One former member of the Obama administration left the white house to go to work for the very company selling the infamous "body" scanners to TSA.
Now, this is a perfect way to suck up the Federal government cow in a good old fashion corporatism way (fascism is another word) where people in the government and some key corporations work end to end to help each other.
What happen once this company has sold enough scanners to fill all airports of the country? Let's keep the cash flow coming and focus on other targets: bus stop, train station, highways... which they did.
http://www.infowars.com/privacy-group-sues-big-sis-over-secretive-mobile-body-scanners/
Now, if you listen to that video
at 2;00 minutes into the video, the truck driver said he has been waiting for 30 minutes.
Translation: add an additional delay in transport (higher cost for transport companies) meaning higher shipping cost leading to higher costs of food and everything else. Oh, and let's not forget the higher price induced by the inflation incurred by the money that will be printed to pay for the scanners and the TSA agents operating it.
Thursday, May 26, 2011
Wednesday, May 25, 2011
Public park & libraries?
Everybody assumes librairies cannot be anything else than owned by the city or county. Same applies to park. But as usual, socialists will dismiss entertaining the idea strongly enough to forbid the intellectual journey of walking through what kind of world would that be.
First thing that must be recognized is that any endeavor done by the private sector rather than a public run enterprise is done better by the private sector. Note that in all cases, the publicly administrated organization has special benefits or an outright monopoly (think of the USPS which is protected by law to be the only entity allowed to provide mail delivery. Note that UPS and FedEx does not classify as such - just check the federal law in question).
Libraries could be all done and managed by private corporations that charges for membership and likely more than one such organization is in any city. For sure, the competition among them will make them work hard at adding services that will differentiate them from the rest of the competition. How about the poor? The wealthy usually buy the books brand new, they don't bother about going to the libraries, hence the majority of those who will be served are from the poor and middle class. If those companies wishes to attract them, they will need to offer a price low enough for the membership to account for their ability. The establishment where the libraries are could be owned by the city but managed by private companies, this is another alternative that is somewhat midpoint.
In fact, a few city parks in the world are administrated privately and works much better this way.
To read more on this:
http://reason.com/archives/2010/12/02/making-parks-decent-again
http://www.foxnews.com/opinion/2010/12/02/making-parks-decent/
First thing that must be recognized is that any endeavor done by the private sector rather than a public run enterprise is done better by the private sector. Note that in all cases, the publicly administrated organization has special benefits or an outright monopoly (think of the USPS which is protected by law to be the only entity allowed to provide mail delivery. Note that UPS and FedEx does not classify as such - just check the federal law in question).
Libraries could be all done and managed by private corporations that charges for membership and likely more than one such organization is in any city. For sure, the competition among them will make them work hard at adding services that will differentiate them from the rest of the competition. How about the poor? The wealthy usually buy the books brand new, they don't bother about going to the libraries, hence the majority of those who will be served are from the poor and middle class. If those companies wishes to attract them, they will need to offer a price low enough for the membership to account for their ability. The establishment where the libraries are could be owned by the city but managed by private companies, this is another alternative that is somewhat midpoint.
Central Park in NY. image from City of NY
City parks could still be owned by the city but managed entirely by a private management firm. Such firm would not receive a dime from the city and would not be taxed either on any profit in exchanged for maintaining the park with its primary purpose to serve the public a place to walk, jog, pic nic, with no fee to enter the park. How would they manage to get the money they need to maintain the park you ask? Well, some special food booth or other food court could be allowed by this management firm, again free of taxes, but for which these small restaurants would need to pay a monthly fee to the management firm to be able to operate in the park. You would be surprised how much better such park would be administrated.In fact, a few city parks in the world are administrated privately and works much better this way.
To read more on this:
http://reason.com/archives/2010/12/02/making-parks-decent-again
http://www.foxnews.com/opinion/2010/12/02/making-parks-decent/
Friday, May 6, 2011
A trap for fiscal conservative: the chicago school of economics & Milton Friedman
Say you have 2 systems, one virtues and just (say system A) while the other not so (say system B). If the other system (B) gives tremendous profits to some corporations, which system do you think such corporations will try to promote and keep? This other system B isn't it? ...
Well, it is obvious to me that central banking (which always lead to fiat paper money by the way) provides much more wealth and profits to the banking industry, most specifically those banks controlling such central bank. Consequently, that such banking cartel would do whatever they can to keep such system is easy to imagine.
Central Banking allows government to easily grow, spend and increase their debt, which in turns provides the constant flow of money under the commercial bank's fractional reserve pyramid to keep providing loans to the general public. When such system is initially tied to gold, it will inevitably detach itself from it when more money has been printed than there was gold (as FDR has proven with Executive Order 6102 and again with Nixon in August 1971, so called Nixon Shock).
An economist that is well received by the majority of the people on the left is John Maynard Keynes for which his economic views have been called "Keynesian economics". This calls for the government to start spending in downturn (when the fractional reserve banking inverse pyramid collapse - see my previous post http://eggdescrambler.blogspot.com/2011/05/gold-as-money-are-you-mad.html)
Growing the government, particularly in socialism programs isn't the call that the fiscally conservatives would make and hence, they would turn to another economic view. The Austrian school of economics (promoted by such web site has the Mises Institute http://www.mises.org) would have been a good answer since it asks for small government and free market capitalism. Any government regulations and interventions would be interfering with the free market and will results with more issues. In fact, most issues we see today where the media blames the free market actually happens because of one or more government regulation or intervention. The problem for the banking cartel is that the Austrian school also promotes free market money and banking, where there is no such monopoly of money by a central bank fixing interest rates. Although it is speculations from my part, knowing how much financial impact the banking cartel has on the educational community, I believe they knew a wall had to be mounted to keep the Austrian school in the trench views.
To attract fiscal conservatives away from such economic school, the creation of another economic school still promoting free market in everything but money and still promoting small government and anti-socialism views would be ideal. As long as the central banking scheme is left alone and allowed to print, the system can survive. Here comes, somewhere in the 1950s, the Chicago school of economics, inserting itself right between the Keynesians and the Austrian School. It was given such name because so many of the economists of this school were part of the department of economics of the University of Chicago. Note that although Wikipedia list Frederick Hayek as part of this movement, Hayek was part of the Austrian school of economics and in favor of a hard money/free market money. Milton Friedman is one of the most well known economist part of this school. He is the one who advised Nixon to go off the gold standard in 1971, so much for free market... but it does prove the Chicago school was no enemy of the banking cartel. Ironically, Friedman later mention regretting that call as it allowed the federal government to grow even more. What was he thinking? To his defense, Friedman give several wonderful statements and debates in favor of free market and against socialism of which one of my favorite is the 4 ways to spend money:
So, my point is that I believe the banking cartel probably helped or is the originator of the Chicago school in order to dominate the "alternative" view to the pro-socialism-Keynesian view. If it wasn't there to provide such barrier - or wall - the major alternative would have been the Austrian school of economics with its anti-Central banking view. I think they succeeded since barely today anyone has heard of the Austrian school, even though it is even older than Keynesian economics (which took main root in the 1930s). However, the latest financial debacles of this century's first decade has woken up a growing segment of the population who have decided to educate themselves more on this very fundamental issue of money, credit and central banking. In that process, they have learned about the Austrian school. If you haven't, start your wonderful journey at mises.org. Recommended books are some by Robert P. Murphy, Thomas Woods or Peter Schiff.
Well, it is obvious to me that central banking (which always lead to fiat paper money by the way) provides much more wealth and profits to the banking industry, most specifically those banks controlling such central bank. Consequently, that such banking cartel would do whatever they can to keep such system is easy to imagine.
Central Banking allows government to easily grow, spend and increase their debt, which in turns provides the constant flow of money under the commercial bank's fractional reserve pyramid to keep providing loans to the general public. When such system is initially tied to gold, it will inevitably detach itself from it when more money has been printed than there was gold (as FDR has proven with Executive Order 6102 and again with Nixon in August 1971, so called Nixon Shock).
An economist that is well received by the majority of the people on the left is John Maynard Keynes for which his economic views have been called "Keynesian economics". This calls for the government to start spending in downturn (when the fractional reserve banking inverse pyramid collapse - see my previous post http://eggdescrambler.blogspot.com/2011/05/gold-as-money-are-you-mad.html)
Growing the government, particularly in socialism programs isn't the call that the fiscally conservatives would make and hence, they would turn to another economic view. The Austrian school of economics (promoted by such web site has the Mises Institute http://www.mises.org) would have been a good answer since it asks for small government and free market capitalism. Any government regulations and interventions would be interfering with the free market and will results with more issues. In fact, most issues we see today where the media blames the free market actually happens because of one or more government regulation or intervention. The problem for the banking cartel is that the Austrian school also promotes free market money and banking, where there is no such monopoly of money by a central bank fixing interest rates. Although it is speculations from my part, knowing how much financial impact the banking cartel has on the educational community, I believe they knew a wall had to be mounted to keep the Austrian school in the trench views.
To attract fiscal conservatives away from such economic school, the creation of another economic school still promoting free market in everything but money and still promoting small government and anti-socialism views would be ideal. As long as the central banking scheme is left alone and allowed to print, the system can survive. Here comes, somewhere in the 1950s, the Chicago school of economics, inserting itself right between the Keynesians and the Austrian School. It was given such name because so many of the economists of this school were part of the department of economics of the University of Chicago. Note that although Wikipedia list Frederick Hayek as part of this movement, Hayek was part of the Austrian school of economics and in favor of a hard money/free market money. Milton Friedman is one of the most well known economist part of this school. He is the one who advised Nixon to go off the gold standard in 1971, so much for free market... but it does prove the Chicago school was no enemy of the banking cartel. Ironically, Friedman later mention regretting that call as it allowed the federal government to grow even more. What was he thinking? To his defense, Friedman give several wonderful statements and debates in favor of free market and against socialism of which one of my favorite is the 4 ways to spend money:
So, my point is that I believe the banking cartel probably helped or is the originator of the Chicago school in order to dominate the "alternative" view to the pro-socialism-Keynesian view. If it wasn't there to provide such barrier - or wall - the major alternative would have been the Austrian school of economics with its anti-Central banking view. I think they succeeded since barely today anyone has heard of the Austrian school, even though it is even older than Keynesian economics (which took main root in the 1930s). However, the latest financial debacles of this century's first decade has woken up a growing segment of the population who have decided to educate themselves more on this very fundamental issue of money, credit and central banking. In that process, they have learned about the Austrian school. If you haven't, start your wonderful journey at mises.org. Recommended books are some by Robert P. Murphy, Thomas Woods or Peter Schiff.
Thursday, May 5, 2011
Gold as money? Are you mad?
In the USA and many other countries, we have to go several generations back to find people that actually used both gold and silver coins as money instead of government printed money. This is an important fact to mention as this implies the great majority of today's population look at gold as money from a perspective where they know only about paper money. Several misconception or lack of understanding about money comes from this narrow perspective. In this article, I want to address the most prevalent ones and allow the audience the opportunity to see it from another perspective.
As I stated in another post before, one of the best way to fight the great divide between the rich and the poor is using sound money (concentration of wealth is more acute today than in the past). Government paper money has come in 2 forms in history, either directly printed by the government such as Lincoln's greenback during the American civil war, or via a central bank. By extension, we can include ancient civilizations where their governments (or kings) were debasing their coins with cheaper metals, hence similar to a government directly printing its money (or debasing). Central banking came up for the first time with the Bank of England in the 17th century where a central bank with the monopoly on money prints the money out of thin air and lends it to the government who in turns spends it. This requires the government to pay back the interest on that money, but usually some of that interest is returned to the government. Still, part of that interest flows to the banking corporations owning part of the central bank. Central banking is more subtle and complex but quite more interesting for the bank as we will illustrate in a future post. But in both cases, the poor are the one who will suffer the most as they are the least able to protect themselves from this printing. Essentially, all those government programs to help the poor and some of the middle class are actually paid by the poor and the middle class. When considering the drawback of a monopoly when the government is the sole provider of the service, the overall deal is more a loss than a gain for the poor and nearly all of the middle class.
But let's come back to gold.
If we use gold and silver as money, prices will decline as there is not enough gold. That's bad isn't it!?
It's bad if we are in debt, but good otherwise, as any computer buyers would tell you. Prior to the creation of the Federal Reserve, people were buying houses and cars full cash. It was mainly companies and industries that were getting loans for improving their facilities and increase their productions. Savings was not a losing gain but rather a real pay off since all the technological improvements made everything cheaper - in gold. Any workers would save up 10% or more of their paycheck and then spent it on the car or the house. If they decided to deposit it at a bank and collect interest, the gain was even more - as long as they chose a bank that was making loans to sound companies. Houses build would get even better with even better material with the same price or perhaps even lower price, but since the builders would too enjoy price deflation, they would be able to still make a profit.
If we used gold, it would limit growth in the economy isn't it?
The capacity of the economy is limited by the resources available (human labor and material) to it as well as the new machinery's and tools that can be developed to increase its performance. It would be time consuming initially for Robinson Crusoe, stuck on the island, who needs to knock down coconuts by climbing on each tree until he takes the time to develop some long perch that will help him knock them down from the ground. This applies to an economy as well with new industrial tool and system. That we print more paper money will not change such capacity. If many savers decide to save their gold coins under the bed rather depositing it at the bank to make new loans, such high saving rate hidden from the system would lower the price of everything, making the little amount of gold coins left more valuable for the borrowers (companies) who get them. In essence, the scale is adjusted with the available gold coins in circulation. When the companies increases its output from the new tool/system, more products can come up and those savers might become spenders - buying these new products made in much larger quantities. You suddenly have more products and more gold coins, but it will keep adjusting. The key is the resources available can only vary so much, and a fixed amount of gold, or somewhat increasing via gold mining, will reflect it.
How will governments be able to spend without higher taxes?
I admit, the question is silly, but I've added it to show that it governments would not be able to lie anymore about where the money comes from. Politicians are humans and they love power and it is the very reason they are attracted to politics. To get elected to power or to stay in power requires making and giving promises, spending in favor of a given electoral group. But taxing is not seen favorably by the electors and the amount of taxes required are likely not enough to match the spending. Borrowing is the way they use, but this increases interest rate in an environment with gold as money. The government has to compete with corporations that borrow to improve their manufacturing. More demand, higher interest rate and hence, the government is locked up in higher payments.
One of my favorite: Gold could not be used as money, there is not enough gold
At this current price, that's true. If tomorrow gold was the standard world money (along with any other metal the market would choose), its value would increase to match the true amount of wealth it can be used for exchanges. Note also that its current price is undervalued because of government suppression (see http://www.gata.org/ for more info). Instead of the typical standard family homes selling for about 120 ounces of gold, it would sell for 1 ounce of gold. Likely, we might be talking about grams of gold which is a smaller unit. Basically, the market will naturally adjust its value to match the need of the market, with supply and demand.
Why is paper money more bad for the poor and the middle class?
I don't want to mean all of the middle class, but a large majority of them. In essence, the middle class would be in a better position if not for paper money, even though most would disagree with this statement. To illustrate the reason, we have to understand how the money flow. When money is printed, it will lose value but this devaluing is not shown equally across the board. The monetary system we have today creates paper money out of thin air via 2 ways:
This means the very first class of goods and services that this new money from commercial bank affect are the asset class: stocks, bonds and real estate. If the interest rate is lowered too much, it allows easy lending and hence, a runaway bubble leading to a market crash (think late 1920s after the low interest rate allowed for investors to borrom money to buy stocks - or early 2000s for real estate).
Wouldbe homeowners bid up prices as the interest rates are artificially lowered down. Too many are required to take ever increasing loans to afford a house,... until the bubble burst.
The same as when the soviet unions had politburos figuring out how much of toothpaste or carrots had to be produced rather than letting the free market decide, the same applies to interest rate which is the rent on money. It inevitably leads to misallocation.
I will add more points if I read comments with other questions that require so.
Other interesting articles:
http://www.gata.org/node/9885
Thanks for reading.
Take care
As I stated in another post before, one of the best way to fight the great divide between the rich and the poor is using sound money (concentration of wealth is more acute today than in the past). Government paper money has come in 2 forms in history, either directly printed by the government such as Lincoln's greenback during the American civil war, or via a central bank. By extension, we can include ancient civilizations where their governments (or kings) were debasing their coins with cheaper metals, hence similar to a government directly printing its money (or debasing). Central banking came up for the first time with the Bank of England in the 17th century where a central bank with the monopoly on money prints the money out of thin air and lends it to the government who in turns spends it. This requires the government to pay back the interest on that money, but usually some of that interest is returned to the government. Still, part of that interest flows to the banking corporations owning part of the central bank. Central banking is more subtle and complex but quite more interesting for the bank as we will illustrate in a future post. But in both cases, the poor are the one who will suffer the most as they are the least able to protect themselves from this printing. Essentially, all those government programs to help the poor and some of the middle class are actually paid by the poor and the middle class. When considering the drawback of a monopoly when the government is the sole provider of the service, the overall deal is more a loss than a gain for the poor and nearly all of the middle class.
But let's come back to gold.
If we use gold and silver as money, prices will decline as there is not enough gold. That's bad isn't it!?
It's bad if we are in debt, but good otherwise, as any computer buyers would tell you. Prior to the creation of the Federal Reserve, people were buying houses and cars full cash. It was mainly companies and industries that were getting loans for improving their facilities and increase their productions. Savings was not a losing gain but rather a real pay off since all the technological improvements made everything cheaper - in gold. Any workers would save up 10% or more of their paycheck and then spent it on the car or the house. If they decided to deposit it at a bank and collect interest, the gain was even more - as long as they chose a bank that was making loans to sound companies. Houses build would get even better with even better material with the same price or perhaps even lower price, but since the builders would too enjoy price deflation, they would be able to still make a profit.
If we used gold, it would limit growth in the economy isn't it?
The capacity of the economy is limited by the resources available (human labor and material) to it as well as the new machinery's and tools that can be developed to increase its performance. It would be time consuming initially for Robinson Crusoe, stuck on the island, who needs to knock down coconuts by climbing on each tree until he takes the time to develop some long perch that will help him knock them down from the ground. This applies to an economy as well with new industrial tool and system. That we print more paper money will not change such capacity. If many savers decide to save their gold coins under the bed rather depositing it at the bank to make new loans, such high saving rate hidden from the system would lower the price of everything, making the little amount of gold coins left more valuable for the borrowers (companies) who get them. In essence, the scale is adjusted with the available gold coins in circulation. When the companies increases its output from the new tool/system, more products can come up and those savers might become spenders - buying these new products made in much larger quantities. You suddenly have more products and more gold coins, but it will keep adjusting. The key is the resources available can only vary so much, and a fixed amount of gold, or somewhat increasing via gold mining, will reflect it.
How will governments be able to spend without higher taxes?
I admit, the question is silly, but I've added it to show that it governments would not be able to lie anymore about where the money comes from. Politicians are humans and they love power and it is the very reason they are attracted to politics. To get elected to power or to stay in power requires making and giving promises, spending in favor of a given electoral group. But taxing is not seen favorably by the electors and the amount of taxes required are likely not enough to match the spending. Borrowing is the way they use, but this increases interest rate in an environment with gold as money. The government has to compete with corporations that borrow to improve their manufacturing. More demand, higher interest rate and hence, the government is locked up in higher payments.
One of my favorite: Gold could not be used as money, there is not enough gold
At this current price, that's true. If tomorrow gold was the standard world money (along with any other metal the market would choose), its value would increase to match the true amount of wealth it can be used for exchanges. Note also that its current price is undervalued because of government suppression (see http://www.gata.org/ for more info). Instead of the typical standard family homes selling for about 120 ounces of gold, it would sell for 1 ounce of gold. Likely, we might be talking about grams of gold which is a smaller unit. Basically, the market will naturally adjust its value to match the need of the market, with supply and demand.
Why is paper money more bad for the poor and the middle class?
I don't want to mean all of the middle class, but a large majority of them. In essence, the middle class would be in a better position if not for paper money, even though most would disagree with this statement. To illustrate the reason, we have to understand how the money flow. When money is printed, it will lose value but this devaluing is not shown equally across the board. The monetary system we have today creates paper money out of thin air via 2 ways:
- Commercial banks when they print money via fractional reserve banking on a new loan for either a business or an individual.
- The central bank when it buys treasury bonds from the federal government.
This means the very first class of goods and services that this new money from commercial bank affect are the asset class: stocks, bonds and real estate. If the interest rate is lowered too much, it allows easy lending and hence, a runaway bubble leading to a market crash (think late 1920s after the low interest rate allowed for investors to borrom money to buy stocks - or early 2000s for real estate).
Wouldbe homeowners bid up prices as the interest rates are artificially lowered down. Too many are required to take ever increasing loans to afford a house,... until the bubble burst.
The same as when the soviet unions had politburos figuring out how much of toothpaste or carrots had to be produced rather than letting the free market decide, the same applies to interest rate which is the rent on money. It inevitably leads to misallocation.
I will add more points if I read comments with other questions that require so.
Other interesting articles:
http://www.gata.org/node/9885
Thanks for reading.
Take care
Sunday, May 1, 2011
My next 2 posts
Sorry for the delay in my weekly post, I haven't finished it yet.
To give you a heads up, one of my next 2 posts will be about gold as money and the other one about the US constitution as an inspiration for a new Canadian constitution that many of the provinces - in particular Quebec - might like very much, at least some part of it.
To give you a heads up, one of my next 2 posts will be about gold as money and the other one about the US constitution as an inspiration for a new Canadian constitution that many of the provinces - in particular Quebec - might like very much, at least some part of it.
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