German Stock Market during Wiemar Republic Hyperinflation

S&P 500 Adjusted Against Dollar-Index

I just wanted to take a moment to make three quick points:

1) The Internet is not going to stop working when we run out of IP addresses. In fact, that whole idea is incomprehensibly dumb.

2) There are PLENTY of IP addresses!!

Okay, get this… There are fewer than 300 million internet users in the world. There are over 4 BILLION IPv4 addresses.

Get it? There are plenty of addresses. The problem is not the number of addresses. The problem is that the crackheads assigning them don’t care whether or not they end up being utilized. What an incredible (and expensive) waste.

3) There is a very simple solution to this that doesn’t involve spending billions of dollars on forcing the world to move to IPv6 before it’s ready:

ARIN should just start reclaiming unused IP blocks.

It’s that simple. It really is.

Ping each IP address, and if there’s no response, check a few ports.

Use that data to create a utilization metric for each IP block.

If the IP block is underutilized, or not used at all, simply recover part or all of the IP block for someone else to use.

That’s it. That’s all that has to be done.

People are idiots.

What You Should Already Know

Everybody knows that the US Government is running a HUGE deficit — like $1.8 trillion so far this year — way more than the average human can fathom. I think it’s also safe to assume that everybody understands that this money is borrowed from other governments, like China, Japan, Brazil, the UK, etc.

So, obviously, the US government has to pay interest on this money that it borrows. It makes these payments by borrowing more money, which results in more interest payments for which even more money must be borrowed, and so on. The cycle continues as the debt increases exponentially.

What You May Already Know

This works fine as long as other countries continue to have an appetite for US debt. However, if they were to decide not to continue buying more and more US debt, the US Treasury would not longer to be able to afford to service its debt and would have to default. Total chaos would ensue, like you can’t imagine. Many banks would be rendered insolvent overnight, mutual funds and ETF’s would be wiped out, corporate and individual savings would be depleted, tons of governments — both foreign and domestic — would instantly go bankrupt, and the $100 trillion T-Bond futures market would be crushed.

But, that will never happen, because this is America, and the rest of the world will always want more and more and more of our debt, no matter how much we create. It’s a risk-free investment, after all!

What Just Happened

So, long story short, it turns out that last week the Treasury started having trouble unloading some of that freshly-created debt. Actually, they couldn’t sell about half of it. But not to worry — Bernanke’s crew quietly stepped in, printed $14 billion out of thin air, and used it to buy up all those bonds nobody else wanted.

That’s an easy quick fix, because most people probably won’t even learn about what happened, but it should send off alarm bells for anyone who has any interaction with the US economy.

See… if nobody wants to buy the US treasury’s debt, they basically have two options: They can default on the debt, which I described above, OR, since the government can print its own money, they can print money like crazy to continue financing their madness.

The latter is what seems to be going on right now. The problem with this is that as they create more new money, the existing money — the cash that’s in your wallet and bank accounts — loses value. Since your money is less valuable, it takes more of it to buy the same stuff. In other words, prices go up. Economists call this “price inflation” for obvious reasons.

All modern governments do this to some degree. This is why prices gradually go up over time. It’s basically a hidden tax.

However, the more the US government inflates the money supply to finance their deficit spending, the faster the US Dollar will lose its value. If this continues, the US economy could enter into a state of hyperinflation, and virtually all of the value of the USD could be wiped out.

This is nothing unprecedented. The US did it back in the 1860′s, Germany did it in the 1920′s, China did it in the 1940′s, Israel did it in the 80′s, and Zimbabwe is doing it today. These are just a few of many, many examples.

I guess the biggest difference is that everyone in the US seems to think it can’t happen here, but apparently it’s starting to slowly unfold.

Part 1:

Part 2:

Click here and here if you can’t see the videos.

Click here if you can’t see the video.

The idea that this will be thrusted upon everyone in American really, really pisses me off.

Says Moore:

“The wealthy, at some point, decided they didn’t have enough wealth. They wanted more — a lot more. So they systematically set about to fleece the American people out of their hard-earned money. Now, why would they do this? That is what I seek to discover in this movie.”

This is just dumb. As John Stossel begins to point out, it’s not the private sector that is “fleec[ing] the American people out of their hard-earned money,” it’s the government. Who robs Americans of half of their hard-earned income at gun point every single year? Who counterfeits endlessly to the point of causing massive and widespread malinvestment, job losses, inflation, and depressions? It’s certainly not the private sector. And it certainly has nothing to do with Capitalism.

(Note: This post was authored for the LRC Blog.)

Sometimes I really enjoy watching financial news channels, but it’s not at all because they provide any valuable information. I’m just fascinated by how clueless the talking heads tend to be. If you know better, it’s really amazing to watch. If you don’t know what I’m talking about, just watch this YouTube clip for a perfect example. These guys on TV have no clue at all what’s going to happen in the future, because they have no understanding of what’s going on in the present. People like Tom Woods and Peter Schiff (the guy in the YouTube clip), on the other hand, are students of the Austrian school of economics and therefore have a fundamental understanding of current events that is extremely rare these days. My point is that Tom Woods is uniquely equipped to explain what’s currently going on, and you’re simply not going to find such accurate, insightful analysis anywhere else.

That’s why I’m so thrilled about this book. It’s the one book that has the power to enlighten the masses as to what’s really going on. Don’t be a babbling idiot like the talking heads in the YouTube clip. Pick up a copy of Meltdown and gain a crystal-clear understanding that even most economists don’t have.

- Ron Paul, 5 fucking years ago

But there’s something they seemed to be missing… with the occasional exception of replica watch spam or penis enlargement spam, almost all spam is an advertisement for controlled substances… without the state making it illegal to conduct such transactions out in the open, it wouldn’t be necessary to broadcast this crap to as many people as possible in order to make money. It would be more economical to setup shop just like any other business. Thus, without the state, such spam would not exist.

…just a random thought…

This is a graph of the Consumer Price Index from 1800 to 2007:

It doesn’t take a rocket scientist to figure out which part of this is more stable.

THE US economy lost the title of “world’s biggest” to the euro zone this week as the value of the US dollar slumped in currency markets.
Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the US when the European currency surged to a record high of more than $1.56 per euro overnight.

“The curious outcome of breaching this latest milestone is that the size of the euro zone’s annual output has now exceeded that of the US,” the economics department of Goldman Sachs, the Wall Street investment bank, said in a note to clients.

Taking official estimates of 2007 GDP, $US13,843,800 billion ($14,726,000) for the United States and 8,847,889.1 billion euros for the euro zone, the economy of the latter passed the US once converted into US dollars, shortly after the euro topped $1.56.

The US dollar sank to $1.5688 per euro late in European trading hours overnight, at which rate the euro zone’s 2007 GDP equates to $13,880,568.4 billion.

The 2007 GDP estimates are as published by the US Commerce Department’s Bureau of Economic Analysis and provided to Reuters on request for the euro zone by Eurostat, the European Union’s statistics office.

Here are some excerpts:

Banking experts say there is one thing that will save your money if your bank goes under. That’s FDIC insurance. “It’s the gold standard,” says banking consultant Bert Ely. “The FDIC has ample resources. It’s never been an issue,” he says.

As loan delinquencies rise, and bank failures increase, the FDIC is shoring up its reserves.

That’s fascinating, because last I checked (about five minutes ago), the FDIC had in its assets about 1.2% of the deposits it claims to “insure”.

If your bank bites the dust, there’s nothing to fear according to the FDIC. A healthier banking institution normally buys the failed bank according to Barr. “There is little or no interruption to the consumer,” he says. “If you go to bed one night as a customer of a bank, and you wake up as a customer of a new bank, there is nothing you have to do.” Your checks will still clear, you can still use your ATM card.

See? Bank failure isn’t even a bad thing!

Article I, Section 10, Clause 4 of the United States Constitution:
“No State shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;”

(Note that on every unit of paper money the U.S. government asserts without apology: “This note is legal tender for all debts public and private.”)

Title 18, Part 1, Chapter 25, Section 486 of United States Code:
“Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.”

So there you have it… The Constitution says gold and silver are the only valid forms of legal tender. The Congress now says, use gold or silver as money and go to jail. How could it get any more black-and-white than this?

The founding fathers understood that giving the government power to print money out of thin air was a bad idea. They knew it would lead to incredible inflation at the expense of almost every American, which it has. They knew the government wouldn’t be able to fabricate gold and silver out of thin air, so they made it law that legal tender must be in the form of gold and silver.

But that probably won’t ever happen, right?  I mean… we’d have to be in pretty bad shape.

Well, check out this graph…

Non-borrowed Reserves = Total Reserves – Money Borrowed from the Fed.

Notice how the latest tick is at -3.9.  This means that, for the first time since the Fed started publishing this data series, the banks’ reserves are made up mostly of money they borrowed from the Fed.  How do you feel about your bank having to borrow money just to maintain a 10% reserve?

Thanks to Dr. Mark Thornton for pointing this out and to Dr. Randall Holcombe for explaining it to me.

• The Spectrum Should Be Private Property: The Economics, History, and Future of Wireless Technology by B.K Marcus
• The Spectrum Swindle by Tim Swanson

Every American has been screwed by the FCC.  A vast, vast majority of them will never know just how much they’ve been affected, but sadly they all have and will pay the price.