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This is wonderful and true:

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

Joan Robinson, as quoted in Peter Bauer’s “Equality, the Third World, and Economic Delusion.”

I think many of us have this fuzzy, but comforting, tendency to lump economists in with mathematicians and by extension the “hard” side of university life. They are not reading poetry; they are not out in the wild participating in peyote ceremonies; they are not making pottery. No, they do MATH, and MATH IS REAL.

Thus when an economist pronounces something, people tend to take them seriously.

But the naked fact is that economics cannot, intrinsically, by definition, be divorced from politics. If you want to regulate, as an example, the stock market to achieve an economic end–market stability, for example–you intrinsically have to support a strong enough, intrusive enough police power of the State to make it happen.

Or take Keynes Fascist idea that the government should be able regulate all prices, and all capital flows in and out of the country: you have to have a very strong government in place to do that.

As I have said many times in many ways, there are essentially two types of economists, in my view: those who describe cause and effect relationships based upon historical experiments and logical analysis; and those who describe how things OUGHT to work, and who extrapolate backwards from their desired end point, in narratives which never touch the practical in any way.

Can economists be corrupted by political ends? Of course. Just look at the ubiquity of support for the plainly counter-scientific narrative of Anthropogenic Global Warming. There is no reason to dispute that many, many scientists find themselves in the position of publicly supporting this intellectually offensive attack on the very foundations of the scientific method. Nor is there any reason to grant such farcical ideas any credence because methods of incentivization and disincentivization have been used to effectively and widely for so long. Science is not a popularity contest.

Thus when I use terms like “Fabian”, I have actual referents in mind. It is an unassailable fact that large swathes of the men and women educating our children want one world government, and Socialists running it. This is easily enough documented–for example, in books like David Horowitz’s “The ProFessors”.

Such people breed tendencies in people who go into broadcast journalism, newspaper journalism, and ECONOMICS. Paul Krugman is not stupid: he is an advocate of policies designed to end America’s dominant, peace-keeping role in the world, which in the Never-Never land these fairies live in will result in the improvement in the lots of unspecified humans somewhere.

Laying this idea next to the actual history of such ideas, of course, plainly shows that where such ideas are proposed and idiocy is not present, evil is.

How many of you have heard of this? I have mentioned it a time or two, but my focus remains on domestic economics.

It was the idea, as I recall, of John Maynard Keynes, Hjalmar Schacht (“Hitler’s Financier”, I believe was one of his nicknames), and, if memory serves, Montagu Norman, the President of the Bank of England for some time, and a likely participant in the dollar inflation whose end brought on the stock market crash of 1929. Google, of course, no longer readily pops up the pages I’m looking for. Why they apparently feel so little shame interfering in the free exhange of opinion and information, I have no idea. Sometimes it seems as if the accumulation of great wealth, especially when combined with recalling the methods used, creates crises of conscience for which no remedy short of working tirelessly to force other people to give up their wealth will do.

Or perhaps they are merely ignorant of basic economics and history. They will not have learned them in most American universities.

In any event, look at a recent report:

We need to build improved resolution regimes within jurisdictions and create agreements across them. And we need to continue building a regulatory perimeter that is sufficiently robust and extensive to encompass every institution that acts like a bank.

Who are these people? I don’t have time to do exhaustive research, but let me submit one idea, and another idea which was the original point of this post.

This group is an organization of Central Bankers, which is apparently quite literally working on redesigning our international financial system with no feedback from any of the sovereign governments involved.

Ben Bernanke, for example, went to Basel II, and he can sign what he wants, because he does not have to ask for Congressional approval for ANYTHING. Other than hyperventilate, there was nothing any member of Congress, the President, or the Supreme Court could have done to stop Bernanke from his money printing schemes that, unless I miss my mark, went almost exclusively overseas, to people and parts unknown. As I point out often, THIS IS INSANITY.

But consider the even greater insulation from the opinions of those whose lives they are affecting profoundly–if invisibly–of a GROUP of people like Ben Bernanke. I don’t know how most central banks work, but I suspect many of them are much like the Fed, largely insulated from “political pressure”, which is to say accountability. These people, who stay in the best hotels, drink the best wine, and chase the finest hookers, are literally writing our financial destiny without even asking us.

The main point I wanted to make is that the only concrete detail from the Basel II meetings that I understood was that bank reserve ratios will be raised, starting about 2016, if memory serves. This is one of those things where you announce it, but it is so far out nobody squeaks about it, then it comes, and they can point out with justice that we were warned.

Let’s return to my favorite tax table.

What will be happening in 2016, according to Obama’s people? We will be taking in $3 trillion and spending $3.5 trillion, in inflation adjusted dollars. Put another way, tax receipts are scheduled to increase by 50% over 2011 (1.9 trillion) in five years. How does this happen? PFM: pure fucking magic.

This is patent nonsense. We are not going to raise tax revenues that much without causing major economic dislocation in the process, which in turn will horribly impede the economic growth that HAS to happen to increase the tax base that much. No possible tax increases on the “rich” could amount to more than a small fraction of what will be needed.

So what will we have to do? Borrow, borrow, borrow. So we have on the one hand the largest economy on the planet sitting in the corner with a duncecap on, and begging for money, and we have the international financial system engaging in DEFLATIONARY policies.

For those who don’t read much, the inflation/deflation cycles is the most basic form of economic assault. It was plainly the cause of the Great Depression, which was simply used by FDR, in sustained acts of amoral political cynicism, to engineer a political order and propaganda regime that got him elected 4 times, despite assiduously pursuing over long periods of time economically ruinous ideas, and causing thereby unprecedented suffering.

No conspiracy theory is needed to point out that policy is being made without the input of our elected representatives.

The BIS, the IMF, the World Bank: we have to end them all.

The relationship between the rejection of self pity and meaning is that the first enables the formation of the second. There is no linear connection, but there IS between feeling self pity and being UNABLE to form a useful meaning system. Rejecting self pity creates the possibility of success, whereas failing to do so ensures failure. All one can do is create fertile soil, and work regularly to find suitable seeds to plant and nourish.

I am going to quote from Viktor Frankl’s excellent “Man’s Search for Meaning” (page 86 in a very old paperback addition):

And there were always choices to be made. Every day, every hour, offered the opportunity to make a decision, a decision that determined whether you would or would not submit to those power which threatened to rob you of your very self, your inner freedom, which determined whether or not you would become the plaything of circumstance, renouncing freedom and dignity to become molded into the form of the typical inmate.

Seen from this point of view, the mental reactions of the inmates of a concentration camp must be seen as more to us than the mere expression of certain physical and sociological conditions. Even though such conditions as lack of sleep, insufficient food and various mental stresses may suggest that the inmates were bound to react in certain ways, in the final analysis it became clear that the sort of person the prisoner became was the result of an inner decision, and not the result of camp influences alone. Fundamentally, therefore, any man can, even in such circumstances, decide what shall become of him, mentally and spiritually. He may retain his human dignity even in a concentration camp. Dostoevsky once said: “there is only one thing I dread: not to be worthy of my sufferings.”

…An active life serves the purpose of giving man an opportunity to realize values in creative work, while a passive life of enjoyment affords him the opportunity to obtain fulfillment in experiencing beauty, art, or nature. But there is also purpose in that life which is almost barren of both creation and enjoyment, and which admits of but one possibility of high moral behavior: namely in man’s attitude to his existence, an existence restricted by external forces. A creative life and a life of enjoyment are banned to him. But not only creativeness and enjoyment are meaningful. If there is meaning in life at all, then there must be a meaning in suffering. Suffering is an ineradicable part of life, even as fate and death. Without suffering and death human life cannot be complete.

Between them, Fannie Mae and Freddie Mac control 90% of the mortgages in this country. According to Answers.com there are some 44.4 mortgages in the United States. This means that the FEDERAL GOVERNMENT OWNS OR HAS LEGAL CLAIM to some 40 million homes. Let me repeat that: they own or have legal claim to some 40 million homes.

Again, according to Answers.com there are about 130 million housing units in the us.

This means that our government, at this moment, owns or controls just under one third of the homes in the US.

Further, they own in inventory some 242,000 foreclosed homes.

Now, we need to ask how exactly they got these homes. If you or I buy a house, we have to pay real money. However, the government can, in many cases, print money to achieve real claims on real property.

As an example, the Federal Reserve can purchase stock in Fannie Mae or Freddie Mac through Open Market Operations. We the American people of course don’t know when this happens, since the Fed is utterly unaccountable–or at least largely unaccountable, with some mild improvements having been made by the Finance Reform Act or whatever the recent attack on “Wall Street”, which of course is practically to say the small fry–was called. Provisions to audit the Fed, to a limited extent, are already showing up huge irregularities–things that make no sense if the Fed is to viewed as tasked exclusively with protecting the American economy–like sending huge amounts of American dollars abroad to foreign owned banks.

Consider this: what if the government, rather than trying to sell or rent the homes in its inventory, simply allowed people to live there for free? They themselves don’t have mortgages to pay. However they “financed” it, it was either put on the balance sheet of the American taxpayer, or in effect gifted to them. You could gift homes to your supporters, the ideologically compliant. You have a raffle. If there is no purchase price, it’s hard to see how that would depress home prices.

Would this not be perfectly consistent with the aims of Socialism? Framed another way, why is the Federal Government pretending to be interested in market forces?

The reality is that none of the socialists who concocted Fannie Mae and Freddie Mac as examples of the “semi-autonomous bodies within the State” Keynes dreamed of in his Fascist (Mussolini called it Fascist, and who am I to argue with the man who coined the term and invented the philosophy?) tract “The End of Laissez-Faire” want the reality of their subversion to be clear. They want to act like private sector landlords for exactly the same reason that Obama wants to call the expansion of the Federal government “investment”. This is an Orwellian term, used, as all such terms are, cynically.

Let me quote from Keynes a bit more: “I believe that in many cases the ideal size for the unit of control and organization lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and recognition of semi-autonomous bodies with the State–bodies whose criterion of action within their own field is solely the public good as they understand it, and from whose deliberations motives of private advantage are excluded.” (Chapter 4, paragraph 4).

What is he really talking about? Governmentally sanctioned bureaucracies, which have the power to make laws, but not to answer regularly to the citizenry though either elections, or direct and regular control by Congress.

There was a time when Fannie Mae and Freddie Mac were tied only indirectly the the government, by using the credit of our government–and that of the American people, who foolishly allowed this to happen–but not actual cash.

Well, they underwrote far too many loans that should never have been originated, and they failed. This has meant that many billions HAVE in fact flowed from our pockets to theirs. It also means they ARE the government, once again.

I would argue, though, that the Social Security Administration meets this criteria as well. They were set up to be outside the normal appropriations process, as I understand it. They collect their own taxes, ahandle their own paperwork, and send out their own checks. All of this happens largely without any Congressional intervention. They do periodically borrow money from the Treasury Dept., but that is not something, as I understand the matter, that goes through Congress. Congress–which to be clear is in theory supposed to best represent the will of the people, and to be the paramount authority in all domestic matters–has been removed. Medicare and Medicaid would likely meet this criteria as well, as would of course, the “investment bank” that Obama is apparently set to propose soon. That is a New Deal idea through and through. The goal is to buy political patronage, and spend money uselessly, bringing us yet closer to the brink and eventually reality, of disaster.

These are a few scattered thoughts I have not organized fully. Hopefully they are coherent enough to be useful to someone.

I wanted to make a few points here. The overarching point is this: Ron Paul is the only candidate who cannot be sorted neatly into a box that is consistent with our dominant narratives.

Look at this table: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

From 1980 to the present the expenditures of the Federal government have increased, with the sole exceptions of 1986-87, 1992-93, and 2009-10 (which was anomalous, since spending in 2009 jumped by $470 billion, then dropped back to a number that was still $300 billion more than 2008).

There is this implied but wrong idea that the expenditures of the Federal Government should rise pari passu with economic and population growth. This argument only holds if we believe that the Federal government has functions other than protecting this nation, regulating relations between States, and handling foreign policy.

Given genuinely Liberal policies, those oriented around checking the power of the Federal power through the 10th Amendment–as our Founders plainly intended, being well able to foresee the mess we now find ourselves in–the percentage of Federal spending as it relates to our GDP should have been steadily shrinking.

In point of fact, spending has kept pace with economic growth over the last 71 years, and in spite of that growth, we have managed to add to our national debt in 59 of the last 71 years. In every year but one, Reagan added to our national debt. If we count his tenure as 1953-1961, Eisenhower added to our debt in 5 of 8 years. 2001-2007, with a Republican President and Congress, 2001 was the only year the national debt did not increase, and that was clearly the legacy of a moderate Democrat working with a Republican Congress, combined with the explosive economic growth of the 1990’s.

The history, then, of elected Republicans being fiscally responsible is not good.

And we need to understand that an intelligent Fabian strategy could easily consist in nothing other than making sure that, one way or another, the size of the Federal government in the national economy increases year after year, and that more is spent than taken in. It really doesn’t matter if it is Reagan building up our national defense, or Johnson greatly increasing government share-the-wealth programs. With such a strategy, you can bet equally on both parties, and alter the dominant narrative from time to time from helping the poor, to protecting America, and back again. The details don’t matter.

The task, in boiling the frog, is getting people used to annual debt, such that the total can become enormous slowly, over time, and at some point unmanageable.

Look at the Obama numbers. Look at the gap between revenues and expenditures: -10 for 2009, -8.9 for 2010, -10.9 for 2011, and projected at -7 for 2012. Beyond that is BS, since we don’t know what the economy will do, or who the next President will be.

In order to find a -7 you have to go back to 1946. 1945 was -21.5, but we had a rather large war going on at the time.

What I would like to suggest is this: Obama is not a radical; he is, rather, merely the apotheosis of the last 70 years. He is the culmination of long term policies which have acted year after year after year to make us weaker as a nation. He is our “habit” made large. He is our enervated spirit incarnated, and shown on a large screen.

If we look at history, NO ONE will make much of a difference, if they keep doing what everyone since Herbert Hoover has done.

At the present moment our most pressing national security threat is our debt. You cannot fight this with Marines, aircraft carriers, or the latest technology. Victories in Afghanistan and Iraq will not shelter us from this threat. On the contrary, national bankruptcy and economic decline will not only destroy us domestically, but prevent us from even waging those wars.

In some respects we deserve Barack Obama. We have been asleep at the wheel constitutionally since the time of FDR.

Ron Paul, as I see it, is the only one sufficiently “nutty”–by which I mean individualistic enough to get branded with validity an outsider–to do the sorts of things which need to be done to prevent an inevitable national decline.

Yes, we need jobs. Yes, we need limited government. But we need to look at the big picture. What is it our brave soldiers and Marines and airmen will come home to, if we can’t avoid collapse? Would it not make more sense to bring most of them home, and start paying our bills?

I am increasingly inclined to believe yes. Rome was destroyed by civil wars. We are being destroyed by simple stupidity, and that applies both to those who fail to grasp the consequences of our policies, and those who are consciously articulating them in the hope of American decline.

I have more to say on Iran and Cuba, but will have to get to it later.

First, the proposal.

I have only received feedback from one person on this proposal. He was a very successful financial advisor, and he told me I would cause a ten year global depression. Now, that’s not the outcome I’m going for, so I have continued to try to get more comments, and failed to this point. He would not give me further feedback. My best guess was he thought I failed to address the need for liquidity. I added liquidity. That is why this version is version two. I don’t think he read it, though.

Some things warrant emphasis, though. First, this is not a default. Everyone who we owe money gets paid. As an example, we write the Chinese $9 trillion in checks, and mark the bill paid. This money does not become worthless, because the plan is to revalue it. Once that happens, the Chinese still hold roughly $9 trillion equivalent in the new dollars, that they can use to invest in American industry, use as a reserve currency, or exchange with some other currency. Our government–and the American people whose interests that government supposedly represents–just doesn’t owe them that money any more.

Second, yes, it will be interesting trying to sell this. It is hard to predict market reactions once it is introduced. If sold correctly, in my view, it should be seen as positive by everyone who wants America to be strong economically. It may not seem as if this would be the case, but even the Chinese want us strong, since we are a HUGE export market for them. If we go broke, it will hurt them terribly, for the foreseeable future. And they are not losing their money. They can buy up American businesses, if they like, which capitalizes us for job creation. This is not a bad thing. We just, of course, have to watch the ones working on secret stuff.

Third, something like what I am proposing will be needed to end the Fed correctly. Anyone who studies the situation will grasp IMMEDIATELY that, at a rock bottom minimum, we need to return the control of the Fed to the Secretary of the Treasury, which is where it was before the Fed used the opportunity the Great Depression (which they caused, at least in large part) to get themselves fully independent of supervision and accountability.

More generally, though, the Fed does solve problems that the fractional reserve system creates, specifically the problem of cash flow. [It does also apparently serve as an intermediary for most credit card and, I think, bank transactions, as I understand it, but that can be sourced out to private companies.]

If banks lend out money they don’t have, they always run the risk of not being able to pay that money back out, if enough people ask. That is part of the reason the Fed exists.

Logically, then, if we are going to be thorough, we need to end the practice of fractional reserve banking at the same time as the Fed. My proposal not only does that, but funds it. No banks go bankrupt as a result of this process, although of course if nobody wants to borrow money later, they might. A superabundance of capital can only be called a good thing, even if the benefits of it don’t reach the banks. They have been in effect counterfeiting for centuries, so don’t try and cry me any rivers on their account. They can downsize, or change their business models.

I have not read every book on the Fed, but have read two, by Murray Rothbard and G. Edward Griffin. I plan to read Secrets of the Temple, The House of Morgan, and a couple on the IMF and World Bank, but I think I have the basics well in hand.

The two I mentioned, I did not care for, since they did not take the logic of the thing far enough. They provided useful facts, which I then operated on in a cloud of smoke until I reached understandings which I did find acceptable.

With regard to Griffin in particular, I am neither for nor against conspiracy theories, but simply see them as pointless when the things that are happening in plain sight are manifestly unacceptable; when, to be clear, the action needed is in broad stroke painfully obvious.

One prophecy I will make about the future is that I will keep putting these ideas out in public as often as I can, and as well as I can, until somebody provides me sufficient substantive feedback to further hone them. Then I will put the new ideas out in the same way. This is an important topic, and I will not let it go until this problem is solved.

Creating an idea, a plan, is like creating a work of art. My aim, like that of a good chef, is a balanced combination of aesthetic appeal, taste, and nutritive content. It must work, first and foremost, but as a craftsman I see no reason not to add personal touches here and there.

As I’ve said on a number of occasions, the term I like for myself is “thought worker”. I assemble invisible engines, that nonetheless may one day affect the world we see–in a positive way, if my job has been done correctly and with skill.

I am continuing my course on music, and we are up to the fugue. As I said a week or two ago, it seems to me that Versailles is a powerful and relevant symbol, but not for what one would normally assume.

The French rebelled against a King and God. They did not rebel against the order and harmony that Versailles represented. On the contrary, I think one must see in the Gallic mind as it exists to this very day an instinctive–and, as it were, atavistic–fondness for the “music of the spheres” conception of the universe that Versailles represented.

Everything and everyone in its place, “scientifically” ordered. Is this not what Socialism/Communism, with their overarching bureaucracies and purportedly rational controls represent? Did Marx himself not label Communism “scientific socialism”, a phrase later invoked by Barack Obama Sr. in his most famous published work?

If you look at the conception of the French banlieue, they represent a spatial organization that is meant to connote and imply order, planning, a smoothly flowing society. They don’t operate as such, of course, since our world in reality is chaotic in a formal sense, but that is the aesthetic conception.

Socialism, the fugue, and Versailles are all of a piece. “Plus ca change, plus c’est la meme chose”.

The Sun King still rules in spirit, n’est ce pas? All hail his magnificence, in the form of Marxist ideology.

I truly believe this is right. This is the cognitive counterpart to the fundamentally psychosocial outcomes of intellectual decadence I have labelled, depending on how far advanced it is, either Sybaritic Leftism or Cultural Sadeism.

I rarely watch action movies more than once. What is the point?

But there are a few I really enjoy. I added Battle: Los Angeles to that list tonight, having watched it a second time.

To my mind, to my instinctive dark part within me, persistence has an irresistable allure. I love people who fight when there is no hope, who carry on because they are BUILT THAT WAY.

A quote I have quoted several times is from the Kentucky Derby Museum, which quoted some Louisville personality, known for neat suits, good drinks, and great parties, who said that: “Mint juleps should never be made by novices, Yankees, or statisticians”.

Oh, we all need that nourishment in the dark, don’t we? We need that secret faith that things will either work out, or that we will die nobly. We don’t want to count the odds, but simply deal ourselves in and watch what happens.

Most of history has been made by ridiculous people, hasn’t it? How long did the reign of Julius Caesar last? A year? Something like that. But we all know his name. Alexander Hamilton never really got any of his proposals through, but we read about him, too. Caesar, of course, was his hero.

I look at we Americans and I still see courage. I still see sincere committment to principle. This is a beautiful thing.

What you persist in–and why–determines who you are. You can take that to the bank.

The primary claim of Liberalism is that governmental power is necessary, but that it should be distributed as widely as possible, in an interlocking series of checks and balances.

The primary claim of most of the people I have known who have called themselves Libertarians is that governmental power is NOT necessary, and that it should be as little as possible, and ideally something close to zero. This basic position could also be called Anarchism, where the idea is not a lack of order, but rather as many orders as there are individuals, and groups of individuals choosing to associate for a common purpose, for whatever length of time.

Philosophically, I have argued that Liberalism rests upon the idea that all ideas which do not cause harm to others are to be treated legally as equal. Morally, it stipulates no absolute principles other than the desirability of peace and order, as embodied in the principles of life, liberty, and property (and the pursuit of Eudaemonia, if we follow Jefferson).

Libertarians, on the contrary, DO posit an absolute principle, that governments have no claims on the freedom of individuals, and should not, in principle.

Practically, as an example, where a Liberal will see drug law as a matter for local custom, a Libertarian will view ALL laws restricting drug use as invalid morally. Where a Liberal would leave the matter up to the States, a Libertarian will seek to abolish all drug laws on a national basis.

These thoughts may be helpful for some.

I can’t resist adding that virtually every self-declared Libertarian I have ever met either smoked pot or read Ayn Rand with a devotion approaching religious adoration.

No telling if this will make it through, and I have no desire to try and remember to check. Response to this article.

Actually, I’m going to add a bit, so this won’t be quite the same.

Like the US, the EU owes way more money than it can ever hope to repay, if we apply normal economic methods to the problem. This is why I have invented new economic methods.

Please consider my proposal of using controlled hyperinflation (an apparent, but not real oxymoron) to recalibrate national economies: http://www.goodnessmovement.com/files/Download/Saving%20America–How%20to%20fix%20our%20financial%20system–version%20two.pdf

Governments get away with inflation because they do it gradually. Prices go up, and as Keynes pointed out, not one person in a thousand can tell you why. They just know milk costs twice this week what it did last week. This process is sneaky, so governments get away with it.

What no government in history has done, to my knowledge, is openly announce that is what they are doing, and do it all at once. This is chutzpah, but hell it’s better than bankruptcy.

To be clear, if the Weimar German government had announced, publicly, that the inflation the German people were seeing was being used to pay off government debts and industrial debts, there would have been a revolution, once the effects of that inflation hit.

Yet, the government was able to confiscate, secretly, the wealth of almost all Germans, and use it to get itself, the government, back in the black, as well as all large German firms who had wracked up debts in the War. Back in those days, most people were savers and not debtors. Inflation helps debtors and hurts creditors, unless those creditors are the ones creating the money, which is normally the case in the United States.

I ask again, and have received no good answer to this: why can’t we print our way out of trouble, but do it intentionally, openly, and QUICKLY? All private and public debt of all Americans erased, and the system capped so that future inflation is impossible. This will lead in short order to generalized wealth. I am convinced of it, even though no nation in history has ever done what I am proposing, either as a fix, or as an end condition (no money creation).

Feel free to answer here. Anonymous is enabled, and there is no filtering (although spam and blatantly inappropriate comments will of course be deleted.)