"Quote of the Week: 08.31.2009"

To Ronny ben David on Facebook, about two minutes ago:

"..economics is a lost academic discipline with a bad case of physics-envy..."

"A Bushism pops up in Obamanopoly"

I came across an article by a staff writer for the Washington Post. Here's an excerpt:



"The Obama administration will largely preserve Bush-era procedures allowing the government to search -- without suspicion of wrongdoing -- the contents of a traveler's laptop computer, cellphone or other electronic device, although officials said new policies would expand oversight of such inspections.



The policy, disclosed Thursday in a pair of Department of Homeland Security directives, describes more fully than did the Bush administration the procedures by which travelers' laptops, iPods, cameras and other digital devices can be searched and seized when they cross a U.S. border. And it sets time limits for completing searches.



But representatives of civil liberties and travelers groups say they see little substantive difference between the Bush-era policy, which prompted controversy, and this one.



"It's a disappointing ratification of the suspicionless search policy put in place by the Bush administration," said Catherine Crump, staff attorney for the American Civil Liberties Union. "It provides a lot of procedural safeguards, but it doesn't deal with the fundamental problem, which is that under the policy, government officials are free to search people's laptops and cellphones for any reason whatsoever."



Homeland Security Secretary Janet Napolitano yesterday framed the new policy as an enhancement of oversight. "Keeping Americans safe in an increasingly digital world depends on our ability to lawfully screen materials entering the United States," she said in a statement. "The new directives announced today strike the balance between respecting the civil liberties and privacy of all travelers while ensuring DHS can take the lawful actions necessary to secure our borders."



Why do we keep pretending last year's election meant a change in political climate?

"What is Libertarianism?"

Libertarianism is an ethical philosophy that holds to the non-aggression axiom.

When libertarianism is applied to the realm of politics, it maintains that the role of government should be strictly limited to the protection of the life, liberty and property of people (individuals and collections of individuals), although other libertarians like Murray N. Rothbard would later go on and argue that any form of government action is inherently coercive.

"AIG"

It's going through the roof. As of 12:13 P.M., ET, it's up almost 35% to 48.63!

Short the hell out of this bad bitch, its going down soon.

"Update, 9/25 + Commentary of the Day"

Bubbles.

As for today's subject of the day: the Federal Reserve and the bubbles it creates.

Original, I know.

Ben Bernanke was renominated as Chairman of the Board of Governors of the Federal Reserve Banking System. Economists like Professor Mankiw of Harvard and other famous and well-respected leaders in the field have applauded President Obama's decision, citing his decisive tactics at the helm of the Fed as a reason for preventing an economic armageddon. The odds of Congress not confirming him are far, and frankly, it really doesn't make a difference who's managing the Federal Reserve, the tools, the job description, the undelegated authority, it's still there; all of it is retained regardless of who's hand is priming the pump. I suspect there will be some fiercer opposition coming from a few select Senators and House members than what many speculate he will receive, especially since Congressman Ron Paul is no longer the lone wolf on Capitol Hill.

The talking points, the pro's and con's on the current Chairman are the following:

Pro's:

- "The academic and financial community view his management of the Fed & the crisis with shining approval."

I would dispute that we are even out of the recession as of yet, and that he has driven us in between a sharp dagger and a waterfall. In order for the Federal Reserve to start raising interest rates, that would involve a lot of the securities that banks have in their holdings to be pulled back out. This might send financial giants back into a tail spin. However, lowering interest rates anymore is starting to get unfeasible even for Ben Bernanke and the Board of Governors, otherwise they would have went ahead and done it. They understand and are fully aware of the looming threat of the "I"-word. Lower interest rates than they are now would further add to an inflationary bubble in a not so distant horizon. This is not just a farfetch'd position being chanted by gloom & doom prophets like Marc Faber and Peter Schiff, or the lot of Austrian School economists, but by all start economists as well like Martin Feldstein who wrote on op-ed on the matter for the Huffington Post not long ago, an established, self-titled, progressive online news outlet.

- "Bernanke's academic studies into the Great Depression, gives him the intellectual ammunition in dealing with the current-day woes and maladies of the economic crisis."

His dissertation was based on three loosely linked essays that dealt with the short-run microeconomic implications of credit cycles and their macroeconomic effects on the long-run business cycle. I read through some of it, but I understood very little of the mathematical operations that were in it. In a nutshell, the core of it basically "proved" the central thesis of Milton Friedman and Anna Schwartz; that being that the Federal Reserve was indeed responsible for the Great Depression by raising interest rates precisely when they should have been lowered to allow an influx of liquidity into the economy. In plain English, the Federal Reserve's tight monetary policy brought about a massive contraction in the money supply that in turn facilitated the economic downturn by constraining the flow of money and credit, and that if only the blunt chairman at the time had lowered the money levies, all of the economic actors would have continued their projects and the whole catastrophic business cycle would have been averted. This is a decent articulation for the intellectual layman. It's also the explanation that that most misinformed right-wing "free-market" conservatives like Larry Kudlow adhere to, and the misinformed self-described political Left like Naomi Klein, Michael Moore, Noam Chomsky and Howard Zinn feel is responsible for the "free-market" zealotry that continues to mislead the American public, as to who the actual inglorious bastards, the true capitalist whores that became greedier, and then screwed the working man.

(And these are the people that are called capitalists? None of these people know what capitalism is, right?)

Con's - I'd argue there are plenty more here, but alright, we're keeping it mainstream and objective from now on.
* His approach of pumping liquidity into the economy is merely storing up inflation for the future.

Absolutely true, and although he has repeatedly stated that he isn't worried about inflation is because he follows the standard economic definition of inflation that every undergraduate student learns in his economics 101 class:

"Inflation is a rise in the general level of prices of goods and services in an economy over a period of time."

However, this definition does not provide an actual explanation as to what inflation is, it merely provides a description for some unknown phenomena, a syndrome of some sort. It's like describing a cancer patient with cancerous tumor as a mass of replicating cells. I'll quote chief economist of Mann Financial and adjunct faculty member, Frank Shostak here:

"...similarly, the essence of inflation is not a general rise in prices but an increase in the supply of money, which in turns sets in motion a general increase in the prices of goods and services..."

The implications that arise from defining inflation as the mainstream does leads to a resulting mischaracterization of what inflation actually is, and as consequence, anything that leads to a rise in prices is immediately categorized as inflationary. For example, a rise in foreign oil prices or underperfoming potential GDP. Further, it removes the central banking authority as having any direct causal relationship to inflation, when the reality is that all central banks are inflationary machines, by default.

* He has not been been transparent with 2.2. trillion of TARP funds or been held accountable for his monetization of private institutions to the US public or Congress about trillions of other dollars of Fed loans to other central banks in the form of "credit swaps". This is mainly the premise by which a bipartisan coalition to sponsor Federal Reserve transparency has cultivated itself in Congress. Sound legislation has brought ideological counterparts like Congressmen Dennis Kucinich, Ron Paul, Alan Grayson, Scott Garrett, Walter Jones in the House and by Bernie Sanders and Jim DeMint in the Senate, to work together, despite with various different intentions and coming from a variety of philosophical and economic angles. They have been met with such success that the majority of the House is now sponsoring the bill, and more than a handful of the Senate as well. Other liberty-minded organizations like C4L and Audit the Fed have been campaigning heavily in support for such bills, in spite of recent mainstream objections.

* "His role in loose monetary policies and the failure to regulate the sub-prime sector helped cause the crisis."

I'm not at liberty to position this site into a conspiratorial direction. Personally, Bernanke really didn't have anything to do with the immediate crisis at hand. I would attribute the Greater Depression of 2008-20?? to his predecessor, as do many prominent Austrian economists. Why are his present loose money policies not being questioned? Relative to Alan Greenspan, Bernanke really has lived up to his nick name, "Helicopter Ben". There's already talk in the off Wall Street, Austrian circles that a new speculative bubble is forming, the result of grossly misallocated resources. This time, its very possible the bubble is appearing in U.S. Treasury notes and the stock markets (explaining the artifical growth the DJIA has experience the last few months). There's evidence that although the artificial injection of government spending is currently in the mix and may temporarily prop up government indicators (see latest BLS statistics for instance for which the stimilus is attributed), even the all-star economists are aware of an uncertain future.

Not only that, but there is also evidence to believe that another unexpected asset class is beginning to inflate: gold. As odd as that may sound, because it certainly was a shock the first time I heard it from Dr. Murphy about a month ago, it makes a lot of logical sense. People, investors, any concerned person is reasonably conscious of the Fed's inflationary policies, despite the fact that the dollar hasn't hit rock bottom as of yet, they know the possibility of higher inflation or a Zimbabwe exists. They know that the U.S. dollar is no longer a reliable unit of savings, so what's the most reliable asset in which people can put, hard money. Silver. Gold.

A simple visualization of the Fed's role in the economy.

Its hard to be sure, but I'm starting to see the accuracy of the causal-realist approach, especially when it comes to applying it in the form of goods-based economic indicators that draw from theoretical axioms. Dr. Mark Thorton, a senior fellow at the Ludwig von Mises Institute wrote a paper on how the skyscraper index, as developed by economist Andrew Lawrence who demonstrated an empirical correlation between record breaking skyscrapers, and the economic recession that always follows it. In this paper, Dr. Thornton shows how ,"...a theoretical foundation of “Cantillon effects” for the skyscraper index is provided here showing how the basic components of skyscraper construction such as technology are related to key theoretical concepts in economics such as the structure of production. The findings, empirical and theoretical, suggest that the business cycle theory of the Austrian School of economics has much to contribute to our understanding of business cycles, particularly severe ones...", like the Great Depression and our current economic depression. The key economic significance of such an index is that an a priori methodological approach to economics can supply theory that provides tenets for empirical work attained through observable historical evidence. (Some readers may be unfamiliar with Richard Cantillon, and so I've linked a great introductory article to his name.)

Ben Bernanke actually wasn't the only Federal Reserve officials with announcements. Yesterday, the New York Federal Reserve named Denis M. Hughes and Lee C. Bollinger as the new Chairman and Deputy Chairman, respectively, were named to the Board of Directors. Denis M. Hughes is not actually a big name in the financial world or on Wall Street, he's actually the former President of the NY AFL-CIO, the largest labor union in the State of New York. Lee C. Bollinger, is also not a person that is frequently heard in Wall Street, which is what caught my eye even more when I heard about this appointment. In fact, Lee Bollinger is extremely common almost 100 blocks uptown relative to Wall Street, in Morningside Heights, on my very own university campus. Lee C. Bollinger is the President of Columbia University, and he sits as the head of University's Senate and as a member of the Board of Trustees. Mr. Hughes is a former labor activist that received some headlines when he managed to acquire millions for the reconstruction of New York City after 9/11, and the latter is a Constitutional attorney who's made his fame arguing affirmative action cases before the U.S. Supreme Court.

I'm not sure what to say about this. I'm honestly vexed, besides the obvious question: Why are you appointing a union leader and a career attorney at the helm of the largest quasi-bank in the world? I suppose the answer is, it doesn't actually matter who's running these colossal apparatuses. I do think however that the media silence with regards to this appointments, and the sketchy figures, says something about the moral fiber of the managers running the show...

Stay free America, more than just the world is watching.

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It's been three weeks since this blog was reinvigorated, and now it has music. I'm cutting back on the embedded videos because they deter from substance, but I'm starting to turn up the level of hyperlinks in the next few weeks because they will broaden horizons and really do put formal citations into the intellectual ashtray of antiquity. I'm attempting to limit the bombardment of short posts to three or four a week, and instead refocusing on putting out longer comments of meaty content. I've coined the latter, "blarticle": a portmanteau of two very obvious words; "blog" and "article", with the hopes of it becoming a neologism one day. Aside from today's comment, I'm also going to be honing in on events, people and ideas that I come into more direct contact in everyday life.

Comments, suggestions, hate-mail, I'll take it from you now.

Here's also my official mission statement for this site: "...To provide mindful objective analysis on similar free thinkers, and join their dissent in review countless items affecting the natural liberty of people...and offer free Criticism on nearly everything...and in addition serve as a humble bastion of relentless volleys against the evil & stupidity of the State, throughout the day and the years to come,..."

That took almost a good 60 seconds to draft, revise and publish. Thanks.

"The Most Interesting Man in the World has a position on the Two-Party System..."

I enjoy a decent commercial more than a "great" movie.

Where else can you find attractive women, sharp wit, music and advertise a product, all rolled into less than a minute? Nowhere.

Here a few of the very best I've encountered of late. Note: I don't have a functioning television in my house.:













;-]

"Students Rights Week?"

The majority of liberty-minded folk in the world usually conclude that women don't have special rights for being females, neither does your inclination to sexual preference or physical handicap grant you a right to a wheelchair or a right to some other form of entitlement. A strict "ethics of liberty" of the Rothbardian-Lockean strain would argue that you an inalienable natural right as individual to life, liberty and property.

So, does being a student give you a right to say whatever you want on campus?

Certain libertarian-minded student groups are recently teaming up with FIRE, (The Foundation for Individual Rights in Education), to bring Students Rights week to a college campus near you.

They advocate free campuses, and freedom of speech, individual liberty on campus, and yes, students rights. Students Rights week has a mixed guise of a libertarian rhetoric and U.S. Constitutionalesque feel to that many liberty-minded folk can immediately seem as warm and amenable, especially since it is being so heavily promoted in a week-long, nation-wide event by the same liberty-minded organization. I can attest that many of my fellow group members felt the same way about the event at first few glances. The week-long campaign includes delivering copies of the movie "Indoctrinate U" to libertarian groups everywhere, pocket U.S. Constitutions, free books and pamphlets courtesy of FIRE, manuals on how to engage Students Rights on their campuses! They even offer a list of expert speakers, sign-up sheets and marketing materials.

A few side notes about that movie before I advance: It's poorly made, loses focus often and has actually very little to do with actually liberty. Its inconsistent from top to bottom. It spends time focusing on affirmative action, and uses Ward Connerly being bashed at a campus as an example of anti-free speech. It seems to be beside the point that Ward isn't even a student. Then it actually shows liberal students at Columbia University voicing their opinions on campus against the affirmative action bake sale, and pushing for a progressive, multicultural change in front of the alma mater statue. It seems like freedom of speech was pretty open there, and no one denied the affirmative action people their protest. Affirmative action isn't even a real issue, its a misallocated issue that is the result of too public goods in society and government meddling!

It's a silly documentary that entirely misdirects the freedom movement with diluted perspectives on what freedom and liberty actually means. So geting onto the most important question at hand:

Why are organizations like Students for Liberty that I am personally associated with, working with FIRE?

I've looked into FIRE, they aren't a libertarian organization whatsoever. I think they're using SFL as jumping bench to gain publicity if you want to be absolutely frank about it. I think their tactics are atrocious in doing so. They actually pursue court cases that will mandate freedom on campus from the demigods of a judicial bench? How does that qualify as freedom-like to private institutions?

Quote from the site:

"FIRE effectively and decisively defends American liberties on behalf of thousands of students and faculty on our nation's campuses. In case after case, FIRE brings about favorable resolutions for these individuals who continue to be challenged by those willing to deny fundamental rights and liberties within our institutions of higher education. In addition to individual case work, FIRE works nationally to inform the public about the fate of liberty on our campuses."

What does any of that even mean? Do students have a right to smoke pot on campus, because I consider that a fundamental right? American liberties on our nation's campuses? Perhaps they are mainly referring to public universities where the U.S. Constitution can be applied, but let us not get sucked away into the semantics and the adjectives and the ooohs and aahs of "defending American liberties".

Where in the Constitution is their even a provision that permits the federal government to provide block grants to public schools? The real question that should be postulated is the one that follows: Does government even supposed to have the moral legitimacy to tax, free American people, and set up a public college system with that money? The correct libertarian position would appear to me that public schools shouldn't even exist, much in the sameway libertarians find the post office, Medicaid and Amtrak inefficient and the result of misallocated tax dollars. and if so, funded and operated at the local school level. So why are we even defending the right to free speech on institutions that ethically speaking, libertarians and liberty-minded folk should be against? It seems to me like there are plenty more pressing issues at hand that libertarians should be more actively engaged in opposing then standing in a week-long coalition defending "students rights" to freedom of speech and individual liberties on publically subsidized campuses.

The overwhelming majority of private and public campuses actually permit their students to have freedom to voice their opinions, and even if they didn't, I don't see how that qualifies it as an issue? Private colleges are run by shareholders and a board of directors. They have a right to enact the standards they see fit because its private. There are plenty of Christian campuses and Jesuit run organizations that promote a socially conservative life style by not allowing secular bands and groups to exist on campus, not allowing certain articles to run in college newspapers and banning alcohol.

This is exactly one of the marginial benefits of why having a free market system means having the freedom to choose: because we can actually pick and choose what sort of environment we want to be in, whether its tolerant and diverse of thought like at Columbia University, where the Office of Multicultural Affairs runs a variety of multicultural programs each semester, or more moderate, conservative campuses that restrict the consumption of alcohol like Liberty University or others that separate male and females in residence halls like at Fordham University. This is certainly a far more desirable alternative then the one size fits all of public colleges that spend more time arguing for these "positive" rights in the Supreme Court than actually educating. These are examples of what Students for Liberty as an organization should be playing up and highlighting, the virtues and empirical evidence that freedom and markets work, and governments don't. By allying themselves with FIRE, they hurt potential friends by alienating campuses that are not so friendly to diversity of though, but are indeed libertarian-minded, like Grove City College, which was founded extolling the principles and ideals of a free American society, and openly states on its mission statement an anti-FIRE policy, "...while many points of view are examined, the College unapologetically advocates preservation of America's religious, political, and economic heritage of individual freedom and responsibility...", they certainly have a free-minded heritage in liberty that would be of most benefit to SFL.

Furthermore, I don't see what's the net gain in SFL being allied with an organization that's effectively promoting what could be construed as an activist Leftist agenda. The problem that many libertarians mistake coming so quickly to support other pro-freedom movements, arises from confusions in the word "freedom". The word "freedom", often takes a variety of positions in everday life, like the "freedom-to-hang out" that an adolescent living under household rules earns after completing their chores. FIRE definitely has the "freedom"-like ring to it that so many civil libertarians adore, but that doesn't actually extend to society, much in the same fashion that the government can't extend the 1st Amendment into your house.

All of our natural rights, are indeed derived from property rights. You don't have a "right to freedom of speech", you have a write to start a newspaper publication and write as many op-eds as you want. You have a right to rent out an auditorium, and bash the New York Mets for being a lousy baseball team. Property rights are the crux of liberalism, and the axiom from which all other rights are derived. Ludwig von Mises treatise on liberalism starts with private property as the basis for a classic liberal society. A civilization based on peace and freedom between individuals coexisting in a market economy where the social system of the division of labor is under private ownership of the means of production. Here's an excerpt from "Liberalism":

"The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production... All the other demands of liberalism result from his fundamental demand."

If we were to support everything that was free, then that would probably have us "libertarians" supporting proposals like "free healthcare" and "freedom from racial discrimination"? I'd argue that most modern-day, lower case "liberals" actually do have a distorted perversion of what freedom actually means. The following is the essay that shattered any preconceptions I had about libertarianism and flushed out most of the misconcepts I had remaining from my Marxist, pro-government days, which I have called, "the Early Days". Here, I quote Congressman Ron Paul, in the finest essay I have ever read:

"George Orwell wrote about “meaningless words” that are endlessly repeated in the political arena. Words like “freedom,” “democracy,” and “justice,” Orwell explained, have been abused so long that their original meanings have been eviscerated. In Orwell’s view, political words were “Often used in a consciously dishonest way.” Without precise meanings behind words, politicians and elites can obscure reality and condition people to reflexively associate certain words with positive or negative perceptions. In other words, unpleasant facts can be hidden behind purposely meaningless language. As a result, Americans have been conditioned to accept the word “democracy” as a synonym for freedom, and thus to believe that democracy is unquestionably good. The problem is that democracy is not freedom. Democracy is simply majoritarianism, which is inherently incompatible with real freedom. Our founding fathers clearly understood this, as evidenced not only by our republican constitutional system, but also by their writings in the Federalist Papers and elsewhere. James Madison cautioned that under a democratic government, “There is nothing to check the inducement to sacrifice the weaker party or the obnoxious individual.” John Adams argued that democracies merely grant revocable rights to citizens depending on the whims of the masses, while a republic exists to secure and protect pre-existing rights. Yet how many Americans know that the word “democracy” is found neither in the Constitution nor the Declaration of Independence, our very founding documents?... Few Americans understand that all government action is inherently coercive. If
nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations. If we intend to use the word freedom in an honest way, we should have the simple integrity to give it real meaning: Freedom is living without government coercion. So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.

The political left equates freedom with liberation from material wants, always via a large and benevolent government that exists to create equality on earth. To modern liberals, men are free only when the laws of economics and scarcity are suspended, the landlord is rebuffed, the doctor presents no bill, and groceries are given away. But philosopher Ayn Rand (and many others before her) demolished this argument by explaining how such “freedom” for some is possible only when government takes freedoms away from others. In other words, government claims on the lives and property of those who are expected to provide housing, medical care, food, etc. for others are coercive – and thus incompatible with freedom. “Liberalism,” which once stood for civil, political, and economic liberties, has become a synonym for omnipotent coercive government.

The political right equates freedom with national greatness brought about through military strength. Like the left, modern conservatives favor an all-powerful central state – but for militarism, corporatism, and faith-based welfarism. Unlike the Taft-Goldwater conservatives of yesteryear, today’s Republicans are eager to expand government spending, increase the federal police apparatus, and intervene militarily around the world. The last tenuous links between conservatives and support for smaller government have been severed. “Conservatism,” which once meant respect for tradition and distrust of active government, has transformed into big-government utopian grandiosity.

Orwell certainly was right about the use of meaningless words in politics. If we hope to remain free, we must cut through the fog and attach concrete meanings to the words politicians use to deceive us.
We must reassert that America is a republic, not a democracy, and remind ourselves that the Constitution places limits on government that no majority can overrule. We must resist any use of the word “freedom” to describe state action. We must reject the current meaningless designations of “liberals” and “conservatives,” in favor of an accurate term for both: statists.

Every politician on earth claims to support freedom. The problem is so few of them understand the simple meaning of the word."

Why don't we just support free everything then? I believe, that having FIRE in a free-market society, would act as a consumer protection group, or an advisory board that would make policy reccommendations for campuses across America, much in the same way we have hundreds of magazines, institutes & consumer product committees that try out and test vehicles and consumer goods and issue reviews and commentaries on them. While I support a free environment on campuses personally, I don't see that as a role for a libertarian/freedom movement oriented group to be in league with.

I'm sorry, but I know that organizations such as SFL are still starting out, but I don't feel that they have to resort to being the jumping pad for the propoganda of Student Rights organization. Students for Liberty is an excellant organization, that is well-run, and is increasing in numbers, but I feel that by highlighting certain rights, we dilute the core message of liberty, and misdirects the intentions that an an organization of this nature is supposed to be for. I think I'm bringing up more than reasonable objections to libertarian organizations that have noble intentions and excellant prospect in exerting greater influence across campuses.

Call it intransigence, I call it being principled.

Stay free, America. More than just the world is watching.

Disclaimer: This commentary does not necessarily represent the position taken by any of members of the Executive Board or the Board of Directors of SFL.