Saturday, January 19, 2013

The Absurd Ridiculous

The budget deficit isn’t our biggest problem, by a long shot.

Furthermore, it’s a problem that is already, to a large degree, solved. The medium-term budget outlook isn’t great, but it’s not terrible either — and the long-term outlook gets much more attention than it should. It’s true that right now we have a large federal budget deficit. But that deficit is mainly the result of a depressed economy — and you’re actually supposed to run deficits in a depressed economy to help support overall demand. The deficit will come down as the economy recovers.

So opined the Fool as Economist, Dr. Paul Krugman, in a recent op-ed piece in the New York Times.

How could a Nobel prize winning economist say something so absurdly ridiculous? Just what are they teaching in the schools these days?

In contemplating this, I first assumed that the Fool was a man of great intelligence whose thinking was logical given some set of presuppositions and premises. But what could they be?

Ah yes, silly me! It's the Federal Reserve. As the Fool is well aware, the Federal Reserve has the legal ability to create money out of debt. They are authorized to buy debt with money they have created out of nothing. Of course no one can create money out of nothing. But they pretend to do so and as long as everyone believes the con, they appear to do so. In a pinch they could buy the entire US debt tomorrow at 2:33 PM or, if you please, at midnight tonight.

Since the 1940's the Fed has been returning the interest on the notes they create to the US Treasury. If they were holding the entire US debt, the interest would be a wash in terms of the federal budget. All the interest the US paid on the debt would be returned to the US Treasury, minus operating expenses, which are an insignificant fraction of the total interest. At that point, the Federal Reserve could simply cancel the debt with no one appearing to lose any money - including the Fed themselves.

Such a move would be hyper-inflationary and it would tend to destroy confidence in the faith and credit of the United States, stealing trillions in the process. But it would remove the debt, or any portion of it that the Federal Reserve desired. If one ignores or denies this devastating effect of fiat money (and John Maynard Keynes was probably right when he said that inflation was a tax that only one man in a million could diagnose), then our Fool appears to be right.

But God is not mocked. He has the last word which is that those who borrow and do not pay back are wicked. (Psalm 37:21) All men, including the respected Federal Reserve, will reap the wickedness they sow.

Friday, January 18, 2013

An Honest Liberal

I was eating lunch the other day with a colleague and the conversation turned to guns. Like most Brits, he considered Texans' paranoid clinging to their guns and the 2nd Amendment both outdated and just plain stupid - although he was too kind to use the latter word. Of course a wide ranging conversation quickly ensured covering all the usual arguments at least once.

There were a few misconceptions of the constitutional position, such as the idea that gun ownership does not prevent tyranny because many European nations did not have guns and their governments had not become tyrannical. (Debate of that assertion was reserved for another lunch. But that’s analogous to saying that sprinkler systems don’t keep buildings from burning down because one knows of several buildings without sprinkler systems that haven’t burned down.  It should be obvious that if the buildings haven’t burned down it’s because no one started them burning, not proof that sprinkler systems are unnecessary. Sprinkler systems do impede or stop a fire once it’s started just like guns impede or stop the advance of tyranny when such sins break out from rulers.)

But the most interesting and revealing comment came following a comparison of the gun death numbers in both countries.

Honest Liberal: Gun deaths in the UK are only 35 compared to 35,000 in the US.

Me: Yes, but violent crime is far higher in the UK than in the US. I pointed him to a UK site with some figures. 

I thought this data from a British source showing a violent crime rate over 4x the rate in the United States (466 compared to 2034) would surely be convincing. While that was not the case, his response did turn out to be highly revealing.

Honest Liberal: OK ... I'll give you that ... statistically more people in Britain may say they have been victims of crime ... but they are alive to talk about it. Getting your purse snatched versus being mowed down with a fire arm ... that's the choice.

Therein lies the heart of the difference. Liberals would rather have their life than their freedom. They would rather live in a world of petty robbery, home burglary, muggings, government directed health care, government mandated education, government monopoly money, government supervised sanitation, government provided water, government approved food, with confiscatory taxation to implement it all and be alive to talk about it than risk death in the cause of liberty.

Of course, liberals want freedom too- freedom to watch the movie of their choice and vacation in the country of their choice, freedom to choose which company will send 3/4 of their pay to the government and which government approved doctor will oversee their health, freedom to vote for which politician will drop the tax on them 10% and raise it 20% on the other guy, freedom to either walk or drive their 1.1 children to the government mandated school, freedom to go to bed at the time of their choosing, freedom from being fired by their employer or injured in their wood shop, and freedom to be robbed and live to talk about it.

Nothing illustrates the contrast between liberals and patriots better than to compare this actual conversation about how liberals view life with this actual flag about how patriots view liberty.

This is the Troutman flag hanging in the Texas State Bar building in Austin, TX. It is blue pigment on a plain white sheet. In 1835 the Texan's fight for independence from the Mexican confederation attracted attention throughout the United States. Although the US rightfully did not entangle itself in this foreign issue, hundreds of individuals properly responded to the call for help. This flag was made by 18 year old Joanna Troutman for one such group from Macon, GA.

The flag was raised when the Georgians arrived at Velasco and became an inspirational symbol in the dark months leading up to the victory at San Jacinto. Virtually the entire GA command along with the Red Rovers from Alabama and the Texans under Col Fannin were taken prisoner and massacred following losses at Refugio and Colete.

Those who are unwilling to risk their life in the cause of liberty usually have neither. Those who are willing to risk their life for the sake of honor and liberty usually have both. But yes, the tree of liberty does need watered with the blood of patriots from time to time.