This Blog Has Moved!

My blog has moved. Check out my new blog at realfreemarket.org.



Your Ad Here

Friday, July 4, 2008

Reader Mail #58

I liked this article on slate.com. Someone was being prosecuted for possession of child pornography on his computer. It turned out that someone had written a virus that child pornography.

Why would someone write a virus that downloads child pornography? One reason is "click fraud". If a website generates a lot of downloads, then it is apparently more attractive to advertisers.

Another reason is that, if lots of people are downloading child pornography due to viruses, then it's harder to catch people who are downloading child pornography because they want to.

There's a third reason, not mentioned in the article. Someone at a spy agency could have written the virus. This would cause "amount of child pornography" statistics to be inflated. These inflated statistics could be used as an excuse to regulate the Internet more. I'm not saying that's definitely what happened; it's merely a possibility.



I liked this post on the Liberty Papers. Three years ago, the US Supreme court ruled that local governments may use "eminent domain" to seize land and then sell it to developers. This is in the "public interest" because it raises the property tax base. This has led to a sharp increase in local governments seizing land from poor people and giving it to developers.

You don't have full allodial title to land you think you "own". Property taxes (rent), eminent domain, zoning restrictions, and environmental laws mean that individuals don't really own their land.

Of course, the people most likely to have their land seized by the State are poor people, who are then paid less than the fair market value of their land.

“When ‘the common good’ of a society is regarded as something apart from and superior to the individual good of its members, it means that the good of *some* men takes precedence over the good of others, with those others consigned to the status of sacrificial animals.” - Ayn Rand

If you believe "common good" takes precedent over "individual rights", then you're asserting that the majority have the right to steal from the minority.



I liked this post on Check Your Premises, linking to this YouTube video. It's a video by Michael S. Rozeff. He uses economic principles to analyze the efficiency of the State.

He also has his own section on lewrockwell.com. These three articles were interesting.

His conclusions are "The State is evil!", which I already knew. However, his argument made some interesting points.

He didn't answer "So what are we going to do about it?" The only solution that has a chance of succeeding is agorism.



This post on Check Your Premises is missing the point. He places the blame for the Iraq war on the front-line soldiers who blindly obey orders to kill complete strangers.

If you willingly pay income taxes, you're as responsible for war than the soldier who kills. Also, the policeman who blindly enforces tax laws is as responsible as the soldier who kills.

In the present, I'm paying income taxes, but under duress. I'm aware of the scam and looking for free market trading opportunities. I'm planning to make the transition from "theoretical agorist" to "practical agorist" sometime in the next few years.



I've seen this quote a lot.

“Democracy’s the worst form of government except for all the others.” - Winston Churchill

However, the NULL government hasn't been tried. A more accurate statement is "Democracy is the best form of government for giving the average person the illusion of power, when they are in fact slaves."



I liked this post on Crash Landing. A windfall profit tax on oil companies would be stupid and pointless. They would just pass the cost on to customers as higher prices.

This stuff is ridiculous. Oil companies are hated so much that the weakest of criticism sticks. Now even Republicans and WSJ pieces are saying things like, "A windfall profits tax is not likely to reduce prices much," as opposed to, "WHAT??! In what school of economic thought does raising taxes lead to lower prices?!"

The proper blame for rising oil prices is money supply inflation. This is practically never mentioned in mainstream media sources.



I see a lot of mainstream media sources complaining "Obama is an elitist!" What's the opposite of "elite"? Someone who is incompetent and unqualified?



I liked this post on no third solution. The tiny island of Forvik has declared independence, citing a legal technicality. If the guy is serious, he could attract freedom seekers to move there.

On the other hand, if his project is successful, he'll be invaded or assassinated.

I advise freedom seekers to stand their ground where they are currently living. I don't think moving to achieve freedom is necessary, if you're living in a modern western country (USA, Canada, UK, EU, Australia). If you're living in China, North Korea, or a 3rd world country, then moving probably is a good idea if you can do it.



This post on no third solution linked to this list of George Carlin quotes.

I saw some YouTube clips of George Carlin. He was talking about politics more than standup comedy.

I'm considering doing a standup comedy routine where I play the Supreme Leader of Humanity, bragging about how he enslaved the entire world. So far, several people have said it's a stupid idea. As a scientist, I feel that I should conduct an experiment.



I liked this article on lewrockwell.com, referred by the Mental Militia. A juror attempted to exercise his jury nullification right during jury deliberations. The other jurors objected. The juror was kicked off the jury.

The judge said "You must interpret the law exactly as I state it." The author said this means that if the judge said "The law says that all Italian defendants are automatically guilty.", then the juror would be obligated to follow that law as fact.

The current implementation of trial by jury effectively repeals trial by jury.

As an agorist, if I were forced to pursue a sui juris "jury nullification" defense, I would. However, it's much better to avoid being in a court in the first place. For this reason, stealth is key.

I'm totally undecided. Should I pursue stealth-agorism, building up a free market economy with trustworthy trading partners? Should I become a blatant-in-public-agorist, building up public awareness? Which is more risky? If I became a "celebrity agorist", that could work to my advantage if I'm the victim in a trial.



I liked this post on no third solution. I suspect that, like me, David Z attaches zero legitimacy to the US Constitution. However, it is an interesting discussion occasionally.

The 3rd amendment bans people from being forced to house and feed troops, directly in their homes. The original authors of the US Constitution intended for their to be no standing army. An army would be temporarily convened during times of war, and disbanded afterwards.

The income tax effectively repeals the 3rd amendment. I am forced to give approximately 50% of my income directly or indirectly to the Federal government. Approximately 50% of the Federal budget is military. The current system is the functional equivalent of me being forced to quarter troops in my home three months per year. I am forced to work directly for the US military for 3 months every year, via income taxes.

David Z also points out the inherent absurdity of the way taxation disputes are handled in State courts. If you attempt to argue that the income tax is illegal or unconstitutional, that's deemed a "frivolous argument". Who makes such a determination? A State-employed judge, of course. In a taxation case, a Federal judge *CANNOT* be impartial, because he'd dependent on taxes/theft to pay his own salary!

Trial by jury, as currently implemented, provides no protection to individual rights. Suppose you're lucky and 1-2 competent people make it onto the jury. In that case, if the jury is hung 10-2 or 11-1, you'll just be the victim in a brand new trial! Above, I gave an example where a juror who was attempting nullification was kicked off a jury, after the jury had begun deliberating!

The State is the ultimate final arbiter in all disputes, *INCLUDING THOSE WHERE ONE PARTY IS A STATE AGENT*. Anyone who is the ultimate final arbiter in all disputes, including those involving himself, is the Supreme Leader of Humanity. People say "A State is needed to ensure fairness and justice." The State *PREVENTS* fairness and justice, because of sovereign immunity. If the judge in a trial is biased against the defendant, then the defendant has no recourse.

However, the above restrictions apply to a lawyer defending a client. A lawyer is barred from making a jury nullification argument, lest he lose his law license. The threat of disbarment keeps lawyers in line. I'm not sure what would happen in the event of someone defending themselves sui juris.

If I were defending myself sui juris in a tax evasion trial, I would pursue a jury nullification defense. Even if the judge forbade me to say it, I would do so anyway. I'm already being held prisoner against my will, if convicted, so I may as well present an honest defense!

There's another point that David Z missed in his post. The 5th amendment provides protection against self-incrimination. As currently implemented, the income tax requires people to disclose all their income to the State, in violation of the 5th amendment. Further, the 13th amendment bans "involuntary servitude". The income tax is a form of involuntary servitude.

Also David Z didn't mention that "income", as defined in the early 20th century, means what is currently understood to be "passive income". In 1913, "income" was defined as "interest, dividends, capital gains, rents, and corporate profits". "Income" was retconned to also mean "wages" after the 16th amendment was passed.

Of course, there's the argument that the 16th amendment was never properly ratified. Also, there's the argument that Congress never explicitly authorized the IRS to tax individual wages and all economic activity. The income tax means, literally, that people need permission from the IRS and Federal Reserve to work. This runs completely contrary to the original purpose of the US Constitution.

By taxing your right to work, the State has the power to prevent you from working! The same principle that allows a 1% taxation rate also allows a 99% taxation rate. If you add up all the direct and hidden taxes, your true taxation rate may be 95%-99% or more! For example, restrictions on starting your own business is a type of tax.

The State has the power to prevent people from working, by "managing the economy". The Federal Reserve tries to keep unemployment around 5%, guaranteeing that workers don't have bargaining power with their employers.



I liked this post on the Agitator. A prosecutor was ordered to pursue a criminal trial where he thought the defendant was innocent. He intentionally lost the trial, and admitted it later.

I think that's great! Admitting it might mean that he'll face political repercussions later.

When presented with such a situation, should you (a) resign or (b) lose the case on purpose? I'm not sure which is better. If you resign, another prosecutor will be assigned to the case. If you lose the case on purpose, then you're helping justice, and you aren't suffering any personal injury. Both approaches are acceptable. Personally, I'd almost never stay in a job where my boss was abusive.

I would lie about my belief in jury nullification to get on a jury, if I felt strongly about the issues. I'd definitely do it for a tax evasion trial. I'm not sure if I'd do it for possession of marijuana.



The Hunt family recently sold one of their petroleum businesses for several billion dollars. There was a rumor that they might re-enter the silver market. I wonder if any of them read my blog? My post on "The Hunt Brothers' Silver Corner" ranks high in Google.

Suppose I had a spare couple billion dollars and was investing for a SHTF scenario. What would I do? I'd probably invest 80% of it in an *UNLEVERAGED* gold/silver investment. Without using leverage, I wouldn't be subject to the whims of the financial industry and margin calls. I'd invest the remaining 20% in long-term gold/silver/commodity calls. Instead of investing in futures, I'd invest in long-term (2+ year) out-of-the money call options. This way, I would be the net beneficiary of inflation, my downside risk would be limited if commodity prices crash, and I wouldn't be at risk for being blown out of my position via margin calls. I would pay for the calls 100% with cash.

Where would I store my gold and silver? It would have to be in a warehouse I control. It would have to be on a self-sufficient farm, where my armed guards and their families would live. The farm would have to be self-sufficient, so my guards won't abandon me when TSHTF; the farm would be the safest place for them to stay! I'd stockpile enough supplies for 2 years. In a SHTF scenario, order probably would be restored in a few months. Other people might demand refuge on my farm, and having a margin of error for supplies would allow me to accept some refugees.

Regrettably, such fancy preparations are only feasible when you're a billionaire. For the average person, a network of trustworthy trading partners and mutual self-defense agreements would have to suffice. The latter might actually be *MORE* secure than a billionaire making fancy precautions. When TSHTF, what prevents your armed guards from revolting and kicking you off your farm?!



I liked this article. It had one really interesting point. Why is "disobeying a police officer" a crime? If you haven't done anything else wrong, then why is it a crime to disobey an order from a policeman? This attitude suggests that the average person has a lower status than policemen.

For example, suppose you're having a pointless protest and blocking traffic. A policeman orders you to disperse, you refuse, and are arrested. Your crime is "blocking traffic" not "disobeying a police officer".

As another example, you're walking down the street, a policeman orders you to stop, and you don't. The policeman then arrests you. "Disobeying a police officer" is not a crime if you weren't doing anything illegal.



I liked this article, referred by the Mental Militia. An Amish farmer was the victim of a raw milk sting. An undercover agent went into the farm and asked for some milk. The farmer offered to give it for free. The agent insisted on paying.

As justification, a State-licensed researcher says "Raw milk is harmful." That's like saying "The advocate for large corporate farms says 'Raw milk is harmful'." If you use organic farming techniques, raw milk is safe/safer than the milk from a corporate farm. Raw milk bans are 100% subsidies for large corporate farms.

This also indicates that, as an agorist, you have to be *VERY CAREFUL* who you sell to, if the product being sold is regulated.

There's another interesting bit from that thread. If you're a raw milk farmer, the State can seize your equipment, without trial.



I came across this letter by Lysander Spooner. It doesn't really contain much new information, but it's an interesting read. It's over 100 years old, so the language is tough to follow in some areas. I liked this bit (paraphrasing):

When the average person is the victim in a State trial, it is the functional equivalent of being tried in a secret tribunal. The rules and procedures are incomprehensible to him. His lawyer will advise him "Give me your life's savings and trust your defense to me; otherwise, you will rot in jail." Even if acquitted, the criminal defendant has his savings extorted from him via his lawyer.

The procedural rules for a criminal trial are biased in favor of the State. A trial by a monopolistic State court provides the illusion of justice, but no true justice.

The outcome of a trial is random. If you did commit a real crime, you may always hope to be acquitted on a technicality. If you did not commit a real crime, you may be the victim of unfortunate circumstances during the trial.

Lysander Spooner makes an argument I've made before.

I cannot delegate to another any right to make laws--that is, laws of his own invention--and compel a third person to obey them.

For example. I cannot delegate to A any right to make laws--that is, laws of his own invention--and compel Z to obey them.

I cannot delegate any such right to A, because I have no such right myself; and I cannot delegate to another what I do not myself possess.


He also made an interesting point that bankruptcy law is irrelevant. When you borrow money, you should always pledge tangible property as collateral. In this manner, there is always a 1st mortgage, 2nd mortgage, 3rd mortgage, etc. In the event of insolvency, the 1st mortgage is paid in full, then the 2nd, etc. If there's only enough money after the property sale to partially pay off the 2nd mortgage, then the 2nd mortgage is partially paid off and the 3rd mortgage is worthless.

That's a very interesting legal concept. In a free market, *ALL* loans must be backed by specific tangible property. Otherwise, the debt is uncollectable. On the other hand, it makes sense to pledge future labor as collateral for loans. It can't be too much labor, because otherwise it becomes a slavery contract.



I liked this thread on the Mental Militia. Texas now has mandatory vaccines for HPV/cancer for all girls. Merck owns the patent for the vaccine, and is using extensive lobbying to get the government to mandate the vaccine.

According to that thread, parents may opt-out of the mandatory vaccine process. However, the opt-out feature is not disclosed to parents and the bureaucrats act as if the vaccine is mandatory.

Is this vaccine beneficial? Or, is the vaccine mandate corporate welfare for Merck?



I liked this post on Check Your Premises. What is love?

When people say "love your country", they mean unconditional love. You have to "love" your government no matter what.

Love should not be unconditional. If someone starts being abusive, you should leave them.

A commenter said that loving someone also means you don't demand full possession of them. In that sense, the State does not love me, because it demands full allodial title to my labor and my property.



I liked this post on to Herd or not to Herd, referring to this article. Over 100 years ago, people were expected to make their own tools. Most Americans have lost that ability, including myself (regrettably).

Sometimes, I wonder if I should give up software engineering and learn how to manufacture things myself. If I'm going to be a practical agorist, I wonder I'm better off knowing manufacturing/repair than software engineering. In a SHTF scenario, being able to build/repair machinery will be *VERY* valuable, but software engineering would be useless.

On the other hand, anyone intelligent should be able to learn to build/repair things when/if needed. The average person does a bad job repairing their own plumbing because they only try it once every few years, and not because it's intrinsically difficult. I predict that after a week or two attempting to build or repair things, I'd become an expert.



Regarding Heller vs. DC, I read something very cynical. Suppose the Supreme Court had ruled that people did *NOT* have the right to own a gun. Activists would have pushed to amend the constitution to make it clear.

By saying "people have a vague but severely limited right to own a gun", there isn't enough momentum for the pro-liberty activists. By slowly reducing liberty, people don't complain as their rights disappear. It's the "frog boiling in a slowly heated pot of water" problem.



I liked this article on a suppressed natural cancer treatment. Whether that treatment works or not is "not proven". The pharmaceutical industry has banned research into that treatment.



I liked this article, referred by the Agitator. In Colorodo and New Mexico, it's illegal to put a barrel to collect rainwater that falls on your house. You don't have full allodial title to your property. The State claims that it owns the rainwater that falls on your land.

In the comments, someone said that the UN passed a resolution saying all rainwater worldwide is "commercial property". In some countries, private rainwater collection is illegal because the State water monopoly charges extortionate prices.



I liked this article on the Agitator.

Blackwater has found a way around federal restrictions on private ownership of automatic weapons by buying 17 AK-47s and 17 Bushmasters XM15 E2S rifles, then giving them to a local sheriff’s department–but on the condition that the guns be stored at Blackwater facilities, and can be used by Blackwater employees.



I liked this article, referred by the Agitator. Shaquille O'Neal was given an honorary deputy badge. He made a rap video that was critical of Kobe Bryant and used foul language. Based on the video, the Sheriff stripped him of his badge.

if any one of my deputies did something like this, they’re fired. I don’t condone this type of racial conduct.

The Sheriff claims the right to restrict what his employees may say when they're not on duty.



I liked this article, referred by this thread on the Mental Militia. From the very beginning, the US Constitution was a power grab by politically connected insiders. In 1787, people in the USA were revolting against taxes and winning. A strong central government was needed to put down these revolts. To ensure passage, the initial version of government was severely restricted. Over time, people's freedoms were eroded.

Originally, the US Constitution passed by very thin margins in many states. In several states, repeated revotes and threats of violence (or actual violence) were needed for passage. Further, approval by a majority of the legislature is not the same as approval by a majority of the people. The majority does not have the rule to tax or impose their will on the minority; the US Constitution is illegitimate even if a majority would have willingly voted for it. Further, people who lived 200 years ago do not have the right to impose a contract on people living now.



I liked this thread on the Mental Militia. Asset forfeiture laws allow the police to keep a percentage of the assets they confiscate. This encourages overly aggressive seizures by police.

Police seizing assets are protected by sovereign immunity. There's an inherent conflict of interest, because they get to keep some of the stolen property.

Police have the attitude that seized property belongs to them. After all, they stole it fair and square! If you don't like it, start your own police department.

There was an interesting debate. Should honest people quit their government jobs? If they quit, they'll just be replaced by someone dishonest. If they keep their job, they can try to do the right thing, even though they'll be facing heat for behaving honestly. I prefer to avoid dealing with the State as much as possible, but everyone should make their own decision. You should judge someone by each of their individual actions, and not whether they are employed by the State or not.

If you can work for the State *AND* behave honestly all the time, then it's morally acceptable. If you start saying "I'll do this immoral thing so I can do good later", then you're a criminal (by my standards of justice).



I liked this thread on the Mental Militia. In Mexico, gasoline is subsidized by the government. Gasoline in Mexico costs 50% as much as in the USA. People who live near the border cross into Mexico to buy gasoline and come back.

This sounds like a business opportunity! If you have a car with a big gas tank, you should be able to profitably buy gasoline in Mexico and sell it in the USA!



This article on MSN.COM about the Supreme Court Exxon Valdez decision was interesting (cited elsewhere also). A group of people who lived in Alaska sued Exxon over the Valdez oil spill in 1989. Originally, $5B in punitive damages were awarded, later reduced to $2.5B. The Supreme Court further reduced the total to $0.5B.

This is an example of sovereign immunity. Corporate management is practically immune from liability when they commit misconduct. Big punitive damage awards are *NECESSARY* to encourage responsible behavior. Without punitive damages, the cost/benefit calculation *FAVORS* negligent behavior. As another example, Vioxx and Zyprexa are popular drugs that were later proven to be harmful. The total amount these lawsuits were settled for was *LESS* than 1 years' profits from the drugs! Knowingly selling harmful drugs is profitable! Big punitive damage awards are needed to prevent such negligence.

I'm a supporter of the "corporate death penalty". Courts are reluctant to award punitive damages that would bankrupt a corporation. There's nothing morally wrong with that. That would make the plaintiffs in the lawsuit the new owners of the corporation. In fact, I would rule that the plaintiffs in a negligence lawsuit have a higher priority than any bondholders. Awarding punitive damages that bankrupt a corporation is one way to implement the corporate death penalty.

Justice delayed is justice denied! The Exxon Valdez accident occurred in 1989. Nearly 20 years later, the victims still haven't received compensation! Their attorneys will take a huge % of the bill. $1B in 1989 dollars is worth a lot more than $1B in 2008 dollars!

It's practically pointless to seek justice in a government court.



This post on gilliganscorner is missing the point. A reader was complaining that some of his quotes weren't sourced.

I normally don't quote the source for most of my ideas. I keep track of ideas, and not the sources. Many sources contain some useful ideas and some lies and propaganda. I'm much more interested in keeping track of ideas than keeping track of sources.

Quoting sources is something that pro-State trolls do. Read a typical academic article. It's heavily footnoted. Are those articles comprehensible? Are they useful? Do the footnotes add anything? Usually, no.

For example, the Compound Interest Paradox does *NOT* meet Wikipedia's standards for inclusion. No mainstream media source mentions the Compound Interest Paradox. If I were restricted to quoting "reliable sources", I would be barred from writing about the Compound Interest Paradox.

Insisting on "reliable sources" is equivalent to insisting "You must recite the propaganda spewed by mainstream media."

On Wikipedia, the "reliable sources" policy is the functional equivalent of a censorship policy.

When arguing against the Federal Reserve and income tax, the way they operate in the present is well-documented. You may verify all the details on the Federal Reserve and IRS's own website.

Whether the current corrupt system evolved as part of a conspiracy or by accident is irrelevant. The important thing is that we do the best we can to correct the problem. Arguing about who said what 50+ years ago is pointless. We can't go back in time and check. Mainstream media sources frequently retroactively change history. It's just like in George Orwell's 1984.

For example, some people say that "income" as commonly defined in 1913 did not include "wages". Is this relevant? No. The important point is that the income tax is immoral, along with all other forms of taxation. Whether the 16th and 17th amendments were properly ratified or not is irrelevant. The important part is the erosion of individual freedom.

I don't bother quoting sources for most of the ideas I read. I'm more interested in polishing and extending ideas I read about. If you don't like my style, then why are you wasting time reading this?

If a quote is interesting, use it. It doesn't matter if you can prove the original source actually said it or not. For example, there are some quotes by Woodrow Wilson where he admits that he ****ed up when he signed the Federal Reserve Act. Did he really say that, or was it misattributed later? Does it matter?

The obsession with "reliable sources" is a type of censorship.

This bit deserves its own separate post.



I liked this article on Kitco, referred by to Herd or not to Herd. It's about market manipulation and the decline of the US dollar.

Bear Stearns refused to participate in the bailout of Long Term Capital Management 10 years ago. They also had a huge long position in gold and short position in the US dollar. Allegedly, as punishment, they were liquidated and bought out by JP Morgan Chase. When their gold position was liquidated, it forced down the price of gold.



This post on Gilliganscorner is about eGold and other electronic gold vendors. However, State crackdowns on eGold have happened or will happen soon. The law that restricts transfers to offshore gambling sites *ALSO* restricts eGold deposits/withdrawals!

The problem is that you have no assurance that the State won't raid the eGold vendor and seize the assets, as happened with the Liberty Dollar. If the eGold vendor is located in the USA, then there's the risk of seizure by the IRS. If the eGold vendor is located outside the USA, then there's the risk of seizure by a foreign government *OR* seizure by the US government as you move money in our out of your account.

Also, there's no assurance that the eGold vendor actually has the physical gold they promise they have.

The excuse is "eGold facilitates crime! It must be outlawed!" Most of the "crimes" that are "facilitated" by eGold are free market activities that shouldn't even be crimes in the first place. By declaring free market activity as crime, this allows further restrictions of individual freedom.

What's wrong with using physical gold in your possession?

Another alternative is a totally decentralized P2P alternate monetary system. I originally called this the Social Credit Monetary System, which is a bad name because the C. H. Douglas version of Social Credit is a pro-State theory of money.

Any alternate monetary system *HAS TO BE DECENTRALIZED*. Suppose I store 200 ounces of gold in my apartment. I risk seizure by the State or criminals. Suppose I store 10 ounces of gold in each of 20 friends' apartments. That is much less risky.



In this thread on forum.globalhousepricecrash.com, some people were discussing my blog. That forum appears to have its users based primarily in Australia. The principles of fractional reserve banking and the Compound Interest Paradox apply everywhere in the world, not just in the USA.

It was the usually discussion forum pattern of one intelligent person and a bunch of pro-State trolls (of varying degrees). There was one interesting bit:

A certain small percentage of humanity would behave honorabley under all circumstances. Another small percentage are miscreants. The rest in between behave according to which way the wind blows.



I liked this post on Liberty is my Homie, in reference to this YouTube video. A state legislator in Minnesota said that government can spend money more wisely than individuals.

Most government employees probably sincerely believe this, although few are as stupid as this guy to explicitly say so.

I recall an interview of Hillary Clinton, where she repeatedly says "Politicians have to be careful to not kill the golden goose." Is she aware that the gravy train is close to derailing?



I liked this post on RadGeek. The AMA is lobbying for home-birthing to be declared illegal. This is corporate welfare for doctors and hospitals. It's unclear if giving birth in a hospital is safer than giving birth at home.



I didn't like this post on Econospeak. Mainstream economists like to use fancy Mathematics, including game theory. Using fancy Mathematics is useless when your assumptions are wrong. It doesn't make sense to talk about economics if you don't understand how the State operates.

A frequent example is the "Prisoner's Dilemma". Two suspected criminals are arrested and kept isolated. Each is given the opportunity to plea bargain. If both keep quiet, then each will get 6 months in jail. If one plea bargains and the other keeps quiet, then one will get 5 years in jail and the other gets off free. If both plea bargain, both get 4.5 years in jail. Since you can't control what the other person does, is confessing optimal?

The error is "What right does the State have to prevent the two prisoners from talking to each other?" Once you realize this, then the Prisoner's Dilemma becomes useless as a model for economics. In a true free market, there would be freely shared information among market participants. Also, a free market would be more like "iterated Prisoner's Dilemma", where you play repeatedly with the same pool of players, with knowledge of previous outcomes. In that case, "tit for tat" dominates, which is a form of the "non-aggression principle". (If your communications are being tampered with, then "tit for tat with forgiveness" is superior to "tit for tat". If "cooperate" is sometimes misreported as "defect", then "tit for tat with forgiveness" is superior, with forgiveness % based on the miscommunication %.)



I liked this thread on mises.org. (I didn't make any contributions to that thread.) "Kingmonkey" gave a good response to a pro-State troll who insisted government is needed. Another person made an interesting point that I've mentioned before (originally by Francois Tremblay). If you say "There should be a government", you're making a *POSITIVE* argument for its existence. The person who says "There should be a government" should be forced to prove that government is a good idea, rather than making the free market advocate prove "no government is a good idea".

Most of the "government is needed" arguments are due to phony assumptions or invalid reasoning. For example "people are intrinsically evil" is actually an argument *AGAINST* government, because the most evil people will exploit government for their own purposes. As another example "There needs to be an ultimate authority to decide all disputes, including those involving themselves", which leads to the obvious contradictions and a Supreme Leader of Humanity. As another example "Government is needed to prevent war"; war is only "profitable" when you can force people to pay the cost via taxes. There are no large-scale wars in a stateless society. Any police business that let a dispute escalate to war would lose all its customers.



For those of you keeping score at home, user "DriftWood" on mises.org is almost definitely a paid disinformation agent.



A lot of Spanish blogs are linking to my blog, noticed via Technorati. I don't speak Spanish at all. I've noticed a lot of Spanish discussion of agorism. (It seems like disproportionately a lot, because I remember the Spanish sites and I can't read them to see if they're interesting or not.)



In this thread on mises.org, someone was complaining about the inaccuracy of government economic reports.

I wrote an article calculating inflation-adjusted GDP, using an accurate measure of inflation instead of the biased CPI. My conclusions were depressing.

I consider gold, M2, and M3 (no longer available) to be a better measure of inflation than the CPI.

BTW, official GDP statistics for 2007 are out now! It's time to start writing another update of my shrinking GDP report.



In this thread on mises.org, someone was asking about the book "Crash Proof" by Schiff, which I haven't read.

If you want a crash-proof investment, buy physical gold or silver. If you want a relatively low-risk decent investment, buy an index fund.

So in other words, how is the gov't f'n things up?

The government is ****ing things up via monetary policy.

Other countries are willing to export tangible goods to the USA, in exchange for a piece of paper with a number printed on it. As long as other countries are willing to trade tangible goods for a piece of paper, why bother actually manufacturing anything?

If a foreign country says "We won't export goods for worthless paper anymore", then the US overthrows their government. For example, Saddam Hussein was willing to sell oil in Euros instead of dollars. Those military bases in Europe, Japan, and the Middle East are there to prevent foreign leaders to have any funny ideas about dropping the dollar as a reserve currency.

How can a manufacturer in the USA compete with a printing press?

That is a myth--FRN's are not worthless. Tons of people accept and want to be paid with them.

Federal Reserve Notes *ARE* worthless. There's nothing that prevents the Federal Reserve from printing 10% more of them and giving them to their friends in the financial industry.

By holding Federal Reserve Notes in my wallet or bank account, I'm letting other people steal from me via inflation.

A more accurate statement is that Federal Reserve Notes have *TEMPORARY* value, but no permanent long-term value. Their value is continually eroded by inflation.

Foreign central banks hold dollars as reserves. Their purchasing power is being lost to inflation and stolen by the US financial industry.

It's true that they have temporary value. But again, I must reiterate that the statement that they are worthless is a myth. Why? Because lots of people still attach worth to them.

It depends on what you mean by "valuable". I define something as being "valuable" if I can put it under my mattress, come back 20 years later, and it will still have the same purchasing power. Federal Reserve Notes fail that test. Gold and silver pass that test.

Federal Reserve notes only lose their value at a rate of 10%-30% per year (depending on which measure of inflation you use). That's not as bad as losing all their value all at once, but that point is approaching soon.

The bottom line for me is that, by keeping Federal Reserve Notes, I'm letting other people steal from me via inflation. The fact that most other people are fools, doesn't make it morally acceptable.

As a practical matter, I still use Federal Reserve Notes as money. I'm working towards alternatives. I'm thinking of buying some gold or silver, but haven't done so yet.



In this thread on mises.org, people were talking about a gold standard.

One advantage of a gold standard is that real interest rates can't fall below 0%. In the present, if I keep my savings in a money market account, I get 2% interest but inflation is 7%-30% (depending on what measure of inflation you use). This makes it hard for me to raise money to start a business. If I try to accumulate capital via saving wages, I'm fighting an uphill battle against inflation.

Negative real interest rates subsidize banks and large corporations. They can borrow at 5%-6%, while inflation is 7%-30%. Using leverage, they earn huge profits, just from their extensive use of debt.

For example, Freeport McMoran bought out Phelps Dodge. They loaded up on debt to fund the purchase. Two years later, copper prices have been rising 20%-30% per year. The debt that funded the purchase was yielding around 6%. Freeport McMoran's management and shareholders profited from leverage and negative real interest rates. This profit isn't free; it came from somewhere. When my dollars lose their value to inflation, part of the proceeds go to corporations like Freeport McMoran. In this manner, negative real interest rates encourage consolidation of industries.

Under a gold standard, you would see a lot more small businesses and fewer megacorporations. Suppose a small business owner wants to raise capital. Reinvested profits works very slowly, because of the inflation problem. A small business owner can only borrow at very high rates, or not at all. The small business owners is at a competitive disadvantage relative to large corporations. Management of a large corporation can borrow a lot of money, use the proceeds to bankrupt smaller competitors, lobby the State for regulations that shield it from competition, and then wait for inflation to make the borrowing profitable.

There's also a common fallacy you're using. The total value of the economy is a lot greater than all the gold there is. Therefore, a return to a gold standard is infeasible. That assumes that someone, after receiving gold, puts it under their mattress. In practice, a gold coin will change hands many times during a year. In this manner, the size of the economy can be a lot greater than the supply of physical gold.

Also in a gold standard, people won't hoard gold because it doesn't earn interest. They would prefer investing in bonds/loans, land, or other income-producing businesses. People rush to hold physical gold when they expect government to default on its money, as happened in 1933 in the USA.

A gold standard is a fair benchmark for determining price. You can have a gold standard without shipping physical gold. For example, if imports equal exports, you're on a gold standard but you aren't shipping any gold around.

If you follow Austrian-style "time deposit banking" or the "Bills of Exchange" system, then you can have trustworthy paper promises for gold that trade at parity with gold.

However, if the government issued a declaration that the US was on a gold standard again, that would be a windfall profit for anyone currently holding gold.

You may ask "If gold is such wonderful money, why aren't people using it?" People don't use gold as money due to taxes and regulations. If I use gold as money, I pay a *GREATER* taxation rate than if I use Federal Reserve Notes as money. I can't go to my bank and make a deposit of gold. Taxes and regulations make it impractical to operate a gold-denominated warehouse receipt bank. I can't easily trade back and forth between gold and Federal Reserve Notes because taxes and regulations make it hard to operate a gold dealer business.

The correct way to return to a gold standard is to repeal all the taxes and regulations that prevent people from using gold as money. That isn't going to happen.

Rothbard and de Soto preferred to convert existing money to a gold standard.

There is a way to convert existing money to a gold standard. Go to a coin shop or Internet store and buy some!

I saw a very interesting post elsewhere. If you're planning for a SHTF scenario, physical gold will be practically useless during a severe crisis. Assuming you can survive the crisis and safeguard your gold, then metal is a way to preserve wealth across the collapse of an economic system. You can buy gold now, store it someplace safe and survive, and then sell it when the SHTF has subsided and a sense of normalcy has returned. If you expect a complete collapse of the US economic and political system, then physical metal is practically the only investment that will allow you to preserve wealth from now until after the collapse.

During a collapse of a monetary system, the people who convert to hard assets first profit the most! I feel slightly hypocritical saying that, because I don't own any silver or gold yet. There's no need to rush (yet). I'll buy some in the next few years.

I don't see why there is this fascination with using gold. Why not something more valuable, like platinum, so there is less to store? Or go with something like palladium? I prefer the idea of a platinum standard, myself.

Gold and silver are what the free market selected as money, before government became strong enough to force people to use unbacked fiat paper instead.

Other metals are just as usable as gold. If you owed me 1 ounce of gold, I'd accept 0.8 ounces of platinum instead (or whatever the appropriate ratio is).

When there are a few people hoarding nearly all the gold *AND* government violence demands people only use gold as money, then you can have distortions. It's one thing to say "gold is my preferred method of payment". It's another to say "I *DEMAND* payment in gold and will use violence to prevent people from using other forms of money."

If you don't have a centralized authority controlling money, then money *MUST* be backed by tangible goods. Metal coins have advantages over other forms of money. Metal doesn't spoil. Metal is fungible; every .999 purity one ounce coin is equivalent to every other such coin. If you trust the mint, metal coins can be quickly counted or weighed.

Also, hoarding gold is pointless, if you trust that the economic system isn't going to collapse. You're better off investing in tangible, revenue-producing assets instead of gold. In the present, all other forms of investment are heavily taxed, making gold very attractive. You can't invest in land due to property taxes; you don't get full allodial title. You can't invest in stocks, because you can't prevent the CEO from granting himself a lot of stock options or mismanaging the corporation. Metal coins are the *ONLY* investment where you can get true full allodial title.

A return to a gold standard won't work, because the Hunt brothers lost a fortune speculating on silver.

I wrote a post on the Hunt Brothers. It's one of my most popular!

What happened to the Hunt brothers is that they were borrowing in dollars and buying gold. When the Federal Reserve jacked up interest rates *AND* changed the margin rules, their scheme collapsed. The problem was not buying silver. The problem was *BORROWING* and then buying silver.

As an individual with a small budget, I'm not going to buy enough gold or silver to substantially move the price.



According to Google Webmaster Tools, some of my pages now have a PageRank of "medium". Previously, they were all "low". I'm moving up!



Joel on Software says that some people just don't get pointer arithmetic. No matter how hard they try, there's a mental hurdle and some people just don't get it.

After posting on mises.org, I've concluded that some people just don't get the Compound Interest Paradox. No matter how many times you explain it, they won't get it. I don't know whether it's because these people or fools or because they're paid disinformation agents, or some combination of the two.

It's weird to see people on mises.org arguing "Fractional reserve banking is not immoral". If you're aggressively defending fractional reserve banking and fiat debt-based money, mises.org really isn't the right place (unless you're a professional troll).



My blog statistics for June are in. I set a new traffic record of 2480 Absolute Unique Visitors in June, according to Google Analytics. That's a 3% increase over May, but May had 1 more day than June. (It was a 6% increase compared to May 2 to May 31.)

Organic growth is still working for me, although I've hit a relative plateau lately. My trend has been sharp growth, then plateau for awhile, then more rapid growth, etc.

It appears to be possible to slowly "climb the long tail", provided you consistently produce good content. It's hard to grow a blog without having a more popular mainstream source promote it, but it still is possible.



There's a famous quote by L. Ron Hubbard where he says "To make real money, you have to start your own religion." I disagree. "To make real money, you have to start your own government." Actually, religion is a type of government, from the point of view of the participants.



In this thread on mises.org, people were talking about free market justice. Free market justice is something that most people just don't get. It's an incredibly foreign idea. The idea that crimes can be solved without a monopolistic State is completely incomprehensible to most people.

The primary point of free market justice is that all the details don't need to be resolved right now. That's the whole point of a free market! Free market justice has a flexibility and fairness that State justice will never have.

How can police investigate and solve crimes without violating the Non-Aggression Principle?

Suppose someone breaks into your house and steals your stuff. When you get home and discover the crime, you call the police. In the present, your only option is to call 911. In a free market, you'd have a choice of police agencies to call.

Further, police protection and insurance would be bundled together. When you purchase police protection, your are also purchasing insurance for your property. Your police protectors would be obligated to restore your property, even if they don't catch the criminal. In the present, if you call the police and they can't solve the crime, that's too bad for you.

There are *TWO* types of legitimate law. There's contract law and criminal/common law. If someone breaks into your house and takes your property, that's covered by common law, even if you don't have an explicit contract with the criminal.

The difference is that, in a free market, you'd have a choice of police vendors.

Suppose the criminal purchased police protection from a dishonest agency that protected them from their crime. In that case, that police protection agency would lose most of its customers and it would be shut down by its honest competitors. If there was a genuine dispute, a trusted third party would resolve it.

Dishonest behavior by police is only "profitable", when you can force your "customers" to pay via taxes. With true free market competition, the police would behave honestly, or they would lose their customers. In the present, police sometimes/frequently behave dishonestly because they can get away with it. Even if you're unsatisfied with government police, you have no choice but to pay their salaries via taxes.

But you can't arrest a criminal without violating the non-aggression principle. You're aggressing against the criminal by arresting him or investigating him against his will.

Suppose the police had your fingerprints on record, and they matched the fingerprints in my house. Suppose I had videocameras installed in my house, and it was obviously you.

Now what? *YOU* violated the non-aggression principle when you invaded my house. Now, I'm *NOT* violating the non-aggression principle when I demand my stuff back or demand restitution. I don't have to do it myself; police will do it for me on my behalf. Free market competition guarantees that the police will treat everyone with respect.

Suppose now you're just a suspect. There's just a 10% chance that you're the criminal. The police have fingerprints in my house, but they don't have yours. The police politely ask for your fingerprints. If there's no match, you're acquitted and the police reimburse you for time wasted. If there's a match, now there's a 90%+ chance that you're the criminal and the police are justified demanding restitution.

Suppose you refuse to give fingerprints. Who have you hired as your police protection agency? They would point out that, as terms of your contract, you are obligated to give fingerprints if asked. Who would sell police protection and insurance to someone who refused to give their fingerprints, when given a reasonable request?

You're confusing "initiating violence" with "self-defense". Violence is acceptable when used in self-defense. I don't have to catch you red-handed in-the-act for it to be justified.

These arguments against free market justice assume that everyone is stupid.

Police don't have the right to search your apartment in the present.

In the present, insisting on a lawyer or refusing to let the cops in is dangerous. You can assert your rights, but the cops can make up a frivolous excuse and arrest/detain you. In theory, you can refuse a search. In practice, it's not so obvious.

What if you don't have absolute proof of who is the criminal? You can't interrogate someone without violating their rights.

You're missing the point of free market justice.

If you don't have police protection purchased in advance, you probably wouldn't be allowed in my neighborhood or city.

However, purchasing police protection in advance isn't mandatory. Suppose you are investigated and found not guilty. In that case, you are reimbursed for your time wasted. If you are guilty, you owe investigation costs plus punitive damages.

The key point you're missing is that the police are required to compensate suspects for time wasted, IF THEY'RE NOT PROVEN GUILTY. You can investigate a crime, without violating the non-aggression principle.

You're assuming a world inhabited by idiots. If you have positive evidence that someone may have committed a crime, then you're justified investigating them.

Doesn't this mean you can just detain people and pay the fee for wasting their time?

No. If you go around frivolously accusing/detaining people, then you're committing a crime. In that case, you would owe punitive damages in addition to compensatory damages.

Most of the arguments against free market justice assume that people are inherently stupid. It's a workable system. I don't have to get the details 100% right before I conduct an experiment. Free market justice is worth investigating and pursuing. In an agorist economy, judgments would initially be enforced via ostracism, instead of violently. If you cheat your trading partners, you'll get kicked out of the community.

That thread degenerated into a trollfest/flamewar, which usually happens to threads with an interesting and original topic.



In this thread on mises.org, someone said that the non-agression principle is not a natural principle.

If you deny people the right to defend their property, then why would anyone ever build anything? Why would I build a house, if you can just come and steal it? Why would I plant a crop, if you can just steal it?

The right to defend your property is a "natural right". Suppose I believe that I have the right to defend my property, and that you believe you have the right to steal my property. In that case, I will look for cleverer ways to defend myself, and you will look for cleverer ways to steal.

Defending property is easier than stealing property, if you take proper precautions. As long as I can raise your theft costs enough to make stealing unprofitable, then I can defend my property.

Suppose you have some people who believe they have the right to defend their property, and some people who believe they have the right to steal property. In that case, the people who believe they have the right to defend their property would join together in mutual self-defense. Their productivity would be greater than people who believe "stealing is acceptable", and they should win out eventually.

This is *NOT* how governments originated. Historically, governments were established by a conqueror cementing control of his slaves. Governments were *NOT* created via unanimous consent of the people, but rather imposed by violence. Even in the USA, there were groups that resisted taxes imposed by the new Federal government, such as Shay's rebellion and the whiskey rebellion. These revolts were put down violently, rather than by consent or a sincere debate of the issues.



In this thread on mises.org, someone said they had $600 in savings bonds and they were thinking of buying gold or silver.

If you have savings bonds, you're earning a negative inflation-adjusted return. The bonds probably pay 2%-4%, while inflation is 20%-30%.

I'm considering the possibility that gold is a better investment than the stock market!

Recently, there have been VERY few years where a gold investment lost money, denominated in dollars. If you hold your gold for at least a few years, you're practically guaranteed to outperform bonds or a money market investment.

If you have only $600, that isn't enough to buy an ounce of gold. Have you considered silver? You can buy 1 ounce rounds or "junk silver" (pre-1960s US silver coins).

If you're really concerned about buying at a market maximum, perform "dollar cost averaging". Convert $300 to silver now, and another $300 a year from now.

I'd buy $600 in one ounce silver rounds, if I were you. You could try a local coin dealer, or try an Internet dealer. I haven't bought any metal yet.



Anonymous has left a new comment on your post "The Strawman Fallacy":

using your wiki definition this is the correct usage. They are describing his argument as depending on the weaker points. Aka the income tax is evil depending on the supreme leader of humanity. Therefore they think they can destroy a weaker point and the stronger point fails.

My post on the Strawman Fallacy has generated a surprising amount of feedback and hate mail. Based on the sources I've read, there's a lot of different versions of the same idea.

The overall idea is simple. Suppose I write about A and B separately. Trolls will say "B is false, therefore FSK's article on A is wrong." Mainstream media debates use this all the time. Alternatively, the stupidest thing someone does is overhyped. For example, Don Imus made some stupid comments. Therefore, he should lose his job, even though a lot of people like listening to him. Don Imus should be judged on his overall career, and not the stupidest thing he did. These two ideas are slightly different, but closely related.

I'm planning an updated version of this post soon. When I have time, I'm updating all my "Best of FSK" posts.



In this thread on mises.org, someone mentioned a reform proposal where people only pay for government services they approve of, and withhold taxes for the remainder.

You have an unrealistic fantasy that the bad guys would voluntarily give up their taxation power. If you had the ability to violently extort 50% of the productivity from the rest of the country, would you voluntarily relinquish it? How exactly do you plan on implementing your proposal?

The only solution is to completely boycott taxes as much as possible. You should also boycott the Federal Reserve and use sound money instead, as much as possible. This is called agorism.



gilliganscorner has left a new comment on your post "Reader Mail #57":

Thanks for citing my post. Your recent series on the Compound Interest Paradox was very interesting. Keep up the good work.

However, I never stated on my post that "voting is immoral". I did state that "voting is pointless", but not immoral. And no, I did not go back and re-edit the post. You have my word on it.

You didn't explicitly say "voting is immoral". However, it was implied.

When we express a preference politically, we do so precisely because we intend to bind others to our will.

This is sort of like saying "voting is immoral", but not explicitly.

On the one hand, voting is immoral because it provides the illusion of legitimacy to government. If you vote for the "lesser of two evils", the candidate interprets that as a mandate for everything he does. Voting is irrelevant, since the choice presented by an election is a false choice.

Paying taxes is immoral, because the proceeds are directly used to injure other people, including me. When you pay taxes voluntarily, you're directly contributing to my oppression. In the present, tax resistance is risky and impractical. People should work towards a true free market economy.



Liberty Student has left a new comment on your post "Reader Mail #57":

I'm starting to get bored/frustrated with mises.org. It's the usual "occasional insightful comment, buried by flamewar" problem. On the other hand, it's been successful driving traffic to my blog.

I'm starting to get bored/frustrated with my job. It's the usual "occasional cool task, buried under mountains of paperwork" problem. On the other hand, it's been successful at keeping my belly full and my rent paid. :)

My blog is not a source of income, so it isn't my job. If I don't enjoy fighting with trolls on mises.org, then I'll stop. Most of the interesting threads seem to degenerate into trollfests and flamewars. I'm particularly annoyed by users "Driftwood" and "Anonymous Coward". Driftwood seems to be interested in heavily promoting another propaganda website. Anonymous Coward keeps saying "I refuted this argument already, but I'm not providing the details again." (That's one advantage of having a blog. I don't have to repeat myself, and key arguments are saved as posts I can just cite. I don't give a full explanation for the Compound Interest Paradox every time I mention it.)

There's a lot of "argument from authority fallacy" on mises.org.

Blogging for traffic and market share is a job, just like any other. Sometimes, you do what you have to do, to increase your traffic!

That's one advantage of Google Analytics. I can see how much traffic I'm driving to my blog. Mises.org has a better engine than other forums. Other forums just say "index.php" and I don't know which post referred someone to my blog. On mises.org, each thread has its own URL. I can see which thread is referring how much new traffic to my blog.

According to Google Analytics, I'm still getting a decent return on time invested. Also, the topics are interesting enough that I repost them here in the Reader Mail posts. I know that I'm not going to convince the pro-State trolls. However, other people who read the thread may visit my blog. (Also on mises.org, I'm not as accusatory of pro-State trolls. I usually ignore the threads as they degenerate into noise. It's better to be one of the first comments in a new thread. In a neutral forum, the trolls will claim the moral high ground if you point out they're trolling.)

I shouldn't confuse "blogging" with "job" until I get enough traffic for it to be a reasonable source of income. Right now, I'm just doing it for fun, and I should stop participating on a forum when it isn't fun anymore.

I got frustrated with the Ron Paul Forum after awhile. A similar thing will happen with mises.org eventually, but I'm spending time on it for now. Once the "new visits from mises.org" statistic in Google Analytics starts decreasing, I'll probably move on.

For example, one woman seemed attractive and returned eye contact. However, her pickup line was "Can you spare some change?" That was really odd, considering she was speaking on a cellphone just before; she obviously wasn't homeless.

In these situations, I would ask her for change or to use her phone.

People who panhandle don't expect someone to ask them for something, and the momentary confusion will normally get you past them and further down the road.

A friend once asked a homeless person for drugs or money to buy drugs. It was funny to see the beggar running away from the begged.

I'm not interested in such games. I'm polite to homeless people and panhandlers (in case they're psycho), but I walk away and don't give them anything.



David_Z has left a new comment on your post "Heller vs. D.C. Observations":

"The purpose of the 2nd amendment isn't just so individuals can protect themselves against crime. The 2nd amendment exists so individuals can protect themselves against their own government!"

Precisely! It is ridiculous for anyone to assume that a Constitution of Government would declare that individuals have the right to protect themselves from other individuals! The First Amendment doesn't mean that I have to listen to you, it arguably means that Congress can't prevent you from speaking. The Fifth Amendment doesn't say that "People aren't allowed to steal your belongings," it says that The State is not allowed to steal your belongings.

But, since the state ultimately interprets and renders judgments, most of these points are moot.

That's the whole problem with having a Constitution in the first place. A Constitution is useless when Congress, the President, and judges have been corrupted. In most trials for things that are non-crimes, the judge has a conflict of interest. He's a State employee, so he's always going to make the decision that increases his own power. For a trial involving possession of drugs, possession of a gun, or tax evasion, the judge cannot be impartial. For "victimless crimes", the judge has an inherent conflict of interest. The State is both the plaintiff and the judge.



David_Z has left a new comment on your post "Axes of Freedom":

"Agorism won't succeed because the State will fund its activities by printing new money!"

Ha! Let them try! The road to hell is paved with a hyperinflated currency. The more the Fed relies on the printing press, the more imminent is its financial collapse.

Actually, the road to freedom is via hyperinflation. During times of hyperinflation, the people who fare the worst are State employees, because their raises lag inflation. During hyperinflation, State police will walk off their jobs once they realize their paycheck is worthless. If there's a mature agorist economy at that time, then free market protection agencies will hire State police away. I predict that many police will secretly be on the payroll of agorist protection agencies before the collapse of the State.

In fact, agorist economic activity encourages hyperinflation! The more people that use sound money and the more people that avoid taxes, the sooner hyperinflation sets in.

Someone said that the only time people are free is the time inbetween the collapse of one government and the creation of a new government. If agorists do a good job, they'll be able to prevent a new monopolistic government from forming. That's the reason the collapse of the current State has to wait until there's a mature agorist economy.



By E-Mail, Joey from the Freedom Symposium writes:

I replied to your post as well as other people entering this discussion here: http://thefreedomsymposium.blogspot.com/2008/06/anarchy-philosophy-agorism-where-to.html

I did skip over a lot of stuff in your post rather than doing the point-by-point as I usually do because I think this is more of a philosophical matter than a economic one, and I don't care to get too deep into economics at this time. I could be wrong, of course, but I look forward to your reply if you have one.

There's still a huge error. If you voluntarily pay taxes, you aren't a true anarchist. If the State has the power to leech 50%+ of your productivity, you aren't really free no matter how much interpersonal freedom you have.

The decision to work as an agorist or a slave is a tactical decision. I still work 100% as a slave, while working for free market trading opportunities. Over time, I plan to gradually increase my free market labor % and reduce my slave labor %.

Another E-Mail:

There's still a huge error. If you voluntarily pay taxes, you aren't a true anarchist.

Voluntary? I disagree. People (especially anarchists) pay the extortion because they could get shot if or jailed if they don't. So paying isn't necessarily voluntary. It is like saying if you get robbed by a guy holding a gun and give your money for fear of being shot that you are giving it up voluntarily. It is not voluntary in the sense that you support that person taking your money by force or what they will do with that money.


However, if you are robbed, you should make plans for avoiding robbery in the future. If you say "I accept robbery without resisting", then you're a slave. Agorism is the only tactical strategy for resisting the State that has a nonzero chance of success. Agorism isn't a proven success, because it hasn't been tried before, but it's worth pursuing.

If the State has the power to leech 50%+ of your productivity, you aren't really free no matter how much interpersonal freedom you have.

I think you again misunderstand what what we mean by personal freedom at Freedomain Radio. Given the choice, I'd rather be in a good marriage and have good family and friends and pay %50 taxes then live in a world where I am stuck a crappy marriage and corrupt relationships and pay no taxes. See the difference?

That's the Catch-22 argument. Would you rather live on your feet or die on your knees?

I though you were unaffiliated with the Freedomain Radio website? I thought that was entirely Stefan Molyneux?

Why not have BOTH good interpersonal relationships *AND* economic freedom? It's hard to have personal freedom when the State leeches 50%+ of my productivity.

Like I say, the State is not going anywhere anytime soon and neither are their schemes. What we can do now is fix the personal stuff and eventually the State will collapse due to it being corrupt. You could do both, I suppose, but tax resisting really isn't doing much but putting you a risk.

Actually, a large body of practicing agorists will accelerate the collapse of the State. The Supreme Leader of Humanity won't let the State collapse until viable free market alternatives are in place. If there's no underground free market economy, then there will be chaos as the State collapses. If there's a viable free market, then there will be a smooth transition to a free market as the State collapses.

In the present, the State claims everyone as its personal property, preventing collapse. If a large percentage of people stop acting like State property, that assists the collapse.

As the collapse draws near, taxes and regulations will be increased. That will provide further incentive for agorists.

It isn't enough to think about freedom. You need practical freedom. You need both interpersonal freedom and economic freedom. You can't have just one of them.

The decision to work as an agorist or a slave is a tactical decision. I still work 100% as a slave, while working for free market trading opportunities. Over time, I plan to gradually increase my free market labor % and reduce my slave labor %.

Yes, I still understand that, but that's not point of the discussion. Where you work outside the State makes little difference in the State eventually collapsing.

No. If a large number of people work in the free market, that accelerates the collapse of the State. That's the reason so many resources are wasted cracking down on tax resisters. Once people realize the benefits of the free market, they won't tolerate the State anymore.

You're entirely missing the point. It isn't enough to talk about freedom. You have to put your ideals into practice eventually. The only way I see to implement that is agorism. I don't practice agorism yet, which makes me a partial hypocrite. However, I intend to practice agorism, at least part-time, sometime during the next few years.



Anonymous has left a new comment on your post "The Hunt Brothers' Silver Corner":

Thank you for this post. - An "Austrian" graduate student.

My post on the Hunt Brothers is my #1 or #2 post in Google Analytics in most days. It's rapidly shooting up my "Best of FSK" list. There aren't many other posts on the subject, so my article ranks well in Google Analytics. Plus, a few incoming links have boosted that article's PageRank.

I don't consider myself to be an "Austrian economist", but I understand Austrian economics really well.

The bottom line regarding the Hunt Brothers is that borrowing via margin and buying assets is very risky, if you aren't a politically connected bank. You're probably going to get blown out of your position due to margin calls during the next economic bust. If you want to speculate in gold or silver, an unleveraged long position is best. You should also buy some long-term out-of-the-money call options to benefit from inflation. A call option has limited downside but unlimited upside. If you own a call option, you're betting *ON* inflation.



gilliganscorner has left a new comment on your post "Censorship in Action!":

Thanks to the internet, more and more people are becoming aware of what the Fed is and how it works.

The internet is doing a good job breaking the mainstream media monopoly. Government is working feverishly to try and shut down free speech on it.

eagledove9 has left a new comment on your post "Censorship in Action!":

oops... Something might have changed between the time when you wrote this blog and when I clicked those links, but: it seems like one of the links (the google cache link) goes to page 1 of the comments and the other link (the live web page) goes to page 5 of the comments. I clicked page 1 on the live page, and it went back to the beginning, where the original anti-fed comments were posted. The google cached version doesn't go all the way down to the bottom, where the numbers 1-5 are written for you to click on. I wonder if that's how it originally looked.

Maybe they had a problem with their website.

I have "NoScript" enabled in my browser. That's why I saw the comments on the Google cache but not on the original page. I unblocked NoScript and then I saw the page.

This seems like a false censorship accusation. I've heard of that happening elsewhere, though.

I feel embarrassed that I made a false censorship accusation. However, I've heard of similar censorship in other instances. I've heard of anti-psychiatry comments censored from mainstream articles on drugs.



Anonymous has left a new comment on your post "The Compound Interest Paradox":

Your article is valuable, but I suggest you remove the reference to imaginary numbers. They're not relevant to your discussion and it's obvious that you don't understand their application.

I understand imaginary numbers pretty well. I add those explanation, such as the reference to quantum mechanics, to provide alternate explanations.

I disagree with your statement "The value of a dollar is a real number." Here's why. Let's draw a supply and demand curve. I'll use round numbers. The supply of dollars is $10T (actually, it's only $7.7T, but I'll use round numbers). The demand for dollars (total debt) is approximately $50T.

For each extra $1 created, and extra $1 of debt is created. This is the whole point of the Compound Interest Paradox. For each $1 of debt repaid, $1 is destroyed.

If you draw the supply of dollars and demand for dollars, you have two parallel lines. If you increase the supply of money, you also increase the demand/debt.

Therefore, "The value of a dollar is a real number." is false. The supply and demand curves don't intersect.

It's a silly analogy. Debt-based fiat money is silly, once you understand how it works.



Francois Tremblay has left a new comment on your post "The Market Anarchist Blog Carnival - June 2008 Edi...":

Well, blog carnivals are not a platform for you to try to change what people are writing about.

I have zero interest in writing about free market businesses, and I doubt there is much interest from anyone else on that topic. If that was your interest, you should encourage agorist blogs to post on the carnival.

The blog carnival was a collection of articles that said "The State sucks!" That isn't interesting, because I already knew that.

I want to move from theory to implementation. If all you ever do is complain, then you're not accomplishing anything.

It is true that there are practically no articles anywhere about actual free market businesses. That is very disappointing. There's still a lot of work to do.

Matt has left a new comment on your post "The Market Anarchist Blog Carnival - June 2008 Edi...":

Actually, you don't really have a choice about buying Windows. It's possible to get a machine that didn't come with a license, but those machines are functioning as subsidies toward the machines that do have the license and so they come at a premium.

If you assemble your own PC, you don't have to pay the Windows tax. If you buy a PC from someone like Dell, I believe Windows is bundled with it. An OEM (bundled with PC) copy of Windows is cheaper than buying it separately afterwards.

I agree, I think an agorist business carnival may be in order. I'm looking forward to some ideas for software that will enable free market discovery and transactions.

I'm looking for *ANYONE* with decent articles on free market businesses. I haven't seen anything.

The free market software movement is a reasonable model for an agorist economy. However, you need to move from software to tangible goods, like clothing, appliances, food, etc. The same model that succeeded in the free software movement, needs to be applied to tangible goods.

I wrote some relevant posts. I wrote about raw milk. I wrote about free market banking. I wrote about tax resister insurance.

Any software that enables a free market economy has to be completely P2P decentralized. Otherwise, the bad guys could shut it down by infiltrating/seizing the server. I wrote a specification of such a system. I haven't worked on implementation.

The most important thing right now is to focus on producing tangible goods and trading them, agorist-style. The cost of taxes is over 50%. If all you accomplish is tax avoidance, you're doubling your productivity. There are many taxes and regulations that discourage economic activity. If you avoid all of them, I predict you would see a productivity gain much greater than 50%.

The value "50% gain" assumes you avoid taxes on your labor with no other efficiencies. If you buy and sell with other agorists, you'll see a 50% productivity gain *AND* you'll see a decrease in the prices you pay for goods and services. Once you get started, exponential growth works dramatically in your favor.

I predict a community of 5 people, working in the same city, at least 5 hours per week, is sufficient to get an agorist free market economy started. At this point, the focus should be on producing tangible goods and not writing software. Should I learn repair/manufacturing instead of software?

It is *FALSE* that large factories are more efficient than small local manufactures. A smart person or group of people working out of their basement should be able to outperform a factory. A large corporation excels at lobbying the State for favors, but not actual efficiency.

A free market doctor would have productivity gains greater than 50%. He wouldn't just avoid taxes. He would avoid all the licensing and regulations that apply to doctors. If you want to provide cheap and affordable health care, work as an agorist doctor!

I'm looking for articles about actual free market businesses. I haven't heard of many.



Monkt has left a new comment on your post "The Market Anarchist Blog Carnival - June 2008 Edi...":

I actually have started to explain free market ideas to my parents and my dad at least is starting to agree with them.

I've given up. My parents are older or more closedminded. I try once in awhile, but it's hard. When I say "Taxation is theft!", I can almost literally see their brains shutting down.



Joey has left a new comment on your post "Your Strawman Corporation":

"Of course, such legal arguments are irrelevant. The *MORAL* argument against income taxes is much more important than the legal argument."

Agreed, and I was disappointed you never mentioned "extortion" in your post. Taxes are just a euphemism for extortion, and we know that because if anybody else taxes without being recognized as the State they are extorting.

That post was supposed to be specifically about the Strawman Corporation and not a general criticism of taxation. Taxation is still theft.



phubaba has left a new comment on your post "The Black-Scholes Formula is Wrong! - Part 5/12 - ...":

please continue this 12 part article, I'm finding it very interesting. (along with the rest of your articles)

I actually did finish it. I went back and updated the posts in the series with links.

I didn't update them, because Blogger used to re-publish an article in your RSS feed if you edited and reposted it. It doesn't do that anymore.



Anonymous has left a new comment on your post "The Labor Theory of Theft":

This theory simply says that the value(price) of a product can be computed by the amount of labor it takes to produce. This is not true because value is created by the valuer.

I should make an updated version of this post. Calling it "The Labor Theory of Value" is misleading, because that's a swear word in most people's minds. I should call it "The Free Market Labor Arbitrage Process".

More simply, price = cost of capital + cost of labor.

If price less than those costs, then businesses will close and prices will rise.

If price is greater than those costs, then workers will raise capital and start new businesses.

If labor is overpaid, new workers will enter the field.

If labor is underpaid, then workers will start new businesses.

If capital is underpaid, then the owners will sell and invest elsewhere.

If capital is overpaid, then more investors will enter the market.

In a free market, the "market interest rate" indicates what capital owners should get as a return.

Capital is entitled to its fair return on investment, which is a few percent per year in a free market. In a free market, capital is prevented from earning excessive returns or "rent-seeking". In the present, most people who start a business are actually rent-seeking. They're looking for a business that can be sustained indefinitely, protected by State violence/regulations, even if it's managed by fools/MBAs.

For an individual's point of view, prices are subjective. I would pay $50 for a hamburger, because I need to eat to survive and my daily wages are more than $50. Fortunately, due to competition, I don't pay $50 for a hamburger, although I would if I had to.

In a *REALLY* free market, prices are always fair. A natural arbitrage process causes business to open and close. In a really free market, talented workers have easy access to capital.

In the present, the State restricts the market. This allows unearned profit (rent-seeking) for capital.

For example, the primary value of my employer's business are their "connections" with large corporate customers. Even if I could make a better product, I would be unable to sell it. Connections trump talent, which is a feature of communism rather than a free market.



Anonymous has left a new comment on your post "The Compound Interest Paradox - a Simpler Explanat...":

I explained this to my 10 year old very simply. I pulled out 100 $1 bills and said "we're going to create a country and this will be all the money it will ever have. The only way to release this money is for it to be borrowed by the people from me, the banker. I will make one loan to you and you have to pay me back with interest. The total due will be $105. How are you going to pay me back?" It took him awhile, but he realized that he will never have the extra $5 since there will not be more money than the $100 set out initially. I then told him I could loan $200 so there would be enough to pay back the $105 but that the new loan would require $210 to pay back. Where was he going to get the money this time? Same answer. I told him this is how it works and the cycle repeats. He knows that if the lending stops, the country loses its possessions and also that the debt keeps adding up. He doesn't think it can keep doing this forever and will eventually fail.

I would have used Monopoly money instead of Federal Reserve Notes.

Actually, it can go on forever *PROVIDED* you have continuous money supply inflation. Debt grows exponentially faster than the money supply, due to the Compound Interest Paradox. However, the money supply also grows exponentially via inflation.

In practice, it won't go on forever. At some point, the issuing authority gets too greedy and prints too much money for itself. The result is a hyperinflationary collapse. Historically, every fiat monetary system ended in hyperinflation after approximately 100 years. The US dollar has been fiat money since 1913, when the Federal Reserve was created. From 1913-1933, the dollar was gold-redeemable, but legal tender laws forced people to trade Federal Reserve Notes at parity with gold.

If you're son learns real economics and real politics, isn't he going to have a hard time in school?



barry b has left a new comment on your post "The Market Anarchist Blog Carnival - June 2008 Edi...":

Been giving a lot of thought to your blog and plan on writing an article soon addressing a couple of your themes. Your "all taxes are immoral" argument and the agorist market interest me. Way I've been thinking this over I'm gonna end up coming down on what goals are actually achievable versus those hopes that exist in our minds (that may not be realistic). Anywho I'll shoot it over to you in a month or two. Like always enjoyed the read.

"Taxation is theft!" is obvious to me. All forms of taxation are theft. That includes income taxes, property taxes, excise taxes, tariffs, and even a direct capitation (equal amount per person). "Voluntarily paying taxes is immoral" is true, because the proceeds are used to help other people.

I consider a total agorist revolution to be an attainable goal. For now, an agorist should pick and choose his battles. I advise going after "easy" markets first, and progressing to harder markets later. Manufacturing clothing seems easy and profitable. Building and repairing appliances seems feasible. More risky, but with greater reward, is agorist health care and doctors.

You have to start somewhere. I'd start with the easy stuff first, and progress to the harder stuff later. Plus, each individual has different risk tolerances. It's probably a lot easier to convince someone to buy a shirt from you than convince them to visit a non-State-licensed doctor. Plus, if caught, it's easier to defend your shirt-making hobby than your doctor hobby.

For example, I could provide an agorist psychiatrist service, helping people in withdrawal of anti-psychotic or anti-depressant drugs.

E-Mail me a link or leave a comment if you write an article you want me to read. The "debt prison" blog is buried in my RSS Hitlist somewhere, but I don't read it regularly.



Liberty Student has left a new comment on your post "The CPI is Biased":

Shadow Stats has a white paper on CPI and other measures. Have you considered test driving a subscription?

I don't need a subscription. I use M2, reconstructed M3, or the price of gold as my index of inflation. Over a period of 5+ years, gold should be a very good approximation of true inflation, even though the gold market is heavily manipulated.

There's enough free resources that I don't need a paid resource.



barry b has left a new comment on your post "The CPI is Biased":

This subject comes up often as it should (what inflation really is). I tried to explain to my friend that last year when you purchased 100 dollars of groceries (as example) this year same groceries would cost 104. Now I saw a report for 2006 I think where some agency was quoting a government source as inflation was 4.8 or something. Now considering the increase in the costs of gasoline (doubled) in bush days and therefore the snowball of rising food and other prices on retail and industrial items. Where do you think inflation really is. I was thinking 6 to 7 percent. But in the last 3 years I'm not sure that is high enough...

M2 is growing at a rate of 6%-7% per year. Reconstructed M3 is growing at a rate of 15%-20% pear year. The Federal Reserve no longer publishes M3, so it's hard to use M3.

I used these three sources for the price of gold. The price is the price on January 1 of that year.

YearPrice
2001$271.04
2002$309.73
2003$363.38
2004$409.72
2005$444.74
2006$530.00
2007$639.75
2008$846.75

Gold is currently over $930/ounce, so the trend is continuing so far in 2008.

If you believe "Gold is money!", then inflation was 32% in 2007. The price of gold indicates 23% annualized inflation over the last 3 years, 17% annualized inflation since 2001.

Seven years is a non-trivial time period. Over that timeframe, any short-term fluctuations and market manipulations should average out. The price of gold indicates severe and accelerating inflation.

Surprisingly, the stock market is relatively flat even though there has been severe inflation. Is it time for another stock market bubble?

There is one interesting point. If you are busted for the IRS for underpaying taxes, the "interest and penalties" is only around 8%-12% per year. If you underpay your taxes, and use the proceeds to buy gold, that's a profitable trade! Hyperinflation reduces the risk of tax resistance!



By E-Mail, redpillguy writes:

Have you ever seen any info on how many % of M3 is debt-money, over time?

I haven't seen it. It's impossible to calculate it presently, because M3 is no longer reported.

The ratio of M3 to debt should remain mostly constant over time. If debt starts to outpace money supply, then there will be extra inflation to compensate. Debt grows exponentially faster than the money supply, but the money supply is also growing exponentially.

For example, I saw another source (I forget where) that said that interest payments on the national debt, as a % of GDP, has been consistently 2% since after WWII. If interest payments become a greater % of GDP, then there is money supply inflation to offset.



Anonymous has left a new comment on your post "The Compound Interest Paradox":

This analysis is flawed, because you neglect the fact that bankers spend money too. You do mention that the financial interest benefits and then go on to ignore the money that the bankers spend right back into the pool of money that is in our economy. Every bank loan increases the money supply and now most banks reserve requirement is only 3%, so each loan is an increase of a small portion of the money supply by 97%.

Your very first payment on the loan is 98% interest which the bank spends to buy your congress person, your media, all that money goes back into the money pool for you to earn back via your labor so you can repeat the cycle next month with the banker only getting 97.8% to spend... we are slave of the bank.

Don't borrow, don't feed the monster.

You should look at my page of examples. When the Federal Reserve "monetizes the debt", the Compound Interest Paradox operates with the full force of law. The balance sheet of each individual bank balances, but the books of "society as a whole" do not balance.

The fact that banks have profits and expenses does not eliminate the Compound Interest Paradox. That's not how fiat debt-based money works.

Even if I refuse to borrow, I'm feeding the monster. As long as I use Federal Reserve Points as money, I'm letting the government and financial industry steal my savings via inflation.

That's an interesting pro-State troll point. "If you don't borrow, you aren't supporting the bad guys." That's false. If you use Federal Reserve Points as money, you're supporting the bad guys, whether you borrow or not.

The only way out is agorism. I should completely boycott the Federal Reserve and income taxes.

Also, reserve ratios in the USA are presently 10% and not 3%. I'm not sure about other countries.

It seems that a lot of the anonymous criticisms are pro-State trolls.

6 comments:

Joey said...

Heads up! I got some commentary on your reader mail once again. You can find it posted here:

http://thefreedomsymposium.blogspot.com/2008/07/fsk-i-converse-on-taxes-other-stuff.html

As always, thanks for the conversation. My readers are loving these debates/conversations so I intend on giving them more.

barry b said...

FSK,

Since I've been following your blog a lot more here recently I've realized that the topics you blog about are the same damn ideas that float through my head all day. Also, they happen to be the subjects of conversation among a couple of my friends with whom I can actually discuss these issues with. I can't devote nearly the time to blogging, reading, and research that I would like.

I'm working 48 hours per week right now and it's hard to give the time to the blog. However, my question for you is... how do find the time to read as much as you do and post as often as you do. I've been following you closely lately and am impressed with how much of this subject matter you find time to read and comment on. Hell your blog is starting to become a one stop source for news related to taxes, gold, liberty etc.

Keep up the great work.

barry b said...

FSK,

also wanted to tell you I read Peter Schiff's "Crash Proof". I'm not sure that you'll much you don't already know. However, I like his analogy on U.S. vs China. Everyone says that China's economy is completely dependent on U.S... as they are actively producing everything we consume these days and the U.S. is actively producing printing presses. In the book he compares America to a neighbor who used to produce a lot of crops. But over time we began to produce less and less, and consume more. Finally this neighbor (who now sits around and plays golf all day) has the entire world working for them. And all of this is based on the false assumption that the U.S. dollar is as good as gold. Once they realize the U.S. economy is a false one based entirely on monopoly money - the u.s. will sink and the chinese will work a little less but still proser just the same.

Overall it was a good read and learned a few things I didn't know.

laterz

bb

barry b said...

FSK,

I thought this was an interesting article


http://www.spiegel.de/international/business/0,1518,563499,00.html

tecbelico said...

Hello FSK,

I guess you've mistaken my blog as a Spanish one, at least it's the most probable explanation by looking at your Technorati page.

Later I'll write a post there (tecbelico.wordpress.com) about agorism in English.

kevin quinn said...

FSK: a Prisoner's Dilemma cannot be resolved with communication. It reappears as the choice between keeping to the agreement to keep quiet or reneging. Reneging is dominant. As for (infinite)repetition, it's true that the cooperative outcome is a possible outcome; but so is always defect. The repeated PD becomes a coordination game, with multiple equilibria.

This Blog Has Moved!

My blog has moved. Check out my new blog at realfreemarket.org.