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Tuesday, January 15, 2008

Reader Mail #27 - Free Bill Stickers!

I liked this post on "Digg is Dead". Apparently, there is active censorship at Digg. A surprising number of people are disgusted with Digg.

I heard that some people claim to have "teams" of Digg-ers. If you subscribe to their service, they will make sure your articles will get lots of Diggs. Also, they will make sure that certain articles get buried.

IMHO, the problem with Digg is that each article is assigned a unique global score. If your preferences don't match the aggregate bias of Digg users as a whole, you won't like the content presented on Digg. I consider blogs, combined with "Feed Aggregators", to be a much better source of information.

I made a "Request for Diggs" on the Market Anarchist Blog Carnival, which someone else submitted to Digg. That article acquired 1 extra Digg, for a grand total of 5, after I asked for Diggs. I know that my site has around 300 regular readers. I assume that anyone who actively reads my blog *AND* is an active user on Digg would have Dugg in response to my request. Therefore, I conclude that less than 1% of my blog's readers are active Digg users.

I'm not going to waste time on sites like Digg. I'm better off focusing on creating good content on my own blog. Google Search seems to lead to some visits and regular readers. Organic growth is best. Remember: If you like my blog, link to it in your own blog or E-Mail it to others. Even if your blog only has a handful of readers, you're still helping me. The "long tail" effect is noticeable!

If I had time, I would write a better Digg-like engine. I think that Google Reader, combined with "Shared Items" and feed aggregators, is good enough. Right now, blogging appears to be a more effective use of my time than writing software.

Does anyone subscribe to my "Google Reader Shared Items"?

I liked this picture on Out of Step.

I liked this article on the Ron Paul Forum. The value of an apartment in Manhattan, quoted in gold, has dramatically tanked.

I don't like owning a condo or co-op as an investment. You have to pay property taxes and a "management fee" to the corporation that technically owns the building. Owning only one unit, you have no real say in the management of the building. When you consider "implied rent", including the management fee, you can get much better returns in the stock market. A real estate investment has HUGE transaction costs compared to a stock investment.

With real estate, you can use leverage. Who wants to refinance their mortgage every few years to make sure they're maximizing their leverage? As you pay down your mortgage, and the value of your apartment increases due to inflation, you need to refinance to get the maximum benefit of maximum leverage.

I noticed another Federal Reserve media myth.

People anticipate the Federal Reserve's monetary policy moves. This minimizes the Federal Reserve's power.

This is not true. Anticipating the Federal Reserve's moves does not minimize its power. The new money isn't printed until the Federal Reserve makes its move.

All a professional trader accomplishes by "anticipating the Federal Reserve" is that he claims a share of the new money printed by the Federal Reserve.

I saw an interesting comment on an article about the NFL's drug policy. It was coming under criticism for some reason. I think the NFL fired a bunch of its urine collectors because the IRS ruled they were employees instead of contractors.

The interesting bit is that the NFL spokesman said "The NFL drug policy is the 'gold standard' of league drug policies." In this context, "gold standard" meant "high quality". It's amusing that the common usage of "gold standard" still means high quality, even though economists trash-talk it whenever possible.

I don't understand why oil companies get blamed for "price gouging" in the face of rising oil. Why don't people blame inflation and the Federal Reserve? If you print more money, prices go up. What's complicated about that?

This post on no third solution was somewhat interesting. It says that the Nuremburg trial standards should also be applied to US soldiers. If a superior orders you to do something, that is not a defense if what you were doing is obviously wrong. For example, suppose you are a US army sniper and your superior orders you to kill someone who's obviously unarmed and not threatening anyone. If you follow that order, you are committing a crime. Of course, this standard is not applied to US soldiers. "I was following orders" is *ALWAYS* a valid defense for a soldier.

What this article fails to mention is that policemen in the USA should be held to the *SAME STANDARD*. If a policeman enforces a judge's illegal/immoral order, that policeman is technically guilty of a crime. Of course, policemen are not expected to think independently. In fact, policemen capable of thinking independently are rapidly weeded out.

"I was following orders" is never a valid excuse for doing something wrong. It doesn't matter if you're a soldier, judge, policemen, bureaucrat, or corporate executive.

I liked this quote on Life, Love, and Liberty.

“Every actual State is corrupt. Good men must not obey the laws too well.”

This website outlines in this page a list of reasons why the 16th amendment to the US Constitution was fraudulently declared ratified.

That's focusing in the wrong direction. After allowing the income tax for almost a century, the US Supreme Court isn't going to say "This amendment was never properly ratified." or "The income tax, as currently implemented, is illegal."

People interested in tax resistance should focus on the *MORAL* argument. Saying "The income tax is immoral" is a lot easier to explain than "The income tax is illegal."

The best argument is "Working is a natural human right. No government has the right to tax or restrict a person's ability to work." Remember that the income tax means the Americans need permission from the Federal Reserve in order to work!

I liked this article on the Liberty Papers. Should the US Postal Service filter out junk mail from people who do not want it?

With E-Mail, the cost of E-Mail is typically paid by the recipient. Spam E-Mail is very lucrative. Even though only a handful of people are dumb enough to fall for it, the cost per item is very small. The best proposal I ever read for combating spam E-Mail is a micropayment system. If you want to send E-Mail to someone not on your "approved senders" list, the cost is $0.01. If you nominate someone as an "approved sender", the cost is zero. This would make spam unprofitable. The value of $0.01 is arbitrary. Some people could set it at $0.10 or $1 or higher. For example, a celebrity might charge $100,000 for the privilege of sending him E-Mail.

The problem with junk mail is the USPS has a monopoly. Only the USPS may deliver mail to private mailboxes; it is illegal to develop a competing service. With junk physical mail, the sender still bears the full cost of delivery. However, what about the rights of the recipient? Technically, if you receive unwanted mail, you are the victim of littering or trespassing. With free market mail delivery, you could refuse to accept delivery from a service that sends junk, or have a valid tort claim against someone who delivers junk.

I liked this post on Scholars and Rogues.

today’s workplace shootings are akin to slave rebellions

A student or corporate worker who "goes postal" is merely a slave reacting to his oppression. After all, a school is really a brainwashing center. A corporate worker is practically a slave.

I liked this post on the Picket Line.

The word scruples comes from the Latin word for “pebble.” Scruples, like sharp stones in a shoe, can hinder a retreat from danger.

This is another variation of "killing the cop in your head". Sometimes, your "scruples" are merely part of your pro-State brainwashing. You have to consider what is a genuine good ethics, and what is State brainwashing. If your education was 100% useless propaganda, it wouldn't stick! It's the carefully calibrated mix of truth and lies that makes pro-State brainwashing successful.

BTW, the Picket Line isn't including me in their list of "Favorite Links". I feel slightly offended.

I liked this post on Overcoming Bias.

Pro-State trolls like to say "There's no such thing as objective truth. There's only shades of grey." If you're a fool who can't tell the difference between right and wrong, then everything seems grey to you. The people who say "There's no absolute objective truth" are the ones who benefit from people's ready acceptance of propaganda.

It's a good idea to not be absolutely 100% certain of any statement. It's a good idea to question things. However, you should know what you're relatively certain is true and false.

When I say "Government was a bad invention and needs to be eliminated", that's actually my objective unbiased conclusion. From the point of view of a pro-State troll, I have an "agenda".

If you say "Science is based on faith just like other religions", the priests science have the benefit of being able to perform specific, repeatable miracles. No other religion can perform the repeatable miracle of a working light bulb or a computer. Beware the false prophets of science! They're the most dangerous fakes of all. For example, I consider a "Keynesian economist" to be a false prophet of science.

I liked this post on the Freedom Outlaw. Was Alan Greenspan merely clueless in his mismanagement of interest rates? Or, was he actually being very clever, trashing the US economy on purpose, in a true Ayn Rand style.

The Compound Interest Paradox is fully baked into the rules of the US monetary system. Periodic economic crises are built into the rules of debt-based money. That will occur no matter what the Federal Reserve does. I'm not sure you can give Alan Greenspan "credit" for wrecking the US economy on purpose.

I read somewhere that Alan Greenspan once dated Ayn Rand. If I had the opportunity to interview Alan Greenspan, I would make sure I asked:

  • What was it like to f*** Ayn Rand?
  • You used to be such a strong supporter of the gold standard. When you signed up as Federal Reserve chairman, did your d*** fall off?

I liked this article on Techdirt. Someone bought a high-definition monitor. Their PC is powerful enough to stream HD-TV signals. The DRM software that powers the monitor is written in a way that DRM-crippled content from multiple vendors can't be used simultaneously.

In other words, the DRM-crippling feature is BUILT INTO THE MONITOR. There is no workaround! Alternatively, Microsoft's driver for the monitor insists on being DRM-naughty. It was unclear from the article whether the "DRM blame" falls on the monitor manufacturer or Microsoft.

I like this article on Techdirt. Some companies make rules that their products cannot be sold or re-sold below a specific cartel price. For some bizarre reason, the Supreme Court ruled that such restrictions are legal. Some people were selling used products on eBay. They were being busted for violating the "minimum pricing" rule.

The companies were sending DMCA takedown notices to get these below-price auctions removed from eBay. That is an abuse of the DMCA, by DMCA standards. EBay is now suing the companies for sending frivolous DMCA takedown notices.

Many of these Internet legal disputes are interesting. When both parties to the lawsuit are a large corporation with deep pockets, that means the lawsuit will actually be resolved based on the issues. For an individual vs. corporation lawsuit, it is very hard for an individual to finance a lawsuit that will likely take multiple years.

I liked this article on Techdirt. New Boeing 787s are equipped with in-flight Internet use for flyers. Unfortunately, the customer Internet service is on the SAME NETWORK as the airplane's software!

I liked these quotes from Life, Love, and Liberty.

“The news and the truth are not the same thing. ”
- Walter Lippmann

“It takes less effort to condemn than to think.”
- Emma Goldman

I liked this article on ProBlogger. A good blog has an average of 1 post/day. If you have too many posts, people stop reading them.

Some bloggers said the opposite works for them: a lot of short posts. I get disgusted by blogs with lots of small posts, unless they're of a very high quality.

Whenever I see something that only merits a short post, I put it in a "Reader Mail" post.

I liked this post on Overcoming Bias.

In the ancestral environment, anyone who says something with no obvious support, is a liar or an idiot. You're not likely to think, "Hey, maybe this guy has well-supported background knowledge that no one in my band has even heard of," because it was a reliable invariant of the ancestral environment that this didn't happen.

Conversely, if you say something blatantly obvious and the other person doesn't see it, they're the idiot, or they're being deliberately obstinate to annoy you.

These techniques are very effective in a tribal environment, where everyone has a shared knowledge base. It's harder explaining things like the Federal Reserve, the income tax, and the evils of government. When I ask someone "Explain to me how taxes and stealing are different.", they think that it's obvious that they're different.

What do you do if the world appears to be populated almost entirely with idiots?

I liked this post on Overcoming Bias.

If even the proponent of science admits that science is less than perfect, why, it must be pretty much worthless.

When discussing a non-standard idea, why must the proponent be ABSOLUTELY CERTAIN?

Why is showing doubt considered to be the equivalent of showing weakness?

The problem comes from religion. People are asked to accept, without evidence, the existence of God. There is a requirement to obey all of God's arbitrary rules, as told by priests. The priests are absolutely certain they are quoting God verbatim.

A scientist, who says that it is possible he is wrong, is inferior to a priest, who claims absolute perfect certainty.

If God personally manifested himself in front of you, would you say "Hello, God!" or "That's a very clever magic trick! How did you do that?"

There is difference between a Mathematical proof and political debate. A Mathematical proof must have absolute certainty at every step in order to be valid. Political debates are full of phony assumptions and invalid reasoning. Once you discover "Taxation is theft!", it's very hard to assign nonzero legitimacy to any government that collects taxes via force or implied force.

I have a new blog pet peeve. Blog pet peeve #1 is partial RSS feeds. Blog pet peeve #2 is a post that's just a link, WITHOUT ANY MEANINGFUL DESCRIPTION. What kind of blog post is just a link? I have nothing better to do than follow random links? If you want me to follow the link, you could at least give me a reason.

From now on, any blog that makes a post that's just a link, gets a '-1 demerit' on my blog rating scale. The blogs with partial RSS feeds are slowly being banished to my "Rejects" folder.

If I had to name a 3rd blog pet peeve, it would be "tagging". It's like a chain letter, but blog-based.

I liked this post on Do it Yourself. There's the "official, taxed economy". There's also the informal, unpaid economy. Suppose you help a friend or relative solve a computer problem. That's valuable work, but it's untaxed labor.

Paradoxically, the red market wants the "informal economy" to be as small as possible. The government doesn't want people to work without paying taxes. From the government's point of view, it's much better for elderly to be cared for in an old age home, where the labor is taxed. If people can directly take care of their parents, that's untaxed labor.

The agorist wants the "informal economy" to be as large as possible.

Whenever possible, the red market tries to regulate and disrupt mutual aid groups.

The article calls the "informal economy" the "core economy". The red market does the best it can to destroy the "informal economy". Paradoxically, if the "informal economy" is destroyed, society completely falls apart!

Most of us at some stage will have come up against accusations that the community groups in which we work are ‘un-democratic’. I know I have, many times. While I suppose it is the nature of politicians generally to want to do things, there is too often general mistrust of any group trying to do things for themselves rather than waiting for the local Council. This is more serious than simple petty mindedness. It impinges on the legitimacy of community-based action – action by and for local people.

In the eyes of a government bureaucrat, a group of people getting together solving a problem is bad. People acting independently of the government is a threat to the government's monopoly. If that happens too much, people will start having ideas like "Who needs a government?"

Most independent community groups are not democratic. Usually, there's one person who contributes most of the effort and does the organizing. Of course, a democracy isn't accountable either! A democracy is easily exploited. However, someone independently solving a problem can't be controlled.

Local Government over the past 40 years has been subject to greater and greater control by central government, to the point where it could be argued that they are no longer ‘local’, but simply agents of the national state.

I liked this webpage, referred by No Third Solution.

In a free market, the world's supply of oil can never be completely exhausted. As oil becomes scarce, prices will rise. This makes alternative energy sources more profitable. Oil usage goes down, and usage of alternates goes up. Eventually, as non-renewable energy sources are used up, the world will be using only renewable energy sources. A free market guarantees that the path to this equilibrium will be smooth.

However, there is one major flaw in both articles. The USA is not a free market! In a free market, the arbitrage between energy sources will occur smoothly. In a non-free market, there usually is a crisis. A free market adapts smoothly to crises. A non-free market does not.

On No Third Solution, David_Z is talking about the Labor Theory of Value. Under the current corrupt economic system, it is possible to spend a lot of time without producing something of tangible economic value. This does not contradict my definition of the Labor Theory of Value, because the current market is not a free market. In a truly free market, a business that was wasteful would go out of business. Currently, large corporations receive massive government subsidies that more than make up for their inefficiencies.

Regarding stateless free-market justice, there are two types of law: common law and contract law. Common law covers "You can do whatever you want unless you injure someone else". Contract law would usually have its disputes specified by the terms of the contract.

A dispute involving someone breaking into your house and stealing something would have the case resolved by a criminal court.

A dispute between a grain farmer and a baker would be resolved by a court that specialized in business disputes. Even if it wasn't specified in the contract, it would be understood that businesses have their contracts disputes settled by experts in their business.

Regarding the gold standard, it's very easy for Congress to return to the gold standard. All they have to do is repeal the taxes and regulations that prevent people from using gold or silver as money. The market will naturally set the exchange rate between Federal Reserve Points and money. With true competition between money and Federal Reserve Points, people will choose to use money. In other words, removing these taxes and regulations is logically equivalent to returning to a gold standard!

All you have to do to "return to a gold standard" is remove the state violence that prevents people from using gold as money!

According to Google Analytics, my search traffic from Google Search has dramatically increased recently. Something must have boosted my PageRank. I think it may be due to my blog being cited on Kevin Carson's blog.

Kevin Carson says I'm an "Austrian Economist". That isn't entirely accurate. I consider Austrian Economics to be far superior to Keynesian Economics. However, Austrian Economics is still a pro-State theory of economics.

A lot of people are saying that the vote count in New Hampshire was rigged against Ron Paul. My reaction to this is "Duh!" Some people say that Ron Paul had 15,000+ known active supporters in New Hampshire, but he received fewer votes than that. In some districts there were people who *KNEW* they voted for Ron Paul, yet his official total was zero.

Elections are rigged whether the votes are counted fairly or unfairly!

Gold went over $900/oz. Did you notice that?

There's no need to rush out and buy gold yet.

IMHO, I am not convinced that a stock market investment will outperform a gold investment over the next 10 years. In the long run, a stock market investment is worthless after the inevitable collapse of the US economic system.

On How to Run a Successful Hedge Fund, an Anonymous reader wrote:

If you borrow from the Fed, you are supporting its operations and ethos. This makes you like the people who run it.

Most of the people who are aware of the flaws in the monetary system are currently profiting from those flaws. There is no incentive for them to fix it.

As a non-insider, knowing the flaws helps you be a better investor. However, you'll never have the perks that insiders get. If you know in advance what the Federal Reserve is going to do, that's a HUGE advantage.

David Gross has left a new comment on your post "Reader Mail #26":

You complain here (and have before) that war tax resisters are of a statist, lefty bent. This is true enough, in many cases, but I think you have the complaint backwards.

Why don't anti-state anarchists and minarchists have anything approaching the organized, long-term tax resistance movement that the largely-leftish peaceniks have?

You speak of how nice it would be to have an underground banking system, a gold standard, agorist barter programs, etc. But the reason this anarchist is happy to hang out with largely-leftish, largely-statist war tax resisters is that they don't just wish: they actually resist their taxes, they join mutual-support networks, they create alternative funds and mutual insurance programs, they educate and agitate and recruit and run workshops, they share practical knowledge gained from hard experience fighting the IRS (and not just theories gained from arguing about Mises, Hayek, and Rand like so many "anti-state" lib/ana-caps I read about).

Some of them, indeed, are anarchists and unlike the theoretical branch who talk a great game about what a great idea it would be and why the state is illegitimate, these anarchists live their lives to match their views.

I agree that war tax resisters who believe (often enthusiastically) in taxes to support the welfare state are suffering from a weird contradiction. But I see more hope for them than I do for all the libertarians and anarchists and minarchists I read about who have nothing good to say about the state whose support they can't seem to stop themselves from providing.

You're still missing the point. Is it possible to be a "tax resister" *AND* a "pro-State troll"?

It's silly to say "The only thing the State does that I don't like is war. I'm willing to pay taxes for other purposes." First, if you're reporting ALL your income to the IRS and only pay part of the tax, you make it very easy for the IRS to collect. Second, it's hypocritical to say you disapprove of some forms of State violence and not others. Tax collection is the ultimate form of State coercion.

If you're resisting taxes on income the IRS already knows about, you are following an extremely ineffective form of tax resistance. The real goal is to do useful work without the State confiscating the fruits of your labor.

You are following another fallacy. You say "An underground agorist economy has not developed in the past. Therefore, it will not develop in the future." The Internet has enabled individuals to share information in ways previously impossible. Suppose that would-be agorists have a population density of only 0.1% or 0.01%. Isolated, they cannot be effective. The Internet allows these people to find each other and share information. If you live in a city with more than 1M people, there probably are at least 100-1000 potential agorist trading partners, if only you could find them!

There is a valid reason to assume that the future may be different from the past.

Is it hypocritical for me to simultaneously work in a corporate slave job, while working towards agorism? I'm unsure. If an anarchist is willing to hire me for the same after-tax wage as my corporate slave job, I'll do it. Until them, I'll stick with my corporate job and pursue agorism in my spare time.

Remember: One of the themes of agorist-style resistance is: "Resist the State, *WITHOUT* sacrificing any of your personal lifestyle."

I am looking for agorist free market business opportunities. I'm not quite ready to start experimenting. At this point, raising awareness is more important.

On Bring Back Gold Clauses!, David_Z writes:

I don't have it handy, but in my learnings I read about a case in the U.S. court system (probably 80 years ago, now) where a contract included just such a gold clause. I believe the contract was a bond, but I'm not certain. In any regard, when the debtor tried to pay his obligation in debased FRNs, the creditor took him to court, where the government held that paper currency was legal tender for all debts public and private, thus invalidating the gold clause in the contract.

To add insult to injury, if my memory serves me right, the terms of the contract were drawn up and agreed upon years prior to the Federal Reserve Act and prior to repudiating the gold standard - when all U.S. currency was (allegedly) redeemable in specie.

The incident to which you are referring occurred in 1933. I wrote about this before. Reviewing, in 1933, President Roosevelt confiscated all the gold of US citizens and declared gold ownership illegal. After the gold seizure, Roosevelt devalued the dollar from $20/oz to $35/oz.

Anticipating a default on the gold standard, smart creditors before 1933 inserted "gold clauses" into their loan contracts. They specified that if the dollar were devalued relative to gold, the amount of dollars paid would be increased. After the gold seizure, Congress declared these "gold clauses" to be illegal, usurping Congress' power to regulate the value of money. In other words, Congress ripped off all the creditors and provided a huge subsidy to all the debtors. As usual, people who knew about this in advance made a huge profit!

I tried researching this, and IMHO it's a legal grey area if a court would enforce a gold clause. If you tried inserting a "gold clause" in any employment or business setting, the corporation you're dealing with would rapidly tell you where to go.

Based on my interpretation, when US citizens were allowed to own gold again, gold clauses were legalized again. The ban only applies to pre-1933 gold clauses. (Some very long-term bonds pre-1933 haven't been fully repaid yet.) I believe that *NEW* contracts may include a gold clause, if both parties agree. Under normal circumstances, a gold clause is not obtainable.

On Bring Back Gold Clauses!, gilliganscorner writes:

The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress codified in Pub.L. 93-373 which went into effect December 31, 1974. P.L. 93-373 does not repeal the Gold Clause Resolution of 1933, which makes unlawful any contracts which specify payment in a fixed amount of money or a fixed amount of gold. That is, contracts are unenforceable if they use gold monetarily rather than as a commodity of trade.

The attack on gold as money was now complete. What parties would deal with each other in gold now? In the event of contract breach the contract would be invalid if payment was in gold. The injured party would have no recourse through the corrupt court system.

I'm not sure if this is correct. I read another source that said the ban on gold clauses was lifted.

That is funny! A group of us are wondering "Are gold clauses legal in the present?", and none of us knows the answer! We could hire a lawyer and *STILL* not get a straight answer, because there's no guarantee the lawyer would give the correct answer. There's no guarantee a lawyer could research this issue better than us!

On Bring Back Gold Clauses!, an Anonymous reader writes:

I thought this was an interesting read, relating to this post. Goes to show you the length the government will go to preserve their FRN paper franchise:

I've seen this criminal case cited many times.

Summarizing, the US government issues 1 ounce gold coins with a face amount of $50. Obviously, this is wrong, because the fair value of a 1 ounce gold coin is $900. Of course, the government sells the coins for the fair market value, not the legal tender value.

These coins have a legal tender value of only $50. An employer paid his employees with these $50 gold coins. The legal tender value of the transaction meant that it was below the IRS reporting threshold. The employer and employee acted as if the only income were the "legal tender" value of the gold coins.

The IRS pursued criminal charges against the employer and employees for tax evasion. The IRS argued that income tax should have been paid based on the fair market value of the gold. They were all acquitted.

This was roundly hailed as a win for the average person. However:

- The defendants still may be facing CIVIL penalties for failing to pay the tax.

- The defendants do not recover their legal fees. The defendants do not recover the time and energy wasted on the case.

- The IRS can still pursue criminal charges against other people who attempt the same trick. This case is not "precedent" that can be cited in other cases. Only a judge's rulings can be cited as precedent. A jury acquittal can not be cited as precedent. Someone else defending themselves against the exact same charge could NOT cite the defense used in the other case.

Even if juries routinely acquit people in cases like this, the IRS is willing to invest a lot of resources pursuing people who try to "honestly" resist taxes.

On General Blogging Thoughts, David_Z writes:

I've found that WordPress automatically truncates your posts in RSS, despite what you've set your "preferences" to display the full feed. I use the Full Feeds Widget to overcome this problem, I recommend it for anyone else using WP.

I don't use WordPress. I've noticed that a lot of WordPress blogs have partial RSS feeds. MY #1 BLOG PET PEEVE IS PARTIAL RSS FEEDS!

Someday, I may move my blog to a self-hosted format. In that case, WordPress is the obvious choice. For now, I'm going to use the free service provided by Google.

On Reader Mail #4 - The Compound Interest Paradox is Real, an Anonymous troll writes:

"After receiving the $50 million in interest payments, the Federal Reserve uses it for its own expenses or turns that money over to the Federal government. However, the "rest of society" still has a money supply shortfall of $50 million."

Uh... when either the Fed or the government incurs expenses, that $50m would go back to "the rest of society" of course.

WRONG! Go back and reread the examples. It's obvious you didn't understand them. This comment shows such a lack of understanding that it's in the "troll" category. On the other hand, the Compound Interest Paradox is *REALLY COMPLICATED*.

The $50 million in interest payments is NEW MONEY, that was issued LATER, AFTER THE ORIGINAL LOAN. The only way a loan can be repaid is with more loans! Continue with that example, but assume the Federal Reserve stops creating new money by issuing loans. You'll see that THE DEBT CAN'T BE REPAID!

On Nepotism Capitalism" , lordjek writes:

May it be the problem in nepotism is in the goverment part? If I make buisness with friends, it is not nepotism. But if I hold some power over some people, and then I use it to promote my friends buisness, it is corruption?

Yes, that's entirely the problem. In a TRULY free market, if you're inefficient you're subject to competition. Government means that inefficient business can afford to do stupid and wasteful things, without suffering negative consequences.

In a free market, if I hire my friends over more qualified workers, those people will start competing with me. In a free market, if I deny a qualified worker a raise, he will go to a competitor or start his own business.

The *ENTIRE* problem with "capitalism" is the barriers to competition imposed by the government. When people say "capitalism", they mean an economy with a central bank, an income tax, and extensive government regulations. In other words, what is commonly understood as "capitalism" is *NOT* a free market.

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