Saturday Reading

Yeah... It's a boring headline, but so what?  Everybody's tuned into football, leaf peeping, or enjoying the Indian summer.  Here are some interesting links I collected but ended up not blogging about.

Why Ron Paul Will Never Be Elected President

Praise Allah, we schwacked another turd in a turban who has been plotting America's destruction.  As a bonus, he was a traitor to America as well.

Instead of celebrating, Ron Paul called it an illegal assassination.  That's not presidential; unless you are president of an America-hating turd-world nation.  Dr. Paul is awesome on banking, economics and small government, but he loses me when he starts talking crap like this.


How Money Works

If you want a quick lesson on international currency, how one goes up and others down, and just what it means to have the dollar as the reserve currency (and why losing reserve currency status could be a good thing), read this article:  FP - An Exorbitant Burden

Ve hav Vays of making you stop talking...

Even Liberals are Fed Up with TSA.  Advice Goddess Amy Alkon, no conservative but a great blogger, has accused the TSA of rape.  In true Chicago fashion, HeimatlandSicherheit Kommissar Janet Napoleonitano looks on approvingly as the accused TSA groper threatens to file a defamation lawsuit against blogger Alkon for writing about the incident.

How to Balance the Budget

John Stossel explains how to balance the federal budget

Cosmetology Cartel Kills Jobs
George Will tells a true story that illustrates how government regulation protects big business and guards the prerogatives of special interest cartels, killing jobs in the process.

Clearing out the job-killing regulations would give us an immediate economy stimulating jobs program without the half-trillion price tag.

Finally, the Quote of the Week

The honor goes to the plain-spoken and always on his A-Game, 98ZJUSMC

I never brag about my paltry foreign adventures, but our leftist friend Ducky will nonetheless zero in on them from time to time, for some strange reason.  On this particular day, he was chiding me for my service in Colombia, a beautiful country full of wonderful people and an excellent military and police force.

How much did we pay you to guard the pipeline in Colombia?

98ZJUSMC Responded:

But, everything's just ducky when Shanks McMulligan, Lightbringer of the Receeding Oceans, Possessor of the Magic Key, Guardian of the Idiot Realm and purveyor of Keynesian economic nonsense pulls off another teleprompter enabled coup of Fordian dimensions.

Good as Gold

http://www.marketskeptics.com/2009/06/chairmen-of-federal-reserve.html

Monetary policy and the gold standard can be confusing topics, but we must understand them if we are going to put a stop to government's wealth destroying shenanigans 

I've dipped my toes into Austrian School economics and f oundthe water a pleasant intellectual temperature but very, very deep.  I've read Ron Paul, I've read Murray Rothbard, and I still have at best a only very fundamental understanding of money and banking.

Why the Opposition to the Gold Standard?

Government meddling has destroyed the value of our currency, which in turn robs us of our savings and destroys our buying power.  Nathan Lewis has a gift for breaking down complex issues like the gold standard.  First, he explains why money manipulation is attractive to the mercantilists (those who oppose a gold standard or fixed currency.)

Mercantilists don't see currency instability and monetary fiddling as problems; they see them as solutions. A gold standard system prevents them from implementing this apparent solution, which is why they sometimes refer to the "golden fetters" that used to hold them back.

A standard pro-Federal Reserve argument says that the Fed expands and contracts the money supply to keep the economy on an even keel.  We know how well that has worked over the past 100 years.  Lewis explains the flaw in this argument:

In the short term, a currency devaluation, or an easy-money policy, can create what appears to be an improvement in economic conditions. We saw this with QE1 in March 2009 and QE2 in late 2010. In the longer term, however, this sort of strategy tends to cause stagnation and economic decline. The notion that a country can become wealthy just by fiddling with its currency is patently ridiculous. The most successful countries worldwide have always been those with the most stable currencies.

Such manipulations provide the illusion of wealth, but that's all it is, an illusion.  My house is worth more now than it was 10 years ago, but the dollars that it is priced in are worth so much less, it's probably a wash.  Again, Lewis explains how the Dow Jones Industrial Average is valued higher now than in 2000.  However...

The Dow Jones industrial average was worth about 43 ounces of gold at its peak in 2000. Today, it is worth about 8.5 ounces, a decline of about 80%!

So, like my house or the DJIA, it all looks good on paper, but it's just paper!  You can add zeros on to the price of something, but it will not increase or create real wealth.

A similar story could be told by per-capita GDP, in nominal and gold terms. Today, after 40 years of floating currencies--since 1971--U.S. per-capita GDP, as measured in ounces of gold, is back to levels first seen in the early 1950s. Forty years of easy-money currency fiddling has caused stagnation and decline, just as the Classical economists said it would.

This explains why when government economists point to statistics to say how much better off we are, we really don't feel any better off.  It's all accounting tricks done with currency manipulation.  We went off the gold standard in stages, with Nixon dealing the final blow:

The floating currency system appeared in 1971 for this exact reason. Richard Nixon wanted to boost the economy with easy-money before the 1972 election. Did it work? Officially, GDP rose 5.3% in 1972. Nixon was re-elected. This kicked off a decade of inflation and economic decline.

The Reagan recovery was real because it was driven by a strong dollar.  We all really did get richer because our money was not losing value in the 80's.  Alas, George W. Bush went back to the old government tricks, with President Obama kicking the printing presses into hyperdrive.  Here we are today, richer on paper, poorer in reality.  Thank the Federal Reserve.

Nathan Lewis - If the Gold Standard is so Great...
Market Skeptics