republicans will break with the president within a matter of months.  House Minority Leader Nancy Pelosi issued this statement after the president's speech.

“The President’s speech was utterly disconnected from the cruel reality of his conduct.

“The President speaks like a populist, but he is selling working people down the river to Wall Street.  He claims that he’s making America safer, but he has jeopardized the security of our country and weakened our fight against terror with his Administration’s dangerous, incompetent and unconstitutional actions.

“The Trump Administration has spent 40 days putting Wall Street first, making America sick again, sowing fear in our communities, and ensuring Russia maintains its grip on our security and our democracy.  Democrats will continue to lead the fight against President Trump’s bait-and-switch assault on America.”

Pelosi's statement runs true to form in its dishonesty, and Pelosi is too old or too stupid to see it.  Democrats have been given cover by their media allies for so long that they have come to believe that their voters would have endless patience in the face of their empty promises.  Republicans have always been their foil, always available for blame, and the media could always be depended upon to assist in focusing that blame.  That well is running dry.

Trump has come along to steal the Democrats' thunder, and Pelosi has come face to face with it.  Under her leadership the Democrats' squandered reservoirs of trust by failing to improve the lives of their constituent identity groups.  They gave it away by opposing school choice for inner city kids in failing schools.  They gave it away by pushing through minimum wage laws that kill entry level jobs and rob the poorest of opportunity.  Democrats chose labor union political contributions over the well being of the people they were elected to serve.  For decades the Democrats have played racial politics while the inner cities descended into pits of corruption and crime.

The Democrats' ability and desire to govern has atrophied to the point where they hardly even bother with it.  Instead they campaign, almost exclusively.  Issues don't matter.  Hillary could vote in favor of the Iraq war one day, and on the next day oppose it.  She could oppose gay marriage one year and support it the next.  Who cares?  The Democrats take a position for two reasons.  One is that successful legislation on it will give themselves and their allies the power to punish their enemies as they have through government agencies like the IRS and the EPA. The other is to provide a debate forum in which Republicans can be cast as evil, dishonest people who can't be trusted.  Issues are contrived so that predictable Republican objections can be framed as greedy or bigoted.  Transgender bathrooms?  Whatever they dream up they have been able to throw out there, and then stand back while the media dutifully piles on.

It's fake news.  Pelosi's statement is fake news.  The bad news for Pelosi is that now just about everybody understands that it's fake news.  According to recent NBC/WSJ polling the president's favorability is underwater.  Much is made of it being the lowest for any president since such polls have been in existence.  Disapproval of Donald Trump outweighs approval by 47% to 43% among those who were asked for a net rating of -4.  It would seem like a problem for Donald Trump and the Republicans until you compare his numbers to Nancy Pelosi's.  In the same poll Pelosi is viewed positively by a total of only 19% of respondents while 44% view her negatively for a net rating of -25.  The poll was taken last week before the president's speech, so it's fair to expect that the next round of polling will show improvement for Donald Trump and deterioration for Nancy Pelosi.

In a CBS poll of 857 people who watched the speech, 76% of respondents approved of the president's speech while 24% disapproved.  Among African Americans who watched the speech, 47% approved of what they heard while 53% disapproved.  Even though disapprovals outweigh approvals, 47% approval is a quite remarkable when you consider that Donald Trump received only 8% of the African American vote in the November, 2016 election.  There is a reason for the almost positive reception by a core Democrat constituency.  President Trump laid out plans that focus on jobs, opportunity, and economic growth, and he explained why rolling back the Obama legacy was a necessary step in getting us there.

Meanwhile, the fossilized leadership of the Democratic party holds firm in their opposition to everything President Trump proposed, even when it seems as though he was force feeding some of their own proposals back to them.  They allow themselves such grand latitude on their alleged principles.  They think they will be carried by their own Tea Party — those petulant post-election protesters with their pink hats and bodily part costumes, and the town hall protesters who come armed with their Organizing For America manuals instructing them how to disrupt.  Good luck with that.  Sure, protesters and party leaders are on the same page, invincible in their righteous anger.  That one so low, so unfit as Donald Trump could presume to win an election that rightfully belonged to Hillary Clinton was an insufferable injustice.  They are the good, they are the compassionate, they are the enlightened, and they are entitled to have one of their own in charge.  The rage is palpable.

It's fun to watch.  Donald Trump's sheer boorishness goaded the Democrats into coming out in the open as the party and the movement that offers the gift of its own saintly superiority — and nothing else, really.  The rest of us are deplorable, of course.  We got that straight from Hillary the enlightened and most qualified.

The political landscape is in the midst of a shift that began with the Tea Party uprising.  Trump won over the Tea Party faithful with his willingness to fight, and suddenly a new coalition of disaffected blue collar Democrats, traditional Republicans, Tea Partiers, libertarians, and Christian conservatives has come together behind Trump, with some reluctant NeverTrump elitists thrown in because they have nowhere else to go.  At the same time Trump is gradually winning over African Americans and Hispanics. 

With blue collar and minority Democrats giving Trump a serious look, the Democratic party is on the verge of collapse.  The rise of Tom Perez to head the DNC solidifies leftist control of the party and all but guarantees a continuation of the strategies and policies that have been to the disadvantage of so many Americans for so long.  With President Trump in the driver's seat, Democrats have no choice be to oppose him.  They will be opposing economic growth, jobs, and opportunity.  In place of improved well being and security for Americans, they offer themselves and their wonderfulness.  They are the party of self regard.  They can't be defeated soundly enough.

Categories: Blogs, United States

Idaho Bill Would End Taxation of Gold and Silver

Sun, 2017-02-26 12:05 +0000

The following article was written by Sound Money Defense League Assistant Director Jp Cortez.  It was originally published at www.soundmoneydefense.org.

 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 

The Framers of our nation established that gold and silver are money, but federal taxing authorities in recent decades have required taxpayers to pay taxes on this form of money when its exchange for Federal Reserve Notes results in nominal capital “gains.”

But that problem may soon be mitigated, at least in Idaho.

A prominent Gem State state representative has advanced legislation to remove state income taxes when Idaho taxpayers sell their precious metals.

House Majority Leader Mike Moyle introduced House Bill 206 on February 23rd to amend Idaho revenue statutes, providing “that capital gains and losses on precious metals bullion and monetized bullion sales be added to or subtracted from Idaho taxable income.”

Similar to a bill recently passed by Arizona’s state House, Idaho HB206 is a pure and tax neutral proposal. That’s because both precious metals gains (income) and losses are backed out of the calculation of one’s Idaho taxable income.   While HB206’s passage will have little fiscal impact as to Idaho tax revenues, it will have a larger impact on Idahoans’ freedoms.

Enjoying the backing of the Sound Money Defense League, the Idaho Freedom Foundation, and Money Metals Exchange (an Idaho-based national precious metals dealer), the Idaho proposal seeks to correct the misclassification of precious metals by the IRS as “property” rather than money.  It is only because of this misclassification in the first place that precious metals income and losses are included in the federal adjusted gross income number that flows through to the taxpayer’s Idaho tax return.

Assessing Income Taxes on the Exchange of Money Is Unjust

Income taxes are one major way government bureaucrats penalize holders of precious metals. If you own gold to protect against the ongoing devaluation of America’s paper currency (which results from the inflationary practices of the Federal Reserve), you may end up with a “gain” on your gold when it’s priced in dollars. Not necessarily a real gain, mind you. It’s frequently nothing more than a nominal gain – but it’s nonetheless considered income against which the government assesses a tax.

The Federal Reserve strives for and openly announces a target inflation rate, and it’s these policies that cause these artificial “gains” which precious metals owners experience.

By removing precious metals from the state income tax, Idaho can stop compounding the problem and instead help promote the adoption and widespread use of constitutional money.

While Idaho citizens are not currently subjected to “double taxation” in the form of sales taxes, more than 20 other states do.  In most states with sales taxes, precious metals owners are taxed on their original purchase and then taxed again if they have nominal “gains” when they sell their precious metals.

But that’s not all.  At the federal level, these dollar-denominated gains on precious metals are taxed at the discriminatorily high 28% long-term capital gains tax rate. Capital gains on other assets are taxed at 15% or 20%, depending on one’s income level.

And, unless a state passes a bill like the one under consideration in Idaho, the “income” one receives from owning and selling gold and silver increases the taxes they must pay at the state level too.

Let’s hope Idaho House Bill 206 passes through both chambers this session and gets signed into law.

Categories: Blogs, United States

When Government Acts, “Unintended Consequences” Follow

Thu, 2017-02-09 13:18 +0000

The following article was written by Sound Money Defense League Assistant Director Jp Cortez.  It was originally published at www.soundmoneydefense.org.

 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 

In 1850, French economist Frédéric Bastiat published an essay that is misunderstood, or more often, unread, titled, “That Which is Seen, and That Which is Not Seen.” Bastiat brilliantly introduced the idea of opportunity cost and, through the parable of the broken window, illustrated the destructive effects of unintended consequences.

Unfortunately, because of misplaced belief in government benevolence, even the most powerful and successful members of the American citizenry often miss the point.

According to Reuters, Ramin Arani, a co-portfolio manager of the $25 billion Fidelity Puritan fund, said while discussing his current bullish stance of gold, “In terms of unpredictability, there is a tail risk with this administration that did not exist with the prior…There is a small but present possibility that government action is going to lead to unintended consequences.”

Arani’s overall bullish stance on gold is sound. Given the political climate, gold is an attractive “insurance” for equity exposure. The problem doesn’t lie in his financial analysis, but rather in the seemingly innocuous comment that followed.

“There is a small but present possibility that government action is going to lead to unintended consequences.”

To suggest the chances of unintended consequences are merely “small” is extremely naïve.

Notwithstanding myriad examples of government action leading to unintended consequences, including, but certainly not limited to, minimum wage laws, rent control, social security, and the disastrous war on drugs, there are countless examples of unintended consequences brought on by government action that should resonate with a multi-billion-dollar portfolio manager. Yet they seem to have fallen on deaf ears.

Unintended Consequences of Gold Confiscation

In 1933, President Franklin Roosevelt signed Executive Order 6102 which called for the confiscation of gold. Robert Higgs’ writes for the Mises Institute:

Besides being theft, gold confiscation didn't work. The price of gold was increased from $20.67 to $35.00 per ounce, a 69% increase, but the domestic price level increased only 7% between 1933 and 1934, and over rest of the decade it hardly increased at all. FDR's devaluation provoked retaliation by other countries, further strangling international trade and throwing the world's economies further into depression.”

Looking for government action that led to the unintended consequence of literally worsening the worst depression in world history? Check.

Unintended Consequences of the Community Reinvestment Act

In 1977, Congress passed of a piece of legislation called the Community Reinvestment Act. The evolution of this act played a significant role in establishing the lowered lending standards that caused the 2008 housing crisis. Combined with the Federal Reserve artificially lowering interest rates, Fannie Mae and Freddie Mac taking on the “philanthropic” effort of improving homeownership of low and middle class families, and many other factors, the unintended consequences of government action raised the rate of foreclosure by 225% from 2006 to 2009.

Looking for government action that led to the unintended consequence of close to a million American families losing their homes? Check.

Unintended Consequences of the Affordable Care Act

The first half of Arani’s statement speaks to rising unpredictability under the Trump administration relative to the Obama administration. It has been barely two weeks since President Trump was inaugurated, but one would be remiss to speak on the Obama administration as if it was the bastion of predictability.

Without examining the disparity between Obama’s foreign policy campaign rhetoric and his unpredictable drone-happy administration, there is a glaring example of an unintended but extremely foreseeable consequence stemming from his signature health care law.

In September 2013, President Obama said the following in a speech on the Affordable Care Act:

"In the United States of America, health care is not a privilege for the fortunate few -- it is a right. And I knew that if we didn’t do something about our unfair and inefficient health care system, it would keep driving up our deficits, it would keep burdening our businesses, it would keep hurting our families, and it would keep holding back economic growth."

The most predictable consequences of passing the Affordable Care Act came to the surface. A large spike in premiums, increase in taxes, millions of Americans losing their plans, and job losses, just to name a few.

Looking for government action that led to literally 100 unintended consequences throughout the health care system? Check.

Mr. Arani is correct: gold is an attractive investment. The importance of sound money in investments cannot be overstated and he should be credited for recognizing this when a lot of his financial market counterparts do not.

But to minimize the severity and predictability of unintended consequences brought on by government action as a “small but present possibility” is disingenuous.

Categories: Blogs, United States

A Libertarian Perspective

Thu, 2017-02-09 13:16 +0000

Back in the days of my misspent youth, my ultra-libertarian friends and I would often argue the question, how much government do we really need.  If we could just get rid of excessive regulations, promote competition and take advantage of its self-regulating benefits, then we wouldn't need so much government.  There is some truth to that, though I confess that my friends put much more faith in power of the "invisible hand" than I did.  I tended to side with Friedrich Hayek who said that liberty requires a strong government, one that can defend the freedom of its citizens and provide them a level playing field for the pursuit of their aspirations.  It doesn't need to be perfect, but it needs to be predictable, and it needs to be fair.

Imagine a Super Bowl without referees.  Not happening.  We'll never see a Super Bowl without referees no matter how much the fans complain about them.  The refs got this offsides call wrong, or they blew that pass interference call, but at the end of each game, most agree that it was fair for both sides.  If the fans didn't think so, if everybody believed the games were fixed, hardly anybody would bother watching.  And then where would ticket prices be, and the ad revenue, and all the business that surrounds the games?

This notion of fair competition and its benefits is one of the things that drive libertarianism.  In almost all business circumstances there ought to be competition, and it ought to be fair.  Good things come from it, like better service and lower prices.  When companies compete for your business, things like that come about in the normal course of events.  It happens because people tend to do what they think is in their own best interest.  It is in a company's interest to provide customers with some advantage to using its products and services rather than its competitors.  All people, almost all the time, do what they think is in their own interests.  We might be wrong about what's best, and other people might disagree with what we think is best, but that doesn't stop us from striving for it.

I'm not sure everybody believes that.  As the story goes, F. Scott Fitzgerald said to Earnest Hemingway, "The rich are different from you and me," and Hemingway replied, "Yes, they have more money."  Must have been early in their careers, since neither one of them spent a lot of time being poor.  At any rate, I subscribe to the Hemingway viewpoint rather than the Fitzgerald.  People are much the same, although different circumstances can drive people to do different things.  In the end, everybody does what they think best, whatever that may be, and however ill advised it may seem to somebody else.

Those ideas played a large part in the design of America as set forth in the Constitution.  People are pretty much the same, and they tend to do what they think best, and that includes people who wield great power.  Our founding fathers did what they thought best by striving to design a government that would not easily be used to advance the interests of the officials in it.  That meant the power of government had to be limited, and the establishment of three competing branches, Executive, Legislative, and Judicial, was meant to keep it that way.  Power not explicitly given to the federal government was reserved for the states and for the people.  In general, government was supposed to play the impartial referee rather than the overlord.

My, haven't we come a long way.  Nowadays, there seems to be a widespread rejection of the notion that people are much the same.  Instead, a substantial number of Americans believe there is good, and there is evil, and that each is easily recognizable.  The good are compassionate, kind, and inclusive.  The evil are greedy and unfair, and they say hateful things.  Redemption is rare.  The good and compassionate among us believe that the evil and the greedy should not be allowed to say those hateful things, and they believe government has a role to play in this.  Unfortunately, the U.S. Constitution guarantees everybody the right of free speech, which includes the right to say unkind things.  And so the good, compassionate people sometimes go out and break windows, beat people up, and set fires in order to stop the evil, greedy ones from saying them.  If only we could change the government and make mean speech illegal.  Then, the good, compassionate, inclusive folks wouldn't have to break any more windows, or burn any more houses and cars.  But for now, desperate times call for desperate measures.

In the meantime, the good, compassionate Americans work for change, and there is a wonderful diversity of opinion as to what is the best way.  Someone named Sarah Silverman suggested that a military coup could save America.  

Based on that I would say there are two kinds of people, those who get it, and those who don't.  Sarah doesn't.

Or maybe she does.  I know some people who would rather not publicly admit that they voted for Donald Trump last November.  They might lose friends, or their jobs might be threatened.  Maybe Sarah is in the opposite sort of a quandary.  It's true, she could just keep her mouth shut.  But maybe she's looking for work, and a good provocative tweet might make her noticeably attractive to like minded potential employers — like the Democrats.  In any event, with her tweet she did what she thought was in her interests.

And she might have been wrong about that.  She might be like millions of Americans who only know that the November election didn't give them what they wanted, and who now call for some drastic measure to fix the "broken" system so that it does — impeachment, coup, abolition of the electoral college, taking it to the streets.  The options are tossed around with little thought to what might come afterwards.  But what these particular Americans are asking for is that somebody should be given power, somebody should take control, so that they can have what this election didn't give them.

For over 200 years the Constitution has served as a limit, imperfect as that limit may be, on the power that the government may exercise over the people.  When we have taken the drastic step and ceded the necessary power for government to "fix" itself, will future officials exercise it in ways that serve our interests or their own?  If you think it will not be their own, then maybe you just don't get it.

Categories: Blogs, United States

The Manchester Free Press aims to bring together in one place everything that you need to know about what’s happening in the Free State of New Hampshire.

Media

Articles

Bloggers

Our friends & allies

New Hampshire

United States

We publish links to the sites listed above in the hopes that they will be useful. The appearance of any particular site in this list does not imply that we endorse everything that the particular site advocates.