Archive for the 'Economics' Category

Ron Paul Predicted F&F Bail-Out, Five Years Ago.

Monday, September 15th, 2008

“If Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices…. By transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.”

- Ron Paul, 5 fucking years ago

Most Spam Would Not Exist Without The State

Monday, May 5th, 2008

So I’m on this uber-high-volume hardcore-libertarian mailing list and the subject to spam came up… Someone pointed out a story about a spammer being jailed, and a debate broke out about whether or not the state should be jailing people for sending unsolicited email.

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…

What they will say about the 2008 election in the future?

Monday, March 24th, 2008

Click here if you can’t see the video.

The Federal Reserve Fights Inflation! Right?

Monday, March 24th, 2008

You hear it all the time: We must have the Federal Reserve in order to keep prices stable.

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.

US Economy No Longer No. 1

Tuesday, March 18th, 2008

From the article:

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.

Bank Failures? No big deal, says CNN

Friday, February 29th, 2008

I really enjoyed reading this article, although I think would be much better suited publisher.

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!

Legalize Real Money!

Thursday, February 28th, 2008

I’ve been asked what Ron Paul fans mean when they say, “Legalize real money!” To answer this, see for yourself what the constitution says and compare it to current federal law:

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.

US Banks Jumping Without a Reserve?

Thursday, February 28th, 2008

So in America, banks are required to keep 10% of deposits on hand.  That is, when you deposit $100 into your savings account, they’re required to hang onto $10 and they’re allowed to lend out $90 of that to others.  The $10 they keep is their reserve.  This is called fractional-reserve banking because the bank only keeps a fraction of the money they promise to give you when you try to make a withdrawal.  There are many, many problems with this, but for now let’s concentrate on those reserves.  The idea is that if there were ever a crisis so huge that more than 10% of the customers wanted their money, the Federal Reserve could print more money out of thin air.  This obviously screws everyone who has US Dollars because printing new money causes prices to go up, which means the money you already worked for becomes less valuable.

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.

Why You Should Hate The FCC

Thursday, December 27th, 2007

Have I mentioned that Tim Swanson and B.K. Marcus are two of my heroes?  The first time I read B.K. Marcus’s piece on why spectrum should be private property, I almost had a Glenn Beck moment.  If you’ve ever thought for a second that the FCC might be good thing for America, you must read these two articles:

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.

Liberty Dollar Raided by FBI and Secret Service, Co-Founder Confirms

Thursday, November 15th, 2007

The company that offers the Liberty Dollar, a gold-backed private currency, was raided by the FBI today. “…they took all the gold, all the silver, all the platinum and almost two tons of Ron Paul Dollars that where just delivered last Friday. They also took all the files, all the computers and froze our bank accounts.” writes co-founder Bernard von NotHaus. This after the company began offering silver coins featuring an image of presidential candidate Ron Paul, who espouses hard money and commodity-backed currency. Details regarding the raid, including the reason for the raid, have been scarce. However, a host of was able to reach von NotHaus for an interview. The server that originally hosted the interview is virtually usable right now, but with some patience I was able to obtain a copy. I’ve uploaded a copy to, which should be able to serve several thousands of users at once without being bogged down. You can listen to it here: