Finally On The Right Street

I was in Chicago one week ago, taking a fun day trip with my 3-year-old son Ethan, doing 'ooh ahh' touristy stuff.

It was a concise little route to begin the day, arriving at Chicago Union Station via Amtrak. We walked across the south branch of the Chicago River on Jackson Street to the Willis Tower. After looking out over the city in those glass balconies, we had Chicago style pizza at Giordano's, which is just a block east on Jackson, across Franklin. After lunch, we walked towards the Lake along Jackson Street as I looked for a cab to hail. Before I could find one looking for a fare, we arrived at the intersection of LaSalle & Jackson. One the northeast corner, I saw the Occupy Wall Street protesters- outside the Bank of America building.
The thing that immediately struck me was that nobody was protesting on the northwest corner of LaSalle & Jackson. This is the location of the Federal Reserve of Chicago.What struck me next was that there were protesters carrying anti-war signs. They were protesting Bank of America, for funding wars.

Looking at the protester-free Federal Reserve Bank of Chicago. Protesters at the Bank of America, to the right, and this well-intentioned man, on the wrong side of the street.

I didn't want to have a political day. I was there with my 3-year-old, who is fascinated with trains, tall buildings, pizza, and fish. I wanted to get him to the Shedd Aquarium, post haste, and not get involved in protracted political discussions. That would have bored the crap out of him.

But damn! At least OWS is on one of the right streets now. They're just on the wrong side of the street. Is it possible, really, that people who one might suspect are politically aware, could be so ignorant to not know that it is the Federal Reserve, with its printing of money out of thin air, that funds these wars? That, if we were on a gold standard, and not able to deem ourselves able to spend massive gobs of money on war machinery, we simply couldn't do it?

The Fed! That is where you should be protesting! If I accept that the protesters are politically aware, my only possible conclusion is willful ignorance- that blind adherence to anti-corporate rhetoric comes long before striking at one of the roots of the problem. I'm not fan of corporatism, but corporatism is enabled by fiat currency and politicians who don't mind to direct the printers to whip up more cash, and who want to thump their chests as the World's Cop.

So yeah- protest at the White House and at Capital Hill, too. OWS is still largely at the wrong street. Protest at the Fed. This is all the more pertinent on this Veterans Day.

On The Wrong Street

The thought that keeps running through my head whenever I see a news report about the Occupy Wall Street protest is that the have the wrong street. The best places to start would be the nearest Federal Reserve Bank. There are 12 branches. The nearest to Indy is the Chicago Fed. Locations.

I also think about Thomas Jefferson's admonition about private banks (such as the Fed is) and corporate power. Consider that he made his remarks over 200 years ago, so it isn't

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

* Letter to the Secretary of the Treasury Albert Gallatin (1802) and later published in The Debate Over The Recharter Of The Bank Bill (1809)

Or, if that doesn't resonate, pick one or the other of the following streets: E. Capitol Street, or Pennsylvania Ave.

Is corporate power too great? Don't like the bailouts? Well, who granted that power? American corporations didn't magically divine their powers. They were created by government. The money corporations get from government? Corporations may well ask for it, but it requires a bailout, or a stimulus program, or a subsidy for that money to end up in corporate hands. So, protest to the government that makes it so. Strike at the root, don't just pop the head off the dandelion.

The Fed is also the root. Where did the stimulus money come from? It was printed out of thin air. It did not back actual value. If governments cannot command their private bank to print money out of thin air, then banks on Wall Street cannot so blithely be bailed out when they screw up royally.

I admire many things about the protest (the 'Stop Capitalism' notably excepted), but I believe it is ultimately misdirected. There are members of Congress and executives at the Fed laughing and high-fiving over the misunderstanding, and the idea that the protesters are on the wrong street.

Update: Oh, did I say I admired Occupy Wall Street? Well, yes, I did. They just went way down the toilet in my estimation, now that I have read the 'Proposed List of Demands For Occupy Wall Street'. I beg the world's pardon. I fucked up. I saw protests against corporatism, and they had my interest. But now that I see that particulars? Sheesh. There are two good ideas in there along with one needless one, and 10 big stinking losers. They thought the economy was bad now? Bwaaahahahaha!

Horns of the Burnout/Excitement Dilemma

When it comes to politics, I go through cycles of excitement and burnout, and usually it's an either/or proposition. Not now. This time, it's both.

I was wholly burned out up until I saw the results of the elections the following day. But, seeing Chard Reid get more than 7% in his US Congress race, and 9.45% here in Hamilton County really picked me up. Seeing our base on the federal races go from 1-2% to 4-8% in every single Indiana congressional district is positively uplifting.

But, I'm still burned out. I'm tired of politics. I'm very interested in re-broadening my horizons again. I've missed music, and want to buy a guitar and bass, and play in a band again. I want to play with my kids more.

I'm not at all excited about the Republicans winning office. Sure, I'll probably get gridlock, which is usually my best bet for limiting government. History tells me the Republicans won't cut anything, but slow the growth rate. Sorry, that's not the real deal. Watch what happens when they confront the debt ceiling. That will tell you whether the commitment is to maintaining the size and scope of government, or to sustainable government.

Add to this the remaining staggering idiocy. I was reading a leftward blog this morning and saw a post suggesting that... Hold on. I have to quote it, just to capture the sheer stupidity in its full essence:

Had we just devalued the dollar to about 70 percent of the current worth, and at the same time devalued all property, wages and prices by the same amount, we would be super competitive in the world, we could afford to produce and sell products worldwide instead of sending our jobs overseas, and people could afford to stay in their homes.

In context, that line is about class warfare. This is one person's suggestion that would presumably improve the lives of the lower and middle classes.

Inflation improves the lives of exactly one class of people- landlords. The rents go up in pace with inflation, while the landlord pays off the mortgages with less valuable dollars. Everybody else pays higher prices for everything: food, gasoline, rent, cars, everything. So, who can best afford to pay the difference when gas goes from $2.50/gallon to $3/gallon, as it did this week? Why did the price go up? Because the Federal Reserve bought a bunch more of our debt, thus weakening our dollar. This continues the trend of monetizing debt that began in August. It hasn't weakened by 70% yet, as the genius on Masson's Blog desires. That's probably only going to be good for 1 or 2 point increase in the inflation. I figure the guy who makes a quarter million a year can better afford to shell out an extra $5 at the pump each week, an extra $25 at the grocery store, etc. If I wanted to crush the poor, the BEST tool I could think of would be inflation.

So, with this kind of idiocy running rampant, I get torn on the consideration of forging on or giving up. Yes, libertarians have momentum, but stupidity that willfully ignorant seems impossible to overcome.

You Can Never Go Wrong Underestimating...

Abandon ye all hope. "Petitioning" to increase inflation to 100%. The man should be fearing for his life. Alas.



At least one man stood his ground and refused to sign.

We Want To Give Power?

Why am I so opposed to government run health care? Because I'm hard pressed to think of anything important that government does well. For reference, consider our economy.

Yes, the Federal Reserve is a private bank, but it is given power to control our currency by our federal government. Ben Bernanke is the 'Czar' of the Fed. He was wrong about housing, wrong about the poosibility of recession, wrong about the strength of economic fundamentals.



Video courtesy Lew Rockwell. Great article.

This is typical. 'Stimulus' packages don't work, so our federal government does stimulus packages. Inept people run the show. Socialized medicine doesn't work, so of course we are headed that way, and no doubt, some inept clown with be the 'Czar' of health care.

If I had a surgery I was putting off, I'd get it done pronto.

(h/t: Wayne Kirk)

And, Here's The Inflation

Well, I guess the rate can't be cut much lower than 0.5%, so what's left to do? Fire up the printing presses! Make some of that 'money' out of thin air! From CNNMoney:

...the Fed will likely continue to use its new favorite tool, quantitative easing, "Fed-speak" for pouring new money into the economy.

In addition to lowering rates, the Fed has increased its lending to financial institutions and foreign central banks throughout the year to ease the credit crunch. But when the financial markets exploded into crisis-mode in mid-September, the Fed's reserve of Treasurys to support its lending began to run low. As a result, the central bank began firing up the printing presses, financing drastically increased lending to banks, purchases of corporate debt and bailouts of troubled institutions like AIG.

So, I hope you did invest in gold, or some other commodity that can hold its' value. Your currency isn't going to be worth anything.

"The end result of all of this could be the next major problem: the crisis of confidence in the dollar," said Baumohl. "At some point, foreign investors are not going to come to the table to buy U.S. debt, leading to a dollar decline."

I'm more worried about by purchasing power, although to hear the disciples of FDR, a body blow to my purchasing power is a blessing.

I can't wait to watch the left struggle to explain itself. How is it that the Clinton era was so prosperous under the anti-inflationary eye of Alan Greenspan, and we are to return to prosperity with Obama under an inflationary course?

I get to thinking about my favorite stories of Weimar Germany, hoping it never reaches us. From a nice, short history via PBS:

Pianos, wrote the British historian Adam Fergusson, were bought even by unmusical families. Sellers held back because the Mark was worth less every day. As prices went up, the amounts of currency demanded were greater, and the German Central Bank responded to the demands. Yet the ruling authorities did not see anything wrong. A leading financial newspaper said that the amounts of money in circulation were not excessively high. Dr. Rudolf Havenstein, the president of the Reichsbank (equivalent to the Federal Reserve) told an economics professor that he needed a new suit but wasn't going to buy one until prices came down.

Why did the German government not act to halt the inflation? It was a shaky, fragile government, especially after the assassination. The vengeful French sent their army into the Ruhr to enforce their demands for reparations, and the Germans were powerless to resist. More than inflation, the Germans feared unemployment. In 1919 Communists had tried to take over, and severe unemployment might give the Communists another chance. The great German industrial combines -- Krupp, Thyssen, Farben, Stinnes -- condoned the inflation and survived it well. A cheaper Mark, they reasoned, would make German goods cheap and easy to export, and they needed the export earnings to buy raw materials abroad. Inflation kept everyone working.

So the printing presses ran, and once they began to run, they were hard to stop. The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."

and

The flight from currency that had begun with the buying of diamonds, gold, country houses, and antiques now extended to minor and almost useless items -- bric-a-brac, soap, hairpins. The law-abiding country crumbled into petty thievery. Copper pipes and brass armatures weren't safe. Gasoline was siphoned from cars. People bought things they didn't need and used them to barter -- a pair of shoes for a shirt, some crockery for coffee. Berlin had a "witches' Sabbath" atmosphere. Prostitutes of both sexes roamed the streets. Cocaine was the fashionable drug. In the cabarets the newly rich and their foreign friends could dance and spend money. Other reports noted that not all the young people had a bad time. Their parents had taught them to work and save, and that was clearly wrong, so they could spend money, enjoy themselves, and flout the old.

The publisher Leopold Ullstein wrote: "People just didn't understand what was happening. All the economic theory they had been taught didn't provide for the phenomenon. There was a feeling of utter dependence on anonymous powers -- almost as a primitive people believed in magic -- that somebody must be in the know, and that this small group of 'somebodies' must be a conspiracy."

When the 1,000-billion Mark note came out, few bothered to collect the change when they spent it. By November 1923, with one dollar equal to one trillion Marks, the breakdown was complete. The currency had lost meaning.

I hope it never comes to this. Perhaps we will only go as far as revisiting the 1970s economy. This crisis has all the markings of history repeating itself, though, by way of willful ignorance of economics, and a mindless scoffing at sound money as 'mere ideology'.

Best be prepared.

Time To Talk About The Federal Reserve

It's rare that circumstances make it such that Americans take an interest in monetary policy and the Federal Reserve. Usually, such talk is the kind of thing that gets 'tinfoil hat' comments. However, we are living under such circumstances, and people are beginning to see that printing money without backing by assets is dangerous business, and is the business of our Treasury.

Here's a link to a debate about the Fed that is already underway. A shame place for comments wasn't made available. I am at your service.

I find it instructive to look back on the Federal Government's recent actions against NorFed and the Liberty Dollar. Mainly, it shows a deep commitment to valueless paper money and to inflationary policy.

Not Worried About Short Term Effects

The most irritating comments I hear about the financial crisis are along the lines of 'having to do something', or 'needing to minimize the pain'. I'm seeing through that rhetoric for what it is, and calling it out as dangerous.

Needing to minimize whose pain? I have come to believe that for the President and lawmakers like Barney Frank, John McCain, Barack Obama, Nancy Pelosi, and Dick Lugar, it's all about not having a deep recession happen on their immediate watch. That's exactly the problem. Forestalling what needs to happen only will beget a bigger problem- later.

These bad loans are nearly worthless assets. They have been overvalued for far too long. They should be valued as worthless or nearly worthless. Those who gave out these loans should be losing their asses. Those who took loans they couldn't pay back should be losing their homes. Politicians who encouraged the Federal Reserve to endlessly print money or borrow severly from China and Russia deserve to have a crash happen on their watch. This is actual economic and social justice. Prolonging the necessary means that it will be worse later. Want a depression? Promote a new bailout package.

The market is making correction- as it should. Propping up prices means artificially making things appear to be worth more than they are. That's what Bush, Frank, et al want us to do. This is why I am so pleased that so many members of the House voted against the bailout. It's senseless. It does not have to happen. It is sane that it does not.

Hyper-Inflation in Zimbabwe

I'm happy to say that I have no experience with hyper-inflation. I do have a growing concern about our growing inflation, so it was interesting and frightening to hear a man from Zimbabwe tell what it is like to deal with money that loses value as the minutes pass.

We're all feeling the pinch with marginal increases in inflation. Can you imagine going to the store for something, being interrupted by errands, returning to the store only to find the price has gone up 4x? Can you imagine that as a daily occurrance? This is life in Zimbabwe, where inflation is on a genuine runaway course.

Check out the Cato Daily Podcast for July 29, 2008, titled, "How Inflation Robs Zimbabwe". Link to Cato's podcast archive.

While most of the Federal Reserve's tinkering fixes one thing while creating other problems, one thing it can do well is to help keep inflation at bay. We need to stop borrowing money from foreign nations, and stop printing more money.