Tag Archives: economics

Go Metric

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I put myself on the metric system years ago, using it for everything from sewing to woodworking. It’s especially useful for calculating gas:oil ratios for my various power tools.  My chain saw fuel tank holds about a cup, and the required ratio of gas to oil is 50:1. To avoid mixing more than necessary for the job at hand, I have in the past gone through rigorous calculations to reduce gallon:ounce to cup:teaspoon sizes.  This takes a master mathematician, unless you know that a cup is almost exactly 250 milliliters, and a teaspoon is almost exactly 5 ml, good enough for my chain saw’s 50:1 requirement.

The framers of our Constitution realized the economic importance of having a consistent system of weights and measures. Article 1, Section 8 gives Congress the power “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures,” all in the same sentence.  In the beginning, it was a political issue.  Thomas Jefferson argued for a decimal-based system, while Alexander Hamilton preferred the British “inch-pound” one.  Jefferson won in the money category, which is why we have a decimal-based dollar.  As he explained, the British system of fractions “works for bankers, but not for farmers.”

In 1975, the US Congress passed the “Metric Conversion Act,” which recommended but did not mandate that the US switch to the System Internationale d’Units, commonly known as the “metric” or “SI” system. In 1988 it made the SI system the “preferred” system.

However, the US has been slow to convert. It is now the only country in the world that still uses the old “inch-pound” system, based on the British standard used in the 1700’s.  Even Britain began converting to metric in 1965.  New Zealand began conversion in 1969, Australia in 1970, and Canada in 1975.

We now see a blend of the inch-pound and metric system on grocery items, with weights and liquid measures given in both. We have yet to see many tools with metric measurements.  Rulers, measuring tapes, squares, hardware, and other items in metric are hard to come by.

That the US is out of phase with the rest of the world is nowhere more obvious than in our stubborn adherence to the antiquated inch-pound system. The costs are incalculable, as the “global economy” must adapt to our standards to sell products here.  Modern machines contain parts from all over the world, with both measurement systems applied in many large ones, like cars.

Metric is easy. Conversion back and forth is hard and error-prone, responsible for at least one satellite explosion so far.  Convenience is a major feature of the SI system.  It is based on one family of units.  It relies on decimals rather than fractions.  It employs standard prefixes, and different quantities relate to each other in a simple way.

The inch-pound system, by contrast, is based on a combination of units developed separately, with some, like the mile, coming from the Roman Empire. It derives from “mille passus”, Latin for “thousand paces.”  The foot was established from the length of King Henry VIII’s feet.  His daughter Elizabeth I, in the 1500’s, set the mile as 5280 feet, or eight furlongs.  A furlong was the length of a furrow an ox could plow without resting.  The inch was gauged to be three barley corns, laid end to end.

In the 1600’s there was no universal standard, which became inconvenient for merchants involved in trade with different regions. In 1790, the Parliament of France took action, and in 1795 it officially adopted the SI system.  It established the meter as one ten-millionth of the distance from the North Pole to the equator.  A gram was one cubic centimeter of water at a specified temperature, and the centigrade scale spanned from the freezing to the boiling point of water.  Thus, the meter tied length, area, volume (capacity), and mass together.

The complexity of weights and measures shows in the SI’s “base units” for different types of measurements. The meter is the base unit of length; the kilogram of mass; the second measures time; the Kelvin is for temperature, using the same unit-span as Celsius but having a different start-point (absolute zero, or -273.15 degrees centigrade).  The ampere is for electric current; the candela for light brightness; and the mole for substance.  One liter of water has a volume of 1000 cubic centimeters (or cubic milliliters) and a mass of one kilogram.  “Horsepower” is the inch-pound equivalent of watts, with 750 watts equal to one horsepower.

Despite our general reluctance to keep pace with the rest of the world, metrically speaking, we are moving that way in subtle fashion. Anyone who has measured a standard two-by-four—a piece of lumber used in framing houses, among other things—knows it is not two inches by four inches.  It is one-and-a-half inches by three-and-a-half inches.  But if you measure with a metric ruler, you will find it is exactly 4 centimeters by 9 centimeters.

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An even better example of “metric creep” shows in the four major coins we use, the dime, penny, nickel, and quarter. Measure with a metric ruler, and you will find there is a consistent progression in diameter.  A dime is exactly 1.8 centimeters, a penny 2.0 cm, a nickel 2.2 cm, and a quarter 2.4 cm, each 0.2 cm larger than the one before.

The inside diameter of a 3/4” PVC pipe is 2 cm.

In this election year, I would like to see candidates for all offices move toward practical, easily attainable goals that benefit everyone. Officially adopting the metric scale would be a start.  Abolishing Daylight Savings Time would be nice, too, as it costs way more than it’s worth, for many of us.  In future blogs, I plan to make a case for repealing a number of mandates, primarily the ethanol mandate.  I could make a strong case for repealing the air bag mandate.  Finally, the incandescent light bulb needs to make a come-back, at least until someone finds a better way to heat chicken coops in winter.

US Constitution, Article 2, Section 1

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The capitol city had not been built when the US Constitution was signed in Philadelphia September 17, 1787, but this is the most relevant photo I have.

For those who have not read the US Constitution recently, I’d like to quote the 5th paragraph of Article 2, Section 1, which delineates the necessary qualifications for the President of the United States.

“No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.”

I interpret this to mean that the “natural born citizen” qualification was specifically intended to keep Alexander Hamilton out (as the writerswithoutmoney bloggers have noted), but after that, it was an open field for those 35 or older, who had lived here at least 14 years.  But I’m not a lawyer.

Article 3, Section 1, defining the Supreme Court, is even more vague:  “The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.  The Judges, both of the supreme and inferior Courts, shall hold their Offices during good behavior, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.”

In other words, there are absolutely no Constitutional requirements for Supreme Court justices, no specified number, and the appointment for life is not written in the Constitution.  This means that the last word on every law in the United States rests on the power of nine unelected but appointed individuals who are notorious for 5-4 splits.

This is not a “democracy.”  It is not a “republic.”  It is an economic engine driven by the “Framers”  and funded by a continent of previously untapped natural resources that they needed taxpayers to exploit.

While ObamaCare is blamed on or credited to Democrats, let’s not forget that the Bush-appointed Chief Justice John Roberts cast the deciding vote.  He weaseled around to the personal insurance mandate by calling it a “tax,” thereby effectively passing the world’s first tax on breathing.

Citizens who are willing to put up with this deserve to be slaves.

 

Freedom, Democracy, and Capitalism

 

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Supercapitalism:  The Transformation of Business, Democracy, and Everyday Life, Robert Reich, 2007

December, 2015–I read Robert Reich’s Supercapitalism:  The Transformation of Business, Democracy, and Everyday Life, just after it was published in 2007, and posted the following commentary on my now defunct website in October of that year.  That was the month the “Great Recession” began, so the review, from a 2015 perspective, seems prophetic, given subsequent events.

I followed my own advice to abandon Wall Street for Main Street in January, 2008, after the value of my stock portfolio plunged below mortgage debt.  I used the money to pay down that debt and then devoted every available penny to become completely debt-free.

The following commentary links freedom, democracy, and capitalism by seeking to re-define “capitalism” as we know it.  Milton Friedman, in Capitalism and Freedom (1962) and Ayn Rand in Capitalism:  The Unknown Ideal (1967) both referred to “human capital,” but neither seemed to give “human capital” sufficient status.  I’m presenting my commentary here in its original form, posted when George Bush was still president, to remind readers of where we stood then and how events have grown from seeds sowed long ago.

Supercapitalism’s Crystal Ball Shatters:  The Future Has Arrived
October, 2007

Supercapitalism, by Robert Reich, shows the landscape of the enemy’s mind, and it is lifeless monotony.  Former President Bill Clinton’s secretary of labor trounces capitalism without bothering to define it, yet it’s clear he doesn’t understand the term.  This fatal omission turns the book’s intent upside down to make it a strong example in favor of the “democratic capitalism” he claims is dead.

Freedom, democracy, and capitalism are interrelated qualities only individuals can own or control.  The term “capitalism” has been assigned to those who would harness and control human capital, imperialists who know human capital is the only viable capital.  All other capital is derived from human effort or desire.

I make a career of using the wealth between my ears, my caput – the Latin word for “head” – to work for me.  Supercapitalism shows how amalgamated heads under corporate or government superstructures reduce thinking to the lowest common denominator.  No individual is responsible for the outcome.  That’s supercapitalism.

The word “capitalism” means using your head to generate income, to “capitalize” on available resources. In a truly capitalistic society, tax law would favor individual entrepreneurs and those who can be self-sufficient and perhaps hire and train others.

Human capital respects human dignity and works to create an expanding network of like-minded individuals.  Life is free.  You own your body and your mind. They are your most valuable assets.  No one can live your life but you, and you don’t have to sleep with anyone but yourself.  If you strive to make your life a work of art, and can earn a living doing it, you’ll have only yourself to thank.

In a genuine democracy—which has never really existed–the individual has all the rights, and the corporate structure has none.  Human capital, the only viable capital, assumes priority status, and gives credit where credit is due.  Capitalism within a democracy perpetually renews the individual’s vital self-directed role as a functioning member of a larger culture.

But if you are Mr. Reich, “democratic capitalism” has given way to the “supercapitalism” of “global supply chains.”  Get over it, he tells American customer-voter-citizen-taxpayers.  The supercapitalists are corporations, profit-making contractual arrangements, which have no obligation or responsibility to anyone except their shareholders.  Corporations are inhuman, and they have triumphed over you. They will not be curbed without more government, but politicians are crooked, too.  Nor can you trust the do-gooders, who also benefit from supercapitalism.  That’s progress.

Admittedly, we have social problems, Reich says.  We’re poisoning ourselves out of existence.  Natural resources, manufacturing, and jobs are leaving the country as fast as the supercapitalists can sell us out, but that’s not supercapitalism’s fault.  Supercapitalists are only responsible to the bottom line, and shame on you if you expect otherwise.

Reich doesn’t trace the source of “supercapitalism,” but consider these historical facts:  In 1910 an elite group of bankers, industrialists, and politicians, including investment banker J. Pierpont Morgan and Rhode Island Senator Nelson Aldrich, met secretly on Jekyll Island, Georgia, to engineer the creation of a central bank.  There they crafted the initial version of the Federal Reserve Act, which became law in 1913, and created a debt-backed currency, controlled by private bankers.

According to None Dare Call it Conspiracy, by Gary Allen (1971), “German born international financier Paul Warburg masterminded establishment of the Federal Reserve to put control of the international economy in hands of international bankers.  The Federal Reserve controls the money supply, which allows manipulators to create alternate cycles of boom and bust, i.e., a roller coaster economy.  This allows those in the know to make fabulous amounts of money, but even more important allows the Insiders to control the economy and further centralize the federal government.” p 65.

The income tax, also passed in 1913, guaranteed that American taxpayer income would pay perpetual interest on government borrowing. These two actions created the monster we now see as “supercapitalism,” economic slavery of debt-ridden America to the banks, industrialists, politicians, and their designated favorites.

This system requires ever-increasing debt to prop up the money’s presumed value, but Americans are maxed out on credit.  The banks have stretched the rules to make borrowing easier.  The Fed is fiddling with interest rates to insure its economic health, but the loans are backfiring, and the banks are stuck with tangible, costly assets that they can’t easily unload.   Even the “global supply chain” can’t make it cost-effective to export a piece of real estate to Japan, but electronic money is easily disbursed around the world at the flick of a keystroke.  If money is the bank’s only product, that money better be backed by something of real value, or the bank loses its relevance, and the global supply chain crumbles into a pile of broken links. This is the supercapitalist dilemma.

If Americans aren’t working, spending, and paying taxes, government income can’t keep up with obligations. It can’t repay the loans, or even interest on the loans.  The “consumers” aren’t consuming enough.  Bottom lines have suffered.

Former President Bill Clinton’s Secretary of  Labor touts Clinton solutions.  Under his scenario, government has the answer to everything.  More laws, more regulation, more oversight, more paperwork, more money. . . this is the Clinton team answer, but it does nothing to repair the sidewalks in Savannah.

But of course Clinton is no longer the worst president in American history.  Bush is the next logical progression in the supercapitalists’ slave trader tradition.  Unfortunately, “consumers” are overstuffed and have lost their appetites.  They are fed up.  The supercapitalists might have to start earning their income.  Their seemingly unlimited stable of revenue-producing taxpayers isn’t performing up to economists’ predictions. The money churners on Wall Street and the asset plunderers in Washington are lost in the never-never-land of money backed only by money, and nobody knows where the value went.

Reich talks about “consumer buying power.”  What you have, Joe and Josie Taxpayer, is “withholding power.”  Note the crammed retail shelves and store aisles.  Bad choices abound, as the products worth buying slyly disappear, only to re-appear later with new price and packaging. Hardly worth the walk from the parking lot, or the time spent in the check-out line. Bottom line is they can’t move all that cheap plastic junk made by slave labor in China, and overhead is tightening the designer nooses around their supercapitalist necks.

The term “consumer” insults “customers” and reveals the anachronistic, aristocratic mentality at the core of supercapitalist thinking. This seduces the individual customer-voter-citizen-taxpayer into believing she is receiver rather than giver of charity to government and industry, yet both depend on “customer” income for survival.

But, all taxes fall disproportionately on those who can least afford them.  These individuals—who pay the largest share of disposable income in taxes–suffer first and most severely if the delegated power is abused.

That’s why we should abolish corporate income taxes, Reich says on page 216 of his 225 page book.  Let those profits flow through to shareholders, who are individuals. He claims the corporate income tax rate is higher than what low-income shareholders would pay if it were reported as personal income instead.  He claims lower income shareholders and company employees are unfairly taxed by the current arrangement.

Reich neglects to mention that the megacorporate supercapitalists, inhuman as they are, leave giant footprints on the communities they trample.  The corporate income tax is a token acknowledgment of their superhuman presence within the environment and on the local infrastructure.  The bipartisan, concerted move to abolish corporate income taxes reveals the supercapitalists’ latest ploy to shift costs to neighbor-customer-citizen-voter-taxpayers, better to pad bottom lines and pretend they deliver more than they cost.

Large corporations thus export money and resources out of town while local communities bear the costs.  The small business person, the entrepreneur, is the capitalist who does not depend on government help, yet suffers more than anyone from the political favoritism granted through corporate contractual agreements.  The supercapitalist’s greatest competitor is the genuine capitalist, the individual, who is free to use her head to negotiate her way through local markets, the stock market, and life, whether as seller or buyer, giver or receiver.

In supercapitalist jargon, customer-voter-citizen-taxpayers are not free thinking individuals.  We are “consumers,” “covered lives,” “special-interest groups,” “minorities,” “the elderly,” “the poor,” identities encoded in numbers that can be stolen without a gun, and, by the way, the source of all the supercapitalists’ revenue, whether through product purchases or taxes.  Shareholders are also customer-voter-citizen-taxpayers, and as individuals and capitalists, they are free to buy or sell their stock at any time.

Our society exploits human capital and degrades itself by not appreciating the rich variety of its human talent.  Human capital can’t be owned, but it can be manipulated and controlled through force and deceit.  These tactics eventually fail, because they engender passive aggression and passive resistance that ultimately undermine the predator, to no one’s benefit.  This sadomasochistic dance is the enemy of capitalism, because no one profits in a power struggle.

“Consumer spending” accounts for two thirds of US revenues, and as “consumer spending” decreases, so do tax revenues, an unfortunate, unintended consequence of putting everybody out of work or on the public dole.

My take-home message from Supercapitalism, the bottom line, is this:  The so-called supercapitalists have painted themselves into a corner, and they are desperate. They couldn’t have grown to their current size without significant government help, at the expense of the customer-taxpayers who finance both sides.  But legislation and tax law favor large over small, and the group over the individual. This heavily weighted advantage is the opposite of capitalism, freedom, fair trade, and democracy.

The easiest way to shrink the supercapitalists’ overinflated self worth is to work less, earn less, consume less, spend less, drive less, waste less, want less, and pay less in taxes.  I could repair the sidewalks myself for what I pay in taxes, and if I quit working, I might have the time.

The “customer” is always right. Joe and Josie Taxpayer have the right not to spend, the right not to pay for products shoved down their throats.  Get out of debt.  Interest payments do not give value for money.  Do you think the international investment bankers—the most superior of supercapitalists—want you discovering you have better uses for your money than debt-plus-interest payments?  You think the government wants you to shrink it to a manageable level?  You, Joe and Josie Taxpayer, are the genuine capitalists in America. Your minds are more vital than any supercapitalist contractual agreement. Life is free.  It’s your choice how you spend it.

 

Book Commentary: Confessions of an Economic Hit Man

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If I am opinionated, these are my teachers.

Happy Thanksgiving, Everyone.  Today, Thursday, November 26, 2015, I am feeding poultry, rather than the other way around.  I’m contemplating the market value of feathers from live chickens, and other tangible assets on the here-and-now front.  The Golden Goose, and all that.

I seem to be scoring hits with these Process Commentaries on books about current events.  Here’s another one.  Confessions of an Economic Hit Man was published in 2004.  I read it in March, 2006.  It was an eye-opener.  Perkins doesn’t go into the domestic implications of EHMs.  Think about the domestic implications of the EHM mentality, and you’ll never think the same again.

With out further ado, I’m uploading my 2006 take on Confessions:

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Confessions of an Economic Hit Man, John Perkins, 2004, http://www.penguin.com

Book Synopsis: Confessions of an Economic Hit Man

by John Perkins
Copyright 2004
A Plume Book
http://www.penguin.com

Synopsis by Katharine C. Otto, March, 2006

“Economic Hit Men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign ‘aid’ organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources.”

Thus begins John Perkins’ personal account as an economist hired by a background corporation to promote US government and corporate interests in foreign–primarily third world–countries. The method was simple: if there were resources to be exploited, he worked to seduce foreign governments into enormous debt obligations for infrastructure built by American contractors, financed through the World Bank and others. He achieved this by exaggerating predictions of economic growth. The arrangement resulted in huge contracts to large American corporations. Another goal was to obligate the borrower far more than it could ever repay, in order to tie that government to American political interests.

“I was to justify huge international loans that would funnel money back to MAIN [the company Perkins worked for] and other US companies (such as Bechtel, Halliburton, Stone & Webster, and Brown & Root) through massive engineering and construction projects. Second, I would work to bankrupt the countries that received these loans (after they had paid MAIN and the other U.S. contractors, of course) so that they would be forever beholden to their creditors, and so they would present easy targets when we need favors, including military bases, UN votes, or access to oil and other natural resources.”

Perkins writes that if EHMs fail at their jobs, “CIA jackals” step in. “If the jackal fails, then the job falls to the military.”

The purpose is to promote US commercial interests by ensnaring world leaders “in a web of debt that ensures their loyalty . . . . In turn, they bolster their political positions by bringing industrial parks, power plants, and airports to their people. The owners of U.S. engineering/construction companies become fabulously wealthy.

“Today, we see the results of this system run amok. Executives at our most respected companies hire people at near-slave wages to toil under inhuman conditions in Asian sweatshops. Oil companies wantonly pump toxins into rain forest rivers, consciously killing people, animals, and plants, and committing genocide among ancient cultures. The pharmaceutical industry denies lifesaving medicines to millions of HIV-infected Africans. Twelve million families in our own United States worry about their next meal. The energy industry creates an Enron. The accounting industry creates an Andersen.

“The US spends over $87 billion conducting a war in Iraq,” and now Bechtel, among others, holds US government contracts to rebuild Iraq from the devastation the war has created.

EHMs provide favors as “loans to develop infrastructure–electric generating plants, highways, ports, airports, or industrial parks. A condition of such loans is that engineering and construction companies from our own country must build all these projects. In essence, most of the money never leaves the United States; it is simply transferred from banking offices in Washington to engineering offices in New York, Houston, or San Francisco.

Ecuador provides one striking example of this system’s results: About the size of Nevada, Ecuador has 30 active volcanoes, over 15 percent of the world’s bird species, and a land of diverse cultures. In 1968, Texaco had just discovered petroleum in Ecuador’s Amazon region. Since then, a trans-Andean pipeline has leaked more than a half million barrels of oil into the fragile rain forest. Now there’s a new $1.3 billion, 300-mile pipeline by an EHM consortium, and oil accounts for nearly half the country’s exports.

“Vast areas of rain forest have fallen, macaws and jaguars have all but vanished, three Ecuadorian indigenous cultures have been driven to the verge of collapse, and pristine rivers have been transformed into flaming cesspools.”

Perkins says that since 1970, public debt in Ecuador increased from $240 million to $16 billion. Overall, third world debt has grown to more than $2.5 trillion, and the cost of servicing it is over $375 billion/year, as of 2004.

The only way Ecuador can buy down its foreign obligations is by selling its rain forests to the oil companies. One of the reasons the EHMs targeted Ecuador is the sea of oil beneath its Amazon region is believed to rival the oil fields of the Middle East.

“All of those people–millions in Ecuador, billions around the planet–are potential terrorists,” Perkins says, “not because they believe in communism or anarchism or are intrinsically evil but simply because they are desperate.”

Perkins describes similar tactics in Java, Kuwait, Iran, Panama, Guatemala, Chile, Saudi Arabia, Columbia and Venezuela. In rich countries like Saudi Arabia, he says, the goal was to induce them to spend money already in their coffers, buy US Treasury bonds, and use the interest to pay American contractors.

Book Commentary: End the Fed

bkspaulfed2009by katharineotto.wordpress.com:  At the national Libertarian convention in 2004, I blocked the exit and forced then US Congressman Ron Paul to meet me and shake my hand.

In 2008, when he was again campaigning for president, I wrote him and Ralph Nader, and asked them to run together for president and vice-president respectively.  Each has a history of breaking precedent, so I figured they could pull it off.

In 2009, I read End the Fed, and wrote the following book commentary and review.  Yesterday, I caught part of a live interview with Dr. Paul, in which he warned of a coming financial crisis.  While I agree with his assessment about the present situation, I believe the future needn’t be as dark as he fears.

The nation’s debt is unsustainable, and those dependent on the government stand to lose the most if the US declares bankruptcy.  That includes the elderly and the indigent, but it also includes all government employees, retirees, elected and appointed government officials, all the federal bureaucracies, the military, and government contractors.  That’s why Congress is so heavily invested in raising the “debt ceiling” until after the 2016 presidential elections.

We must remember that all of these people have generous benefits and retirement plans invested on Wall Street, in Treasuries, and in other places “too big to fail.”  Unfortunately for Wall Street and the federal government, the Baby Boomers are beginning to retire, withdrawing money from Wall Street as well as beginning Social Security, two huge money drains on the federal coffers.

Step number one to protecting yourself against loss is to get out of debt.  There is a move to abandon Wall Street for Main Street, where you have more control.  Dr. Paul’s concept of free coinage is good, as is the notion of returning to the stable gold standard.

And with that, I offer the 2009 review of a book that remains current.

End the Fed

by Ron Paul, 2009
Book Commentary by Katharine C. Otto
Written November, 2009

US Congressman Ron Paul’s latest book, End the Fed, raises more questions than it answers, but they are questions every taxpayer needs to ask. The representative from Texas’ 14th district, Dr. Paul, an obstetrician and gynecologist, has long advocated sound money and the gold standard.  This year, he has spearheaded a move in Congress  to audit the Federal Reserve (Federal ReserveTransparency Act, HR 1207).  The bill is now co-sponsored by over 300 members of the House of Representatives.

End the Fed is a personal account of Representative Paul’s interest and track record in economics and monetary policy.  He tells us his decision to enter politics was inspired on August 15, 1971, when President Richard Nixon defaulted on the US pledge to exchange gold for $35 per ounce from foreign governments.  “This was the third broken promise by our government regarding gold backing to our dollar.  Lincoln did it in the Civil War, and FDR did it in 1933 when he confiscated gold from the American people and made it illegal for American citizens to own gold.  Roosevelt took the gold at $20 an ounce and promptly revalued it at $35.  The citizens lost, the government profited.” (p. 45).

Dr. Paul hoped a seat in Congress would provide a forum for examining and helping to restructure the United States’ economic policies.

Simply and concisely written, End the Fed starts with a brief overview of the Fed’s creation, ostensibly to provide for “elastic” money through “fractional-reserve banking, the notion that depositors’ money currently in use as cash may also be loaned out for speculative projects and then redeposited.  The system works so long as people do not attempt to withdraw all their money at once.” (p 15)

He claims the Federal Reserve Act of 1913 is unconstitutional and immoral. It shifts wealth from the poor and middle-class to the privileged and favored few.  It debases the currency by allowing the Fed to expand the money supply without limit.  This has led to relentless inflation, boom-and-bust business cycles, vast expansion of the federal government, and perpetual war, all at the expense of taxpayers whose buying power is reduced while their taxes go up.

End the Fed gives a short history of banking in the US, the role of central banks, and the rationale behind Paul’s call for a return to the gold standard.  He says the Fed creates money out of thin air, but he doesn’t go into the method of doing this.  In this sense, the book oversimplifies in favor of readability.  (A more thorough explanation of the Fed’s creation and methods, as well as banking in general, is contained in The Creature from Jekyll Island:  A Second Look at the Federal Reserve, by G. Edward Griffin, 1994, realityzone.com.)

Born in 1935, Congressman Paul says he started working in his family dairy business at the age of five, checking milk bottles for cleanliness.  He remembers the tail end of the Depression and World War II rationing.  He developed an early interest in coin collecting that evolved into a fascination with economics.  He tells us he was heavily influenced by the Austrian school of economics, primarily Ludwig von Mises.  He also cites F. A. Hayek of The Road to Serfdom fame, and several other Libertarian-minded thinkers. He gives an account of his experience in Congress, pertinent committees and legislation, and conversations with current and former Fed chairmen Ben Bernanke and Allan Greenspan.

Although the book makes no attempt to delve into the intricacies of economics, or the methods by which the Fed has been able to create our current Ponzi dollar—he calls it a Ponzi scheme—Ron Paul has provided a highly readable insider’s view of the devastation wrought by the Federal Reserve Act and the departure from the gold standard.  He ends the book by suggesting several possible and relatively painless ways to restore integrity to our monetary system.

The book’s title came from a University of Michigan student-initiated chant, “End the Fed!” during a presidential campaign tour in October, 2007. The author ends by saying, “Freedom and central banking are incompatible.  It is freedom we seek, and when that precious goal is achieved, the chant ‘End the Fed!’ will become a reality.”

 

 

 

 

 

 

 

 

Empire of Debt

Reflections by Katharine C. Otto

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Empire of Debt:
The Rise of an Epic Financial Crisis

by William Bonner and Addison Wiggin, 2006

Tuesday, January 9, 2007 – I read Empire of Debt, by William Bonner and Addison Wiggin, until 2 AM.  This, by the authors of The Daily Reckoning, is an easy read of the history of empires, especially of their financial excesses.

            Wednesday, January 10, 2007Empire of Debt never defines “democracy” and uses the word in a fuzzy way.  It makes general statements about democracy, using the word to string different government models together.  I question the authors’ assumption that democracy hasn’t been tried, or if it was, failed.  What form of government has ever lasted and been “successful”?  By what standards do you measure success?  People come and go, tribes, cultures, governments.  Each runs its course and self-destructs or transforms into something new.  Some, like the Mayans, seem to have self-destructed.  Centralized power – rather the illusion that the individual has no power – acts like a black hole, sucking all the life force toward it, rather than the other way around.  The definitions reveal themselves in the direction of energy flow.

Thursday, January 11, 2007Empire of Debt reads as easily as a novel.  The authors, William Bonner and Addison Wiggin, have the cynical sense of humor I bring to these studies, but even they are susceptible to testosterone poisoning.

They gloss over terms like “democracy,” and give short shrift to significant historical events, like the creation of the Fed.  They bounce around in time and from war to war.  The book fills some historical gaps for me – such as the French possession of Vietnam before Ho Chi Minh.  But it leaves out, or takes for granted, the facts that Johnson got us in and Ford got us out of Vietnam.  That Truman authorized the nuclear bomb on Hiroshima and Nagasaki, that the 1929 stock market crash was the result of Fed policy (if Milton Friedman is to be believed).

History claims America is great because of its people, independent spirit, and innovative approach.  I claim Americans are the descendents of imperialists, opportunists, debtors, thieves, religious fanatics, prisoners, and slaves, who for one reason or another, couldn’t make it in their own countries.  So they moved here and took over the greatest store of untapped resources in the world.  We exterminated those who lived here, who had squatter’s rights if not the paperwork to prove stewardship of land the Europeans claimed with guns and attitudes.

What’s so great about that?  We have plundered the resources, wasted, sold, and polluted them, all under the naive impression that we are somehow more evolved, smarter, or otherwise better equipped to deal with the complexities of life than others.

The slave who aspires to be a slave owner remains a mental slave to ambition, because he accepts the slavery system.  The poor who aspire to be rich are just as money-driven as those they seek to replace.

A fool and his money are soon parted.  A foolish nation and its wealth are easily parted, too, as we are seeing.

The American Indians had freedom, possibly because they recognized no individual property rights.  They were stewards rather than owners of the land, a concept Europeans overlook.  They left few traces or scars on the land.

William Bonner and Addison Wiggin, in Empire of Debt (2006), claim democracy hasn’t been tried.  I claim it hasn’t been recorded, simply because there were no official guidelines to guarantee what truly democratic cultures took for granted.  Western history is largely military history, so these accounts overlook or discount peaceful societies, or those so amorphous in their structures as to be invisible.

Not to romanticize the American Indian.  I know little about the cultures, except there were no vast empires or other monuments to dead heroes, no evidence of large-scale bloodshed, no traces other than arrowheads, burial mounds, and encampments to show that the Indians even existed, so light was their step across the land.

What more proof of democracy do we need, because when all people are treated equally, no one role assumes falsely inflated importance.

The Founding Fathers did not bring freedom.  They brought European values to a free land and tied it up with strange notions of laws and property rights.  Freedom and democracy were extinguished or at least submerged when the European mindset clashed with native cultures.

Warring over land and territories destroys the assets both parties want. While Indians may have skirmished over hunting grounds, their mobile lifestyles prevented the greedy acquisitiveness that burdens travel.  It was not in their economic best interests to accumulate more than they needed, recognizing that nature is a great storehouse of raw materials, as long as she is allowed to function in that capacity.

DEMOCRACY AND EMPIRE OF DEBT:

Thursday, January 11, 2007 – The US was started by vagabonds, scoundrels, and schmoozers, but they represented the outgrowth of warlike cultures – cultures where democracy didn’t have a chance.  Books like Empire of Debt acknowledge a portion of my beliefs, validate some of my suspicions, answer some questions.  They do not give practical advice to those most affected by this monumental theft disguised as leadership and enforced by police.

Sunday, January 14, 2007 – Reading Empire of Debt shows how badly I got scammed, and continue to get scammed, by using honest cash.   The problem goes much deeper than authors Bonner and Wiggin realize, because they don’t acknowledge what crooks Americans have become, especially among their own.

This is nowhere more obvious than to the honest woman, who has become a rare treasure in today’s environment.  You don’t find honesty at the corporate or government level, because the decision makers have offices out of town and are not directly accountable to the person with a beef.  Legitimate complaints get deflected to talking heads who earn their money by keeping mine.  They have little incentive to earn my money, because the government has stolen it from me and given it to them.  They feed it back to taxpayers in dribs and drabs, forcing Josie Taxpayer to work for it, while the Shape Shifting Alien Reptiles (SSARs)* keep most of the profit.  Freedom is self-employment, without debt, claiming my right as a taxpayer to earn my living in peace.

The money churners fear other people’s freedom most of all, because the free are flexible, able to make quick decisions and change course in unstable times.  Corporate bulk limits flexibility, leaving many natural markets open for development.

“Freedom” implies the flexibility to choose, but also demands accountability for outcomes.  Problems delayed, ignored, or discounted ultimately create so much drag that freedom becomes slavery to unintended consequences.  A country in debt cannot be free, capitalistic, or democratic in the true sense of the words.

If you perceive problems as challenges, you will look for solutions within the problem and thus maintain freedom.

“Democracy” is the natural order of a free society, but the US wasn’t founded as a democracy.  At that time, most of the population was uneducated, distances large, and communications slow and unreliable.  Governments are inherently socialist and serve to limit freedom, democracy, and capitalism at every opportunity.

Democracy assumes an individual is her own highest authority, so it threatens centralized power.  Rather, it strives for organization within its ranks, a give-and-take that facilitates cooperative effort in lieu of cash.  An economically sound base of taxpayers seeks solutions from within before paying government to solve its problems.

“Capitalism” is perhaps the most misunderstood of all American concepts, because it is now linked to historical figures that exploited human capital for power and profit.  We associate capitalism with greed or avarice, but no true capitalist is either.  She recognizes the value of fair trade and the costs of disrespecting trading partners.  Capitalism knows you lose a client when you cheat, mistreat or underestimate her.  Genuine capitalists are the strongest defenders of individual rights and freedoms.

History blames capitalism for the powerful multi-millionaire – and now multi-billionaire – power brokers America has created.  But these people – like the oil tycoon John D. Rockefeller –  could not have amassed so much wealth without lots of government and Wall Street help.  The opposite of “capitalists,” these men were flagrant socialist opportunists who used presidents and Congress to pass monopolistic laws, bleed public coffers, control public land and resources, and obtain enormous and diverse subsidies and favors.  Taxpayer money and public assets apportioned by government paid most of the overhead for wars that expanded the US military-industrial empire and for the highway system that sold oil and cars.

A true capitalist values her independence as highly as she values that of others.  She will not obligate herself to others or them to her without careful consideration, because obligations come at a cost to freedom.

A true capitalist will not waste or hoard resources.  She is conservative in the old-fashioned sense of the word. She conserves resources and allocates them sparingly, hoping to maximize return on investment.  She believes in value given for value received.  Resources become more valuable as they are developed and sold.

Capitalism understands the difference between natural and artificial markets.  It also seeks its own turf rather than compete for “market share” in glutted fields.  It does not overburden itself with more responsibility than it can comfortably carry.  This is more cost effective and more creative, and it ensures ongoing freedom.

True capitalism looks for unfilled needs or desires, and recognizes opportunities to profit by satisfying them.  While this is perceived as exploitive, it only becomes that if the entrepreneur is not sensitive to the market.  She will not risk more than she can afford to lose, and she will not compromise on principle.  Desperation breeds dishonesty and undermines business relationships.

Sunday, January 14, 2007 – More on Empire of Debt:  It doesn’t define terms like “capitalism.”

It is cynical with respect to Americans, who trusted the so-called leaders who led them into this trap.  We feel betrayed by those who have made a mockery of our ideals and our trust, unscrupulous manipulators who have used false promises to make economic war on our values.

The disillusionment can potentially inspire a return to common sense and simple values.  Americans aren’t as stupid as the authors believe, just overly complacent.  A little financial awakening is headed our way.

The concept of government as paid protector, a la Mafia, needs to be addressed.

The book indirectly makes a strong case for investing in tangible assets, like jewelry or hand tools.

It completely overlooks how the tax code favors large over small, and groups over individuals; but the individual does the work, pays the taxes, and has to live within the constraints imposed by government.

Income tax deductions on interest rather than principal payments, for instance.  The income tax itself, as a matter of fact.

What do the politicians promise foreign governments to sell these debts?  My future earnings.  Shame on the buyers if they trust these creeps.  They don’t represent me.

The idea that living standards are rising in the US is so ludicrous that only an economist can believe it.  Look around to see antiquated and decaying cities, cheap commercialization, destruction of ecosystems, crime, violence, sloppiness, filth, pollution, and a general sense of zombieism with no mind or will of its own, following some blind initiative generated by TV.

Rather than blame taxpayers, ask why were they foolish enough to believe the worldly wise would make good on their promises?  The media spinners took valid concepts and twisted them into their opposites, leading the public to believe the talking heads were as honest as the public was gullible.

Meanwhile, the public, which has been led into a trap, is now blamed for following their leaders’ examples?

Government by the people has become government over the people, but the people are paying for their own oppression.  This is because they have been seduced by modern media into pretend versions of news and current events.  They are under informed, misinformed, and otherwise closed out of decision making processes that affect their lives.

Not only is government overspending.  It is actively spending in the wrong areas, almost as if it is committed to making the worst possible investments.

We have a government that wants to privatize without acknowledging a bottom line.  A good business model is a great idea.  Fire the government, and the private sector will take off.

 

* A term inspired by David Icke’s Tales from the Time Loop, 2007

Sell the TV and Read

If I am opinionated, these are my teachers.

If I am opinionated, these are my teachers.

katharineotto’s recommended reading so far

October 10, 2015–CURRENT READFDR, Jean Edward Smith, 2007

Independent Study of Literature, History, Culture, Medicine, Economics, Politics, and Philosophy
As of October, 2015

History, Economics, and Politics

Declaration of Independence, July 4, 1776, Thomas Jefferson and committee

United States Constitution, ratified in 1788-1790 by 13 states. Many authors.

The Wealth of Nations, Adam Smith, 1776

The Autobiography of Benjamin Franklin, Benjamin Franklin, 1771-1790

The Autobiography of Thomas Jefferson, Thomas Jefferson, 1821

Washington: The Indispensible Man, James Thomas Flexner, 1969, 1973, 1974

Alexander Hamilton, Ron Chernow, 2004

Thomas Jefferson: A Life, William Sterne Randall, 1993

The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an

Unnecessary War, by Thomas J. DiLorenzo, 2002, 2003

A People’s History of the United States: 1492-Present, Howard Zinn, 1980-2003

The Creature from Jekyll Island: A Second Look at the Federal Reserve,

G. Edward Griffin, 1994-2007 (realityzone.com)

The Robber Barons, Matthew Josephson, 1934, 1962

Confessions of an Economic Hit Man, John Perkins, 2004

Capitalism: The Unknown Ideal, A collection of essays by Ayn Rand, Alan Greenspan,

Nathaniel Branden, and Robert Hessen, 1946-1967

Capitalism and Freedom, Milton Friedman, 1962, 1982, and 2002

Empire of Debt: The Rise of an Epic Financial Crisis,

William Bonner and Addison Wiggin, 2006

None Dare Call It Conspiracy, Gary Allen, with Larry Abraham, 1971

A Republic, Not an Empire: Reclaiming America’s Destiny, Patrick J. Buchanan, 1999

Why Government Doesn’t Work, Harry Browne, 1995

The Fair Tax Book, Neal Boortz and US Rep John Linder (R-GA) (Not.)

Supercapitalism, Robert B. Reich, 2007

The Waste Makers, Vance Packard, 1960

Palestine: Peace Not Apartheid, Jimmy Carter, 2006

Judging Thomas: The Life and Times of Clarence Thomas, Ken Foskett, 2004

The Water Lords: Ralph Nader’s Study Group Report on Industry and

Environmental Crisis in Savannah, Georgia, James M. Fallows, 1971

Plastic: A Toxic Love Story, Susan Freinkel, 2011

Open Veins of Latin America: Five Centuries of the Pillage of a Continent,

Eduardo Galeano, 1973, 1997

Cuba: A New History, Richard Gott, 2004

Wild Swans: Three Daughters of China, Jung Chang, 1991

The Prince, Niccolo Machiavelli, written 1513, published 1532

Medicine

Overdo$ed America, John Abramson, MD, 2004

The Truth About the Drug Companies: How they Deceive Us and What to Do About It,

Marcia Angell, MD, former editor-in-chief of the New England Journal of

Medicine, 2004, 2005

Philosophy and Memoirs

My Family and Other Animals, Gerald Durrell, 1956

Cheaper by the Dozen, Frank. B. Gilbreth, Jr. and Ernestine Gilbreth Carey, 1948, 2002

Tales From the Time Loop, David Icke, 2003

Rats, Lice and History: The Biography of a Bacillus, A Bacteriologist’s Classic Study of    a World Scourge, Hans Zinsser, 1934

Collapse: How Societies Choose to Fail or Succeed, Jared Diamond, 2005

A Man Without a Country, Kurt Vonnegut, 2005

Walden, Henry David Thoreau, 1854

Fiction 

Gone with the Wind, Margaret Mitchell, 1936

The Lost World, Sir Arthur Conan Doyle, 1912

Life of Pi, Yann Martel, 2002

The Kitchen God’s Wife, Amy Tan, 1991

Empire Falls, Richard Russo, 2001

Moby Dick, Herman Melville, 1851

Invisible Man, Ralph Ellison, 1947

Uhuru, A Novel of Africa Today, Robert Ruark, 1962

A Tree Grows in Brooklyn, Betty Smith, 1943

The Jungle, Upton Sinclair, 1906

Of Mice and Men, John Steinbeck, 1937

The Idiot, Fyodor Dostoyevsky, 1868-1869

1984, George Orwell, 1949

Animal Farm, George Orwell, 1946

Oil!, Upton Sinclair, 1926

All the King’s Men, Robert Penn Warren, 1946

Uncle Tom’s Cabin, Harriet Beecher Stowe, 1852

The Octopus, Frank Norris, 1901

The Good Earth, Pearl S. Buck, 1931

The Old Man and the Sea, Ernest Hemingway, 1952

Remembrance Rock, Carl Sandburg, 1948

The Island of Dr. Moreau, HG Wells, 1896

Fahrenheit 451, Ray Bradbury, 1953

Paradigms

Flatland, A Romance of Many Dimensions, Edwin A. Abbott, 1884

Man’s Search for Meaning, Viktor E. Frankl, 1959

The Tao of Physics, Fritjof Capra, 1975

The “Unknown” Reality, Jane Roberts (A Seth Book), 1979

Put your taxes to work. Use your public library.