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Tuesday, October 14, 2008

Reader Mail #67

I liked this post on Check Your Premises. He links to some interesting political cartoons.



I liked this post on Check Your Premises. In the USA, prison inmates are exploited as a source of ultra-cheap labor. This places the State in a conflict of interest position. By arresting people for many frivolous crimes, this allows a pool of cheap exploitable labor.



I liked this post on Check Your Premises. The only way to fix the "health care crisis" is to completely eliminate all State regulation of health care.

I liked some of the troll comments. "In the early 1900s, the medical industry was unregulated and was a disaster." First, the USA never had a true free market, not even in 1900. Second, in a true free market, someone who fraudulently markets "disease cures" is subject to damages. There never was an efficient mechanism for injured customers to seek redress. Third, before the medical licensing cartels, a typical worker could purchase a year's worth of healthcare for a few days' labor. The medical licensing cartels restricted the supply and drove up prices.

I liked Francois Tremblay's hostile reaction to the pro-State trolls. He wasn't as polite as I am. If you think my blog sucks, then how pathetic does that make you for reading and posting comments?



I liked this post on no third solution. Due to lucrative union contracts, GM is owned by its employees more than by its shareholders.

David Z did a calculation that indicated that GM might be worth more to its employees than its shareholders. David Z got the calculation wrong. Adding up salary and benefits, unionized autoworkers make closer to $50-$70/hr, instead of $13/hr.

Look at it this way. GM stock is a call option. When there is inflation, workers' wages won't keep up with inflation. However, GM will be able to raise prices and hopefully pay off its debts.

At any corporation, an individual shareholder has no rights. There's no way to prevent management from wasting the corporations' assets.

GM is massively inefficient. Why isn't GM facing competition from startups? The auto industry is heavily regulated. It's practically impossible for an individual or small business to manufacture a car and get it approved as "street legal". The cost of getting State approval for a new car is millions of dollars.

Like all large corporations, GM is shielded from competition by the State.



This post on Check Your Premises about the evil of profit-seeking is missing the point.

In the present, the goal of most businesses is not profit-seeking, but rather rent-seeking. Established businesses are shielded from competition by the State.

When VCs invest in a startup, they really hope to create a stable business that has monopoly/oligopoly status in its market niche. Wall Street is not interested in businesses that require skill to run. Wall Street likes businesses that are so shielded from competition that they are profitable even if they are run by idiots. In practice, most large corporations are effectively run by idiots; management seeks to line their pockets at the expense of shareholders and customers.

There is nothing immoral about seeking profits. It is seeking profits, *COMBINED WITH STATE VIOLENCE* that is immoral. When a hedge fund manager seeks profit, he is making money without doing any actual work. Most pure red market businesses are profitable only via the State. Most red market workers have skills that are nearly completely useless in a true free market.

It is important to understand the distinction between rent-seeking and profit-seeking. When rent-seeking, you are seeking income without doing any actual work. When profit-seeking, you are actually performing useful work to earn your profit.

Consider a landlord buying a rent-controlled apartment. He borrows via a mortgage and collects his State-granted rent increase of 6%-7% per year. There is no incentive for the landlord to do maintenance or repairs. This is pure rent-seeking.

On the coldest night of the year, it is in the landlord's best interests to let the furnace fail. The landlord has a State-mandated 48-72 hours to repair it. He takes the maximum time. Due to State violence, the landlord's profit-seeking desire conflicts with the best interests of his tenants.

Suppose a landlord buys a non-rent-controlled apartment. He does repairs and improvements. He screens tenants to make sure they will pay their rent. As the condition of the building improves, rents are raised. This is profit-seeking. (The landlord still receives a massive State subsidy via negative real interest rates on his mortgage.)

In a true free market, a landlord who purchases property and neglects it will suffer subpar returns. He would be better off selling his property to someone who will maintain it properly and investing the proceeds elsewhere.

In a true free market, there's nothing immoral about profit-seeking or greedy behavior. It is greed *COMBINED WITH STATE VIOLENCE* that causes evil outcomes.



This post on Check Your Premises was interesting, in reference to this YouTube video.

From the point of view of the average soldier, the best possible outcome of war is that you make it home alive. There are no other tangible benefits for a soldier.

The speaker in the video also speaks about tax resistance in protest of the war. War is only one of many reasons to resist taxes. All State actions are violence, war, and terrorism.



I didn't like this YouTube video, via Hacker News. It's one of the Seinfeld and Gates commercials. Those commercials are incredibly lame. A commercial of Bill Gates literally burning his money would have been more entertaining, and probably cheaper.



I liked this article, via Hacker News. If you have truly original ideas, you'll probably be alone. It's very hard to get useful feedback from others for truly original ideas.

Further, being alone encourages original ideas.

In the comments section, someone mentioned that most original thinkers had a period of their life when they were alone due to illness.



I liked this article on ArsTechnica, via Hacker News. The article claims that Amazon.com was censoring negative reviews for Spore.

I heard that Spore was a lame game. Here's a good rule of thumb. If a game is heavily hyped and takes several extra years to release, it probably sucks. One of my favorite flops was Master of Orion 3.

If you're serious about working as an independent game developer, I think you're better off making a bunch of games investing 1-2 months on each, rather than making one huge game.



I liked this article, via Hacker News. Google accidentally republished an old story of United Airlines bankruptcy in 2002 as if it were current. This caused United's share price to drop from $12 to $3.

The story was in a local newspaper's website archive. The story contained no timestamp. A single reader viewed the old article early in the morning. This caused the local newspaper to put the article in its "hot stories" section. Google's bot picked up the article as if it were new and current, because the article contained no timestamp. Google News published it as if it were a current story, causing the share price to decline. Bloomberg picked up the story as if it were current, noting the current drop in United's share price. This caused United's share price to crash even more.

Now, there's a bunch of lawsuits over who is responsible. When the story was corrected, United's share price recovered to near $12. Anybody who actually traded United's shares based on this false rumor deserves what they get.

Here's another link describing the same story.



I liked this article on Take the Red Pill. It refers to the "Business Plot". In 1933, a group of business leaders tried a military coup against the US government, with General Smedley Butler backing it. He played along until the last minute, and then chose to be loyal to President Roosevelt.

If you look up a list of participants, the "usual list of bad guys" are not present on the list. The backers of the "Business Plot" are people I'd never heard of before. Combined with the fact that the story is suppressed, the "Business Plot" organizers must have been the good guys. They sincerely recognized that President Roosevelt was destroying the free market in the USA and wrecking their businesses. They had some savings, but they didn't have enough political connections to loot and pillage like other insiders. The corporate/communist/welfare state was going to wreck their business.

The story is suppressed because a group of business leaders at the time concluded "The US government isn't working and should be eliminated."

A military coup cannot succeed. Agorism is the only type of revolt that has a chance of success.



I liked this post on RadGeek. The "big three" US automakers get loans from the Federal government for "research and development". According to the article, the loans were $25B last year and proposed $50B this year.

Real interest rates are negative. This makes a "loan" essentially a gift. If you lend me $25B last year and $50B this year, I'm under no obligation to repay. As long as the loans are "rolled over" for bigger and bigger amounts, this prevents a default.



I liked this post on RadGeek. The ban on marijuana and other drugs is an illegitimate law. Some policemen accept bribes to ignore/protect drug dealers. Are policemen who accept these bribes behaving in a morally just manner?

If the ban on drugs is immoral, than it's moral for policemen to accept bribes to ignore drug dealers?



This post on RadGeek was interesting. Someone is attempting to start an agorist trading group in New Jersey. A few groups appear to be starting in various parts of the country. Hopefully, one will succeed. I'll start one within the next few years.

However, the organizer of that group was protesting at the RNC, proving that he is a fool. The correct anarchist response to the RNC is "Who cares what the RNC does? Who cares what politicians do?" When you protest at the RNC, there's an implicit assumption that "The RNC matters."

If your goal is to promote agorism, you can do that anywhere. You probably shouldn't go to the RNC to promote agorism, because you'll be under increased scrutiny. You can do more good handing out flyers on a random street corner.

The goal of an agorist should be to fly under-the-radar. Protesting at the RNC is like painting a bullseye on yourself.



This post on the Picket Line had a huge error. David Gross said that US Treasury bonds are a 100% safe investment. That is false. Treasury bonds yield 4%-5%, while inflation is 20%-30%. If you invest in Treasury bonds, the nominal value of your principal is guaranteed. Your purchasing power will almost definitely be eroded by inflation over a period of several years.

Federal government debt is "100% safe", because the government may merely print more dollars to pay down its own debt. If you properly adjust for inflation, then Treasury bonds are the *MOST RISKY* investment.

Investment banks can profitably buy Treasury bonds. The Fed Funds Rate is 2% and the long-term Treasury rate is 4%-5%. Banks can make a practically guaranteed riskless profit borrowing at the Fed Funds Rate and buying Treasury debt, collecting the spread of 2%-3% while using leverage ratios of 100x or more. That is one of many ways that inflation bails out banks. "Interest payments on the national debt" primarily fund financial industry profits.

As an individual investor, if I buy Treasury bonds, I'm making an unleveraged long investment. I don't get the perk of borrowing at the Fed Funds Rate. Further, large banks have an extra perk because they don't have to "mark to market" during a recession. As an individual, I'll get margin calls during a recession, if I load up on leverage.

Before 1913, under a gold standard, there was a real risk of default when you purchased government debt. When government debt was gold-redeemable, there was a legitimate default risk. Investment banks' most profitable activity was financing State debt. This naturally led to them lobbying for favors, to protect their investment. This leads to central banking and the Federal Reserve. People who argue "The current corrupt system evolved by accident." say that a corrupt monetary system was the result of large banks lobbying for favors, rather than a deliberate conspiracy.

If you properly adjust for inflation, government debt is *NOT* a safe investment.



I liked this post on Check Your Premises. Suppose you are beaten by police for failing to pay income taxes. Were you a bad person for not paying taxes? Or, are the police evil for enforcing a bad law? Most people assume the former instead of the latter.

As another example, did I lose my recent job because I "was not a team player"? Or, were they a bunch of clueless losers that I shouldn't be wasting my time on?



I saw a bunch of articles (via Hacker News) complaining about iPhone development. When getting an iPhone application approved, you don't ask for approval until it's ready to ship. If Apple declines to approve your application, then all your investment goes down the toilet.

If you write an application that competes with one of Apple's applications, then Apple will reject it.

In other words, you'd be a fool to invest heavily in iPhone application development. If Apple has a similar application already released or in development, you are SOL. Your investment is lost and you have no recourse.



I liked this article, via Hacker News.

When Donkey Kong Junior was in development, the programmer had the bright idea of writing it in Forth instead of assembler. Forth is a high-level language. It was totally unsuitable for the high-performance required of arcade games at the time, which usually were pushing the limits of available hardware.

After several months of no progress, the programmer proclaimed "I'll be finished in a month or two! All the groundwork for success has been laid!", even though he had produced nothing up to that point. That sounds like the Rails advocate.

The task for developing Donkey Kong Junior was given to a programmer with a clue and it was finished in a few months.

If a developer ever says "I'm doing all the groundwork! Even though I have nothing working yet, it'll magically suddenly fall into place!", then that's a tipoff that the programmer has no clue and is faking it.

If a software project doesn't show tangible progress in a month or two, it's probably a disaster.



I liked this list of terms used by Congress. It was mildly amusing. At the same time, I was thinking "This illustrates why government is a complete waste of time."



I've been seeing the "Mercenaries 2" videogame commercial a lot. I really like the song. According to that link, that song was made specifically for the commercial. Usually, commercials recycle another song.

This page has a download for a longer version.

That song summarizes my overall attitude towards the State. "You tried to cheat me! Well, I guess I'm going to have to wreck the entire economic and political system and replace it with something better!"



One of my favorite new game shows is "Hurl!" on the G4 channel.

"Hurl!" features eating competitions alternating with extreme activities, such as riding a roller coaster or riding a mechanical bull. As the name indicates, if you barf, you're eliminated.

The game starts with 5 people, and lasts up to 6 rounds. The first round is an eating competition. The two people who eat the least are eliminated. In round two, the three survivors go on an extreme activity. Round three is another eating competition. If none of the three round one survivors hurls before the end of round three, then whoever eats the least is eliminated. Round four is another extreme activity. Round five is another eating contest. Whoever eats the most in round five wins the game if nobody hurls before the end. Round six is another extreme activity. Usually, the speed is increased and the players are blindfolded. Starting in round 4, you win the game immediately if your opponent hurls.

I never see players using strategy. In round one, your goal is to finish 3rd, not first. If you see you're safely in 3rd, you should stop eating to save room for later rounds. In round three, if someone has already barfed, then it doesn't count at all. If there are three players in round three, then you should play for 2nd place. In round five, you should try to eat just a little more than your opponent, to minimize the risk of hurling yourself.

The grand prize on the show is only $1000. The players are in it for entertainment purposes. It shouldn't be taken too seriously.

It's also amusing to see people take a huge barf after winning the game.

It's interesting to see the things they eat. Sometimes, it's disgusting stuff like cheese-covered broccoli. Other times, it's stuff I would eat like wonton soup. One of my favorite bits was on the wonton soup episode. The person who had eaten the most barfed it all up back into the bowl at the end of the round, saving the 4th place player from elimination.

The production values of the show are good. Even thought it's low-budget, it's very well produced.



I liked this blog post on SeekingAlpha. After Lehman filed for bankruptcy, all the credit rating agencies downgraded Lehman's bonds from investment-grade to junk. That's a bit late, isn't it? That defeats the purpose of a credit rating agency, doesn't it?

Fitch Ratings has downgraded the long- and short-term Issuer Default Ratings (IDRs) and outstanding debt ratings of Lehman Brothers Holdings Inc, (LBHI), parent of Lehman Brothers Inc and other subsidiaries as follows:

--Long-term IDR to 'D' from 'A+';
--Short-term IDR to 'D' from 'F1';
--Senior debt to 'CCC' from 'A+';
--Subordinated debt to 'C' from 'A';
--Preferred stock to 'C' from 'A'.
Any credit rating agency that had Lehman's debt rated as "A" on Friday before it filed for bankruptcy should be sued for fiduciary neglect.



I liked this article, via Hacker News, for this quote.

Maybe the truly dangerous “LHC” isn’t the Large Hadron Collider, but the Lehman Holdings Collapse.

It also had an interesting photograph of "people attending a meeting where they're all told they're about to be fired" or "falsely reassuring people that things are going well". I'm been to my share of such meetings. I even started a near-riot at one once, by asking a suitable question! From now on, my policy should be to start a riot at all such meetings.



I liked this YouTube video on the history of compulsory schooling. The purpose of public schools are to train good slaves/workers. The workers who rise in the bureaucracy are those who are most efficiently brainwashed.

People have tried alternate schooling systems as a business, but had their businesses declared illegal.

In the present, people pay a huge tax burden, some of which pays for public schools. Most people don't have the spare resources to organize private schools or homeschooling associations, because they're already paying a lot for public schools and other taxes.



I liked this article by Nassim Taleb.

Instead of using a "random walk" to model financial markets, you should use "random jumps", which is a combination of random walk plus occasional huge jump.

The executives or traders at a large bank will ignore rare events that bankrupt him, if it increases their profits the rest of the time.

Executives at FRE, FNM, and LEH are not required to give back their huge salaries and bonuses earned in years prior to their collapse.

Limited liability incorporation explicitly encourages executives to not care about rare events that bankrupt them. They can always declare bankruptcy and cheat their creditors.

Of course, the ultimate "black swan" event is the complete collapse of the current economic and political system, which I estimate will occur approximately 20 years from now. Most CEOs and politicians lack the ability to plan more than a few months into the future.



I liked this post by Mark Cuban. He says that being CEO at a large corporation is usually a scam.

Find me the one story where the headline is "CEO has to pay the company losses back for being an idiot ? " or " Risky moves cost CEO his lifetime savings" or "Hedge fund manager gives back bonuses and exits with $1500 dollars a month severance"

Instances like Enron or Worldcom, where executives go to jail, are the exception rather than the rule. "Sometimes dishonest executives go to jail. Therefore, all the other CEOs are saints."

Usually, a CEO has a golden parachute. He gets a hefty payday even if he's a total failure.

CEOs are not selected by a true free market process, but rather by nepotism capitalism. Even if a non-insider rises to CEO, it's because he has the "right" type of "attitude" (pro-State brainwashing).



I watched the "Go God Go!" episode of South Park again. It made an interesting point. Logic and reason are insufficient. You also need to act like a jerk towards people who think irrationally.

I shouldn't feel bad about being rude to pro-State trolls. They're not human and not important.



This post on Check Your Premises, in reference to this YouTube video, was interesting.

The details were confusing. Jan Helfeld was questioning a politician about "Is taxation theft?" or related topics. The Congressman's public relations advisor terminated the interview and confiscated the videotape. Jan Helfeld sued the Congressmen and won. He won $45k, plus his videotape was returned, although portions are deleted.

There's an interesting point that this video illustrates. Neither Jan Helfeld nor Francois Tremblay mentioned it. A Congressmen can't really be too evil, lest he be unable to convince voters. A clueless Congressmen is much more effective than one who is truly evil. A Congressmen must sincerely believe that the crimes he commits are morally just.

The true scumbag was the Congressman's handler, his press secretary. He instructed the Congressman to terminate the interview when it went in an uncomfortable direction. The press secretary makes sure that only people who ask the "right" questions may interview the Congressman.

Even if a Congressmen has sincerely good intentions, it's hard for him to do a good job when his handlers/advisers are scumbags. It's necessary to make sure the Congressmen isn't exposed to "bad" ideas, lest he get crazy ideas about performing his job honestly. For this reason, "peaceful protesters" must be kept away from the true economic and political leaders, and confined to "free speech zones".

I wouldn't waste my time interviewing scumbags/Congressmen. It's interesting to see other people asking embarrassing questions. This trend will increase, rather than decrease.

Normally, a politician is only interviewed by someone who will only ask "suitable" questions. Someone who asks "inappropriate" questions does not normally get to interview Congressmen. For example, Congressional leaders warned representatives to refuse to appear as a guest on "The Colbert Report".

Jan Helfeld has several other interesting interviews where he asks Congressmen "Is the income tax moral or legal?" I consider the moral argument to be the important point, although the legal technicalities are also interesting.

I liked this video, illustrating a pro-State troll getting evasive. A pro-State troll/politician acts very much like a "red zone" dog, which barks at anyone who comes close. The "Dog Whisperer" analogy is very interesting.

This Jan Helfeld video is my favorite. (I think I've linked to it before.) He's interviewing Harry Reid about "Is the income tax stealing?" Harry Reid totally missed the point. He confused "The State relies on people/slaves to voluntarily report their income and economic activity." with "The income tax itself is voluntary." The State relies on terrorism, forcing people to voluntarily rat out each other to the IRS, hence the term "voluntary compliance". This does not mean the income tax itself is voluntary. My W-2 employer fears State violence and automatically reports my salary and withholds taxes, making tax resistance practically impossible. Only an agorist small business owner can efficiently resist taxes.

Jan Helfeld's interviews are interesting. Interviewing Congressmen about the evils of taxation is pointless. However, it may help illustrate the point to less enlightened people. At this point, I'm surprised Jan Helfeld is even able to schedule interviews with Congressmen. Why hasn't he been totally blacklisted?



This post on no third solution had one interesting bit. Some environmentalists decry bottled water, because it's wasteful.

If this were a true problem, there's an easy solution. Place a deposit on the plastic bottles, exactly as is done now with soda cans. Even in a free market, sellers could attach a deposit, if the material was worth recycling.

The actual cost of plastic is so cheap that recycling the plastic bottles isn't worth it.



This post on no third solution referred to my "Truth is not Relative" post.

Anarcho-mercantilist seemed to be 100% pro-State trolling. E-Prime seemed like nonsense to me.

A better technique is "Bayesian Reasoning", where you assign a truth value between 0 and 1 to any statement. You must be careful to never assign a truth value of 0 or 1 to any statement, lest you be caught in an inescapable trap if you have false beliefs.

If you say "Taxation is not theft!" with probability equal to exactly 1, then I cannot communicate with you at all. You are stuck in a defective mental state. If you assign a truth value of 0.9999999 to that statement, then perhaps you can be persuaded.

I assign a truth value greater than 0.999999 to "Taxation is theft!" "Stealing is wrong when individuals do it" is nearly axiomatic. From there, you can conclude "Stealing is wrong when a small group of people do it", such as in an extortion ring. Finally, I conclude "Stealing is wrong when the State does it." The State functions like a massive extortion ring.

Even better than Bayesian Reasoning is "Extended Bayesian Reasoning". Instead of assigning a numeric truth value, you assign a truth probability distribution along with an error estimate. This way, you can reflect the level of uncertainty. I consider "Fluoride in water is beneficial" is nearly completely uncertain. Allegedly, this is the form of reasoning the alien overseers use.

In the comments on that post, anarcho-mercantalist accused David Z of ad hominem attacks for pointing out he is a fool.

It isn't ad hominem to say "You are a fool/troll" if the other person actually is a fool or troll.

There's nothing wrong with pointing out that stupid ideas really are stupid.



I liked this post by Mark Cuban.

One last point, has the irony of 3 of largest companies in the country who make their money giving financial and insurance advice to companies and individuals, are facing ruin from the advice they gave themselves ? If this isnt a lesson to every individual who is taking advice from an investment firm, i dont know what is.

This is the Agent-Principal problem. If you're offering investment advice, "maximize your profits" conflicts with "maximize profits of your customers".



I liked this post, via Hacker News. Someone is using GitHub as their blog.

Tools like Git are useful for agorists who want to share information in a decentralized fashion.



I liked this Reuters story. A money market mutual fund had substantial holdings in Lehman Brothers' short-term debt. The fund was forced to revalue that debt at $0. Its net asset value fell below $1 per share.

They even have a fancy term for a money market mutual fund that can't maintain a $1 share value. It's called "breaking the buck".



The "London Banker" blog has been driving a lot of traffic to my blog, via this post. He was citing one of my posts on the Bear Stearns bailout.



My blog now ranks very high in Google search for "bailout details" and many other searches involving "bailout", which is a relatively common search phrase. I don't understand SEO. I don't write my blog specifically for SEO. My overall search engine traffic is steadily increasing.

I'm averaging 10%-20% monthly traffic growth. Since my current readership totals are only 100-200 per day, you might say "*YAWN*". If I can keep up 10%-20% monthly traffic growth for several years, that would be quite nice.

I wonder how many of my regular readers I would lose if I switched to a self-hosted blog?



I liked this story on MarketWatch (and many other sources). Berkshire Hathaway invested $5 billion in Goldman Sachs callable perpetual preferred stock.

Except for the usual corrupt nature of the US economy, there's nothing particularly evil about the deal. Goldman Sachs gets extra capital so they can withstand the recession. Berkshire Hathaway got a pretty sweet deal. The preferred stock pays a 10% dividend yield and the deal included $5 billion of 5-year call options with a strike of $115.



I liked this post by Kung-Fu Monkey. He's writing about the financial industry crisis.

He linked to this article on the Daily Kos about McCain's involvement in previous economic crises. Most bad laws are truly bipartisan. The only reason Obama doesn't have a history of sponsoring laws that damage the economy is that he's only been in the Senate for 4 years. That article had an anti-McCain slant, but both parties tend to endorse the really bad laws.

I liked this quote from that article.

BOB MOON: OK, I'm about to unload some numbers on you here, so I'll speak slowly so you can follow this.

The value of the entire U.S. Treasuries market: $4.5 trillion.

The value of the entire mortgage market: $7 trillion.

The size of the U.S. stock market: $22 trillion.

OK, you ready?

The size of the credit default swap market last year: $45 trillion.

KAI RYSSDAL: That's a lot of money, Bob.

As in three times the whole US gross domestic product, Bob. And the truth is that Moon probably underestimated. The unregulated and poorly reported credit default swaps may have actually passed $70 trillion last year, or about $5 trillion more than the GDP of the entire world.


Instead of spending $1 trillion on a bailout, the Federal government could instead use $1 trillion to capitalize five new $200 billion dollar banks.



I liked this article, via Hacker News. It's a joke take on the bailout.

Dear American:

I need to ask you to support an urgent secret business relationship with a
transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had
crisis that has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be most
profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my
replacement as Ministry of the Treasury in January. As a Senator, you may
know him as the leader of the American banking deregulation movement in the
1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds
as quickly as possible. We cannot directly transfer these funds in the names
of our close friends because we are constantly under surveillance. My family
lawyer advised me that I should look for a reliable and trustworthy person
who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account
numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission for
this transaction. After I receive that information, I will respond with
detailed information about safeguards that will be used to protect the
funds.

Yours Faithfully Minister of Treasury Paulson

For those of you that don't get it, it's a parody of the "Nigerian needs help with bank transfer" spam E-Mails.



I liked this post on Bill Rempel.

And if you follow the news carefully you know that there’s no proof as solid as an official denial.




This post on the Picket Line was sort of missing the point. David Gross writes that if you don't like the US financial system and the Federal Reserve, then you should start your own monetary system.

This was attempted by the Liberty Dollar and E-Gold. The Federal Government shut them down. The FBI seized the Liberty Dollar's customers' assets. The founders of E-Gold pled guilty to money laundering. E-Gold still exists, but in a crippled state.

An alternate monetary system must be 100% decentralized and off-the-books in order to have a chance of success.



I liked this post on the Liberty Papers. Police routinely get away with misconduct that would be clearly criminal if a non-policeman did it.



I liked this post on the Liberty Papers.

Why is it that when I hear a phrase like “County First” being repeated over and over again at the GOP Convention, the other phrase that comes to mind is “Freedom Second” ?

The author isn't paying attention. Freedom is *MUCH* lower than second.



I liked this post on the Liberty Papers. According to a legal technicality, Bob Barr is the only candidate who should be listed on the ballot in Texas. Of course, that will not happen.

There was an interesting proposal. All candidates for an election should be write-in candidates, with no parties at all. That has zero chance of being implemented.



I'm interviewing at jobs for startups, and noticed a really pleasant trend. A lot of people are saying "We outsourced our development to Russia/India/China. We're planning to bring development in-house with a US-based group." One person said that the cost for a team in Russia was more than $20/hour per person. That's competitive with US wages! Declining salaries in the USA, combined with a declining US dollar, are making outsourcing far less attractive.

If you start a software company, and outsource your software development, you are an idiot who deserves a business that will struggle or barely get by.



I liked this post on the Liberty Papers, cited on many other sources. The Treasury secretary has unlimited discretion and zero oversight regarding how the $700 billion proposed bailout will be spent.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.


I can't believe anyone could approve such a clause with a straight face.

I was watching some of the Bernanke/Paulson Congressional hearings on CNBC. Such speeches would sound much better with an added laugh track (like a sitcom) and appropriate words selectively bleeped out. "The purpose of this bailout is to *BLEEP* the American people and *BLEEP* the economy."



"How Much did the AIG Bailout Cost You?" has been very popular in Google search. I'm the #1 search result in Google for "AIG bailout cost" and related searches.

On September 24, I tied my recently-set record for single-day Absolute Unique Visitors with 346. That's a neat coincidence! It was an *EXACT TIE* with my previous record!

On September 25, I set a new single-day Absolute Unique Visitors record with 370. Most of it was Google search traffic for "How Much did the AIG Bailout Cost You?"

It's unclear how much of this new traffic will stick around. Based on previous experience, traffic spikes lead to an increase in regular traffic after the spike passes.

Here's another "promote your blog" tip. If you're commenting on someone else's blog and leaving a link back to your blog, make sure you do it shortly after the post is published on the other blog. This way, most people who read that post will see your comment. It helps if there aren't too many comments already when your comment is published.

According to Google Analytics, I set a new traffic record for September with 5494 Absolute Unique Visitors. This is a 63% increase over August, which was the previous record. I say that my average monthly growth is 10%-20%, because I tend to have flat growth for a few months, followed by a period of rapid growth.

I have more time to spend on my blog since I'm unemployed. Did my post quality increase in September? Or, was it more traffic due to articles on the financial crisis? If it's the latter, I'm unconcerned. The rules of the monetary system guarantee a big financial crisis every few years!



I liked this post on roguegovernment.com.

Once the 700 Billion Bailout Bill is passed a new public/private entity will be created. This new entity will be known as the Securitized Housing Investment Trust and will be referred to using the acronym SHIT. Once Paulson and the administration get their SHIT together, all of our financial problems will be behind us. In addition to purchasing illiquid mortgage assets, Detroit crack houses, abandoned FEMA trailers, and other real estate assets, the trust will also purchase porta potties. Paulson is quoted as saying: “ the porta potty acquisition is the crown jewel of our plan. As the US Dollar reaches parity with toilet paper, left over toilet paper in the porta potties could be a valuable asset. We expect a return of 100, 200 or even 1000% on the toilet paper asset alone relative to the US Dollar.”

Most analysts are in agreement, this will be the largest SHIT on the face of the planet.

The US financial industry is literally a highly organized and obfuscated loot and pillage operation.



This article had an interesting statistic.

The bailout exceeds total lending by the International Monetary Fund since its inception after World War II. The IMF has loaned $506.7 billion since 1947 to countries in crisis as far flung as Argentina, Britain, Turkey and South Korea.
The IMF is one of the world's primary financial terrorist organizations. The $700 billion bailout is bigger than all of the IMF's terrorism combined.



I was watching CNBC and saw an interesting fnord. They were having a debate about the $700 billion bailout. They had a pro-bailout guest and an anti-bailout guest. It was flagrantly obvious to me that the anti-bailout guest was set up to look like an idiot.



Some job ads are really weird. They say "We're looking for someone with 3 years of experience to be CTO in our startup." With 10 years of experience, I'm overqualified!?

Most of my experience has a market value of $0, because it isn't in the latest "hot" language.

I see many people lamenting "Why don't college students in the USA study Computer Science?" If all your experience loses its market value every 3-5 years, then why invest in a career in computer programming? In almost every company, there's no real clear "career path" for a computer programmer. Unless you really *LOVE* computers, you'd be a fool to invest in programming as a career.

Given a heads-up choice of programming vs. doctor, lawyer, or accountant, the latter is better. With State licensing requirements, other "professional" careers are guaranteed high salaries. State violence protects doctors from competition. State violence guarantees that the services of lawyers and accountants are always in high demand.

I chose computer programming because I thought it would be potentially cool. Software has a scaling power that other careers lack. A doctor can only help one patient at a time, but the right computer program can help millions of people at a time. I didn't realize that the USA does not have a free market. There are more serious problems for me to work on than anything I'd do as a slave software engineer.

I claim my experience has a high real value. However, market value is what matters, unless I start my own business. In a non-free market, there is substantial deviation between real value and market value. Due to State restrictions of the market, it's hard for me or someone else to arbitrage away the difference by starting a new business.

Most startups have a "cash out in 2-5 years for $500M+" mentality, rather than "build a sustainable business" mentality.



DixieFlatline has left a new comment on your post "A Re-Declaration of Independece":

I agree that people have forgotten about natural rights. Rights were delegated to the government with the consent of the governed.

This implies that the governed can withdraw consent, and re-delegate their rights.

Good luck explaining this to the man on the street. Most people are too dumbed down to think logically.

The average person is a clueless slave.

My target audience is the Remnant. You only need 5-10 people in the same area to get an agorist trading group started. People who really understand the philosophy are needed to get things started. Then, other people are brought in as needed.

Saying "The average person will never understand agorism." is like a computer expert in 1970 saying "The average person will never have a desktop computer." Any disruptive new technology is first refined by experts and then passed on to the average person.

Anonymous has left a new comment on your post "A Re-Declaration of Independece":

Very good post, FSK. What percentage of US citizens do you think would have read a post like that to the end, even if it had magically appeared in their TV screens?

1 percent? You think?

Nobody cares, my friend. It is like a car full of drunk young men. Right now, they are busy with being loud.

The vast majority don't care. This is 99%+ of the population.

My goal right now is to not reach everyone. I only need a handful of people to get an agorist free market started.

I'm considering ways to reach a wider audience. That's why I like my "promote agorism via standup comedy" idea. For now, I'm blogging anonymously. I probably should become an advocate for blatant-in-public agorism to attract a wider audience.

You're thinking like a pro-State troll. In a democracy or republic, you need to convince 50%+ of the population to achieve change or reform. Via agorism, you only need to convince a handful of people.

If you want to repeal the Federal Reserve or income tax, you would need to convince more than 50% of the people. By the time 50% of the people are fully aware of the evils of the Federal Reserve and income tax, the State probably has already lost.

When you say "You need to convince everyone to have a chance of success", you're pro-State trolling.

There's another point you're missing. Clueless brainwashed slaves have a much lower productivity level than independent thinkers in a true free market. If I can help the top 1% of workers increase their productivity by 10x-100x, that's a huge gain.

reasonablecitizen has left a new comment on your post "A Re-Declaration of Independece":

How to Save America

http://kindlingman.wordpress.com/2008/09/01/how-to-save-america/

This is pro-State trolling.

I'm past thinking "Save the US government!" or "Work within the system to achieve reform!" I've moved on to "Scrap this and try something else!"

I already wrote a post on trying to amend/patch the US Constitution. It's a hopeless and pointless task.

People are so reluctant to accept "Government is evil and immoral!" that they go through all types of mental hoops. It's much easier to say "The current corrupt system can be salvaged! All you need is a few minor fixes!" than to say "Scrap the current corrupt system and try something completely different!"

Most politicians attempt reform around the fringes, by passing a small tax cut or repealing a particularly onerous and unpopular law. They don't have the ability to attack the fundamental injustice of the Federal Reserve or income tax.



anarcho-mercantilist has left a new comment on your post "A Re-Declaration of Independece":

A constitution is not sufficient to guarantee limited government, even temporary. It depends the content of the text, how would the congressman and judges agree, how it would be interpreted and on the degree would it be enforced. The Constituion restrains the federal government violating the Bill of Rights, not the subnational state government. Since the U.S. constitution guarantees the subnational states to do whatever they want, even if the constituion is enforced, it would be the same. The wealthy multinational corporations would immediately fund the subnational states to unite and to resemble the current fascist federal government, not 20-50 years.

Only religious fundamentalists would interpret the outdated and useless Constitution, which contains "God-given" rights, "states' rights" over individual rights, and other fundamentalist troll garbage. The Constituion should not be interpreted as a bible, if at all.

Violent protests are a waste of time, because the State has superior resources. Violent protests create sympathy for the State, and violent protests are a violation of the Non-Aggression principle.

The former statement is redundant, and also an immoral addition to the latter statement. The former statement implied that if the State does not have superior resources, then violent protests would work. The former statement implied that you have a right-wing consequentialist belief that you advocate violence if it works.

The last section of the second statement is all that you need.

A lot of mainstream media sources treat the US Consitution as a Bible or religious document, if you read the fnords correctly.

You really should work on your trolling. You write a lot without actually saying anything.



redpillguy has left a new comment on your post "The Destruction of Trial By Jury":

You missed the plea bargain. Prosecutors pile charge after charge, frightening the defendant into accepting a plea bargain (light sentence in exchange for not going to trial). The defending attorney looks at this as making a quick easy buck as opposed to the hard work a long trial takes. IIRC over half of people in jail have not had a jury trial because they accepted a plea bargain. No doubt many of those people are completely innocent.

I mentioned that in another post, but I should have mentioned that also in that article.

Where do you get 50%? I read that plea bargains affect over 80% of all cases. Sometimes, if the case is weak, or if the criminal has political connections, a generous plea bargain will be offered.

I read an interesting way to audit excessive plea bargains. A certain percentage of plea bargain cases should go to trial anyway. If acquitted, then the victim is free. If convicted, then the plea arrangement holds. This way, it can be discovered if plea bargains are too aggressively used. Of course, State prosecutors will never agree to such a reform.



C. K. Phalon has left a new comment on your post "$1 Trillion Financial Industry Bailout":

Sounds a bit like Hawala. The Hawala system has worked for a long time.

A decentralized warehouse receipt banking system would function a lot like the Hawala system. The valuable part is the network of trustworthy trading contracts. Most Hawala bankers have known each other since birth, guaranteeing the integrity of the system.

This comment belongs better on "Agorist Toolkit - Banking".

For me, relying on relatives is not an option, because my relatives are unable to break their pro-State brainwashing.

smokey has left a new comment on your post "$1 Trillion Financial Industry Bailout":

I don't see how bailouts paid by government borrowing are inflationary.

The Federal government didn't raise taxes to pay for the bailout. Instead, new money is printed to finance the bailout. How is that not inflationary? Is there a magic wealth fairy that creates goods out of thin air?

If the money is borrowed by the government by selling treasuries into the market it decreases the money supply by removing funds that could have been invested or spent on other assets.

After funding the bailout via deficit spending, the Federal Reserve "monetizes the debt" to keep interest rates at the target level.

When the Federal government has deficit spending, that increases the supply of government bonds. That increases interest rates. The Federal Reserve keeps its Fed Funds Rate target at 2%. Due to a larger budget deficit, the Federal Reserve must "monetize the debt" more to keep interest rates at the target level.

The Federal Reserve can't lower interest rates below 0%. To cut real interest rates further, higher inflation is needed. Deficit spending by the Federal government lowers real interest rates by increasing inflation.

Also, if the money only replaces funds lost through deleveraging and liquidation of declining assets it is not inflationary.

Many hedge funds are deleveraging right now. This is deflationary pressure. However, bankers then reinflate by issuing new loans. If one group of people deleverages while another group expands the money supply, then wealth is transferred from one group to another.

This is not to say that the bailouts do not hurt the economy. They redirect funds that could have been spent to support businesses into supporting Wall Street.

The entire purpose of the financial industry is to divert resources from everyone else to a handful of insiders.

I saw an interesting joke on another website. Financial industry CEOs like to pay themselves as if they're entrepeneurs and brilliant risk takers. The reality is that they're taking no personal risk at all.

Someone who starts a software company and sells it for $500M typically makes less per year than a CEO of a large bank, including all stock options and bonuses.

CK has left a new comment on your post "$1 Trillion Financial Industry Bailout":

Being inept, the comment above was supposed to have been connected with the article on agorist messenger systems.
The 1 ( it will actually be closer to 3 ) trillion dollar bailout is not anything like the hawala system.

Yes, that comment was on the wrong post.

Anonymous has left a new comment on your post "$1 Trillion Financial Industry Bailout":

This is a very good article, but it isn't "grown up" enough. This overview assumes that the government and the bankers are really, honestly, trying to save the economy, and have some legitimate goals other than theft. The article shows then that this may come at a great cost.

I've had this debate many times already. Is the current corrupt system part of a deliberate attempt to loot, pillage, and enslave? Alternatively, did the current corrupt system evolve by a series of bad decisions and coincidences? I already wrote about the possibility of a Supreme Leader of Humanity.

Do I need to repeat every single point in every single post?

I lean towards the "deliberate attempt to loot and pillage" theory. Most of the public actors are not consciously aware of the scam. The President, most/all members of Congress, and most/all "journalists" are not consciously aware of their part in continuing a corrupt system. There are people behind the scenes who are pulling the strings and are fully aware of the scam.

Is it to well coordinated to be an accident? Or, is it merely a series of bad decisions?

There is an argument against "There is a Supreme Leader of Humanity." Anybody who was able to see the corruption for what it really is would be doing everything they could to fix it. There is no Supreme Leader, because he would not have allowed things to deteriorate this much.

The truth is, that the underlying motive for both the g. and the bankers is the possibility to perpetrate theft. I find that this has been the case every time. Do not believe their explanations of good intentions but bad outcomes. Think, is it conceivable that the same people who time after time plan and execute super theft schemes successfully, would fail to plan and execute at least one level less complicated measures?

If you can easily walk on the curb, should I trust you you really really can't walk on the pavement?

I have found this pdf file to be a good explanation of some that is going on:
http://www.drschoon.com/articles%5CTheKillersAreWithThePatient.pdf

I also found it interesting to watch bailout discussion on CNBC. The anti-bailout guests were made to look stupid. You can have a debate that seems "fair and balanced" while being completely partial!

"Eliminate or reform the Federal Reserve" is never seriously discussed as an option.

Most/all mainstream media sources are merely shills for the establishment.

You should read my blog more carefully before you accuse me of underestimating a massive conspiracy to enslave the entire world.

The conspiracy runs deeper than you suspect. When I say "Taxation is theft!" to someone, their reaction usually is "Don't be stupid!" A State policeman doesn't need to arrest me for saying "Taxation is theft!" My friends and relatives act as extremely efficient censors.

It's much more efficient for the slaves to police each other, rather than violently suppressing anyone who tells the truth.

Anonymous has left a new comment on your post "$1 Trillion Financial Industry Bailout":

"Also, if the money only replaces funds lost through deleveraging and liquidation of declining assets it is not inflationary."

There is no such thing as money "lost". Money can only be "lost" for as far as your account is concerned. These same money are in someone's else pocket right now. This is why ANY bailout is inflationary.

You bet with me on whatever. You had lost money. This means I have won money. Now, you have bribed Paulson to bail you out. Paulson sticks both of us with debt, and sends you over the money you have lost to me. He does it by increasing the number of units of account. The result is that I have made money on my correct bet, and yet I will pay for your bad decision. On the other hand you were wrong, and yet you have your money refunded to you. So, where is the punishment for your bad decision?

Show how money can disappear, if you want to show that a bailout can be other than inflationary.

The commenter who said "A bailout isn't inflationary." appears to be pro-State trolling or just plain stupid.

Any bailout must be funded via taxes or inflation. You can't print new money out of thin air without the cost coming from someone.

It's easier if you think in terms of wealth instead of money. Does printing $700 billion out of thin air to finance a bailout create any real wealth? No, it doesn't. All that accomplishes is it moves wealth to the handful of people who are recipients of the bailout. Everyone else loses a percentage of their savings via inflation.

Suppose I worked in the past and have $10,000 in my bank account. By the time I spend the money, some of the purchasing power was lost to inflation. Where did that wealth go? It goes to the people who printed and spent the new money.

A corrupt monetary system necessitates such periodic bailouts. The financial industry is always bailed out during each recession via Fed Funds Rate cuts. This bust is so severe that an explicit bailout is needed. After the first version of the bailout bill was rejected, the Federal Reserve jacked up the money supply to help bail out banks.

The financial industry will get its bailout. It will either occur all at once, or over time via inflation.

There's another common misconception. If everyone withdraws cash from their checking account and puts it under their mattress, it makes no difference. Your savings still are stolen via inflation. It only matters if people withdraw cash from their checking account and buy gold or silver or other tangible goods. If people refuse to hold Federal Reserve Points or stocks, that would be inflationary.

smokey has left a new comment on your post "$1 Trillion Financial Industry Bailout":

"Show how money can disappear, if you want to show that a bailout can be other than inflationary."

Money is created through thin air by debt. When debt is repaid , money disappears back into thin air.

During the asset bubble, money created through debt drove asset prices higher which then expanded debt money, which then drove asset prices higher and so on in a positive feedback loop.

This exponential expansion reaches its limit when the ability to borrow more becomes constrained by insufficient income. This inhibits the creation of new debt which fed the inflation of asset prices.

The high debt-to-equity (leverage) ratios expected exponential inflation of asset values. But this inflation stops when the creation of new debt becomes saturated. It is at that point that assets must be sold in order to reduce the leverage ratios.

As this liquidation proceeds, the supply of assets overcomes the demand causing the prices of assets to fall, which further exacerbates liquidation and deleveraging, which then causes asset values to fall further and so on in a negative feedback loop.

As these debts are repaid, the money first created through debt disappears back into thin air.

The bailouts are an attempt to reflate; replace the money that is being lost in the system, and to slow the deflation of asset prices which is destroying capital and thus preventing the expansion of debt.

It appears that the authorities will try to reflate the system by government borrowing through the selling of treasuries into the market. This borrowing decreases the money supply and is therefore not inflationary.

If the authorities choose to monetize assets; that is, print money to buy them, then monetary inflation will occur only if the expansion of money can overwhelm the destruction of money.

There are two means to reflate. First, there was the explicit $700 billion financial industry bailout. Second, the Federal Reserve can "monetize the debt" and increase the money supply. This is indirectly a bailout to the financial industry.

Currently, interest rates are very low, yet it is very difficult to borrow. Only people with great credit ratings may borrow. In other words, only politically connected insiders may borrow at the bottom of the recession and take advantage of cheap interest rates. When the average person borrows, it usually is at the end of the boom phase.

It's good to see that people other than me are able to respond intelligently to trolls.



This post, via Hacker News, was hilarious. According to Congress, the official title of the failed $700 billion banking bailout bill was:

To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes

I like the way that the official title of a law has nothing to do with the actual content.



Zargon has left a new comment on your post "Reader Mail #66":

The article on the Chinese cop-killer was interesting. My initial reaction is that perhaps the Chinese have less physical freedom than us, and more mental freedom. It seems logical that the two would be negatively correlated, as more oppression seems like it would result in more dissent. On the other hand, the US has been going the wrong way on both counts for... just about it's entire lifespan, I think.

In a rare move for me, I went looking for comments on the article, wondering what people would think about a large public support for a cop-killer, and ended up on digg. I was shocked at how many people supported the guy. I expected nearly universal condemnation, but about half were at least understanding if not outright supportive.

But part of our brainwashing is to overplay the conditions of places like China, so we seem better off in comparison, and this was reflected in some of the comments. The Chinese guy was stopped for no reason, kidnapped, and apparently beaten/maimed. Later, his lawsuit against them was thrown out. Very few commenters seemed to notice that events like that already happen on a fairly regular basis in the US, and I've no doubt there would be near universal condemnation (to put it lightly) if one of those victims did the same thing, with the only difference being his location.

That's an important aspect of pro-State brainwashing. "If you don't like the USA, leave for another country. Other countries are worse." There are quite a few fallacies with that argument.
  1. Due to corrupt international treaties, all "industrialized" countries offer nearly equally lousy conditions for citizens/slaves.
  2. It isn't easy to move to another country and get full citizenship.
  3. This is my home and I'm not leaving. Why should I be forced to move because of terrorists?
  4. There's no unoccupied space to move to and set up a free society. Before the US closed its frontier, this placed a natural limit on State aggression. Anyone unhappy and motivated could move west, kill some native Americans, and start a farm.
I actually have no idea what it is like to live in China. In China, I would be at risk of arrest for the authorities for writing a blog like this. In the USA, that hasn't happened (yet?). Conditions in the USA are deteriorating, more than conditions in other countries are improving.



DixieFlatline has left a new comment on your post "Reader Mail #66":

I do not feel I was adequately represented in this reader mail.

How so? I answered all your comments except for "A Re-Declaration of Independece" above. I put the "Reader Mail" post in the queue a few days ahead of time, so I don't get every comment answered.

As far as SEO, you're ranking for long tail terms. "Ruby on Rails Sucks" is a 4 word keyphrase that Google estimates gets 210 searches per month. This is good if you rank high for it, but the entire point of long tails is to rank for 1,000 of them, so now you are ranking for nearly a quarter million searches per month.

Someone googling "Ruby on Rails Sucks" is likely to stick around and enjoy my blog. Similarly, "Federal Reserve sucks" is a low-frequency search phrase, and I'm currently the #2 search result in Google for that phrase. However, anybody googling "Federal Reserve sucks" is almost definitely interested in my blog.

It's be nice to be on the first results page for "Federal Reserve", but that isn't a viable option. If my blog were a for-profit business, I'd consider experimenting with adwords. (Surprisingly, there are no Google ads on a "Federal Reserve" search, so I'd only have to bid the Google minimum to get displayed?)

It's not just volume of search traffic. It's also quality (i.e. people who are likely to stick around and become regular readers). Even if someone visits my blog and "bounces", they may remember my blog and come back and stick around later.

Google Analytics doesn't provide good breakdowns for "how regular readers first found my blog". I need to self-host and get full server logs for that information. I'd probably have to also write a custom Analytics tool.

A lot of people google "fsk reality guide" or variants thereof. That counts as search traffic in Google Analytics, but obviously the searcher has read my blog before.

Blogger is a crap platform for SEO. Wordpress is much better. Even hosted Wordpress is better because you can pingback and trackback automatically.

I'll probably switch to self-hosted Wordpress sometime in the next few years. There's no need to rush.

Wordpress is open-source, right? I could make any modifications I desire.

Another advantage of self-hosting is I can set up some other projects I'm contemplating. I'm contemplating writing my own Wiki/Digg/Forum engine. I can add that on the same site as my blog. If I decide to vlog, I can self-host my content and distribute it via BitTorrent.

Also, your on page SEO is pretty bad. There is no need to leave your site name in the page title of individual posts. It dilutes the keyword density.

I had noticed that. I checked, and Blogger provides no option to remove my blog title from post titles.

Your post titles and (in post) links don't have the title attribute of the <.a.> tag defined.

That doesn't appear to be enabled in Blogger by default. I'd have to manually edit the HTML for each post to do that. Sometimes, Blogger strips out custom tags. I'm not going to bother checking.

Writing a blog specifically for SEO is a mistake. The best source of traffic is referrals. Other people cite my blog on their blog, or in discussion forums.

According to Google Analytics, my readership is increasing by an average of 10%-20% per month. A growth rate of 10%-20% per month is pretty nice, especially if I can keep it up for several years. That doesn't mean I would do better or worse with another approach. A consistent growth rate of 10%-20% is evidence that I'm not doing too poorly. If you think you can promote my ideas better than me, go ahead! I don't claim any copyright, patent, or trademark on my content.

The only SEO trick I consciously use is post titles. Google seems to weight keywords in post titles far more than keywords in post bodies. I try to pick appropriate post titles. I picked a poor title for "The Incredible Shrinking Economy!", and that didn't generate much search traffic.

Better to abandon blogger. If you were on Wordpress, all of your citations of NoThirdSolution, NoState, CheckYourPremises etc would be building backlinks for you. Obviously, that would hold true for NoTreason, but then you don't link to me, I just link to you. Unrequited blog love.

I had an issue with trackbacks when I first started blogging. Some spam blogs stole my content and linked back. This caused Google to banish me to "supplementary results".

I have a lot of RSS feeds in Google Reader. If there's anything particularly good you want me to look at, provide a link directly.

I figured out why I never cite anything from your blog. *YOU DON'T GIVE FULL RSS FEEDS!* Unless a blog is super-awesome, I don't bother with blogs that don't give full RSS feeds. A partial RSS feed entirely defeats the purpose of having an RSS feed in the first place! Blogs that give partial RSS feeds wind up in my "read if only really bored" folder. I have a "FSK's regular commenters" folder in Google Reader, but YOU HAVE TO GIVE FULL RSS FEEDS.

Why wait a couple years to go into business? Get a domain name and throw a piece of free software you coded up there for the world. Use it as a means to promote your blog. To network. To grow professionally. It doesn't have to be complicated. Make sure you can walk away any time you like if you find a job or you want to do something different.

Also, there are probably quite a few opportunities online to code and get paid through a 3rd party service like E-Gold. I'd be concerned about escrow, because I hate getting burned by people who want, but can't pay. Just the same, there are smart ways to go about that.

I thought that E-Gold halted redemptions. I live in a high cost-of-living city, so getting a telecommuting job in another city is not an option.

Plus, I'm currently living with my parents, who are overly restrictive. If I tried spending $20-$50/month on hosting, they would say "OMFG!! FSK is wasting his money!" Starting a business (agorist or on-the-books) is not feasible while stuck with them. My #1 goal is to regain my personal freedom, which I had before I was hospitalized. It isn't worth the effort disagreeing with my parents. I can't convince them "FSK would like to spend $20/month on webhosting because he's starting a web-based business."

The price for Blogger is $0. It has its flaws, but it's good enough for now.

My blog is sort of a business. I'm growing traffic at around 10%-20% per month. At some point, it'll be something I can profit from. Even if I don't make money from my blog, the accumulated knowledge is valuable. I'm polishing my free market ideas. Only via blogging can I get immediate feedback, both directly and by reading other blogs.

So far, the best business idea I've had for "Promote agorism and profit at the same time!" is standup comedy or vlogging. Freedomain seems to have a profitable vlogging business, and I should be able to do at least as well as him.



I didn't put this as a separate post. The purchase of Washington Mutual and Wachovia's banking assets also contained a bailout feature. The acquirer both purchased the customer banking business and part of the mortgage loan portfolio. The FDIC guaranteed losses on the loan portfolio, if it exceeds a certain amount.

The trend for the financial industry appears to be that there will be only 4-5 "too big to fail" banks. A small bank is not a viable business, because you can't milk the State for bailouts.

Wells Fargo outbid Citigroup for Wachovia, because the accounting rules were changed. More favorable accounting rules meant that Wells Fargo could make a higher competing bid. Citigroup's executives are suing for "breach of contract". (As if the massive State subsidy they already received wasn't enough!)



John Petrie has left a new comment on your post "Reader Mail #66":

"'Ruby on Rails Sucks!' was another unexpected SEO success. A few people google that phrase every day, and my post is #5!"

Looks like it's up to #3 right now.

It varies. I noticed that my placement in Google search results varies, even for the exact same search phrase.

"I'm getting bored/frustrated with mises.org, and haven't posted there in awhile."

I have really appreciated a lot of the stuff I've learned from Mises.org over the years, and the current banking/financial crisis is another great opportunity for the columnists and commenters to teach us laymen about monetary theory and banking. I am woefully ignorant about it. I'm working on rectifying that. You definitely seem more informed and insightful about money and banking than 99% of the people out there on the interblags, so I, for one, appreciate all the education you could give us.

Not that you have to keep setting the pro-State trolls on the discussion threads right. Keep writing lessons on your own web page. I'll be so bold as to suggest the next topic for you: What the hell is a "mortgage-backed security"? I tried learning about them from Wikipedia, but there were so many other terms I needed to learn first that it almost turned into this.

That's the part that's most annoying about mises.org and other open forums. I waste too much time correcting/fighting the pro-State trolls. Several pro-State trolls on mises.org say "I logically refuted the Compound Interest Paradox." or "I logically refuted agorism.", when their arguments are incoherent gibberish. Truth is determined by a majority vote. If I say "X" and 5 other people say "not X", then it may seem to a casual observer that I'm the one who's wrong.

You can't win a debate with a fool. It isn't worth trying. However, sometimes the observers can be attracted to my blog by a flamewar.

Right now, I'm taking a break from mises.org. Writing good posts is a better use of my time than posting on mises.org. I might go back to mises.org again sometime.

I already wrote a post on CDOs. I cited it in my recent post on credit default swaps.



I liked this post on Bloomberg, via Hacker News. The Federal Reserve injected $630 billion of liquidity in one day.

Even though Congress rejected the bailout, the Federal Reserve still has the power to create money out of thin air and loan/give it to banks. This is as effective a bailout as if it were explicitly allocated by Congress.



Anonymous has left a new comment on your post "The Amero Subterfuge":

The Amero, or whatever it's real life name (as opposed to development stage name) happens to be, will, of course be needed. This is because, the dollar is and always has been, worthless, and the only reason it is used is that the People didn't know they were foolled, i.e. they were confident in us dollar.

As that confidence washes away while the People observe the fraud and the farce, it will become unrewarding for the government to continue to use the dollar. It will become inefficient in extracting value. Something will be needed to be done again, to fool the people into stop watching the value.

Not necessarily, but usually such problem is dealt with by introducing yet another fraudulent unit of account, albeit under different name. Without understanding the true reasons behind the collapse of a former currency, the People assume that the new currency has features that are the result of government attempt to repair what went wrong. True, the new feature is usually it's name. They trust the new currency and the cycle repeats itself.

In this trust to a newly introduced unit, the people are no different than those trusting pyramid schemes. Late acceptors will be treated progressively different than the firs ones to accept the unit, and for the same reasons, i.e. to create trust in order to extract value.

As for the exchange rates, you are incorrectly assume that the 1:1 rate will be offered. Contrary to this, there will be "progressive" reasoning used. Up to a certain amount, the rate will be 1:1. From say 10000 USD and up to say, 1000000 the rate will be 5:1, and so on, just like with taxes. But don't worry, all the connected functionaries will be afforded an opportunity to exchange all their capital at 1:1 rate. This is because they will already be exchanging, while the people are watching expert after expert, authority after authority vehemently denying coming change of the unit. Finally, on Friday night, the president himself or his vice, or the fed chairman, will put to end "all baseless and harmful rumors". This one will swear this would not happen. The exchange will be announced the following Monday or Sunday night.

So, notwithstanding the reasons you have stated against introduction of Amero, it most probably will be introduced, precisely because none of the goals you have shown undesirable or unreachable, are actually sought. In other words, I agree, Amero will do no good, which is why it will be introduced.

Remember, the government is here not to do good. Amero can't do any good. The government is here to extract value. That is what Amero can help them with.

That's happened occasionally in history. Unbacked fiat paper is wrecked by hyperinflation. It is replaced by another unbacked fiat paper. For some bizarre reason, the new fiat paper is accepted and does not suffer from hyperinflation.

Unbacked fiat paper is only used as money when State violence prevents competing monetary systems.

The financial system and monetary system is one big scam. Do I need to mention that in boldface in every single article, lest people think I'm pro-State trolling?

I read another depressing statistic. Quite a few people have researched the Federal Reserve and income tax and discovered how evil they are. Once you make such a discovery, you can no longer morally pay income taxes. Most such researchers wind up in jail for tax evasion. As an agorist, I hope to be careful enough to avoid going to jail for tax resistance.



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

I can't believe anybody actually took the time to write such a lengthy arugment on something they obvously don't understand (along with imaginary numbers). Dude ought to hit up the local community college for an econ course (taking a couple of the posters with him) and give er another try. There are legit objections to fiat-base money, the fed, and capitalism as a whole but this "analysis" isn't even close.

Money is a medium of exchange and a store of value, not an asset onto itself. And the fact the bankers broker money is not a conspiracy, it's the business model. Money (fiat or otherwise) enables people to shift their consumption across time which people value and are therefore willing to pay for.

To use your mortgage example (which on a side note makes a variety of incorrect assumptions in its "proof") you could just as well save your mortgage payment over your 35 or so working years and pay cash for your house at retirement if you feel so taken advantage of by the bank. But most people value having their house to live in during those years (not to mention the appreciation) and are therefore willing to pay the interest expense to compensate the depositor for the use of their funds. The lender is delaying their consumption so that the borrower can consume now, which since we all have limited days the lender must be compensated for. The bank through economies of scale and scope can do this much more efficiently (i.e. cheaper) than individuals could on their own and take that savings for themselves, which is how they earn a living.

Banks seldom borrow from the discount window and most of their lended funds come from depositors because depositors are a cheaper source of funds. Typically a bank's loans to deposits ratio is in the neighborhood of 90% and as of 2nd quarter it's 93.3%. There's no need to guess and wonder because it's available to the world on the FDIC's website:

www.fdic.gov
Click on the analysts link and then statistics on depository insitutions.

I know, not as exciting as consipracy theories exposed. Kind of like finding out that there's no Santa Claus.

This comment was entirely pro-State trolling. Should I bother publishing garbage comments like this?

There's no point in taking an Economics 101 class when all professional economists are brainwashed pro-State trolls. It's pointless to take a Politics 101 class that doesn't discuss "Taxation is theft!" It's pointless to take a Pysch 101 class that doesn't discuss "The 'chemical imbalance' theory of mental illness is nonsense!" It's pointless to take a Physics 101 class that doesn't discuss "It might be possible to build a Zero Point Energy generator!"

There's no point learning from "experts" when they're brainwashed fools.

My article on the Compound Interest Paradox is explicitly stating "Everyone currently employed as an economist is a fool and pro-State troll!" It's pretty embarrassing that all the professional economists, politicians, and psychiatrists are trolls, fools, and frauds. That's their problem and not my problem. (It sort of is my problem, to the extent that they use violence to impose their will on my. It isn't my problem, in the sense that I'm not responsible for parroting their lies and propaganda.)



Thomas Blair has left a new comment on your post "Reader Mail #66":

My post on the AIG bailout has been a huge success from a SEO perspective. I still don't get SEO. "Popular in search engines" is rarely correlated with my expectations.

When I write articles related to current financial news, those posts tend to do well.

There's a great reason for this: those are the things that people are searching for! Few know about the compound interest paradox and even fewer call it by the name you do (I've heard it called "debt virus", "interest time bomb", and other things). They don't know about agorism and thus don't search for those things. They are, however, looking for explanations for what's going on in the world around them. Here's where your posts on Miley Cyrus, rice shortages, FRE & FNM bailouts come in handy. They find your site to read about AIG and how much it will cost them and they happen across a wealth of information on how this country got to be this way and the only real way out. I'd consider doing far more posts about current financial market happenings, including discussing fundamentals such as terminology (this has been done), investing basics, etc. You gotta please the customer!

Posts related to current events tend to be very popular. I'm keeping that up. I'm really surpised that "Is Miley Cyrus' Vanity Fair Photo Child Pornography?" is #18 on my "Best of FSK" list. Most search traffic for that post has been bounces.

The "good" news is that there will be a big financial crisis every few years. It's statistically built into the rules of the monetary system. Even though the current problem will pass, there will be another crisis in a few years. Due to the *MASSIVE* consolidation currently taking place, the next crisis should be *MUCH* worse! With lots of small banks, one bankruptcy does not threaten the entire country. With only a few "too big to fail" banks, there *MUST* be a bailout!

As the final collapse of the State draws near, economic problems will get worse.

The current bailout of the financial industry will lead to massive inflation in the present and in the next few years.



Francois Tremblay has left a new comment on your post "Reader Mail #66":

"Regrettably, there is no free market health care system at this time. Giving birth in a hospital is your only feasible option."

How in the hell did you get that idea? There are a lot of pepole giving birth at home, and they don't go anywhere near a hospital. That is exactly WHY I want you to watch the movie!

NO ONE should EVER give birth in a hospital.

OK, I'll download and take a look at the movie (via BitTorrent). I'm not interested in spending an hour watching a movie. Why don't you write a summary/review of the movie and post it yourself?

Surprisingly, Wikipedia had just a stub article on that movie ("The Business of Being Born").

The AMA is lobbying to have home-birthing declared illegal, so it must still be a viable option.

I thought the issues with home birthing are:
  1. If you home-birth, it's hard to get slave papers for your child. (birth certificate, social security card)
  2. You need a doctor if complications arise. I have no idea what the true risk is.

Until a non-State licensed doctor can accomplish *ALL* useful services provided by a hospital, I don't consider boycotting hospitals to be a viable option.

Free market health care is lucrative *AND* risky. A free market doctor would need an excellent reputation to attract customers. A free market doctor would risk being the victim of State violence if caught. Someone with State-licensed health insurance would be unable to use their insurance at a free market doctor. State licensed doctors make $200+ per hour, making this a lucrative oppotunity

Paradoxically, State-paid health insurance would actually help agorist doctors. With mandatory health care paid by the State, the quality would be so lousy that agorists would have a great market opportunity.

In the present, anyone with employer-paid State-licensed health care probably wouldn't choose an agorist doctor. Agorist health care only becomes profitable when a lot of people are working as agorists and don't have State-sanctioned health insurance.

One of my agorist business ideas is "Treat people labeled with 'mental illness' without drugs!" That is risky, because I need a State license to publicly advertise or offer such services.



Mike has left a new comment on your post "The True Purpose of Trial by Jury":

Insightful. I'll buy it!

It's just a weird theory.

gilliganscorner has left a new comment on your post "The True Purpose of Trial by Jury":

It is exactly the same thing when a taxation agency reports successful prosecutions. They would NEVER report a successful acquittal.

You can see it here (for Canada):

http://www.cra-arc.gc.ca/nwsrm/cnvctns/on/menu-eng.html

Kill one to terrify 10,000.

Tax collection agencies definitely behave like terrorist organizations.

On that link, were those civil penalties or criminal penalties? If the only risk of tax evasion is paying a fine, I'd take the risk!

In the USA, people who win versus the IRS in a trial are heavily praised on some of the blogs I read. For example, consider the guy who paid his employees with American Eagle gold and silver coins, valuing the transaction based on the legal tender price instead of the fair market value.

People who win versus the IRS don't accomplish much.
  1. The IRS may still pursue other people for doing the exact same thing.
  2. The jury decision may not be used as precedent in other cases.
  3. Judges and prosecutors will refine the "rules of evidence", ensuring greater bias against the individual victim next time. For example, the defense is typically barred from mentioning "jury nullification".
  4. If the victim is acquitted in a criminal trial, the State prosecutors may still pursue a civil trial. If there is a mistrial, then the State prosecutors get a mulligan and may try again.
You don't know how many people get away with tax resistance or tax evasion. They aren't going to come forward and admit it! If you set up an agorist "Tax Resister Insurance" business, you would have good statistics about the true risk of tax evasion. You could also develop best practices for evading detection by the State, how to handle an audit, and how to defend yourself sui juris in the event of a trial. Without a State lawyer license, I cannot represent you in a trial. It's even legally unclear if I'm allowed to help you prepare beforehand, although that's almost impossible to prove.

I wonder how much I am at risk of being victim in a tax evasion trial, if I try practical agorism? I would be a knowledgeable opponent, and State prosecutors tend to focus on weaker victims. However, if I practice blatant-in-public agorism or set up a thriving free market economy, then I would become a tempting target.



By E-Mail, redpillguy writes:

Is the housing bailout the financial patriot act?

Have a look:

http://www.thetruthseeker.co.uk/article.asp?ID=9402

You're off by 100 years. The financial industry equivalent of the Patriot Act was the original Federal Reserve Act in 1913.

There were several other bad laws before that. The financial industry was heavily regulated after the US Civil War. Due to regulations, full-reserve banking was not competitive with unsound fractional reserve banking. (In full-reserve banking, a bank accepts time-deposits and makes term loans. If the cashflow is balanced, a full reserve bank is not unsound. Also, warehouse receipt banking was not competitive with fractional reserve banking.)

I read that, in Scotland, banks put clauses in deposit contracts allowing them to suspend withdrawals for 30-60 days in the event of a financial crunch. This effectively converted demand deposits into time deposits. This was a sounder model for banking. This practice was made illegal, due to lobbying by larger banks. In other words, if you wanted to open a soundly managed bank, you could not do it due to the restriction of regulations.

Also, the US Supreme Court legalized limited liability incorporation in the late nineteenth century. That encouraged dishonest behavior by nearly insolvent banks. Bank owners and management have a free put option to cheat depositors and creditors in bankruptcy court.

The $700 billion bailout is merely a band-aid on a corrupt system. Even without an explicit bailout, the financial industry would profit over time via inflation. The current bust is so severe that an explicit bailout is needed.

Given the constraint of a corrupt monetary system, a bailout is necessary. Returning to a fair monetary system is never discussed. The correct solution is to repeal all the laws and taxes that prevent people from using gold or silver as money.

Redpillguy has directed a surprising amount of traffic to my blog. Unfortunately, he doesn't update his blog that often.



I generally refuse to take programming tests, because the people who ask them tend to be idiots. I do offer code samples, if requested. I send bits of my options trading system, written in C++/MFC.

Recently, one guy had a bizarre complaint. He said my code was too simple! He was able to read it and understand it. Therefore, it was no good! I guess he wanted something like an entry in the Obfuscated C contest.



By E-Mail, someone asked:

Have you written the P2P barter engine yet?

Not yet, no. I've been spending most of my time looking for a regular wage slave job and blogging! I'm going to start an actual barter network first. I'll keep track of things on a piece of paper, and then write software as needed.

Barter network software without a network of trading partners is pointless.



eagledove9 has left a new comment on your post "The Proliferation of Stupidity":

Where's your automatic blog post today? Did the queue get all used up?

It's nice to see you missed me. I had this post scheduled for Monday, but hadn't finished it yet. I also was working on a post on the banking bailout law, and that wasn't finished either.

Plus, I was spending a lot of time searching for a job. I also renewed my video game addiction with browser flash games.



Anonymous has left a new comment on your post "!Death OR !Taxes":

You seem to take the opinion here, that without the state, and specifically the grants of the state, there can be no research.

So, would you then say that as a goal, we should strive to subsidize all research?

What other areas of life are we missing? Where else the subsidy from the state will make our lives better? Where else we would have failed if not the state interference?

No, that's the opposite of the point I made. I said that the State stifles research, via regulations and grants.

Suppose I wanted to conduct an experiment proving "The 'chemical imbalance' theory of mental illness is nonsense." Most FDA drug approval studies cover 6-12 weeks. Suppose I compared the effect of a placebo vs. antipsychotic drugs over 10-20 years. I would never get a State grant to perform such research. There are no alternate sources of funding.

Suppose I decided to self-fund the research. I need permission from the State to perform the experiment. I don't have a State license to do mental illness research. It's illegal for me to conduct such an experiment.

Suppose I decided to start a business helping people treat their "mental illness" without drugs. I don't have a State license to operate as a therapist or psychiatrist. It's illegal for me to start a business in the mental health area. In order to get a State license, I have to spend several years learning to recite the official pro-State propaganda. Even if I had a State license, my license would be revoked if my treatment contradicted the official State propaganda.

Who control the process by which psychitartists and therapists have their license revoked? The other psychiatrists and therapists control the process! If I went around saying "You are all frauds!", then they would revoke my license! In this manner, peer review, State funding, and State violence prevent progress.

Government restrictions of the market prevent progress. The State monopolizes funding. Due to the central bank credit monopoly, it's hard for non-insiders to raise money. An individual who saves fiat money has his savings stolen via inflation. State regulations restrict permissible behavior.

I'm seriously considering an agorist business treating mental illness. Having experienced it before, I could help people overcome the shock of drug withdrawal and helping them enter a higher state of awareness.

In the present, the only area that has a relatively free market is computer software and electronics. Can you name a big technological development in the past 30 years that isn't related to computers and software? The other areas of the economy are completely regulated, preventing progress.

Anonymous has left a new comment on your post "!Death OR !Taxes":

Please keep wondering, FSK. Please.

That actually is excellent motivation for eliminating the State. The State restricts the rate of progress of research, especially medical research. Without the State, there might be technology discovered that indefinitely extends your life.

Therefore, I should defeat the State so that technology is discovered that allows my lifespan to be increased indefinitely.

Imagine Moore's Law applied to progress in medicine! It could happen, if there were no State regulation of medicine! Moore's Law applies for computer hardware and electronics because they are practically unregulated.

Anonymous has left a new comment on your post "!Death OR !Taxes":

>>You seem to take the opinion here, that without the state, and specifically the grants of the state, there can be no research.

Umm, I'd try reading the article again. He's taking the opinion that the state hinders research. Without the state, there would be a significant increase in technology.


Right. That commenter thought I was making the opposite point of what I actually wrote.



anarcho-mercantilist has left a new comment on your post "Reader Mail #66":

Anarcho-mercantilist's conclusion, "your statement that "Stealing is wrong" is subjective" violates the E-prime rule set forth above, and is consequently, a subjective statement.

zing.


I interpret the term 'subjective' as something that would exist even if the human mind never existed.

For example, the human mind creates truth so truth exists subjectively.

If I said "The human mind created the ideas of 'truth' and 'false' as a tool for logical reasoning, therefore 'truth' and 'false' exists 'subjectively'" you all would agree. The statement does not contradict logic, if we 'define' subjective as perceptual. If I said "Truth and false originate and exist from perception and mental processes, perception and mental processes behave subjectively, therefore subjective processes from the human mind creates the ideas of truth and false," you all would also agree.

Anyway, two variables in Extended Bayesian Reasoning (probability and certainty) cannot approximate real world situations without any biases.

I agree with your demonstration on the contradiction assuming the Randian definition of subjectivism.

It looks like a communication problem, without clearly defining the terms.

I don't consider "Avoiding conflicts with trolls/fools." to be a realistic goal. As long as you write intelligently, fools will be offended.

Writers should not assume that its readers would define the terms the same exact way as the writer himself does, and then assume those who define his terms differently as fools.

I'm not a mainstream media outlet where I have to coddle every single reader/viewer, lest advertisers drop my program.

Those who like to promote Agorism should use a language that reaches the widest audience as possible, to convert as many as possible. If a writer does not wish to market their text to the widest audience as possible, then why not write at all? If one does not care of the quantity their audience would understand the writers' terms, then a writer can theoretically write in a language that everyone cannot understand except for the writer himself. Even though the impossibility of 'coddling every single reader', one can coddle as many as possible!

That comment is entirely trolling.

If you think you can promote my ideas better than me, go ahead! How much traffic does your blog get?

The way I avoid wasting time debating fools is that I ignore them, rather than cater to their foolish demands.



My post on the Amero has been another unexpected SEO hit. There aren't many competing articles. My blog has a relatively high PageRank. According to Google Analytics, a lot of people google "Amero". Someone googling "Amero" is likely to be interested in my blog.

I don't specifically write my blog for SEO. It is amusing to note what is popular in Google Analytics. The only SEO tip I've noticed is "Keywords in post titles count a lot more than keywords in post bodies."

As mentioned above, it would be nice if Blogger let me remove my blog title from the HTML page title. That is not an option. I agree that my blog title is polluting my Google search results a little.



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

The value of the capital inputs into a good is not the ultimate source of value. The 'value' of something is only what a buyer is willing to pay in a specific transaction. Nothing has absolute objective value in a market, only that value which the buyer ascribes to it at the specific time and conditions of the trade. If I expend X resources to build something, but that something has no buyers, then it is worthless or at least worth no more than scrap value. The wealth that went into creating this good is actually lost. This is capital decumulation: actual squandering of real wealth in the economy. This is the meaning of business losses and failure. The function of the market is to determine whose product or service is valued and whose is not, thus guiding limited resources to their most productive uses.

The Labor Theory of Value refers to *USEFUL* labor. The Labor Theory of Value only holds in a really free market.

If I have a job where State violence forces people to buy my product and my service has no real value, then the Labor Theory of Value fails to hold. For example, lawyers spend a lot of effort for nothing useful, yet they are highly paid.

In the present, a business that squanders resources does not contradict the Labor Theory of Value. Suppose a business wastes 50% of labor spent. In a true free market, they will be faced with competition and be driven out of business. In the present, many State-licensed careers and corporations are protected from competition by the State.

I should have called it "The Free Market Labor Arbitrage Process" instead of "The Labor Theory of Value". Due to pro-State brainwashing, "The Labor Theory of Value" is tainted in most people's minds. Like most mainstream economics topics, it is falsely taught.

In a true free market, "salary" and "value of actual work performed" should be very highly correlated. Capital is entitled to a fair share of profits. In a true free market, State violence does not protect capital holders form competition. In a true free market, the State does not subsidize the profits of insiders at the expense of everyone else.

The Labor Theory of Value fails to hold in the present, because State violence protects capital holders from competition. With a monopoly/oligopoly market position, it makes no difference if labor and resources are squandered.

The LTV got a foothold due to some unfortunate problems in Adam Smith's "Wealth of Nations" and progressed from there. Marxist exploitation and 'surplus value' theory were logical extentions of LTV. The LTV was and is the intellectual bedrock of socialist/communist/
nationalist confiscation and nationalization schemes. Greed and envy are of course the non-intellectual components serving to rouse the rabble.

I strongly recommend some readings in Austrian economics and subjective marginal utility theory in general. Understanding time preference and the time value of money as the source of the originary rate of interest would also assist with some of your other investigations. See Ludwig von Mises particularly. You can obtain his books at www.mises.org/store/. Particularly: "Socialism"; "Human Action". George Reisman's "Capitalism" is also a tremendous reference work.

Here is a good online reprint of a good introduction to value theory: http://mises.org/story/2422

Here is a good online introduction to marginal utility theory: http://mises.org/story/2610

I hope this information is helpful. I enjoy reading your blog.

I find mises.org tough reading in general. I can re-derive most of that stuff by arithmetic and simple common sense.

True free market economic calculations are actually quite simple. Complicated economic models are merely intellectual hoops that justify the current non-free market as free.

I have an updated version of "The Free Market Labor Arbitrage Process" in my draft queue.



Nick has left a new comment on your post "The Velocity of Money":

The manipulation of inflation rates is another good reason not to trust anything the government says, and in fact probably to believe the opposite.

Government laws are almost always judged in favor of increasing government power over every aspect of a person's life. Anyone who believes the government can accurate judge the value of the money the government itself prints is entirely too gullible.

The Federal Reserve used to publish M3. It doesn't anymore.

Insiders have an incentive to lie and cover up their misdeeds. If people knew inflation was really 20%-30%, they'd be rushing to buy gold and they wouldn't bother with the stock market.

One of my most surprising conclusions is that a stock investment does not outperform true inflation.



pettyfog has left a new comment on your post "How Much did the AIG Bailout Cost You?":

Golly Neds! your post really scared the crap out of me.

Good!

But I have a question. Assuming that treasury just printed dollars to pay for that bailout, what did they base the amount printed on?

For the $700 billion bailout, the Treasury secretary just made up a big number.

For AIG, there were immediate obligations of $85 billion that needed to be paid.

Was it the perceived value of the share of those companies bought?

For AIG, it was mostly due to losses on credit default swap agreements.

For the banking industry bailout, it was the estimate of losses on subprime mortgage bonds.

So.. putting it in terms most of us could understand, isnt it like the government was bulldozing a ditch on Fort Knox and uncovered a pile of bullion that wasnt on the books?

No. It's like the government stole everyone's gold and gave it to a handful of insiders. (That already happened, in 1933.)

Once that gold was weighed, what would Treasury do, after they moved it?

If someone working for the State found a pile of money, they would give it to themselves or their buddies.

Wouldnt they print additional currency to equal the market value of that gold?

The US dollar has nothing to do with gold anymore.

President Roosevelt defaulted on gold-redeemability for US citizens in 1933. President Roosevelt stole everyone's gold in 1933, demanding they exchange it for fiat paper. In 1971, President Nixon defaulted on the ability of foreign central banks to redeem paper dollars for gold.

The dollar/gold price floats. There is no fixed exchange rate. Inflation is approximately 20%-30% per year. The exchange rate between dollars and gold is increasing at a rate of approximately 20%-30% per year.

Seems to me, the inflationary effect would come from the difference between the value printed and the actual proceeds from the sale of that gold.

In a true free market, if there's a new gold mine or gold hoard discovered, it should have negligible effect on prices.

Most potential gold mines have already been discovered. I doubt there would be a discovery of a new mine that would increase the world gold supply by more than 5%-10%. In a typical year, new mining is 1%-3%. (I forget the exact amount.) Most gold is mined as a by-product of other mining operations. Copper ore contains a certain small amount of gold. When refining the copper, the gold must be removed anyway. A huge amount of copper is mined, and the tiny fraction of gold is sold on the spot market. There isn't enought gold in copper ore to affect the mining decision. Due to inflation, the price of copper/dollar is rising as fast as gold/dollar.

In a true free market, there is no obligation to use gold as money. People are free to use other things, if they are concerned about undiscovered gold hoards.

What I'm saying is that AIG and Bear Stearns 'arent worth nothing'. The inflationary aspect is the difference in what Treasury printed to cover the bail-outs and what the assets purchased bring on the market.

And we dont know that, yet.

OK, you're really clueless.

Suppose that the State decides to purchase assets for $700 billion. If the market value of those assets was greater than $700 billion, then *SOMEONE ELSE WOULD HAVE BOUGHT THEM*!

Therefore, when the State buys bonds or other assets, it is by definition paying *MORE* than the fair market value. It may turn out, due to incredibly circumstance, that this was a great investment. I seriously doubt it.

As another example, suppose you have a State job. By definition, you are getting paid more than the fair market value for your labor. Most State jobs are acquired via connections rather than ability.

Also don't forget to account for inflation. Suppose $700 billion is paid now, and the bonds are sold for $707 billion five years from now. There is a "gain" of 1%, but that's pathetic compared with inflation.

If you see the $700 billion as anything other than an outright gift to insiders, then you're too clueless for me to waste time responding to you.

As another example, suppose the State exercises "eminent domain" and forces you to sell your house. By definition, you are getting *LESS* than the fair market value, because you are forced to sell. Even though the law says "fair market value is paid", by definition it is not fair market value, because it is a forced sale.



Anonymous has left a new comment on your post "!Death OR !Taxes":

i really cant see the state collapsing in the next 20-50 years. looking at the current financial and political situation the state is getting stronger. in times of fear and uncertainty people flock to centralised structures, regardless of their effectiveness. From all observations i have made the state is getting more integrated into the lives of companies and people... the form of the state may change, but its presence will grow.

I predict the collapse of the State in 20 years. Other people have made similar predictions. For example, check out the TOFLA website, where the author predicts a complete collapse of the State in approximately 20 years.

The power of a true free market is so great. The more the State restricts the market, the more incentive there is for people to say "**** this!" and start working as agorists.

As for science research countries with strong state programmes on average out rank countries without in terms of R&D and commercialisation of discovery. science is a never ending maze of blind alleys, and it is especially true in medicine that the cost of research is growing exponentially. true, some of this increased cost is down to funding structure inefficiency, but most of it appears to stem from the increase in knowledge and consequent cost of building on that knowledge. commercial science may become less viable in the future as the capital risk grows relative to the return risk (note how many pharma companies have moved into generics - that the market at work!).

"Science is hard." does not lead to "The State must have a monopoly of funding research."

Before the Federal Reserve was created in 1913, private funding of research worked quite well. In fact, I estimate the rate of scientific progress may have been *GREATER* before 1913 than after!

A free market business looking for profit will allocate research funding much more accurately than the State. In the present, most *GOOD/GREAT* scientists are *UNDERPAID* due to State restrictions of the market. A professor at a university must assign patents to the university. Someone working for a large corporation gives most of the profits to their corporate masters.

In the present, only computers and software has a relatively free market. In most other areas, innovation is restricted or outright illegal.

Even without the state 'tax' of some kind will exist - it is the friction of living with others, whether it is explicit or implicit, tax is here for as long as we are.

You are confusing "costs of living" with "taxes". In a true free market, will I pay money for telephone service? Of course I would. Would the telephone vendor have a State-mandated monopoly/oligopoly? No.

In a true free market, you still pay for goods and services. There is nobody who has monopoly power to demand you pay.

If someone else has the power to force you to give them stuff via taxes, then you're effectively their slave.



hartfordclub has left a new comment on your post "Bear Stearns Bailout Details":

Great article, check mine out too!

http://mining101.blogspot.com

I don't get it. Did you mean this article or this one?

That also answers the question of "If banks have a State mandated monopoly, then why not invest in banks?" The insiders always profit, but small shareholders are SOL.

For example, Lehman Brothers' former CEO does not have to give back the huge salary and bonus he earned in the past few years.



anarcho-mercantilist has left a new comment on your post "Reader Mail #66":

Is the increase in the price of gold due to speculation in gold, or an increase in the supply of dollars?

The increase in hoarding due to speculation causes the prices to raise, I think.

I'm not sure.

In the long run, the dollar-denominated price of gold should track true inflation.

In the short term, the price of gold could spike if people rush to buy gold.

Are people rushing to buy gold? Some dealers are reporting a shortage of physical gold and silver. The spot price is low, but they have no inventory. For example, the US Treasury stopped selling silver and gold American Eagle coins.

On the other hand, anybody could arbitrage this discrepancy. They could merely buy a gold or silver future and take physical delivery.

I see no evidence of an "asset bubble" in gold.

The State doesn't like it when speculators use leverage to buy gold or silver futures. The Hunt Brothers provided an example for others. However, many individuals appear to be buying gold or silver and taking physical delivery. There are no reliable statistics. The blogs I read are not a random sample of the population.



eagledove9 has left a new comment on your post "$1 Trillion Doesn't Vanish Into Thin Air":

Deliberate Deflation

Let's ask this question another way.

Suppose you wanted to make trillions of dollars vanish into thin air ON PURPOSE. What would you have to do?

If I controlled the Federal Reserve and wanted to cause deflation, I would jack up interest rates and let the Compound Interest Paradox work its magic.

Insiders want boom/bust cycles, but they don't want a severe deflationary depression.

Time frame to achieve the goal could range from 'overnight' to 'several months,' but less than a year.

I'm not thinking of making paper money disappear. That would be like if a bank vault caught fire or something, and that's not what I'm thinking of. Instead, I'm thinking of ELECTRONIC money, the stuff that only exists on computers, and the stuff that exists on paper except its value is determined by the market.

What are your thoughts on that?

I already wrote a lot about the Compound Interest Paradox.

That post was more about the distinction between "on paper wealth" or "electronic wealth" or "stock market wealth" and actual tangible goods and services.

If a lot of paper/electronic money were destroyed, it would move money from one group of people to another, exactly as occurs during inflation. A money supply crash moves wealth from debtors, who can't repay their loans, to people holding cash. A large bank is effectively holding cash, because it may borrow from the Federal Reserve at the bottom of the recession and buy assets.

Most individuals hold cash or investments/salaries/pensions not properly indexed for inflation. They would be the beneficiaries of massive deflation.

"Have no debts, keep money in a checking account" is just as bad advice as loading up on debt. The former means you're ripped off by inflation. The latter means you're a direct debt slave, and risk losing your house/apartment if you lose your job.



Anonymous has left a new comment on your post "Where Did $700 Billion Go?":

The current problem is much more perverse!!! The gov of US probably doesn't have these $700bn, so it is going to take them from somewhere at interest rate. It is hard to chase the money flow nowadays if you are not insider. It may happen that the gov will take the money as credit from some Wall Street banks to provide them for free to some other WS banks. It's crazy!!!

I believe it is the smaller evil this bailout plan to be executed. Otherwise the crisis will develop more and the impact will be much more severe and the guilty one will be the gov, not the banks. And the banks are much more interested the crisis to get bigger, it is amazing how history repeats, first by inflation and then by deflation and voila the rich are getting richer and the poor are getting poorer!!!

New money will be printed to finance the bailout. Everyone will pay the cost of the bailout as inflation.

If "reform the monetary system" is not one of your options, then a bailout is necessary. The current monetary system guarantees periodic boom/bust cycles.

As the current bubble pops, another is being inflated elsewhere. I actually was expecting another big stock market boom before the next recession. The current massive inflation should be setting up a stock market boom sometime during the next few years.

Dick has left a new comment on your post "Where Did $700 Billion Go?":

The bailout contained provisions for foreign banks to transfer their "underwater" assets to their US-based branches, and then for the US Treasury to purchase those assets.

Some of the bailout money will indirectly benefit politically connected insiders in foreign countries.

This is a way to make good on the promises by us mortgagees. Either they pay as agreed, or they default, in which case the treasury will pay for them.

Wrong! In a free market, if you lend someone money, you are taking the risk of default.

Are you seriously suggesting "X loans money to Y. Y defaults. Therefore, the State has an obligation to pay X."?

If an individual makes a loan, they risk default. When insiders make loans, they can always lobby the State for a bailout.

If done, it will pave a way for future interest rates to stay low, so that housing market can be purchased without lowering the prices.

Wrong again!

Low interest rates mean that your mortgage payment is less. Low interest rates also mean that inflation is higher!

Individuals *DON'T* benefit from cheaper housing loans, because they pay the cost anyway in the form of higher housing prices.

Suppose I'm saving up for a 20% downpayment of $60,000 on a $300,000 house. In the meantime, there's 50% inflation. Now, I have to save $90,000 to make my downpayment! Inflation didn't benefit the homebuyer in that circumstance!

Inflation benefits debtors. If I borrow and buy a house, I want inflation to increase so it's easier for me to repay my loan, or sell my house for a profit. Suppose I put a $10,000 downpayment on a $300,000 house. My interest payment is 6%. Suppose that inflation is 20% in the next year. My house is now worth $360,000. I paid $17,400 in interest. I made a profit of $42,600 on my $10,000 investment! In this case, inflation was great for me!

However, the above calculation does not mean that I should take out a home equity loan or refinance whenever there is inflation, or that I should keep moving to more expensive houses. Eventually, there will be a crash where prices will decline 50% or more. I will be wiped out during the next recession, if I maximize my leverage. Large banks can lobby the State for a bailout. As an individual, I lose my home or my savings.

Inflation benefits anybody who borrows. Individuals typically need a 20% downpayment. Insiders may make lower downpayments and use more agressive leverage ratios. An individual may benefit from inflation, but insiders will always benefit the most. An individual takes on risk, but insiders have a riskless position due to their ability to lobby the State for a bailout.

Inflation *ALWAYS* benefits insiders and screws over the average person.

As an individual, you can't compensate for inflation by loading up on leverage. You'll be bankrupted during the next recession. Only "too big to fail" insiders get to play the "maximize leverage" game and profit no matter what.

If this bailout doesn't happen, then foreign mortgage holders won't be paid as homeowners default. This will prompt higher rates, and thus the decrease in house prices. That, in turn, will prompt yet more defaults, yet higher rates and yet lower prices. Repeat ad nauseum.

Thus we can say, that this bailout is about all of us helping current home owners, not foreign bankers.

Somebody has to pay up, or current home owners will lose their houses. Future homeowners will not be affected as their purchase prices will trend lower to compensate for the higher cost of financing at a future time.

You are entirely pro-State trolling.

If you own a house and have a mortgage, you *NEED* inflation or you'll never be able to repay your loan.

If you own your house without a mortgage, you're inflation indifferent. Your property taxes will rise approximately the same rate as true inflation.

If you have most of your savings in a money market account, then you get ripped off by inflation.

You have to look at the entire monetary system, and not the specific bailout. Given the constraint of a corrupt monetary system, a bailout is needed.

That post sure is attracting a lot of pro-State trolling! It appears the mainstream media pulled off a great snowjob justifying the bailout!

ReasonableCitizen has left a new comment on your post "Where Did $700 Billion Go?":

On the internet someone postulates that every adult American can be given $425,000 and this will solve the mortgage crisis for $85B rather than $700B. The assumption being that people would pay down their mortgages or pay them off.
Is this true?
If true, why would it not be employed?


ReasonableCitizen has left a new comment on your post "Where Did $700 Billion Go?":

Never mind. New-fangled calculators just aren't as good as longhand division and multiplication.
The curse of electronics...

It's about $2300 per person, not $425,000 per person. ($700 billion divided by 300 million is approximately $2300.) This is the pro-State version of "Social Credit". You solve the Compound Interest Paradox by making direct payments to individuals.

You are correct. A direct payment of $2300 to each American will "stimulate the economy" just as much as $700 billion given to a handful of insiders.

The point of the economic and political system is to loot and pillage. Fairness is irrelevant.

Anyone who says that government is not a terrorist organization is pro-State trolling. The primary purpose of government is that it's a highly sophisticated and obfuscated theft operation.

Such a game cannot be played too much. Suppose I have $10,000 in my checking account. The government decides to give everybody a check for $1M to "stimulate the ecnomy". I am screwed over, because my savings just got wiped out. I now have $1.01M in my checking account while everyone else has $1M in their checking account. This happens all the time, but only at a rate of 20%-30% per year.

Anonymous has left a new comment on your post "Where Did $700 Billion Go?":

I'm interested in your saying that financial workers perform no real work. You've also said that insiders know it's a scam.

I think that mentality would make a very interesting article in it's own right, given your background.

I'll work on an article for that, and put it in my draft queue.



johngeorge234 has left a new comment on your post "Did the USA Declare Bankruptcy?":

Now a days it is a hot topic on world wide.What is going to happen in US about their financial status. As every knows that in US many banks are in loss.But Corporations can continue operations even though they are bankrupt.
******************************


Great. You're a lawyer!

Not all lawyers are pro-State trolls, but you didn't have anything interesting to contribute.

The US has technically been bankrupt since:
  • 1971, when President Nixon "closed the gold window" and defaulted on the promise to redeem paper dollars for gold. Only foreign central banks could redeem their paper for gold. In most countries, ownership of gold bullion was illegal.
  • 1933, when President Roosevelt defaulted on the gold standard and declared it illegal to own gold.
  • 1913, when the Federal Reserve was created.
  • 1861, when the southern states walked out of Congress. Without a quorum, Congress had no authority to continue. Some people say that, technically, the US has been operating under covert martial law since 1861 (or 1933). The US Constitution as a voluntary agreement among sovereign states ended with the Civil War.
  • 1787, when the US government first started. No Constitution is legitimate unless it has the 100% unanimous consent of the governed and every individual has the right to withdraw consent later. Otherwise, you're asserting that the majority has the right to enslave the minority. In some/all areas, the Federal government was imposed by force, conquest, or trickery. The US Constitution was a complete betrayal of the Revolutionary war.

Yes, corporations may continue operations while technically bankrupt. As a bankrupt corporation, the US government is closer to liquidation than solvency and emerging from bankruptcy.



David Z has left a new comment on your post "The True Purpose of Trial by Jury":

Barry, I'm with you! One's 'job' as a juror is predicated unfortunately on the immorality of being compelled to judge a man against laws to which he would not have agreed.

jury nullification has been a hot topic of mine during the last few months...

That post doesn't contradict my other views on jury nullification. That was more of a sarcastic take on trial by jury.

Jury nullification or not, monopolistic State courts have *NO* legitimacy. Punishment-based justice is defective, whether ordered by a biased judge, a biased jury, or even a mostly impartial jury.



Dick has left a new comment on your post "Where Did $700 Billion Go?":

ReasonableCitizen,

First of all, you're right, the math is all wrong here. The whole 700 bln will make just 3,800.00 per adult citizen (roughly).

That defect was corrected. I used the entire population, and not merely the adult/taxpayer population.

But, this is not the crux of the issue. Let us imagine that each adult had received 1000000 dollars. Now what you think will happen? The prices will go right up to compensate for this and no one would feel any richer than before (roughly).

That is correct. The State creates no real new wealth when it prints new money.

Inflation cheats savers and benefits debtors.

An even easier way of imagining that is to assume that by a government decree, tomorrow, everyone can exchange their every dollar for a thousand of new ones.
The prices will immediately adjust up exactly 1000 fold and we will be where we are now.

This process is now very much looking like a regular inflation, which it actually is, i.e. the process where a saver (creditor) is made to pay for a spender (debtor). This is because if you'd borrowed 1000 bucks from me yesterday, you'd give me back today 1000 of new notes, but I can only buy what was worth 1 dollar before.

Correct again. Inflation steals from creditors and savers and gives to debtors. Banks love inflation, because they borrow at the Fed Funds Rate and make loans or invest in tangible assets.

This is the reason why we have treasury paper, bank deposits, savings accounts, etc. Through these mechanisms, our government extracts value from gullible people in favor of those who like to spend it. Note that our real inflation rate is higher than the highest interest rate paid, which makes our real interest rates absolutely negative. This means ANYONE who holds his money on interest in treasuries or savings or money market accounts or even stock market, is actually paying for the privilege. His purchasing power continually declines faster than his money can multiply in nominal terms.

You didn't actually think otherwise, did you? :)

A money market account or Treasury Note/Bond is a "secure" investment in the sense that you will keep your principal. The nominal value of your savings won't decrease.

Those investments are *NOT* safe when you properly adjust for inflation.

The entire point of the financial system is to steal from everyone and give the proceeds to a handful of people. That occurs over time, as the Federal Reserve inflates the money supply. This time, it occurred via a direct explicit bailout.

It's pointless to petition the State and say "But if we do this, we can switch to a freer/fairer society." They aren't listening! Insiders love the fact that they may loot and pillage everyone else. Why would they voluntarily give up their power?

The US Constitution says that people have the right to petition the State for grievances. What happens when you petition the State for redress of grievances, and the response is "Go **** yourself!" Then what do you do?



This article, cited many other locations, is about the coordinated interest rate cuts on last Wednesday.

The Federal Reserve, the Bank of England, and the European Central bank all cut interest rates by 0.5%. The central banks of China, Canada, Sweden, and Switzerland also cut rates.

In other words, central banks are inflating to bailout out large banks.



Looking at job ads is very weird. I see ads for "2+ years iPhone development experience". What ever happened to "Hire someone who knows what they're doing and let them pick it up as they go along"?

There's one amusing trend. I've interviewed with at least 5 startups who said "We hired an offshore outsourcing firm to develop version 1.0 of our product. We aren't satisfied with the results. We're now hiring locally." Anybody who starts a software company and outsources software development is an idiot. If you can't hire and manage good programmers locally, then how are you going to pick a good outsourcing firm? "Hire a good outsourcing firm" and "Hire good programmers locally" are nearly the same skill.

It's nice to see that some people are smart enough to notice that outsourcing doesn't pay. With a declining US dollar and declining real wages in the USA, there's no reason to outsource.

I heard that the US economy is so bad that the rate of "illegal immigration" is declining! You're better off staying in Mexico!



I was watching the Communism channel (CNBC) and saw a particularly stupid proposal. To prop up the stock market, the Federal Reserve or Federal government should directly buy stocks or index futures.

It would be simpler to write the professional traders a check directly. (They already did that! That's the $700 billion bailout! That wasn't enough!)

If the government has deficit spending to buy stocks, no real wealth is created in the process. All that accomplishes is it distorts the capital markets. Inflation steals a little bit from everyone and gives the proceeds to politically connected insiders.

By inflating the money supply, the Federal Reserve and Federal government prop up the stock market. If you print more money, then prices go up! The nominal value of the stock market may go up, but the real purchasing power it represents would decrease.



Anonymous has left a new comment on your post "$1 Trillion Doesn't Vanish Into Thin Air":

Here, we actually can touch on what a fiat government can do.

Everyone talk about inflation/deflation as if paper money system must obey some sort of rules...

What prevents government from creating, say 10 trillions overnight and secretly distributing this to the banks? What, an accountant? Shortage of paper?

That is the reason a gold standard is "evil". With gold-backed money, people can protect themselves from inflation by using physical gold. If people are concerned about bank insolvency, they can keep gold under their mattress. Keeping Federal Reserve Points under your mattress is foolish, because you'll still get ripped off by inflation.

There is absolutely nothing that prevents the Federal government or Federal Reserve from printing new money. There is nothing that prevents insiders from printing new money and giving it to themselves or their friends.

Historically, every fiat monetary system fails in hyperinflation after about 100 years. Insiders can never resist the temptation to print more money and steal via inflation.

Intentional deflation is harder simply because you need a willing party to lose money, where for an inflation, anyone would go along.

Massive deflation steals as much as massive inflation. Massive inflation steals from everyone and gives to insiders who print the new money. Massive deflation steals from debtors and gives to anybody holding cash. Most people hold cash or benefits like pensions that aren't properly indexed for inflation. For this reason, extended deflation is never allowed to occur. Periodic deflationary busts are an important feature of the Compound Interest Paradox and how the financial industry loots and pillages everyone else.

Would you mind receiving 10 mln on your bank account? I wouldn't. Because I am human. But, I won't like to play the game if my money were to "secretly vaporise".

This is why, there can only be an inflation, as money can not destroy themselves and will only change accounts, until government interferes in an only accepted way - bringing in extra money.

This is why inflation is guaranteed, but not because of some rules or laws, but strictly because a recipient won't mind.

It's not just that "a recipient won't mind inflation". It's that insiders may lobby the State to print more money and give it to them.

The only way an deflation might occur, is if participants allow their impoverishment, such as, for example, when government defaults on it's promises.

The Federal government will never default on Treasury debt because it can merely print more dollars to pay off the debt or more bonds to roll over the debt. Treasury yields are low because the Federal Reserve buys back Treasury debt.

The US Federal government has a unique perk. All its debts are in money it issues. You may have a gradual default over time via inflation. There will never be an absolute default, because new dollars may merely be printed. Via international monetary agreements and treaties, foreign central banks and foreign governments accept and hold dollars as if they represented tangible wealth.



Anonymous has left a new comment on your post "The Defect of Intrade":

you also missed that the fee is 3% not .3 because the contracts are .1 dollars not 1 dollar contracts and its .03 per... also the expiry fee.

so even if you win you lose a lot in fees... this site is a total scam

Other people pointed that out. In that post, I only considered the effect of not crediting interest and margin rules. If you consider trading fees and expiration fees, it's even worse.



Fen has left a new comment on your post "Reader Mail #65 - Dealing With Scum":

Esolz (as well as their latest ventures) are just the best example of most violent approach to outsource customers. Working on large numbers of freelance websites, selling non-unique templates, asking crazy amount of money for the job, that could be done much better and cheaper even by average european child.

If you are going to invite Esolz or their Infy ventures to participate in your IT-project - you should know there are better services offered over the web. Don’t let the cheap and lame bastards from India cheat you.

I just posted that comment as a joke. I know it was spam. See Reader Mail #66.

If you start a software company and outsource software development, then you deserve to get ripped off. If you're starting a software company without a qualified software engineer, you're a fool.



Anonymous has left a new comment on your post "The Amero Subterfuge":

here here the Amero = not too distant future. Who cares if it fixes things.. but what if its a tool for a higher goal that we dont agree with?

If people finally realize that the US dollar is worthless paper, then the bad guys will merely switch to the Amero, which is another unbacked fiat paper.

I heard a rumor that, to prepare for hyperinflation, alternate paper money was printed and is held in reserve, ready to be distributed.

My post on the Amero was an unexpected SEO hit. It's a relatively high-frequency search term, there aren't many competing posts, my blog has a high base PageRank now, and someone googling "Amero" is likely to be interested in the rest of my blog.

You might say "a few visits per day is no big deal", but if some of those become regular readers, and I have several such posts, then the aggregate effect over time is noticeable.



Mike has left a new comment on your post "The Proliferation of Stupidity":

Would that your "evaporative cooling effect" could be applied to society at large. We could certainly do with a bit less stupid out there.

That's sort of the whole point of agorism. In an agorist trading group, you'll only be dealing with other intelligent individuals. If someone is a fool, State violence does not force you to deal with them.

Some people say that "natural selection" needs to begin occurring in humans again. Hopefully, we can switch from a Communist society to a free market society without massive casualties. On the other hand, with a strict interpretation of "allow the weak to die!", I would have been murdered when I was first hospitalized. Fortunately, my psychiatrists/murderers prefered to milk me for the rest of my life as a drug-addicted cash cow, rather than explicitly murdering me.

Most people have a reasonable amount of natural intelligence, but pro-State brainwashing has crippled their independent thinking ability. Except for the true psychopaths, most people should be convertible to a free market economy.

It actually requires a high degree of intelligence to be brainwashed and keep all the details straight. "Stealing is always wrong!" requires much less intelligence to understand than "Stealing is wrong when individuals do it. Steal is noble when government employees do it." The massive State brainwashing campaign, acting over centuries, has been a type of natural selection in favor of intelligence!



barry b has left a new comment on your post "The Proliferation of Stupidity":

FSK,

Yo, I think you should get your own domain, copy all your posts over, and then receive advertising revenue....

Now I appreciate (as all your readers do) the fact that you don't want google ads displaying some crap that you personally disagree with... no prob I completely understand even though on my own site I allow google to display ads promoting companies I literally rail against in the very posts the ad is shown on.. (debt settlement etc, etc...)

However, you could pick and choose who advertises with you... and I think you would be successful.. I really believe that you possess the ability to make a decent living from your blog. Here's why..

Your devotion on your beliefs is inspiring to us readers. It's your relentless passion concerning money, taxes, private markets, and economic morality that keeps me reading along.... even when I don't always agree... your a guy who knows what he thinks, says as much, and if readers don't like it be damned....

Well thank God theres still a few people who do this.... and it's for those reasons that I regularly check out your blog..

You are a gifted and talented individual with a very provocative message and I believe there is a strong audience that wants to hear it...

anyway I hope that you'll consider what I've said and at least give some thought to creating a blog which you can monetize... If you can create the amount of interesting articles you've been inventing in the past (with an hourly job) imagine what you could do without the pesky death march being in the way...

bb

Your reasoning does not make sense.

You are saying "OMFG!! FSK must profit from his blog *IMMEDIATELY*!!"

There is no rush. As long as I grow my readership at a rate of 10%-20% per month, I will have more and more options when it comes to profiting direclty or indirectly off my blog.

Similarly, there is no need for me to rush to switch to self-hosting. Sometime in the next year or two, I will switch from Blogger to self-hosted WordPress.

Suppose I will lose 30% of my readers when I switch to self-hosting. It makes no difference if I do that now or in a few years, if it's the same percentage. Over time, I'll rebuild my PageRank and incoming links, after I switch.

Goggle adwords is unsuitable for political blogs. Via adwords, I have zero control over what ads are presented.

Even if/when I get a regular wage slave job and have less time for blogging, I'll still make 2-3 posts per week. The overall trend is favorable. So far, I'm satisfied with the progress of my blog, even though I'm not directly profiting from it. It was beneficial for me to write down my ideas, even if I had no readers at all. I've received some useful feedback and some pro-State trolling. I'm getting good at not letting the trolls bother me.

I probably will use my blog to start and promote free market businesses, rather than directly profiting from my blog. Right now, I have about 100-200 regular readers. If I get to 1000 or 10,000 regular readers, then it becomes very feasible to start a business directly or indirectly based on my blog.

I'm looking for "ways to profit off my blog". The best "promote agorism and profit at the same time" idea I had so far was standup comedy.

There's a lot of overhead when you start a State-licensed business. The taxes a small business pays subsidize their larger corporate competitors. The cost of regulation compliance falls harder on a small business owner. The biggest obstacle to starting a free market business is a customer base. Without mainstream media advertising, it's very hard to connect buyers and sellers.

My blog has a value, even if I'm not directly profiting from it yet. Even if a hacker stole my Google login, I still get to keep the accumulated knowledge.

Maybe I'll try to convert "network of regular readers" into an agorist trading group. When I start my agorist experiment, I'm only going to make a time-committment of a few hours per week. I'm not trying a State-licensed startup, so I don't have the usual overhead of starting a business. As an agorist, with no State-mandated overhead, it should be feasible for me to start a business spending only a few hours per week.

(Some people have lost their Blogger blogs when a hacker stole or phished their password. If that happens, you are SOL.)

One advantage of the Internet is that I was able to write a blog without much overhead. If I were forced to print newspapers to spread my message, I would be unable to cover my costs, and I would be unable to attract readers. I benefit both from my blog, and reading other interesting blogs.



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

A system which allows the buying and selling of a commodity like Silver in quantities which do not really exist has got to be the glaringly obvious flaw in a totally crazy system. That this is everyday practice proves that the inmates are in charge of the asylum and their greed and thirst for more has no limits.

There are several problems.

Short sellers do not need to post collateral or proof that they own silver. Insiders can short sell to drive down the price. If the price rises, they know that central banks will sell off their inventory to keep the price down.

Negative real interest rates encourage speculators to borrow and buy metal or futures. However, long speculation is risky if you aren't an insider. The rules are biased, and are subject to change at any time. The Federal Reserve could jack up interest rates, hurting leveraged long speculators. Margin requirements could be raised.

If you want to invest in gold or silver, an unleveraged long position and taking physical possession is the safest. As long as you hold onto your physical metal, your savings are protected.

The USA has a completely corrupt economic and political system. It is broken past the point of reform. It is time to discard it and try something else.



Anonymous has left a new comment on your post "The Proliferation of Stupidity":

barry b above is right.

I too do not always agree with you, but where I do, it is clear.

Is Supply and Demand = Price an unquestioned axiom?

In a true free market, supply and demand completely determine price.

If so is it moral and rational to charge more for food in times of food shortage...Demand outstrips Supply?

Suppose I predict a food shortage and hoard canned food in my basement. The food shortage I predict actually occurs. Do you have the right to steal my food, frustrating my prudent preparations? If you answer "no", then I also should have the right to sell my food hoard for whatever price I choose.

Anytime you restrict the market, you prevent people from making rational economic decisions.

In a true free market, there are no shortages. Someone would recognize that buying food and preserving it would be lucrative during a drought. If the State prevents me from charging fair market price during a shortage, then there is no incentive for me to plan for disasters.

Most shortages are due to State restriction of the market.

Is man just a glorified beast?

Anyway peer review is a gatekeeper system is true it can also function like a powerful church.

I read an interesting excerpt in Freedomain's new book "How (not) to Achieve Freedom". Peer review *PLUS* tenure totally wrecks "academic freedom". Once a professor is tenured, it is almost impossible to fire him. Professors will be *VERY RELUCTANT* to vote in favor of giving someone tenure, since they will then be forced to work with them for the rest of their lives. Since someone tenured cannot be fired, someone with original or different ideas will never be given tenure.

Peer review plus tenure *WRECKS* academic freedom instead of guaranteeing academic freedom.

Since freedomain markets his writing directly to individuals, he is not subject to the peer review system. He is not dependent on the State to guarantee his salary. As long as he is interesting, he will have customers. Freedomain has more academic freedom than most university professors.

However, sometimes freedomain seems like a pro-State troll. He fails to discuss agorism as a way to achieve his ideal stateless society. He's correctly recognize that government is evil, but he fails to answer "How to get there from here?"



Anonymous has left a new comment on your post "Incomprehensible Banking Bailout Law":

FSK, This is not a comment, I just don't know how to reach you by email, so here it goes:

You may want to check this link, if you think we're in some kind of emergency situation:

http://freemmm.blogspot.com/
2008/10/prearranged-bailout.
html

Thursday, October 2, 2008
The Prearranged, Preplanned, and Premeditated Bailout ...

Take care, bud.

That link was malformed. You mean this post?

It is common for bad laws to be prepared ahead of time, and then introduced during a crisis.

Most provisions of the Patriot Act were on Congress' agenda for years. They could be passed, due to objections from people who valued individual freedom and privacy. After the terrorist act, all those objections were silenced. Some provisions of the Patriot Act were not renewed, but many of the erosions of freedom and privacy have become permanent.

The Federal Reserve Act was written in secret several years before it was passed, in 1910 according to various sources.

The problem is that the USA has an defective monetary system. Given the Compound Interest Paradox and a defective monetary system, a direct or indirect bailout is needed to prevent hyperdeflation.

BTW, there is a link to my E-Mail in my profile on the left. My E-Mail address is fsk2006@gmail.com. Be careful when E-Mailing me if you haven't before. Gmail's anti-spam filter has occasional false positives, and I don't always check my spam folder. If you send me a comment, that will always get through.

Anonymous has left a new comment on your post "Incomprehensible Banking Bailout Law":

Once again, if you are not on the steamroller, you are destined to become part of the poad.

I don't get that reference.



Anonymous has left a new comment on your post "Federal Reserve Cuts Fed Funds Rate to Zero":

Why would they buy a bond at greater than face amount?

Suppose you had $100M cash. You can't put it in a bank, because it isn't FDIC insured. You can't put it in a money market fund, because money market funds also don't guarantee their principal. A big money market fund just had its share price fall below $1.00; it's shareholders lost money.

Your only option is Treasury debt. There's no other safe place to park your cash savings for a month or two until the crisis passes. Therefore, you pay more than face amount for a Treasury Note. It's worth paying an interest rate of negative 0.1%, because there's no other 100% safe investment.



I saw a cool T-shirt. "Pi for president! For change that never ends!"

5 comments:

Zargon said...

Even though Congress rejected the bailout, the Federal Reserve still has the power to create money out of thin air and loan/give it to banks. This is as effective a bailout as if it were explicitly allocated by Congress.

Ok, this makes sense. But then why didn't the fed simply issue a $700B 0% interest permanent "loan" rather than attract all this attention with an explict bailout? The bailout raised some awareness of the inherant unfairness in our monetary system, though I'm not sure how much. Printing a huge pile of money and giving it away would just be another unremarkable day at the fed.

eagledove9 said...

I'm amused to hear about the show 'Hurl.' For every phobia, there is a philia. I'm emetophobic and can't stand to see people vomiting and can't be anywhere near it or hear the noise it makes. If I do, I automatically empathize with the person and feel like I'm going to vomit too. The only vomiting that I can stand to watch is the tiny little guests on the Roller Coaster Tycoon game.

But when I first started using the internet and I researched emetophobia, I found out that there are websites where people take photos and videos of people vomiting because it fascinates them. I wasn't able to watch. :p I'll probably never be just neutral or casual - much less, able to laugh - about vomiting. But it's funny that there is now a game show about it.

David Gross said...

"David Gross said that US Treasury bonds are a 100% safe investment."

Actually, that was the argument of Jeffrey Tucker of the Mises Institute. I was merely quoting his article, in which this was a minor aside.

I consider US Treasury Bonds to be 100% unsafe, not so much because they lose value, but because they are a loan to the bad guys.

David Gross said...

"David Gross writes that if you don't like the US financial system and the Federal Reserve, then you should start your own monetary system."

And that wasn't me either; it was Douglas Rushkoff.

Sell House Fast said...

The Times Online has reported a strange phenomenon last week. Apparently many property sellers are starting to ask for far higher prices than normal to sell their house - because buyers are expecting deeper discounts. Here in the UK, pries are already down 14% and are expected to drop by another 10-15% by the end of 2009.

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