Aircraft Engines Are Not That Complicated.

Here is Jamie Diamon, CEO of J.P. Morgan explaining why you don't need to know what bankers do. It's too complicated, like an aircraft engine. Just trust him, all the money J.P. Morgan is making is only fees for managing all this complexity.

This is a straight turbine engine.  It is really marvelously simple.

This is a turbo-fan.  It is a little more complicated, but not much.

When I was in the Air Force they were teaching this stuff to 17 and 18 year old kids who didn't even have high school diplomas.

Banking is not that difficult to understand either.

Banks pay interest on savings and charge interests on loans.

When banks need more savings they increase interest on savings.  Consequently, they must charge higher interest on loans to offset the higher rates they offer to attract savings.  When interest rates are high it is a signal to producers that people are spending now, not saving, so they concentrate on short term projects that quickly satisfy consumer demand.

When banks have a lot of money in savings they pay a lower interest rate.  Consequently, they can charge lower rates on loans.  When interest rates are low it is a signal to producers that people are saving for future consumption, not spending, so they concentrate on long term projects to meet future consumer demand.

It is a wonderful feedback mechanism that balances what the producers are producing with what the consumer is consuming.

It only gets screwed up when a central bank forces interest rates lower by artificial means.  It makes producers think people are saving for future consumption so they start long term projects.  Since the consumers are not saving they are not planning on future consumption, so when those long term project come to completion there are no deferred saving for people to spend on them.  The feedback mechanism is completely destroyed by false signals.

Crash.

I have a GED and community college degree in Arts and Sciences, mostly I concentrated on history, literature and the social sciences.  Basically a glorified high school diploma.  I am not a Harvard MBA, but I did listen to Ron Paul and read Murray Rothbard.

Jamie Dimon can eat a big bowl of dicks.

Dangerous Ideas

On January 17th, the Washington Times published a story about a report issued by the U.S. Military Academy's Combating Terrorism Center. It is titled Challengers from the Sidelines: Understanding America's Violent Far-Right.

The paper say the report "lumps limited government activists with three movements it identifies as 'a racist/white supremacy movement, an anti-federalist movement and a fundamentalist movement.'"

Acording to the Washington Times

[The report] says anti-federalists "espouse strong convictions regarding the federal government, believing it to be corrupt and tyrannical, with a natural tendency to intrude on individuals' civil and constitutional rights. Finally, they support civil activism, individual freedoms, and self government. Extremists in the anti-federalist movement direct most their violence against the federal government and its proxies in law enforcement."

I have downloaded a copy of the report, but I have not read it yet. The CTC's blurb about the report says it offers "comprehensive look at the data." I am curious just what data they are talking about. I am not personally aware of an groups espousing "civil activism, individual freedoms, and self government" engaging in any violent behaviour. Maybe I've missed something.

Again, I have not read the report yet, but based on the Washing Times story I will make this preliminary observation: the truth is people who espouse "civil activism, individual freedoms, and self government" actually are a greater threat to a "corrupt and tyrannical" government, i.e., all governments, than groups like the KKK, the true wackjob militias, Christian Identity groups or White Nationalists--like the folks who are supposed to have shot up the Sikh temple last year--because those groups will never be more than a dangerous nuisance. The general public is never going to be persuaded by violent hate mongers from the right or the left, but ideas, like freedom and self-government have been known to go viral. Ideas have toppled governments in the past and they will do it again. If I were trying to control 300 million people, people like Ron Paul, Ernest Hancock, Larken Rose and the multitudes in whom they have planted seeds would scare the living bejeezuz out of me.

Anyway, I just downloaded the report. It is 148 pages long. It might take a little bit of time, but I expect it to be an interesting read.

The Washington Times story is here: http://www.washingtontimes.com/news/2013/jan/17/west-point-center-cites-dangers-far-right-us/

The CTC's website is here: http://www.ctc.usma.edu/posts/challengers-from-the-sidelines-understanding-americas-violent-far-right

The report can be downloaded directly from this link: http://www.ctc.usma.edu/wp-content/uploads/2013/01/ChallengersFromtheSidelines.pdf

I'm beginning to sound like a broken record.

The Constitution, while it would be far superior to what we have now, is nothing to write home about. In fact, for me the fetish for the US Constitution is really getting old. I understand that for a newly awakening individual it can be breath of fresh air. That was my experience campaigning for Ron Paul in 2007/8. But if you stop there you are just going to rot on the vine. Ron Paul himself has said the US Constitution failed and he has been known to tip his hat to Lysander Spooner.

Fortunately, for me, I listened to what he said and started studying the people he studied. If you start with Ron Paul and don't end up with Murray Rothbard, you are not really listening.
As to the Constitution itself, no one has addressed it better than Hans-Hermann Hoppe:

"[The] Constitution provided for the substitution of a popularly elected parliament and president for an unelected king, but it changed nothing regarding their power to tax and legislate. To the contrary, while the English king's power to tax without consent had only been assumed rather than explicitly granted and was thus in dispute, the Constitution explicitly granted this very power to Congress. Furthermore, while kings - in theory, even absolute kings - had not been considered the makers but only the interpreters and executors of preexisting and immutable law, i.e., as judges rather than legislators, the Constitution explicitly vested Congress with the power of legislating, and the president and the Supreme Court with the powers of executing and interpreting such legislated law.

"In effect, what the American Constitution did was only this: Instead of a king who regarded colonial America as his private property and the colonists as his tenants, the Constitution put temporary and interchangeable caretakers in charge of the country's monopoly of justice and protection.

"These caretakers did not own the country, but as long as they were in office, they could make use of it and its residents to their own and their protégés' advantage. However, as elementary economic theory predicts, this institutional setup will not eliminate the self-interest-driven tendency of a monopolist of law and order toward increased exploitation. To the contrary, it only tends to make his exploitation less calculating, more shortsighted, and wasteful."

Think about what he is saying. Sure, kings claimed the power to impose mandatory taxes and to create law, but that was not spelled out in any legal form so it was always disputed and occasionally resisted. So what did the writers of the Constitution do? They took the disputed powers of the king and enshrined them in law. Yes, they did away with the king, but they kept the powers he claimed and made them legitimate. They did not change the underlying structure of power, they simply changed the outward form.

A lot of people don't want to recognize that the US Constitution was imposed as the result of a coup d'état. The Philadelphia Convention was called to address trade issues and to refine the Articles of Confederation. There was no mandate to institute a new form of government. The reality was by the time all the delegates showed up the new constitution was pretty much already written by the Virginia delegation and ready to go. Kind of like the USA PATRIOT Act, it was almost like people where just waiting for the right excuse to impose it (Shay's rebellion was going on at the same time). One of the first things the new government did was to put down the Whiskey Rebellion. People were fighting a tax that rich distillers, like George Washington, could afford, but the farmer's in western Pennsylvania could not. It reminds me of large corporations lobbying for regulations they can deal with because they have deep pockets and lots of lawyers, while smaller competitors are shut down because the regulations are too expensive for them implement. The more things change, the more they stay the same.

We don't need a bunch of magic paper. As far as I am concerned, this is The Law: I am the boss of me and my property is mine. You are the boss of you and your property is yours.

Anyone who acknowledges that is my friend and compatriot. Anyone who disputes that is my enemy and I have the moral authority to resist their encroachment on me or mine with whatever means are required to stop them. It's as simple as that. It only gets complicated when lawyers and politicians get involved.

Money

Sometime I feel like a stick in the mud, but every time I see someone reference The Money Masters, The American Dream or Money as Debt, I feel obligated to point out that while all three do a excellent job of pointing out the problem, i.e., fractional reserve, fiat central banking, the solution they offer is no solution at all. All three are suggesting that the Treasury take over the issuance of currency. They talk about "spending money into existence" via the Treasury issuing "interest free" money that would essentially be backed by whatever it was spent on. I haven't grasped the exact detail of their plan and I might not be describing it exactly right because frankly I had already taken the economic red pill before I was exposed to them. I didn't waste a lot of time figuring out how something I knew would never work would work.

I'm always of two minds in referencing Gary North because his theology is terrifying. He is a follower of the late Rousas John Rushdoony. In fact he married Rushdoony's daughter. If you are not familiar with Rushdoony I would suggest you do a google search for "Dominionism" and "Christian Reconstructionism." If they don't scare the bejeezus out of you, you either don't grasp what they are getting at or else you think they are good ideas, in which case you are dangerous. Forgive the digression, but I had to get that out.

North, however, is an outstanding economist and he has addressed the ideas in those documentaries far better than anyone. What they are talking about has a name: Greenbacking. Greenbacking is being pushed hard by a woman named Ellen Brown. Gary North has written a masterful series of rebuttals of Brown and the whole idea of greenbacking. I highly recommend anyone who is tempted by Bill Sill or Ellen Brown to read them.

More generally I recommend everyone who views this blog read What Has Government Done To Our Money? by Murray Rothbard. In my opinion, after Ludwig von Mises, Rothbard was the greatest economic and political thinker of the 20th Century. I actually think he is better in some way because his presentation is far more accessible to people without an extensive economics background. If anyone here has found my ramblings on economic and political issues to be of any value understand I am just presenting Rothbard's thinking as best I understand it. Other than a semester of basic economics I took in college many, many years ago, I have no specialized economics training. I have to credit Rothbard for enlightening me. If you have any respect for Ron Paul and his ideas know this: if it were not for Rothbard there would have been no Ron Paul. Rothbard was Ron Paul's mentor.

The bottom line is this: money is a purely a free market phenomenon. It has always emerged from market interactions and every time government has attempted to take it over it has always been a disaster. As I said above, The Money Masters and the other two films I mentioned are absolutely right on the problem and absolutely wrong on the answer.

Not too shabby

For all her obvious bias, Rachel Maddow actually does journalism from time to time.

On with the show, good health to you

Oh, this is delicious...

According to FairVote.org, Jenneifer Sheehan, Legal Counsel for the RNC, plainly stated in a 2008 letter to Nancy Lord, Utah National Committeewoman, several weeks before the convention,

“The RNC does not recognize a state's binding of national delegates, but considers each delegate a 'free agent' who can vote for whoever they choose.

The national convention allows delegates to vote for the individual of their choice, regardless of whether the person's name is officially placed into the nomination or not.” (Source)

This means, much to Romney's dismay, of all the delegates that finally make it to Tampa, just as it was determined to be the case for one of his '08 delegates, are all allowed to vote for anyone they choose, even if that happens to be Rick Santorum, for instance.

The twist to the story however is that the vast majority of the delegates emerging from the states thus far, that aren't Romney's, have actually stated to be voting for Ron Paul.

http://www.examiner.com/article/brokered-convention-taking-shape

Time to cue the music...

How come Mitt Newtorum can't draw a crowd like this?

Shit gittin' real...

"Don't worry that you won't have the strength, you will..."

---

OK, Ron, here's your chance

Rep. Ron Paul, Chairman, Domestic Monetary Policy Subcommittee

Jurisdiction: Domestic monetary policy, currency, precious metals, valuation of the dollar, economic stabilization, defense production, commodity prices, financial aid to commerce and industry.

http://republicans.financialservices.house.gov/index.php?option=com_content&task=view&id=1458&Itemid=43

DO SOMETHING

From Paolo's blog

I saw an interview on CNN the other day, in which the reporter asked <he who must not be named> what he would do, RIGHT NOW, this split second, to get us out of "the Crisis." <he who must not be named> began to respond that before you proposed solutions to a problem, you have to understand what caused the problem. He began to patiently explain how government creation of money and cheap credit caused the problem, but the reporter cut him off. Again, the reporter insisted he offer solutions for the problem RIGHT NOW, without explaining the cause of the problem.

This, I submit, is the problem. Until people are willing to invest a little time in understanding economics, they will always be vulnerable to this charade of lurching from false prosperity to crisis. Economics is really not difficult to understand, at the fundamental level; <he who must not be named>'s favorite school of economics, called the Austrian School, is loaded with Nobel Prize winners and features plenty of thick books filled with difficult prose. But at root, the basic principles are not difficult to understand.

A few sentences are all that is required to explain the roots of the current crisis. The government, trying to give the illusion of prosperity, has inflated the money supply. The excess money goes to buying all sorts of products. Producers, seeing their inventories go down, order an increase in production. Financial markets, seeing the increased production and increased sales (in terms of cheap dollars), decide to invest in these companies. New companies, in this environment, spring into being in the form of Initial Public Offerings (IPO's).

No matter where investors put their money, they seem to win. Companies with no track record rise in value, on paper. Large investment firms begin to direct ever-larger amounts of (cheap) cash into whatever makes money, which is just about everything. Housing and stocks, which seem always to go up in price, get the most investment.

This, ladies and gentlemen, is known as a "bubble."

But a bubble can only go on for so long. Because so much phony money and credit has been pumped into the system, prices begin to rise as more and more money chases the same goods. Those who don't earn enough to invest huge amounts in the bubble are particularly hurt as prices of everything start to rise. Eventually, the economy reaches a point where either you let the bubble burst, liquidating bad investments, and allowing prices to plummet, or you keep pumping in more money in a frantic attempt to keep prices high.

The latter is the approach of both major parties. If enough money is pumped into the markets, you can keep the drunken orgy going a little bit longer. During this time, prices will begin to rise even more precipitously. Food prices will double. Gas prices will triple. Soon, the entire lower and middle classes will find it difficult just to buy groceries and fill their gas tanks. They will begin to scream for Washington to DO SOMETHING!

RIGHT NOW!

Not Without Honor Save In His Own Country

I'm sure they were smirking at him then, too.

If Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions.~Ron Paul September 10, 2003!