The Ultimate Minority

In my previous entry, for which this follow-up entry is long overdue, I cited government intervention in free markets in the form of war, sanctions, imperialism, and mercantilistic policies as a primary cause for our current woes at the pump.  Today, I’d like to address the other primary cause:  How inflation affects gasoline prices.

As a first step, it is important that we do not improperly associate the word inflation with rising prices.  In today’s terminology, it is commonly accepted that inflation is a rise in prices.  This is incorrect.  Rising prices are the result of inflation.  Inflation is an increase in the money supply.  This conflation of terms is intentional, as the government and its unconstitutional central bank, the Federal Reserve, seek to shift blame from their wealth-extracting policy of inflation to the marketplace.  When the money supply is increased, it devalues the currency as more dollars are competing for the supply of goods available in exchange.  To understand why the government inflates the money supply, I’d recommend a reading of my entries titled What is Money? and Fiat Money.

When the government inflates the money supply, it issues new bills of credit to finance its operations.  This is debt.  This newly created money is then funneled to politically connected special interests, such as the Military Industrial Complex, and is used to fund government intervention to support corporatism, for example, supporting “Big Oil” through the manipulation of foreign governments in oil producing countries and subsidization of military dictatorships that will bow to the empire.

When a fiat money is accepted in world markets as a standard and reliable currency, other nations are willing to accept that money in exchange for their goods and services.  They are not acquiring real wealth, such as they would if they were exchanging their oil for gold;  they are accepting debt paper.  This ability to exchange debt instruments for real goods is known as exporting inflation.  Foreign governments are now holding US debt in exchange for oil.

This chart is the key (click on it or; source:  inflationdata.com):  It shows how the US government has successfully exported inflation since 1981 to drive down the cost of gasoline at the pump.  Oil producing countries accepted more debt and provided oil in exchange, artificially reducing the cost of their product for two decades.  Americans enjoyed cheap gasoline over this time period, as is reflected in our usage habits:  We shifted from vehicles of high fuel economy to large SUVs and bigger cars because gasoline was inexpensive, but we were doing it with a national credit card.  The chickens have come home to roost, as the saying goes, and now it’s time to pay for it.

At some point, this privilege of being able to print money in exchange for real goods is bound to fail.  The rest of the world is only willing to take on so much debt, and when they see their largest debtor running up a bigger balance and financing its operations with exponential deficits year in and year out, they begin to shift their desire to accept more paper.  We can see this in the world oil markets, where many of the oil producing countries are no longer pricing their product in dollars, but have instead shifted to pricing in euros (another fiat currency produced by the European Union.)  As of today, it will cost you $1.59 to buy one Euro.

This exporting of inflation led to a shift in markets that would not have occurred had we been paying for oil with real money (gold) all of this time.  Consumer preferences for large, fuel-thirsty vehicles may have never come about, or perhaps demand for more fuel-efficient vehicles (both larger and smaller) may have created innovation in fuel economy.

Central banking creates booms and busts.  What we are witnessing here is a gasoline boom, followed by the inevitable bust.  Don’t be angry at oil companies, they are only taking advantage of what your government has bestowed upon them.  The government and its central bank are to blame.

In January, 2007, Rep. Charlie Rangel (D) of New York introduced H.R. 393; The Universal National Service Act of 2007. This bill would make mandatory national service for everyone 18-42 years old. It is a draft, both for military and “peaceful” purposes.

As the story goes, Rangel introduced the bill as a strong arm tactic to force Bush to get out of Iraq because, according to his logic, people will oppose the war if it looks like we’re going to draft anyone and everyone to fight. Good ol’ Charlie didn’t really want a draft or national service, but he was trying to “make a point.”

Now, we have Time Magazine and a number of “leadership” organizations pushing the national service agenda, and they will invite both major party candidates to a summit on the issue, as both are strong advocates of “service.”

Mandatory service is nothing more than slavery.  It denies the right to self ownership, the right of each individual to choose what he will do with his labor.  And it is a precursor to a fully militarized nation, an empire run by a few employing the services of the many.

This socialist agenda is being pushed on the nationalistic premise that the state comes before the individual, that the needs of the whole are more important than the selfish aspirations of the individual.  It is New Deal II; it is state worship.

It is also the next step in giving government full control over the economy.  The dynamics of the free market are to be replaced by central planning, giant public works projects, and government funding of everything.

It was introduced to get a feel for public reaction, and it was met with apathy.  The waters have been tested, now it’s time to move forward with full advocacy.  It’ll be sold on the public with visions of national greatness, platitudes on the virtue of service, and promise of jobs and education grants.  Free stuff from the government for all, and all you need to do is “serve.”  Service is virtuous.

It won’t be voluntary, it will be mandatory.  Those who resist will be labeled unpatriotic, traitors, perhaps even terrorists, and will be jailed.  Thoreau suggested that it is better to let the government try and jail us all rather than to support its totalitarian actions.  If involuntary servitude is enacted under the guise of “service,” then the time to resist is upon us.

It is often said that we don’t know we’re in an economic recession until we’re two years into it. That is because there are many statistics that signal a recession, not all acting in harmony, and the statistics are twisted and debated until finally, no one can deny it.

But when the mass media and the government are finally admitting it, you can be assured that it is upon us. The words depression, recession, slowdown, downturn, etc. have made the headlines recently. It should be noted that all of these words mean the same thing, it’s just that they fall out of favor as time passes. The Bureau of Euphemisms is always hard at work, softening terminology to divert blame from the government and its disastrous manipulation of the market. Lew Rockwell tells the story of Alfred Kahn, an economist in the Carter administration, who was taken to the woodshed by the president for using the word “depression,” so when speaking to the media, he advised that he was forbidden to use that word and would instead use the word “banana.” He then stated that “we are in a banana.”

Despite propaganda to the contrary, depression is not an inherent property of a free market economy. Yes, there is variation in markets – at any given time, some businesses, and to some degree sectors of industry, are doing better and some are doing worse. But on the whole, the system stays relatively stable. Depression is created by government manipulation of the economy.  The fraudulent scheme to print money with no value other than government decree inflates the money supply and devalues the currency.  But more importantly, the power to manipulate interest rates distorts the temporal pattern of savings and investment in the market, causing large-scale entrepreneurial error across the entire economy.  Periods of over-investment (booms) are always followed by liquidation of both bad and good investment (busts.)  In a free market economy, absent central bank manipulation, the pattern of savings, investment, and consumption is a self-regulating system.

With its tools of monetary inflation, regulation, and interest rate manipulation, government can disturb and distort the market, but it cannot repeal economic law.  The market is resilient and adaptive, it can deal with perturbations, but ultimately it will cleanse itself of all the bad investment, and the bust will be inevitable.  It will recover despite government because individuals will change their pattern of behavior.

People will stop spending on things they don’t need.  They’ll reduce consumption and stop taking on new debt, despite government urging to consume, consume, consume.  They’ll cut back on travel, they’ll work harder, picking up second jobs if necessary (or possible) to keep up with expenses.  They’ll save money by doing things themselves;  changing their own oil in their car, mowing their own lawn, starting their own garden to save on groceries.

Murray Rothbard taught us to understand this correctly – when we take all the actions to cut back consumption, we turn back the dial of economic progress.  By doing things ourselves, we begin to roll back the division of labor, the hallmark of the free market economy.

Ultimately, the market will recover.  The duration and depth of the recession are determined by the amount of government intervention – both in the intervention leading to the bust and the intervention during the downturn in a futile effort to stave off its effects.

Please understand:  The boom/bust cycle is not inevitable.  It is not an accident.  It is not the result of mistakes made by well-meaning bureaucrats who miscalculated.  It is the result of intentional action of the government and its central bank.  It is the result of a system designed to produce immense profits for the banking sector, and to promise to cover any losses they have from bad business decisions with taxpayer money.  It fuels the growth of government, and facilitates a redistribution of wealth from the people to Wall Street bankers, who will confiscate real property when the rest of us lose our shirts.

For all of this, we should be angry about depression, and our anger should be directed at those who cause it and profit from it.  Your targets are the US government and its central bank, the Federal Reserve System.  Don’t look to the government to bail us out of a depression, they caused it!  And anything they do to try and reverse it will only make it last longer, and run deeper.  Don’t let them blame the market and businessmen again, they do it every time.  Study, understand, and point the finger where it belongs.  This illegitimate, unconstitutional government and its central bank are the source of all our woes.

For the reader who desires to better understand the boom/bust cycle, I recommend a study of Austrian Business Cycle Theory.  The Mises.org site is a veritable treasure chest of information, and a good introductory article may be found here.

The terrorist “watch list” is now over a million names long.  This is your government’s list of people to watch, in the name of protecting you.  With 300 million people in the US, this means that the government has deemed one of every three hundred people a potential danger.

Government watch lists are always justified in the interest of protecting the people, but always turn out to be lists that target the people.  Ultimately, they are lists of the enemies of government itself, as the government begins to view the people as a threat to its authority.  See also the Violent Radicalization and Homegrown Terrorism Prevention Act, a piece of legislation passed in the House that will specifically target free speech on the Internet as a potential threat to government.

How far will it go before the people say enough is enough?  Frankly, it doesn’t look good.  It appears as though the populace is willing to trade any amount of liberty for safety, despite being advised against it by the founders.  Of course, these are “different times” we live in…

If you’re one of the 1 in 300 people on the terrorist watch list, the first thing you can expect is to encounter a lot of difficulty should you choose to travel by air.  And even if you’re not on the list, they’re dreaming up a new bracelet for you to wear if you want to travel by air, stepping up the attack on your right to travel unencumbered a notch.  This bracelet will not only keep all of your personal information and make you trackable wherever you go, it will contain a stun feature that will knock you out – that’s right – render you unconscious at the push of a button.

Note that “terrorism expert” Neil Livingstone cited in the Raw Story article advises us that flying is not a right, it’s a privilege.  This is the method of the state, to claim that rights are not inherent in the individual, but are granted to us by the government in the form of privileges.

This is the exact opposite of the American System, as designed.  The people have rights that precede government, rights we understand to be self-evident.  Government establishes nor grants any rights to the people.  The people are sovereign.  The people established the government, and granted the government limited powers to protect their rights, not to grant them privileges.

All of this does not bode well for the future of the airline industry.  Personally, my interest in flying is diminishing with every new encroachment on my liberty.  Maybe ten hours in the car won’t be so bad after all.

Notwithstanding the fact that the Federal Reserve System (the US Government’s unconstitutional central bank) destroys wealth through the inflation tax, it is the enabler of empire and the warmongering aspirations of the imperial government.

Consider this:  Without the ability to create money out of thin air, a government must finance a war via taxation.  The cost of the Iraq adventure is now at about $20,000 per US household.  If George W. Bush and the lapdog congress had to appeal to the American people to pony up $20K each for this war, how many do you think would have willingly opened their pocketbook?

Of course, government regularly forces taxation on the people without their approval, but there is a practical limit to how much they will take.  It brings about revolution when it goes too far – a scenario government would prefer to avoid.

The Federal Reserve is the engine that runs the Military Industrial Complex.  Billions of “off budget” dollars are funneled to the favored manufacturers of the war machine, and their powerful lobby that pushes our government toward intervention.

A nation should be at peace by default.  War should be conducted only when necessary and just to respond to an attack, or to prepare for an eminent attack.  And when you fight a war, as we did in the American Revolution, it should break the bank.  It should drain all the nations resources, and everyone should feel the pain.  War should be painful and taxing.

Instead, war with fiat money, courtesy of the Federal Reserve, seems painless to the masses who willingly follow government propaganda.  We don’t feel its effects until years later, and when we do the government can blame it on everything but government.  Market failures, greedy capitalists, “irrational exuberance,” and (currently) speculators are blamed for all our woes.

War is funded with inflation.  Inflation must always be paid for with recession.  It is inevitable that we should experience financial crisis as a result of our current military adventurism in Iraq.

Without the ability to fund wars with printed money, government would be “chained down” by the constraints that Thomas Jefferson envisioned.

The more I study the dynamics of US interventionism and imperialism in the middle east, the more I understand: Israel is evil.

This is to say nothing of the Israeli people, and has nothing to do with anti-semitism. As an individualist, I do not view people simply as members of groups, so this is not an entry about Jews. It is about the state of Israel, its government. One should make clear the distinction because it is both incorrect and unjust to characterize a people based on the actions of their government.

The Israeli government is a client state to the empire, and it is the tail that wags the dog. AIPAC, the American Israel Public Affairs Committee, is by far and large the most powerful foreign policy lobby in Washington, rivaling even the AARP and the NRA in its influence – and you’re paying for it.

Even though Israel ranks as the sixteenth most wealthy nation in the world, the US Government sends billions annually in foreign aid and military weaponry, courtesy of the American taxpayer. Fully one-third of all unconstitutional US foreign aid goes to the state of Israel. And what do we get in return?

The Israeli government uses the money to spy on us, and pushes our government to use its military machine to fight their wars. And for all of this, our government officials pledge the lives of Americans to “protect” Israel for centuries to come, the epitome of an “entangling alliance” that Jefferson and Washington warned us about.

There is substantial evidence that Israeli spies had information that may have prevented the 9/11 attacks, but did not share the information with US intelligence agencies. Israel is pushing hard for a US-led war against Iran, supplying fraudulent information in the form of “smoking laptops” to make the case for war. Israel demands that Iran – a signatory to the Nonproliferation Treaty – does not have the right to pursue peaceful use of nuclear research while they, a non-participant in the NPT, possess hundreds of nuclear weapons.

The state of Israel is a creation of western governments, displacing others from their homeland. And where Israel was once viewed as acting defensively in the face of hostility directed toward them, it is clear that they have for decades been an aggressive force in the region.

As Michael Scheuer said, the nation of Israel is not worth the life of one American, and John McCain doesn’t have any authority to pledge the lives of Americans to protect it.

I like the libertarian principle of non-aggression. What it says, essentially, is live and let live. Don’t commit aggression against another’s person or property – and this is key – don’t use the force of government to commit aggression in your name. A great introduction to the principle of non-aggression can be found in Chapter 1 of Dr. Mary Ruwart’s book Healing our World, available for free online.

In my college years, I used to work nights as a bar bouncer to help keep up with school and living expenses. We bouncers had a term for the guys who came in to the bar, got drunk, and caused trouble – we called it “Budweiser muscle.” Through careful study of behavior over the years, I learned that the guys who got aggressive, those who talked the biggest talk and stirred up the most trouble were the weakest. They were always eager to get others involved in their fight.

I see the same dynamic at work with those who zealously support government and its aggressive wars. They tend to be belligerent nationalists, buying into the war propaganda and talking tough while their government is off killing people.  They allow the government and the media to dehumanize the individuals who are the target of government aggression, so they don’t think twice about their killing.

There is a difference between one who is fit for freedom, as Eric Hoffer said, and one who is not. Those unfit for freedom do not have respect for the rights of others, and will use aggressive force (whether by themselves or through their government) to infringe upon others. Those fit for freedom understand and practice live and let live where there are differences.

The US is the most powerful nation in the history of earth, and our government is the playground bully menacing the small and weak all over the world.  Third-rate nations with no capacity to threaten the United States are portrayed as dangerous and a threat to the US, to justify an attack upon them.

Government attracts people unfit for freedom to its ranks, people who do not respect the individual rights of others and will use the force of government to push their beliefs on others, even if it means “cracking a few eggs to make an omelet” – killing off a few for the “better” of the whole.  They impose their ambitions on their own constituents with some restriction, just enough to keep themselves in office – but they impose their ambitions on people of other lands with wanton disregard for human liberty and aggression on a massive scale.

Being a government employee does not give one the right to commit acts of aggression against sovereign individuals, it doesn’t matter whether you’re just “following orders” or not. The simple fact is that those in military service are not protecting our freedom as the propaganda cries, but instead are carrying out the misdeeds of a murderous, imperialistic lot of criminals in government.

I believe in peaceful interaction with others, following the doctrine of win/win or no play. If two parties engage in mutually beneficial exchange, it’s a win/win relationship. If they’re just too different from one another, live and let live – go separate ways, no play. But when one party commits an act of aggression against another, I believe in responding to that aggression with a greater degree of force than that posed by the aggressor.

There is nothing inherently wrong with a position of strength, in fact, the best way to keep aggression away is to boldly and confidently portray strength, to be used in self-defense.  But if you’re using your great strength as an aggressor, those subject to aggression will retaliate.  A terrorist attack is just such a retaliation.  As long as the US Government is manipulating, controlling, and killing people around the world, expect more hatred toward the US, and more terrorist attacks as a result.

Neocon columnist / TV talking head Michelle Malkin is insane. Not only is she insane, she is a dangerous propagandist.

She recently railed against Rachael Ray, the foodie, for wearing a scarf in a Dunkin’ Donuts commercial that she claims supports jihadists because of its checkered pattern. In a disgraceful act of kowtowing, Dunkin’ Donuts is pulling the ad. See the writeup at Antiwar.com here.

This reminds me of McCarthyism in the 40s and 50s, promoting constant fear among the populace by looking for bogeymen around every corner, perpetuating the government’s expansion and assault on freedom. This is what the mainstream media is selling us.

Terr’ists! Let’s Hang Em!

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I don’t mean here, specifically, at Ultimate Minority – but here, in your web browser.

There was a time when if you said you read something on the Internet, it was scoffed at. Even today, it’s a knee-jerk reaction by those indoctrinated into the mainstream media as the source of all that is going on in the world.

Television news, radio and newspapers are dinosaurs on their way to extinction, at least in their current form. They no longer do their job, posing the tough questions and exposing government wrongdoings. Instead, todays mainstream media is nothing more than than a government propaganda horn and a source of sick, twisted entertainment posing as “news.”

We should be offended when Britney Spears, Paris Hilton, and American Idol get big coverage on the TV news, and then a five-second note is thrown in that five soldiers were killed in Iraq yesterday. We should be outraged that Pentagon war propagandists are briefed by the war department, then paraded on TV news as expert analysts.

The very fabric of our society is destroyed by the nightly Murder and Mayhem Report broadcast into our homes. Murder, rape, and pillage have always been exceptional events in any populace, but now they’re happening every day, every minute, everywhere because they’re in your living room. People are afraid to let their kids go out and play, because their reality is shaped by what happened thousands of miles away. Bad things have always happened, the world will never be 100% safe, but the risks of living life seem so much more extreme when we’re bombarded with the images every evening.

The Internet is the free media today. Do some research and find sites that give you the news you’re looking for. If you want real information about war, visit antiwar.com where you’ll find some of the world’s top war correspondents addressing the real issues and exposing the truth. These are seasoned veteran reporters who have a difficult time telling the real story in the mainstream media.

You can listen to streaming audio of radio shows hosted by true patriots – those committed to the ideas of freedom, liberty, and the constitution like Charles Goyette, Scott Horton, and Michael Badnarik – not establishment mouthpieces like Sean Hannity and Rush Limbaugh.

Yes, there are a ton of different opinions and perspectives on the Internet – how do you know who to believe? That is the essence of news and opinion! They should be many and varied, and you should read discriminately. Check more sources! This is how you find opinions that represent your own perspective, and continually challenge them. There’s not a dimes worth of difference between the opinions dished out in the mainstream media, so it is intellectually lazy to lap up the slop they’re feeding.

Government regulation of the media through the FCC, under the guise of protecting us, has destroyed the free media. Huge conglomerates control the broadcast outlets, many owned by the same companies that build tanks and bombs for the governments wars.

The Internet has emerged as the new media, the only true free market of ideas. Watch for government to try and gain control over the Internet as a media source, and mind you, it’ll all be done in the name of protecting you, such as the fascist Net Neutrality push that already has a ton of netizens duped into thinking it’ll “protect” them from paying more, or any legislation aimed at protecting our children. Fight government control, know your sources, and turn off the idiot box.

Everyone should have a basic understanding of economics – it is the most vital school of social theory. Those ignorant of economic principle are easily duped and manipulated by politicians and demagogues (or do I repeat myself?)

As an MBA, I have several years of economics in my educational background. It was a topic of interest for me in the early years. We started with “micro” economics, learning the basic principles of supply and demand – not bad stuff. But after a cursory study of these principles, we quickly moved into “macro” economics. At this point, the study became much more abstract and mathematical. I remember sitting by a pool in Memphis, studying my econ text, trying dutifully to understand exactly how government deficit spending benefited the economy. I never did get it.

It turns out, there was a reason I never got it – it’s all crap.

If there was one good thing I learned from graduate school, it was that I had a lot to learn after finishing it. As Dr. Deming said, business schools do not teach proper theory, they teach the status quo – they teach the perpetuation of our decline.

See, it turns out that there are two major schools of economics – free market (Austrian) economics, and socialist (Keynesian) economics. If I had to sum them up for you in brief, it would go like this:

In the early years of economic thought, governments and economists were always at odds. Economists told governments no all to often; no, taxes are bad. No, deficit spending is bad. No, debt is not good for the economy. No, central banking is not a good idea. No, central planning does not work… Along came John Maynard Keynes, and suddenly governments not only no longer shunned economists, they hired and subsidized hordes of them. These economists advised that taxes were good, deficit spending stimulates the economy, central banking smooths the problems inherent in free markets, and central economic planning is valid and necessary.

It is important to understand that Keynesian economics did not displace the classical, Austrian school of economics by disproving anything the classical school held – it simply moved into a position of style and acceptance. When academics receive funding from government, it is beneficial to promote the school that the government wishes to advance.

One of the great failures of the Keynesian paradigm is in its view of the business cycle. We all hear about economic booms and busts (aka recessions, depressions, slowdowns, etc.) In Keynesian theory, booms and busts are inherent flaws in the market, and government economists, bankers, and central planners all have a role in smoothing the business cycle to protect us from the “excesses” of the free market.

Interestingly enough, the business cycle is created by central economic planning, manipulation of the money supply, and government spending. It all started to turn around when the Keynesians could not explain stagflation, a concurrent rise in unemployment and price inflation. Austrian Business Cycle Theory was able to provide a clear explanation – it all had to do with manipulation of, and intervention in the market by government. Yes, there is variation in a free market economy. Sometimes things are up, sometimes they are down. But the variation tends to be more local, more industry specific, while the economy as a whole maintains relative stability. Only through government manipulation (via central banking, primarily) does an entire economy make mass movements from boom to bust.

A core tenet of the American System, as established, is that central planning does not work. Free people engaging in voluntary exchange create markets and build wealth. Those who would seek government positions do not believe in free markets, they believe in central planning and control. It is only natural that they would support an anti-free market, pro-government school of economics. It is time that we reject socialist economics and all of its falsehoods, and educate ourselves on the virtues of economic freedom.

If you find yourself – or have found yourself – wanting to understand economics, and especially if you were turned off to the study from what you read, I recommend that you immerse yourself in the Austrian school. It’s non-mathematical and intuitive. You can get a ton of free media at the Mises Institute web site.