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Saturday, July 31, 2010

How Lazy Are State Bureaucrats?

This blog post was interesting. A criminal defense attorney made a journal of a typical day in court.

Count the actual number of hours of trial. 8:30-9:30, 10:30-11:30, 2 hours for lunch(!), 1:30-3:30, 4:00-5:00.

In a full day of work, the judge only actually worked for 5 hours! That's a pretty sweet deal. Is it normal for judges to take a 2 hour break for lunch every day?

The blogger's attitude was "ho-hum boring". My attitude was "WTF? The judge works 5 hours a day?"

Friday, July 30, 2010

Repeal Sarbanes-Oxley!

Sarbanes-Oxley is a failed financial reform law. Sarbanes-Oxley was passed after the Enron fraud, to prevent executives from lying about earnings. Sarbanes-Oxley failed to prevent financial fraud at Lehman Brothers. Similarly, the recent financial "reform" law will not prevent the banksters from stealing.

Lehman Brothers used the "Repo 105" accounting trick to hide shaky assets off their balance sheet. Loans were disguised as sales. Lehman Brothers did $50B of Repo 105 fraud. Lehman Brothers raised approximately $50B in capital while lying about their earnings.

If there's no Sarbanes-Oxley prosecution for Lehman Brothers, then State thugs might as well repeal the law. Sarbanes-Oxley compliance costs are $3M+ per year, for both small and large public corporations. Sarbanes-Oxley is a huge regressive tax on small public corporations.

Lehman Brothers' CEO Dick Fuld was not prosecuted for accounting fraud. Sholom Rubashkin was convicted for accounting fraud, which wasn't the original reason State thugs raided his business and seized his records. There are two justice systems in this country. There's one for insiders and one for non-insiders. It is hypocritical for State thugs to prosecute non-insiders but not insiders.

A pro-State troll says "Enron's fraud is completely different from Lehman Brothers' fraud." Enron used off balance sheet partnerships to hide losses. Lehman Brothers used the "Repo 105" trick to hide losses. There's no similarity at all.

Sarbanes-Oxley compliance costs $3M+ per year. The compliance cost is nearly the same for small corporations and for large corporations. If a corporation has $5B+ in revenue, then $3M is negligible. If a small public corporation has $100M in revenue, then $3M is a huge cost.

The CEO of a large corporation likes Sarbanes-Oxley. It's a tax on smaller competitors. Many small corporations have been "taken private" to avoid the Sarbanes-Oxley compliance cost. Some small corporations were bought out by larger corporations, due to Sarbanes-Oxley.

Sarbanes-Oxley particularly hurts the software startup market. Before Sarbanes-Oxley, a startup could "go public" with a valuation of $1B. This enables the VCs and founders to cash out their investment. Now, small startups must sell to a larger corporation or stay private.

Knowing that small startups can't go public, large corporations offer lower buyout prices. Sarbanes-Oxley had a huge chilling effect on software startups. Now, a startup needs to be almost as successful as Google to be a public corporation. Facebook is not a public corporation, partially due to Sarbanes-Oxley.

Sarbanes-Oxley is a failed reform law. The "financial reform" law is no different. The State explicitly encourages and rewards fraud by insiders. There are many ways that the State encourages accounting fraud.

  • Negative real interest rates encourage executives to load up on as much debt as they can. Then a bankruptcy or bailout occurs during the next recession.
  • Limited liability incorporation provides a free put option for executives to declare bankruptcy and cheat creditors.
  • "Too big to fail" means that there's no risk when lending money to a "too big to fail" organization.
  • There's the Principal-Agent problem. A CEO is gambling with other people's money. Therefore, he takes unreasonable risks to maximize short-term profits.
  • Government regulations and government violence shield insiders from competition. With a fake free market, there's no penalty for inefficiency and waste and fraud.
Sarbanes-Oxley and the financial "reform" law are evil fnords. These laws provide the illusion of accountability, while insiders may continue to loot and pillage. The biggest State evils are the Federal Reserve and income tax. They are politically untouchable. Too many insiders profit from the corrupt way things are now. They will never allow real reform. Instead, fake reform is sold to the public as real reform.

If there isn't a Sarbanes-Oxley conviction for Lehman Brothers, then that law may as well be repealed. That law is a huge tax hike, due to excessive compliance costs. Small corporations and startups are hurt the most by Sarbanes-Oxley. That's exactly the way insiders like it.

Thursday, July 29, 2010

1099 Reporting and Healthcare Reform

There was a particularly evil clause buried in the healthcare "reform" law. All businesses are required to issue a 1099 form for *EVERY* transaction of $600 or more. It's $600 aggregate per year, so two $301 transactions are still reportable.

I didn't see anyone publicly mention the new 1099 requirement, until after the law was passed. That's the "benefit" of 2000+ page laws written in incomprehensible legal jargon.

You might wonder "WTF? What does 1099 reporting have to do with healthcare reform?" Politicians say "This law won't cost the government/taxpayers money! We aren't raising taxes!" The 1099 requirement isn't a tax hike. It's stricter enforcement of a law that already exists.

(There was a tax hike in the healthcare "reform" law, the "tanning salon tax".)

The President said "The individual mandate to buy health insurance is not a tax hike." Actually, the "individual mandate" was implemented via an income tax hike. If you own health insurance, then you get a tax credit equal to the tax hike.

Previously, you got an income tax credit for mortgages and other things. Now, you get an income tax credit for owning health insurance. The "penalty for being uninsured" is low, but that will probably be increased later. If you're an agorist and have an agorist doctor, paying the penalty is probably cheaper than enrolling in a State-licensed plan.

Politicians claim "This law won't increase the deficit!" They count $20B+ of new taxes collected, due to stricter 1099 reporting.

Politicians like to bundle bad laws with otherwise popular laws. Every Democratic politician is "for healthcare reform", so he won't object to the 1099 reporting requirement. Who would vote against "healthcare reform" just to object to the 1099 reporting requirement. Besides, most Congressmen don't even bother reading the law before voting.

Congress and the IRS have a bunch of "revenue enhancers" they want to pass. They stick these tax hikes in unrelated laws. This allows politicians to claim "This law won't cost money!" By adding "revenue enhancers" to a law, politicians can claim no net deficit increase. State parasites always favor tax hikes.

The 1099 reporting requirement is a huge tax hike for small businesses. Some claim they will need 1-2 more accountants, just to comply with the law. The tax doesn't hurt large corporations, who usually deal in large amounts anyway. For example, my headhunter/pimp is on my employer's "preferred vendor list" and already gets a large quarterly check and 1099.

There's an interesting corollary to this law. Now, gold/silver dealers are required to report almost all transactions. Previously, only transactions over $10k/year were reportable. This law enables State thugs to track everyone who buys/sells gold/silver.

This law particularly hurts dealers who buy gold/silver. If the transaction is more than $600, they're required to get your SSN and issue a 1099 form. If you try to sell gold to a State licensed dealer, you'll get a 1099 form and have to pay income tax on the gain.

Some people say that the 1099 requirement will drive more businesses off-the-books. For this reason, "agoristbay" and a gold/silver barter network seems like a good idea. (The point of agoristbay is not "Lolz! Let's do something illegal!" The point is to set up a useful business. I would buy gold/silver, if only there were a liquid cash market. I would work as an agorist, if only there were a place to buy/sell things. I'm trying to create a business that I would use as a customer.)

There's another subtle evil of the law. The "$600" amount is not indexed for inflation. After inflation, $600 will be worth $300 or less in a few years.

I'm somewhat confused about the 1099 requirement. Does it apply to literally *EVERYTHING*. If I pay my dentist $700, does that mean we are required to exchange 1099 forms? If I pay a car mechanic $700, does that require a 1099 form? It seems that the law applies to every transaction.

All taxation is theft. The income tax means that State thugs are a party to every economic transaction. People have to get permission from State bureaucrats whenever they work.

The 1099 requirement is a huge tax hike. It hurts small businesses more than large corporations, due to a regressive compliance cost tax. It's a huge restriction of freedom. Everyone is required to work for the State as an unpaid tax collector. Government is one huge extortion racket.

The abusive 1099 requirement might be a good thing. A lot of people will just ignore it. Some businesses may be forced off the books, just to survive. I'm interested in experimenting with "agoristbay" and a gold/silver barter network. This law makes "agoristbay" more valuable (and more risky).

Working as an agorist is risky. Being a complacent slave as the system collapses is also risky. There's no 100% safe survival strategy. I'm noticing a lot more awareness for "Taxation is theft! Who needs a government?" On many forums, "Taxation is theft!" is now the majority opinion. That's a huge improvement, compared to just a few years ago.

The 1099 reporting requirement is an evil clause buried in the fine print of an evil law. State thugs say "We support small businesses!", while enacting as many laws and regulations as possible to cripple them. Operating a small business isn't explicitly legal. There's a huge State regulatory compliance cost. As a small business owner, the taxes you pay subsidize your larger corporate competitors.

Wednesday, July 28, 2010

Blagojevich's Lawyer Censored

This story was interesting. The judge in the Blagojevich corruption trial made a bizarre ruling. During his closing arguments, Blagojevich's defense attorney is barred from referring to witnesses the prosecution refused to call. Blagojevich claims those witnesses would have been favorable for him. That's the reason the prosecution declined to call them. Even more bizarrely, the prosecution already mentioned those witnesses.

Blagojevich was given unfair bail terms. As condition for his bail, he was barred from publicly explaining his side of the story. The mainstream media had already pronounced him guilty. The prosecutor got to publish his evidence, but Blagojevich was censored. That was unfair, even before his trial started. This is standard practice in State criminal trials, but it's still unfair. Of course, it's better to agree to the restrictions than spend 12+ months in jail awaiting trial. That doesn't make it right.

The official reason is "The judge doesn't want Blagojevich tampering with the jury pool." The prosecutor already tampered with the jury pool. The mainstream media already proclaimed Blagojevich guilty. Wouldn't it be fairer to allow both sides the freedom to publicly say whatever they want?

I already mentioned this point in "Censorship of Justice". It is immoral for the judge to bar the defense from making argument X or showing evidence X. If X is obviously frivolous, there's no reason for the judge to block discussion of X.

The judge will only block X when it might induce the jury to vote "not guilty". It is a huge perversion of justice, when the judge bars the defendant from mentioning something that would induce a juror to vote "not guilty".

If the judge is eager to censor something, that's a clear indication that it's important. If X is obviously stupid, then why should the judge care?

This is an important point. "If someone has an emotionally hostile reaction to X, then that is evidence that X is important." The judge seems to be arguing emotionally rather than logically. What harm is there, if the defense attorney mentions X? Is the legal system so fragile, that it falls apart if criminal defendants are allowed to say whatever they want?

This suggests a politically-motivated trial. Otherwise, why would the judge be so eager to censor the defense attorney? In many ways, the judge is the prosecutor.

Many judges are former prosecutors. Most/all judges have worked for the State their entire life. Most/all judges have never done an honest day's work in their entire life. They are sympathetic to the State and the prosecutor. Most judges have *NO* experience defending an individual against State aggression.

The judge works for the State. The prosecutor works for the State. They're on the same team.

This blog had an interesting point.

The government spoke about missing witnesses, yet the defense is precluded? Why would that be, Judge?


The yeoman's reaction to a ruling like this is to protest, make a record, and move on. But Sam Adams is no mere yeoman. He knows that there will be no better chance to beat the case than here and now, before the jury. On appeal, everything flips over and all presumptions are against him. On appeal, the sensibilities of judge rule, while the understanding of real people are lost. No, one doesn't give away a critical part of the defense lightly.
The "legally correct" thing for the defense attorney to do is note that the judge made a mistake, and then appeal. However, Blagojevich's attorney may have balls. After all, Blagojevich is an ex-insider. He has better legal representation than most slaves. His lawyer may ignore the judge's order.

That would be a great spectacle. The defense attorney is hauled out of court by State thugs during closing arguments, for something seemingly unimportant. That would make the jury think that the judge is biased against Blagojevich. Every criminal defendant should have a lawyer willing to say "**** you! I'm mentioning this anyway! I don't care if you jail me for contempt of court or revoke my law license!" A lawyer who is not willing to do this, is really working for the prosecutor.

For this reason, I advise sui juris representation. Most lawyers wouldn't have the balls to ignore the judge's order. If you do it sui juris, and the judge jails you for "contempt of court", then you were going to jail anyway when the jury gives an unfair verdict. If the judge censors a lawyer, and the lawyer deferentially says "Yes, sir!", then the jury presumes it's OK. If the judge censors a pro se defendant, then that creates a lot of sympathy with the jury.

Blagojevich is a lawyer. Why doesn't he present his own closing arguments? The "official" legal advice is that is a stupid idea. However, in a politically motivated trial, you need sympathy and a direct connection with the jury.

That blogger pointed out "It's pointless to wait for appeal. The trial judge is a pro-State troll. The appeals judge is an even worse pro-State troll. It's better to try and win the trial now via the jury, rather than wait for a biased appeals judge." Besides, the defendant is sitting in jail while the appeal takes years.

I would really respect that lawyer, if he ignored the judge's order and got a "contempt of court" arrest. Given the circumstances, the lawyer probably wouldn't lose his law license, but you never know. The State legal system is unfair and the State lawyer licensing cartel is unfair.

This comment was interesting:
Jdog, I wasn't able to look at your website long enough to figure out whether you're a lawyer, so if you don't know: "harmless error" is the doctrine that says, basically, "even if the judge ruled incorrectly or your rights were violated, you have no remedy if the appeals court thinks you're guilty."
If the appeals judge thinks you're guilty, and the judge made an error, that isn't grounds for overturning the verdict. It's irrelevant if the *ACTUAL* jury would have voted "not guilty" (or been hung), if the defendant were allowed to present his evidence or argument. The mere fact that the judge made an error doesn't justify an appeal. It has to be an error *THAT WOULD AFFECT THE OUTCOME*, which is irrelevant if the appeals judge thinks the defendant is guilty.

A trial judge is a pro-State troll. The appeals judge is an even worse pro-State troll. If you're the victim of State aggression, it's silly to hold your hopes out for a win on appeal. The appeals courts are there to provide the illusion of fairness, rather than provide genuine justice.

If a judge gives an illegal order, you aren't required to obey it. If the judge says "You aren't allowed to mention X in your own defense!", then you should ignore him and do it anyway. Why is a judge allowed to kidnap and torture someone, just because they say something the judge doesn't like?

The reality of the legal system is that a judge can jail someone indefinitely for "contempt of court". That doesn't make it right. Someone pointed out that statutory crimes are really enforced via "contempt of court" orders. Suppose I operate a gold/silver barter network. State thugs prosecute me. The judge orders me to stop operating my business, before I'm even convicted. If it's a misdemeanor, I don't even get a jury trial. If I violate his order, now I'm guilty of "contempt of court" and don't even get a trial. That's a clever legal loophole. I'd be jailed for "contempt of court" and not for the original invalid law.

The State legal system is completely corrupt. It is biased against most criminal defendants. Blagojevich is an ex-insider, so he gets a better lawyer than most. At this point, it would be an embarrassment for the State, if Blagojevich is acquitted. It's a politically-motivated prosecution. The mainstream media loudly pronounced Blagojevich's guilt. Blagojevich says (correctly) "Hey! Every politician does this!" He must be convicted to prove that he's the only corrupt politician! All corrupt politicians get convicted. Therefore, everyone else is honest.

The Blagojevich trial is amusing. Like all politicians, Blagojevich is a State parasite who probably never did an honest day's work in his entire life. Blagojevich's defense essentially is "Everyone does it!" He is right, but that's not a valid excuse for corruption. The State legal system is so corrupt, that Blagojevich seems like the hero in this story.

Tuesday, July 27, 2010

39 Lawyers

I was offended by pro-State trolling on the 4th of July. They were celebrating "The anniversary of the birth of our country and the Constitution."

The 4th of July has nothing to do with the Constitution. The 4th of July celebrates a group of people deciding "This government isn't working for us. It's time to try something else."

If you carefully read the Declaration of Independence, most of the abuses cited occur in the present. You aren't forced to quarter troops in your home. Via high taxes and high military spending, the effect is almost the same.

The Constitution was a counter-revolutionary document. It created a new strong central government, after the people fought for freedom from another strong government. Many farmers were paying just as much in taxes or more, compared to before the Revolutionary War.

Instead of paying taxes/tribute to the King and Parliament, taxes/tribute were paid to State parasites in the new Federal government. The Federal government was a copy of the British mercantilist system, cloaked under the illusion of legitimacy via a representative democracy/republic.

The US Constitution was written in secret. That's not due to noble goals. People would have revolted if they realized their freedom was being stolen. Some people walked out of the meeting, once they saw what was happening.

Another interesting point is comparing "People who signed the Declaration of Independence" and "People who signed the Constitution". Very few people signed both documents.

The people who wrote the Constitution were a bunch of lawyers. They weren't just any lawyers. They represented insiders for the state governments.

There was no provision for direct popular ratification of the Constitution. It was ratified by state legislatures, which were themselves composed of insiders. In many states, there were many re-votes required to secure ratification. In some states, the Constitution passed by a thin margin.

Some representatives probably were promised favors in exchange for changing their vote. In Rhode Island, the threat of embargo and invasion were required, to secure ratification. Once ratified, there was no provision to un-ratify the Constitution, as the Southern states discovered during the Civil War.

Why should the actions of 39 lawyers 200 years ago enable State parasites to steal from me? The Constitution is not a valid contract.

Suppose the Constitution were put to a direct popular vote today. Suppose that 51% or 75% or 99.99% voted "Yes, I support the Constitution exactly as written." What right to the people who vote "yes" have to steal via taxes from those who vote "no"?

Besides, State parasites would never allow or encourage such a vote. It might break their illusion of legitimacy. People who work for the government, directly or indirectly, would probably vote to preserve the way things are now.

More than 50% of the people work for the government, directly or indirectly. That makes it impossible to achieve real reform by voting.

Thomas Jefferson believed that the Constitution needed to be re-ratified every 20 years, or it would lose its legitimacy. This attitude is reflected in some early laws. The first US central bank was given only a 20 year charter.

It is silly to believe that a document written more than 200 years ago can protect individual freedom. Politicians openly express contempt, when someone suggests that a proposed law is Unconstitutional. State parasites have a monopoly for interpreting and enforcing the Constitution and laws. That leads to the obvious corruption.

It's offensive to see the Constitution celebrated on the 4th of July. Compared to the Declaration of Independence, the Constitution was a counter-revolutionary document. Pro-State trolls don't emphasize "The Constitution was written by 39 politically-connected lawyers."

Monday, July 26, 2010

Shirley Sherrod

This story is interesting. Shirley Sherrod was employed as Georgia State Director of Rural Development for the United States Department of Agriculture. She gave a speech at a recent NAACP meeting.

Many people are angry that the NAACP accused the Tea Party movement as being "racist". Andrew Breitbart posted an edited version of Shirley Sherrod's speech at the NAACP meeting. That made her seem very racist. Andrew Breitbart said it did it to highlight racism in the NAACP.

Having seen this clip, some White House executives pressured Shirley Sherrod to resign. They were really eager to get her resignation. She was in her car, and they asked her to stop driving and send a formal resignation letter on her BlackBerry. Like a good slave, Shirley Sherrod complied with her masters' demand.

The forced resignation seems silly. Why didn't Shirley Sherrod say "Go ahead and fire me!"? Why is it important for her to resign, rather than being fired? Disgraced State insiders usually resign, rather than getting fired. The ex-insider resigns to emphasize the legitimacy of the State and her bosses.

Then, the whole clip of her NAACP speech was viewed. The entire speech seemed less racist. She seemed to be saying "This was a racist thing I did a long time ago. I'm not that bad now." (However, I didn't watch either the edited version or the whole thing.)

Even if Shirley Sherrod said something inappropriate at the NAACP meeting, that isn't a valid reason to fire her. This is an important State principle. "If you say something wrong, then you're disgraced and your career is over." State insiders must be continually on guard, lest they say something wrong and their career is over. Most State parasites have no useful skills. After getting fired from their cushy State job, they will have a hard time earning a comparable living. This enables State insiders to keep the lower-ranking parasites in line.

I liked this quote:

the murder of black people occurred periodically and in every case, the white men who murdered them were never punished
You can make a current version of this quote:
the murder of non-policemen occurred periodically and in every case, the policemen who murdered them were never punished
Some State insiders are angry at Fox News. Allegedly, they hyped the edited video and caused the resignation demand. Fox News claims they only heavily promoted the interview after her forced resignation.

Some State insiders are angry at Andrew Breitbart, for posting that video clip on his blog. The real problem is that State insiders overreacted and fired her.

Some State insiders are demanding that Fox lose its broadcast permit. Some State insiders are demanding that Fox News lose its press credentials. State insiders are taking a "State vs. Fox News" attitude. In turn, this leads to Fox News expressing more anti-State sentiment! Ironically, Fox News is now the most freedom-oriented mainstream news channel.

This is somewhat hypocritical. "The White House will fire someone, based on what a blogger writes or based on what Fox News says." That makes no sense at all.

Shirley Sherrod may file a libel lawsuit against Fox News or Andrew Breitbart. That would another example of State legal extortion. "Libel laws" are usually interpreted as "censorship laws".

Obama tries to look like the hero. He meets with Shirley Sherrod and apologizes. He has plausible deniability, because one of his subordinated demanded her resignation.

The entire "Shirley Sherrod incident" is an example of insane State bureaucrats. It is wrong to fire someone, just because they said something stupid. State insiders overreacted and demanded she resign, and then retracted the demand. Overall, this incident is an embarrassment for State insiders. I already know that the State is one big scam, but incidents like this help explain things to other people.

Sunday, July 25, 2010

Fake Anarchists Riot At G-20 Meeting

I'm offended by the pro-State "anarchists" who riot at the G-20 meeting. This occurs at every WTO, IMF, G-20 meeting. That feeds State propaganda "Anarchists like to senselessly destroy property. Hooray for the State!"

The correct attitude towards the G-20 meeting is "Why should I care what those statists do? Their authority is not legitimate." Going to the G-20 meeting to riot implicitly acknowledges the legitimacy of the meeting.

Most of those "anarchists" are misguided protesters. Some of them may be undercover cops, looking to incite violence to discredit "anarchists". Some of them are criminals who like smashing windows.

I noticed the video of anarchists smashing store windows. My reaction was "Why aren't the State police doing their job? They should be protecting that property!" The store owner should have been in front of the store with a shotgun, protecting his property.

If your goal is to raise awareness of State evil, going to the G-20 meeting is a waste of time. You can hand out pamphlets on any street corner. Or, you could take the less-confrontational approach of blogging. (I plan to expand to other things eventually.)

A famous statist said "Let them riot and protest all they want, as long as they pay their taxes." The only action that hurts the bad guys is ignoring their stupid laws and taxes. A riot is pointless. Why would you intentionally seek a direct violent confrontation with armed professional soldiers?

The pro-State "anarchists" who riot at the G-20 meeting are actually serving the agenda of State parasites. The riots are covered as "news", to create the illusion that rioting is the only option for a disgruntled person. The "anarchists" at the G-20 meeting tend to be the "Property is theft!" fake anarchists.

Saturday, July 24, 2010

Close That Bug!

In "Rewriting History", some commenters said they also had problems with lying parasitic coworkers/bosses. The USA has a non-free market, which is a type of welfare for parasites.

Here's an amusing add-on to the story. I made a bug report complaining "The test data is dirty. Therefore, the output is wrong." The developer was eager to close the bug, rather than make sure there is good test data.

There's some bureaucratic requirement. The developers are evaluated based on open bugs and time to fix. Therefore, they're eager to close the bug rather than fix my concern. This parasitic behavior is a symptom of a broken bureaucratic process.

This problem is also visible when you call tech support. The call center is usually evaluated on "time per call" rather than "Did you actually solve the caller's problem?" This practice encourages lousy tech support. The corporation has a monopoly/oligopoly, so it doesn't matter.

That was amusing. They developer was more eager to close the bug report, than actually fix the dirty test data. That's a symptom of a broken bureaucracy.

Friday, July 23, 2010

NYSE Specialists Became DMMs

On the NYSE, "specialists" are now "Designated Market Makers" (DMMs). I spoke with a specialist when DMM was just a proposal. He said "The DMM system is great! The specialists will make easy profits without any risk!"

The DMM gets equal priority with the order book, when filling orders. Suppose an order comes in to sell 1000 shares, and the quote is at least 1000 shares. Then, the specialist buys 500 shares and the order book buys 500 shares. Under the old system, the order book had priority, but the specialist got a "free peek" at incoming orders. Also under the DMM system, the DMM can add liquidity for an order exceeding the quote. However, it's according to a pre-programmed schedule and not a "free peek". That's still a useful perk, because the DMM is trading at a price better than the quote, ahead of other orders on the book.

The DMM gets 50% of all incoming order flow, as long as he joins the quote. How is this a guaranteed riskless profit for the DMM? As usual, I'll illustrate with an example.

Consider a high-volume, low-volatility stock. Most Dow or S&P 500 stocks fall in this category. Suppose the quote is $10.00 bid and $10.01 offer, for a large quantity of shares. The DMM posts a quote, joining the large public offer. The DMM get 50% of all order flow, no matter what.

The DMM gets to buy at $10.00 and sell at $10.01, no matter how many shares are already on the book. The specialist makes a riskless profit of $0.005 per share he buys or sells.

Where does this profit come from? It comes at the expense of the other orders on the book. Suppose the DMM sees that the price may drop; then, the DMM moves his bid from $10.00 to $9.99. The other orders then get filled at an inferior price. When the stock moves up, other orders at $10.00 missed an opportunity to get filled, because the DMM traded ahead of them. The DMM profits come at the expense of other market participants.

The penny quoting rule facilitates this theft. The penny quoting rule says that public quotes must be a multiple of $0.01. In effect, this rule guarantees the specialist a minimum profit of $0.005 per share. If the NYSE quote is $10.00-$10.01, an ECN can't come in with a quote of $10.004-$10.007. (To be fair, the ECN "take liquidity fee", typically $0.003, should be included in the quote.) The penny quoting rule is a way that the NYSE and DMM are protected from competition from ECNs. It imposes a minimum spread of $0.01.

The NYSE switched from "specialists" to "DMMs". The new NYSE rules facilitate DMM theft. The profits of DMMs are pure economic rent. SEC regulation and the penny quoting rule, protects the NYSE from competition. Inflation forces people to invest, lest their savings be stolen via inflation. State regulations and taxes make it hard to invest in physical gold and silver. The slaves are forced into the stock market, a negative sum game.

Even though the DMM himself is not violent, the DMM profits from State violence. The NYSE executives, like all corporate executives, spend a lot of money lobbying Congress and the SEC for favors.

Government Motors Buys AmeriCredit With Bailout Money

This story was really offensive. GM bought out AmeriCredit for $3.5B cash.

GM will pay $3.5 billion in cash for AmeriCredit Inc., a Fort Worth-based company with 800,000 customers and a $9 billion portfolio of subprime auto loans. GM's purchase will be made out of its $30 billion cash stockpile, one that is funded in part by the government.
WTF? GM received billions of dollars in Federal bailout money. It's using that money to finance leveraged buyouts? How can anyone read this story and not say "Shenanigans!"

Isn't GM's $30B cash stockpile *ENTIRELY* Federal bailout money?

What are GM's executives thinking? The bailout money was supposed to be used to make better cars. It wasn't supposed to finance leveraged buyouts! I can almost hear a GM executive thinking "I know how we'll improve our profitability! We'll buy out smaller profitable companies!"

This is really embarrassing. GM's executives are spending bailout money on leveraged buyouts, without realizing that's a crime. They're probably congratulating each other for their brilliant business skills!

This is very offensive. GM isn't using bailout money to improve their auto manufacturing business. GM is using bailout money to finance leveraged buyouts.

Thursday, July 22, 2010

Censorship of Justice

There's a common practice in State criminal trials. It's a huge perversion of justice. It isn't commonly criticized. It's one of the main reasons State prosecutors can easily convict an otherwise-innocent person. I'm surprised more people don't object.

In a criminal trial, there frequently are restrictions on what evidence the defense may introduce. There are restrictions on what arguments the defendant or his attorney may make. For example, defense attorneys are usually barred from making a "jury nullification" argument.

This contradicts two other important principles of the legal system, "You need reasonable doubt in order to convict." and "It's better to acquit a guilty person than to send an innocent person to jail." If evidence or an argument would give a juror "reasonable doubt", then it's a perversion of justice to prevent someone from making that argument.

A "medical marijuana" store is legal according to California law, but illegal according to Federal law. Any "medical marijuana" store owner is subject to arrest and prosecution for violating Federal drug laws. During the ensuing trial, the defendant is barred from mentioning "It was a medical marijuana store, legal according to California law." After the trial, some jurors say "I would have acquitted, if I knew it was a 'medical marijuana' store." Censoring the defendant allows the judge to convict an otherwise-innocent person.

During pre-trial arguments, the judge says "The defense attorney is barred from mentioning 'medical marijuana' during the trial." The defense lawyer agrees. He's a shill for the State, selling out his client. Any decent lawyer would say "Bull****! That's an obvious perversion of justice!" Suppose the defense lawyer disobeys the judge's order. Then, the judge will jail the lawyer for "contempt of court". The lawyer will lose his law license and his career. After investing $200k+ on law school plus time invested in his career, what lawyer would throw that away?

Why should the lawyer forfeit his career? He gets paid hourly. He gets paid the same whether his client is convicted or acquitted. In this manner, the State licensing cartel for lawyers enables judges to censor defense lawyers. Any lawyer who disobeys loses his law license.

The legal system is like a criminal gang protecting its turf. Even if an honest person got a law license, he'd lose it if he attempted to defend someone honestly. Most intelligent people don't even bother seeking a career in law. They intuitively sense it's a parasite-dominated career.

As another example, someone who was previously robbed is barred from mentioning that, if they're later accused of owning a gun without a permit.

If you want to present a judge-banned argument or judge-banned evidence, you have to do it sui juris. The judge might cut you off, but that would create the perception in the jury that the judge is biased against you. The judge could jail you for "contempt of court", but you're going to jail anyway if there's an unjust conviction. If the trial has already started, the judge can't bar you from attending and speaking at your own trial. If the judge declares a mistrial, then the State just wasted a lot of money.

If you're accused of a statutory non-crime, sui jusis might be the best option. I haven't tried it yet. I'm prepared, if necessary. The fact that I'd be a tough defendant, makes it less likely that State thugs will assault me.

Nelson Mandela represented himself, when he was a political prisoner. Serial killers also choose to represent themselves. They usually have a history of abuse by the State. They know their "public defender" is just a shill for the government, designed to provide the illusion of justice.

I'm surprised this point isn't mentioned more often. In a criminal trial, why should there be any restrictions on what evidence the defendant is allowed to introduce or what arguments he may make? If "reasonable doubt" and "don't convict the innocent" are important, then why should the defendant ever be barred from saying something that might persuade a juror to acquit? Unfortunately, due to the State licensing cartel for lawyers, if you want to present banned evidence or arguments, you have to do it sui juris. Even then, a biased judge may jail you for "contempt of court".

Wednesday, July 21, 2010

NYC Hotel Economic Terrorism

This story is interesting. NY State politicians are considering a law banning sublets shorter than 30 days. This is obvious corporate welfare.

Who benefits from such a law? Executives at large hotels benefit from the law. A hotel room costs $200+ per night. Individuals can rent spare rooms for much less, undercutting hotels on price.

The Internet allows individuals to directly buy and sell. This bypasses corporate cartels. State thugs are declaring this practice illegal. This law targets websites like Craigslist and AirBnB.

However, that article underestimated the evil of this law. How will this law be enforced? Undercover police will troll the Internet, pretend to be customers, and then arrest the room renter. What sort of scumbag takes a job like that?

The hotel cartel externalizes its costs via the State. If the hotel cartel had to maintain their own private army, it wouldn't be profitable. Via higher taxes, I pay the salary of the police who enforce this bad law.

Asset forfeiture laws make this particularly evil. If you rent a spare room, State police may seize your home/condo/coop. Asset forfeiture doesn't have due process. Once police seize your property, the burden of proof is on you to recover it. You are not reimbursed for legal expenses, even if you win. State thugs might even profit from enforcing this law, when they seize the property of victims.

The asset forfeiture law takes advantage of a weird legal loophole. Instead of "State vs. FSK", it's "State vs. FSK's house". My house is charged with a crime and not me. Therefore, I'm not entitled to due process when my house is stolen. Literally, the property is accused of a crime and not the individual. You might say "Isn't that Unconstitutional?" Unfortunately, State judges are pro-State trolls.

A pro-State troll says "This law is good! The subletters are ignoring hotel safety laws!" These regulations are designed to impose extra costs, rather than being true best practices.

A pro-State troll says "These subletters aren't paying taxes on the rental income." All taxation is theft. In a bad economy, people should get creative about ways to earn extra income.

A pro-State troll says "How can the renter and rentee trust each other?" The website AirBnB offers an eBay-like reputation feature. If you go to a State-licensed hotel and get lousy service, you are usually SOL.

Some people attempt to sell taxi/transportation services on the Internet, without a State license. Undercover cops pretend to be customers. Then, via asset forfeiture, State economic terrorists seize your car. This hotel law may lead to police seizing people's homes.

NYC's rent control is a bad law. If you rent such an apartment, you may be able to sublet a room for more than the rent! However, landlords are eager to discover such arrangements, so they can use it as an excuse to evict people and charge market rents.

George Donnelly and others say "Agorists should just use eBay and Craigslist!" The fallacy is that undercover cops will pretend to be customers. Any successful agorist will attract the attention of the State cartel he competes with. An "agoristbay" is needed, to facilitate counter-economics.

This proposed short sublet ban is an excellent example of State economic aggression. The hotel cartel lobbied the State to violently shut down competition. I'd like to develop an "agoristbay" to facilitate counter-economics.

Tuesday, July 20, 2010

The Execution of Oscar Grant

There was a fight on the Oakland subway. The police arrived and arrested some people, including Oscar Grant. He resisted. While Oscar Grant was partially restrained (but still resisting), the policeman shot and killed him.

Oscar Grant had a history of abuse by the State. He had a criminal history, but it was for statutory non-crime. His criminal record was "possession of drugs" and "possession of a gun".

I was surprised that Radley Balko, who's usually pro-freedom, was defending the policeman.

The jury got it right. ... But there simply isn't any evidence that Mehserle is a murderer.
This is wrong. Resisting arrest might be stupid, but it isn't a capital crime. A policeman is a professional. If you murder someone on purpose, or due to your own incompetence, that makes no difference. After shooting someone, the policeman can always claim "But it was an accident!", and that makes it OK? It makes no difference if you murder someone on purpose, or due to your own incompetence.

Why should the policeman be arresting people, just because of a fight on the subway? If the one person involved in the fight asks for assistance, that's OK. Otherwise, the police should break up the fight but do nothing else.

One problem is that there's no inbetween solution. Either the policeman goes to jail or not. The correct answer, according to natural law, is "The policeman should be required to pay some of his salary, for the rest of his life, as compensation to the victim's heirs, until the claim is paid."

Oscar Grant had a history of being abused by policemen. That's probably the reason he resisted. "Resisting arrest" is another fake crime. "Resisting arrest" is not a capital offense. The policeman was effectively judge, jury, and executioner.

As a tactical matter, you probably should surrender peacefully if State thugs assault you. You're outnumbered and outgunned. It's bad tactics to escalate such a confrontation. However, I understand why some people resist, especially people who were previously abused by State thugs.

The officer who executed Oscar Grant was convicted of involuntary manslaughter. That's the least possible offense other than outright acquittal. That provides some illusion of justice. It'll only be a few years in jail. That's still a slap on the wrist. The judge may impose a lighter sentence than what the sentencing guidelines suggest.

The prosecutor only pursued the case after much public outrage. There was a huge political incentive for a sham trial. Therefore, the prosecutor didn't try very hard. The judge let the defense make whatever arguments they wanted.

For example, there were no black people on the jury. The defense obviously wanted to exclude them from the jury. The prosecutor didn't try to hard to make sure they were on the jury. This is a defect of jury trials. Jurors frequently make race-based verdicts.

In a criminal trial, it's State vs. criminal and not victim vs. criminal. This is a problem when State bureaucrats want an acquittal or light sentence.

For example, the judge allowed the defense "It was an accident! I didn't do it on purpose!" The judge could have said "WTF? Who do you think you're fooling?" Suppose the situation were reversed, and a non-policemen mistakenly kills a policeman.

That has actually occurred. In a no-knock raid, sometimes the raidee confuses the policeman for a criminal, and shoots the policeman. In that case, the raidee is usually barred from saying "It was an accident! I was recently robbed and thought it was another burglary!" That evidence is not presented to the jury. When a non-policeman kills a policeman, the political incentive is for a harsh verdict. When a policeman kills a non-policeman, the political incentive is for a slap on the wrist.

Judges and prosecutors are very eager to protect the State police monopoly. They know, even if not consciously, that they are dependent on State thugs for their own power and influence. Without State police backing their orders, government bureaucrats have no power.

This is an important principle of corrupt State law. When a State insider commits a crime, you should judge their intentions and not their actions or the result. This provides an easy out. The policeman says "I didn't do it on purpose!", and that's an acceptable defense.

Legally, a policeman can murder someone, as long as he says "I didn't do it on purpose! I thought he was reaching for a gun!" Why would any policeman ever say "I did it on purpose!"? You should judge what people actually do, and not their intentions. "I had good intentions!" is an excuse for State-sanctioned crime. All of the abuses of the State are carried out by people with good intentions.

Oscar Grant's heirs filed a wrongful death lawsuit. As I mentioned before, suing the government accomplishes nothing. The cost of the verdict/settlement is passed on to everyone else via higher taxes. If they win a $20M claim, that's logically equivalent to "Everyone in Oakland pays $4 more in taxes." The policeman and his fellow gang members don't pay the cost. As terms of his employment contract, the government reimburses the policeman for any lawsuits resulting from on-the-job actions.

According to State law, there is no provision for the victims to directly sue the murderer. The policeman is reimbursed by the State for any losses. He is protected by sovereign immunity.

According to natural law, the policeman should be forced to work, with the proceeds paid to the victim. For example, the policeman might be required to pay 50% of his salary to the victims' heirs, until the loss is paid. A private police force would also be responsible for the claim, but they in turn would collect from the policeman.

In the present, the State police monopoly just passes on the cost via higher taxes. The "wrongful death" claim is one of the many miscellaneous expenses of the highly profitable State extortion racked. This helps provide the illusion of justice.

The occasional lottery payout verdict is one of the necessary costs of the State scam. The huge payout to the victims' heirs is meaningless, because the cost is distributed to every else via taxes. The dishonest policeman's fellow gang members don't pay the cost. State bureaucurats don't pay the cost. The cost is paid via taxes. It's like everyone in Oakland said "Let's each pay $4 to Oscar Grant's heirs! The policeman and his coworkers don't have to pay anything!"

Many poor people in Oakland have a history of abuse by State police. That's the reason they get so upset. However, rioting is pointless. "Let them riot all they want, as long as they pay their taxes." The riots let people vent frustrations, whil accomplishing nothing.

If a free market police force abused their power, they would lose customers. People in Oakland have no choice but to pay the police's salary, via taxes. They can't tell the Oakland police department "You're fired! We're buying police protection from another organization."

For Oscar Grant's execution, the main evil is the State police monopoly.

Some opportunistic criminals and undercover cops probably went to Oakland, just for the chance to riot. There are some people who go to every riot-worthy event, just so they can do violence and steal without being caught. Some of these people claim to be "anarchists", but they really are pro-State trolls and criminals.

The police behave more like an occupying army than the defenders of freedom. If you object, then the only recourse is to stop paying taxes. If people in Oakland are really offended by Oscar Grant's murder, then they should stop paying taxes and form their own competing police force.

The only way to fire corrupt State police is to stop paying taxes. Imagine if, the State police try to arrest someone, and a private police force comes to the victim's aid. That's unthinkable now, but it might be a possibility in the future. Once that happens, the State has lost.

Monday, July 19, 2010

Dan Gilbert Lost His Best Slave!

The owner of the Cleveland Cavaliers made an anti-LeBron rant on his website. (The original webpage has been taken down.) That's an indication that LeBron James made the right decision.

Then, Jesse Jackson criticized Dan Gilbert for his rant. It's offensive that some people attach themselves to certain incidents, claiming racism. The mainstream media covers this as news. In turn, this further promotes racism. Most mainstream media coverage of racism is actually an evil fnord designed to promote racism.

Jesse Jackson and Al Sharpton interject themselves in every racially-sensitive incident. It's a cheap way for them to get publicity. The mainstream media promotes Jesse Jackson and Al Sharpton because their speech fits in with the State's pro-racism agenda. Racism is a great tool for dividing and conquering the slaves.

Dan Gilbert really is expressing a slave owner mentality. LeBron James was in Cleveland only due to the draft and CBA. Unlike most workers, professional athletes don't get to chose their employer in their first job. That's due to State restriction of the market.

Due to State restriction of the market, LeBron James is forced to work as an employee rather than owner. Dan Gilbert says "Hahaha!! I own an NBA team and LeBron James doesn't!" Dan Gilbert receives huge direct and indirect State subsidies.

One interesting bit is that Florida has lower tax rates than Ohio. That's a nice perk, but I don't know if it influenced LeBron James' decision.

The mainstream media spin is that LeBron James was greedy, for switching employers. Is it immoral to cut an underperforming player? Why is it immoral for someone to switch jobs? Dan Gilbert's attitude indicates the hostility State parasites have for people who actually work for a living.

LeBron James earns his salary via his skill, talent, and effort. Dan Gilbert earns his money via State violence. Dan Gilbert made his personal fortune in the financial industry, which is pure economic terrorism.

Summarizing, LeBron James actually earns his money via hard work. Dan Gilbert earned his fortune via State violence. In the financial industry and sports industry, Dan Gilbert receives huge State subsidies. In a very real sense, LeBron James is Dan Gilbert's slave. LeBron James has chosen a new master, but he's still a slave.

Sunday, July 18, 2010

Was Rick Barber A Successful Candidate?

Rick Barber was running for Congress in Alabama. He ran controversial ads that practically called for open rebellion against the IRS. Rick Barber lost his primary runoff election.

The mainstream media says "Hahaha! Rick Barber lost the primary! That proves he's a fruitcake! That proves his ideas are wrong!" My reaction was "40% of the vote! That's pretty impressive!"

Just because a specific person loses an election, doesn't mean his anti-IRS message is wrong. The truth is not determined by a majority vote.

It's practically impossible to reduce the size of government by voting. More than half the people work for the government, directly or indirectly. Writing financial software, I'm effectively an indirect State employee. (My software has no economic value, so I only feel slightly guilty.)

When most of the people are direct or indirect State employees, it's impossible to achieve reform by voting. Such a scam is sustainable because not all workers are equally productive. For example, suppose the top 10% of the workers are 10x more productive than everyone else. In a democracy, they'll never get a fair deal. The majority will vote to steal from them via taxes. However, if those top 10% start working off-the-books and withdraw taxation support for the State, then the entire scam collapses.

10x more productive isn't that farfetched. For software engineering, 10x or even 100x productivity differences occur. Productive workers don't get paid much more, due to the State extortion racket. One problem is that a State parasite cannot tell the difference between a genuinely skilled worker, and a skilled parasite. With a monopoly/oligopoly, this inefficiency doesn't matter. In effect, the parasites collude to cheat skilled workers. Via the State, it's hard for skilled workers to start a parasite-free business.

Efficiency differences are noticeable in other areas. Here's an interesting exercise. Whenever you go into a store, ask yourself "Who's the most skilled worker?"

One commenter pointed out:

Barber on agricultural subsidies: "Because I believe that our food supply is directly connected to national defense, I will fight in Washington for productive farmers' protections against market forces."
That's the problem with representative democracy. Every politician has some desirable viewpoints and some desirable ones. Even if he did get elected, Rick Barber might have been just another statist Congressman.

Ron Paul criticizes the excessive Federal budget, but he still gets earmarks for his district. Rick Barber isn't a full anarchist, but it's a step in the right direction. I'm still very offended by statists and pro-State trolls. However, it's still nice to highlight people who are thinking in the right direction.

I saw an interesting analogy. A representative is *NOT* contractually obligated to keep campaign promises. You can't make a deal with your Congressman saying "I agree to vote for you. In exchange, you agree to never vote for tax increases." If your Congressman breaks a campaign promise, your only recourse is to wait until the next election and vote for a different scumbag. If none of the State-approved candidates promise what you want, you're SOL. The representative is not the direct employee of voters. Via secret ballots, how can your Congressman know if you actually voted for him or not?

It's promising that Rick Barber got 40% of the vote. He was able to express strong anti-IRS sentiment without being thrown in jail. It's a step in the right direction. I'm not holding my breath waiting for honest Congressmen to get elected.

Saturday, July 17, 2010

Why Does Jay Walder Need A Bodyguard?

This story was interesting. Jay Walter is the MTA's CEO. He has two full-time bodyguards.

Outside City Hall, MTA CEO JAY Walder has been spotted with two MTA Police guards. “Chairman Walder adheres to the expert security recommendations of the MTA (police department),” a spokesman said.

Transit advocates say there’s a need for the guards when the MTA makes unpopular service cuts. In 1981, a man stormed MTA headquarters and fired at a door said Gene Russianoff, of the Straphangers Campaign.
Just because someone did something stupid once, Jay Walder gets *TWO* fulltime bodyguards?

Also, Jay Walder takes a State-paid limousine to work. Shouldn't the MTA CEO be required to take the subway?

Why does Jay Walder need a bodyguard? Would you know who he is, if you passed him on the street?

This is offensive, because it's a huge waste.

It's also promising. State bureaucrats must be really scared! If there are two policemen acting as full-time bodyguards for Jay Walder, that's two fewer policemen arresting people for nonviolent statutory crime.

Jay Walder's full-time bodyguards are an example of State waste. If he was paying his own personal money for a bodyguard, that wouldn't be offensive. The cost is passed on to everyone else, via higher taxes or higher fares.

Friday, July 16, 2010

Racist Tea Party?

This story was pretty funny. The NAACP criticized the Tea Party movement for being racist. It was unclear if they were criticizing specific unmentioned people, or everyone.

"It's racist to criticize the President!" is a bizarre evil fnord. Such a statement itself is racist and statist.

I read an interesting anecdote. Before racism was invented, poor while people and poor black people cooperated against State evil. Their resistance was effective! State parasites invented racism, as a means of dividing and conquering the slaves. White slaves got more perks than black slaves, creating resentment by both groups. "Divide and conquer!" is one of the best State control tricks. Group X needs the State for protection from group Y, and group Y needs State protection from group X. The slaves don't realize that the State is actually their common enemy. The abuses attributed to X or Y are really abuses of the State.

The mainstream media portrays the Tea Party movement as a bunch of racist white people, disgruntled because there's a black President. There are some people with that viewpoint.

Anybody can claim to be a "Tea Party Protester/Leader". Nothing prevents a scumbag from presenting himself as a racist Tea Party activist. Undercover cops may be promoting such attitudes. Whenever you have a group of people, State parasites make it a priority to "infiltrate and subvert".

The key ideas of the Tea Party movement are "All taxation is theft! Government is one huge extortion racket! The USA has an unfair monetary system!" These ideas are banned from the mainstream media. Instead, the racism angle and limited government aspects are hyped.

If there are 1000 people at a Tea Party meeting, the one racist guy is singled out for an interview. One stupid person does not automatically discredit everyone else. If the policy is "Anyone who wants to come is welcome!", then you're also going to attract some undesirables.

The most important part of the Tea Party movement is the Internet. Many "Ron Paul 2008" groups are now Tea Party groups. Many are starting to realize "voting is pointless".

Are most of the Tea Party protesters racist? In 2012 or 2016, there will be a new President. I predict that the Tea Party movement will be as big or bigger. More people are realizing that taxation is theft and government is one huge extortion racket.

The most important aspect of the Tea Party movement is the Internet. State comedians blame racists, because they don't want to acknowledge what's really happening.

Thursday, July 15, 2010

Federal Reserve Anti-Blogger Rant

This story was hilarious. Kartik Athreya is employed by the Federal Reserve as a propaganda artist. He wrote an article criticizing bloggers who write about economics.

Summarizing his point, he's saying:

At the Federal Reserve, we spend a lot of time and effort making up lies that fool the American people. These bloggers are ruining all our hard work!
Economics is a subject where a lot of people think they're experts, when they really know less than nothing. "Taxation is theft!" and "Inflation is theft!" pretty much refutes all mainstream economic writing.

I've received a lot of negative comments for The Compound Interest Paradox and my series on the Black-Scholes Formula. A lot of economics "experts" think they know a lot on this subject, when they really know less than nothing. Some pro-State trolls have tried arguing that my analysis is wrong. So far, I have not seen any convincing counter-explanations. (I no longer feel obligated to refute every stupid comment someone makes. That's probably a healthy attitude.)

Kartik Athreya says:
Blogs aren't peer-reviewed. Therefore, blogs have no useful information.
For State science, the "peer review" process becomes a censorship process. No mainstream economics journal would publish my analysis of the Compound Interest Paradox or the Black-Scholes Formula. That does not prove that my analysis is wrong. That proves that mainstream economics journals are shills for the State, rather than conducting true science. (I'm not in the academic career track anymore. I haven't bothered submitting such articles for publication in mainstream economics journals.)

I am convinced of the soundness of my arguments. I don't need "peer review" to tell me if I'm right or wrong. I'm not seeking an academic career. That makes self-publishing on a blog for an audience of 200 people sufficient (for now).

Kartik Athreya says:
Bloggers don't have an economics PhD. Therefore, they don't have anything useful to say.
Much of the financial software I write is more work than a typical PhD. I doubt that most/all of the economists working at the Federal Reserve could handle calculations that I do every day. Most of them could probably not handle simple calculations like "What is the VaR for a portfolio consisting of 100 shares KO and 100 shares MSFT?" or "Calculate an approximation for the Black-Scholes price of this option."

"You need a PhD to have useful thoughts on a subject!" is a State-promoted lie. An economics PhD merely indicates that you've been pro-State brainwashed to think in a certain way. Independent thinkers like me get weeded out of the PhD academic training process. If I tried to write a PhD thesis on the Compound Interest Paradox or Black-Scholes formula, my adviser would probably reject it. He would say "Don't waste time on such foolishness! You have to think about your career! If you write such nonsense, nobody will take you seriously!" If I insisted, the PhD committee might reject my thesis. No journal would publish my paper.

Via blogging, I skip the academic journal censorship process. Ironically, I have more academic freedom than most university professors! However, I'm writing as a hobby rather than as a job.

This also affects other areas. "FSK doesn't have a State psychiatrist license. Therefore, FSK is unqualified to criticize the 'chemical imbalance' theory of mental illness." Once the majority of people in a career are frauds, then the independent thinkers get weeded out. That is the evil of State licensing cartels.

Fortunately, it isn't illegal to write about economics on the Internet, even though you have no economics PhD. Pre-Internet, there was no way for intelligent people to get together and compare notes. Via the Internet, intelligent people are discovering the evils of the State monetary system.

Any new and important idea is the minority when first discovered. The "peer review" process works against academic progress. Galileo went to jail for suggesting that the Earth was not at the center of the universe. Kartik Athreya would love to have the power to jail people who criticize the Federal Reserve. Fortunately, part of the pro-State brainwashing in the USA is "freedom of the press". That worked well when only State insiders owned a printing press! The Internet gives everyone the power to publish their own newspaper via a blog. Only a State parasite would suggest that blogs are evil.

The #1 employer of economists in the USA is the Federal Reserve. That's a severe distortion of the academic market. Most economists get their funding, directly or indirectly, from the State.

If I wrote a blog post insisting "2+2=5", no State insider would feel threatened. The dangerous articles are the ones that mention a suppressed truth. "The Federal Reserve is one huge price-fixing cartel!" is an idea that the banksters don't want to spread.

This is an important point. People are not offended by things that are an obvious lie. People are offended by things that mention a suppressed truth.

Even non-State insiders will frequently defend the Federal Reserve. It's a type of "Stateholm Syndrome", where the slave identifies himself with the master. For all I know, the Federal Reserve may have hired full-time propaganda artists to post pro-State troll comments on various blogs and forums! If I were a Federal Reserve bureaucrat, infiltrating economic discussion forums would be a high priority!

Federal Reserve insiders feel that the Internet threatens their credibility. That is true because the Federal Reserve has no credibility.

State parasites are threatened by the Internet. The Internet threatens their information monopoly. The evils of the Federal Reserve are one of the key components of the State control mechanism.

It's very important to realize that the USA has a corrupt monetary system. Once you understand the corruption of the taxation system and monetary system, you realize that Congress has effectively sold all Americans into tax slavery. Once you understand that there is severe corruption that Congress refuses to fix, becoming an anarchist is the only reasonable conclusion.

Wednesday, July 14, 2010

BP's $20B Shakedown/Bailout

There's been a lot of criticism of the $20B oil spill fund that President Obama extracted from BP. Some people say "The President doesn't have the legal authority to demand an administer such a fund! It circumvents the legal process; BP shouldn't have to pay until a court rules against BP."

My reaction was "$20B! BP got off cheaply!" Negotiating the $20B fund was a brilliant PR move. This creates the impression that the total liability is only $20B. It also creates the impression that BP executives are acting responsibly.

Also, it isn't an immediate $20B payment. Some contributions are deferred a few years. Due to inflation, $20B in five years is worth less than $20B right now. The victims won't receive compensation for years, but the losses are calculated based on current dollars.

This is a defect in the legal system. BP isn't legally required to make a payment until a court finds them responsible. Any trial will take years. Justice delayed is justice denied!

In a free market legal system, BP's assets would have been nearly immediately seized. They would be sold and used to pay for compensatory damages and punitive damages for the victims. There would be no damage caps, making it very likely that BP's assets were insufficient to pay claims. If there were leftovers (unlikely), bondholders and shareholders would get the remainder. There would be no "limited liability incorporation". Some shareholders might be forced to pay extra to pay for the spill! It wouldn't make sense for someone owning only 100 shares of BP to forfeit their life savings. Their liability wouldn't be $0 either!

A slow and cumbersome legal system favors insiders with deep pockets. BP's executives can afford to spend millions in legal fees; that's still cheaper than building safe oil wells! An individual has to pay legal expenses and his mortgage, while waiting years for a payout.

I noticed another quirk of the cleanup. Most cleanup workers are employed directly by BP. They are given restrictive employment contracts. For example, they are barred from wearing masks to protect themselves from oil fumes, because the masks would look bad on cameras and in the news. Why are cleanup workers BP employees, rather than government employees? In other instances, Federal State thugs, at the urging of BP executives, have blocked the cleanup efforts of local governments.

Also, if BP does file for bankruptcy, that $20B was effectively stolen from BP's other creditors. Victims will probably be required to waive their right to file a lawsuit, when they make a claim against the fund.

Does the President have the legal authority to demand a $20B claim settlement fund? The $20B fund was a great PR and legal move by BP's executives. As usual, it's better to spend money on lobbyists than on safe working conditions!

The real problem is that, under the State legal system, any claims will be drawn out for years/decades. It only was necessary for President Obama to "circumvent the legal process" because the legal system is broken.

Tuesday, July 13, 2010

Sholom Rubashkin, Political Prisoner

This story was very offensive. Sholom Rubashkin owned Agriprocessors, which was once the world's largest Kosher meatpacker. His business was confiscated by State thugs. He is now in jail as a political prisoner.

Rubashkin's only real crime is "He was a successful small business owner. He was competing with larger corporate cartels, who successfully lobbied the State to shut down his business."

In the USA, it isn't explicitly illegal to operate a small business. Instead, there are a lot of taxes and regulations designed to crush small businesses. If every small business owner were simultaneously arrested, that would be obviously evil.

Instead, small business owners are kidnapped one at a time, under the guise of "rule of law". The State thugs don't know that they're economic terrorists. They think they're just impartially enforcing the law.

Whenever I hear of a jailed nonviolent offender, I now know they're really political prisoners. "Statutory crime" isn't a real crime, according to natural law. There are many political prisoners you never hear about. I only heard about Sholom Rubashkin because he owned a relatively successful business.

Rubashkin's larger corporate competitors lobbied for his arrest. His workers were not unionized. The meatpackers' union also lobbied for his arrest.

PETA was lobbying to shut down his slaughterhouse. That makes no sense. Kosher meat has much stricter standards than non-Kosher meat. The PETA spokeswoman was bragging about what a great Christian she was. That suggests a religious motivation, for harassing Rubashkin.

In one of the articles I read, a politician tried to shake him down for a bribe and he refused. By refusing to make political campaign contributions, he was vulnerable. His business' margins were thin enough that he couldn't afford to spend much on State bribes.

For a long time, Microsoft's policy was "We don't spend money lobbying." Microsoft's competitors did lobby, leading to the antitrust trial. Microsoft allocated a large lobbying budget, and the antitrust lawsuit went away. State parasites get their tribute.

State thugs conducted a military-style raid of Rubashkin's business. Military-style raids of nonviolent offenders are an example of a police State. They seized all his business records.

With all of Rubashkin's business records, State thugs could now go on a fishing expedition. They already decided that he was guilty. Now, they needed to figure out specific criminal charges. State law is so complicated that, if you do a strict search of someone's business records, you're practically guaranteed to find violations.

State thugs raided Rubashkin's business. He was held in jail without bail. State prosecutors said he might flee to Israel and claim political asylum. They cited Israel's law giving citizenship to any Jewish person. Following that reasoning, any Jewish person accused of a crime should be held without bail.

Rubashkin and his relatives were barred from operating his business while he was in jail. State thugs threatened to invoke asset forfeiture laws against potential buyers of Rubashkin's business. The business was sold for a fraction of the pre-raid fair market value. The business had outstanding loans that could not be repaid, because Rubashkin was barred from operating his business. Rubashkin was left with $0 from his business.

Before Rubashkin was even convicted of a crime, State thugs stole his business. This business had a pre-raid value of $50M+. Who profited? Rubashkin's larger corporate competitors profited by shutting him down. Political insiders bought his business at a huge discount.

That's a common trick that State parasites use. Seize someone's assets and freeze their bank account. Then, they can't even afford a lawyer.

Here's another clever State parasite trick. Pursue multiple trials on separate charges. Only one conviction is needed, to send someone to jail.

In Iowa state court, Rubaskin was accused of violating labor laws. (Rubashkin's business was located in Iowa.) He was accused of hiring "illegal immigrants" and "underage workers". In Federal court, Rubashkin was accused of lying about earnings on a bank loan application. There would have been a third trial for Federal "illegal immigration" violations, but that was dropped after the conviction in the first trial. The prosecutors got three separate chances to send Rubashkin to jail for a long time.

Rubashkin was accused of violating an obscure Depression-era law that requires a meatpacker to pay a cattle seller within 24 hours. Some sources say that Rubashkin was the only person ever prosecuted for violating this law. Obviously, this law violates the right of two parties to make whatever contract they want. The cattle seller would not have complained or known about the law, except when the Federal thugs decided to enforce it. The cattle seller did get paid, but not within 24 hours.

State thugs seized Rubaskin's business records and carefully inspected them. This enabled them to invent plausible-sounding criminal charges. They accused Rubashkin of forging his accounting records, to qualify for a bank loan. Rubashkin would have repaid his loan if State thugs didn't shut down his business. Nobody would have known if State thugs didn't seize his records.

Federal prosecutors were planning an additional trial for hiring "illegal immigrants". After the conviction in the bank fraud trial, they dropped the "illegal immigrant" trial. Notice that State thugs get a mulligan. If Rubashkin were acquitted, they can try him again. It isn't "double jeopardy", because it's technically a separate trial.

Another trick is "piling on" charges. Rubashkin was convicted of 86 charges of bank fraud. Each accounting entry is treated like a separate crime. He was charged of 72 counts of hiring "illegal immigrants". Each worker is a separate crime. Rubashkin was acquitted of 83 counts of violating Iowa labor laws. By "piling on" multiple criminal charges for essentially the same act, State prosecutors can justify disproportionately large jail terms.

When sentencing Sholom Rubashkin, the Federal judge gave Rubashkin a stiffer sentence than what sentencing guidelines require. The judge was considering crimes for which Rubashkin was accused, but not convicted, when determining the sentence. As long as the judge doesn't say "HAHAHA!! I'm sticking it to that filthy Jew!", an appeals court won't overturn the sentence. Instead, the judge says "My sentence considered the many complicated factors of this case."

At 50 years old, a 25 year jail term is effectively a life sentence. Even as a 20 year old, a 25 year jail term means that the most productive years of your life will be spent in jail. Superficially, jailing someone seems less evil than murdering someone. You're still stealing a huge chunk of their life.

The judge and jury aren't allowed to consider "We already cost this guy his $50M+ business. He already spent a year in jail. That's enough of a penalty. We should let him go." After the high-profile raid of Rubashkin's business, a conviction is necessary to justify the raid. If Rubashkin were acquitted, people might ask "Was that raid really necessary?" There was political pressure for prosecutors to get a conviction.

Agriprocessors was previously cited for violating environmental laws. However, that doesn't prove the factory was really unsafe. For example, Amish farmers have been accused of violating environmental laws. Environmental laws impose extra compliance costs on small businesses. Environmental laws are more about bureaucrat requirements, than about genuine best practices.

Regarding the bank fraud charge, the real culprit is the Federal Reserve. Negative real interest rates encourage people to load up on as much leverage as they can. If you borrow at 6% while true inflation is 26%, a $10M loan is like receiving a State subsidy of $2M per year. If you can get a $20M loan instead of a $10M loan, it's like receiving a $4M subsidy instead of $2M. The incentive is to get the largest loan you can, even if you fudge your accounting statements a little.

Negative real interest rates mean that a business should finance its operations via loans, rather than via reinvested profits. If you have a business but have no debt, then you aren't profiting from this State banking subsidy. Rubashkin's larger corporate competitors probably had more debt and a larger leverage % than him.

Almost every CEO of a large corporation fudges their earnings a little. The accounting is so complicated that it's usually hard to prove criminal misconduct. A corporation's accounting is only investigated carefully in the event of bankruptcy, as occurred with Lehman Brothers and Enron. Nobody knows what accounting tricks Goldman Sachs uses.

There is a lot of evidence that Sholom Rubashkin was unfairly treated. Summarizing,

  1. Before being convicted of a crime, Sholom Rubashkin lost his business, valued at $50M+ pre-raid.
  2. Before being convicted of a crime, Sholom Rubashkin spent a year in jail. Other high-profile defendants, such as Skilling and Lay, were allowed to remain out on bail until convicted. Even Bernard Madoff was out on bail until his guilty plea was finalized.
  3. Rubashkin's relatives were barred from operating his business, while he was in jail, even though Rubashkin's relatives were not accused of any crimes.
  4. When Rubashkin's relatives tried to sell his business, State prosecutors threatened to invoke asset forfeiture laws against potential buyers, driving down the price.
  5. Rubashkin's larger corporate competitors benefited from shutting down Rubashkin's business.
  6. Insiders bought Agriprocessors for a huge discount to the pre-raid value.
  7. Rubashkin's larger corporate competitors were unionized. Those unions lobbied to shut down Rubashkin's business.
  8. The only reason Rubashkin defaulted on his bank loan was due to the State raid on his business.
  9. When determining sentencing for accounting fraud, "dollar amount lost" is a factor. The only reason financial losses occurred was due to the raid. The losses were used as a factor when giving Rubashkin a stiff sentence! Some sales that would have repaid most/all of the loan were blocked by prosecutors.
  10. The judge gave Rubashkin a stricter sentence than what the sentencing guidelines suggested. As another example, tax protesters are frequently given extra-harsh sentences.
  11. The fact that Rubashkin testified in his own trial, caused extra time to be added to his sentence, according to Federal sentencing guidelines! If you assert your own innocence in a trial, you get time added to your sentence!
  12. The charges for which Rubashkin was convicted were not the original public reason for the raid. The original public reason for the raid was "hiring illegal immigrants". Rubashkin was convicted for "accounting fraud" and "not paying a cattle seller within 24 hours". Those criminal charges were not fabricated until after State thugs seized his records.
  13. After seizing Rubashkin's business records, State thugs went on a fishing expedition. By carefully inspecting his records, they were able to fabricate extra criminal charges.
  14. State accounting laws are so complicated that innocent-seeming activities are criminal. For example, Rubashkin was the owner of the business. Why would it be wrong for him to withdraw money for personal use?
  15. Allegedly, Rubashkin was the only person every accused of violating the law that says a cattle seller must be paid within 24 hours. The actual seller would not have complained, if the raid had not occurred.
  16. State prosecutors "piled on" criminal charges. Multiple instances of the same action were treated as separate crimes.
  17. State prosecutors had 3 separate trials for Rubashkin. First, there was the Federal bank fraud trial, resulting in a conviction. There was the trial for violating Iowa labor laws, resulting in an acquittal. That acquittal occurred after the first conviction, giving prosecutors an incentive to not try too hard. Finally, there was a trial for violating Federal illegal immigration laws, dropped after the first conviction. Notice that, if Rubashkin were acquitted, prosecutors would get a mulligan in another trial.
  18. The mainstream media loudly pronounced Rubashkin's guilt.
  19. After the raid, a conviction is necessary to make the raid seem justified.
  20. Some of the illegal immigrants were given special "u-visas", in exchange for testifying against Rubashkin. In order to get a "u-visa", you must claim you were physically abused by an ex-employer. Therefore, the "illegal immigrants" claimed that Rubashkin physically abused them.
  21. All the things Rubashkin was accused of are not crimes according to natural law. "Hiring illegal immigrants" is not a crime. "Hiring underage workers" is not a crime. "Not paying a cattle seller within 24 hours" is not a crime. "Bank fraud" is civil and not criminal; the only reason he didn't repay the loan was because State thugs raided his business. Technically, a fractional reserve bank commits fraud whenever they make a loan.
Sholom Rubashkin is one of many political prisoners in the USA. (I'm planning a post listing all political prisoners in the USA.) Anyone jailed for a nonviolent offense is a political prisoner.

Why should I be forced to pay the cost of jailing Rubashkin? Some fraction of my tax bill covers the cost of jailing Rubashkin and his trial. For-profit prison corporations and prison guards' unions lobby for "tough on crime" policies.

Was Sholom Rubashkin a tough businessman? Maybe. He was competing with larger corporate cartels. Is it unreasonable to fire a worker who complains? No, not in a really free market. That isn't criminal. All the things he was formally accused of doing, even if true, are not real crimes.

State insiders lobbied for Rubashkin's arrest and for shutting down his business. It was entirely a politically-motivated trial.

Some people say that "The business climate in the USA is very hostile towards small business owners. All the regulations and taxes mean that State police may shut you down at any time." Sholom Rubashkin's trial is an example that supports the conclusion "The US government is an out-of-control police State."

Monday, July 12, 2010

Real GDP Is Crashing, 2000-2009

GDP statistics for 2009 are out. It's time for an updated version of my Real GDP Is Shrinking post. This is a regular annual feature.

Contrary to official government statistics, the US economy is shrinking at an alarming rate.

In the following graph, I set GDP in 2000 equal to 100. Instead of using the CPI as my deflator, I used the price of gold. The results are pretty surprising!

According to the above chart, the US economy is pretty severely ****ed. That was per capita GDP measured in ounces of gold. By that measure, the US economy has shrunk by more than 65% since 2000! That's an annualized shrinkage rate of more than 10%!

In the rest of this article, I give the details of the above calculation.

The official inflation-adjusted GDP numbers are calculated using the CPI. The CPI is biased and understates the true inflation rate. If you adjust GDP using an unbiased inflation measure, the US economy is shrinking rapidly.

State communists/economists/comedians use the CPI as their deflator rather than true inflation. This causes inflation to be misreported as economic growth.

A common myth is "The US economy is dependent on continuous growth to survive!" This is false. Due to the Compound Interest Paradox, the US economy is dependent on continuous money supply growth. Due to biased inflation measures, money supply growth is misreported as economic growth.

Source Data

Here is the raw data that I use as a source for my calculations.


I use this page as my source for GDP data.

This isn't the "official" final number, but it's good enough. If there are revisions, it won't substantially affect my conclusions.

I use per capita GDP not adjusted for inflation. Later, I'm going to adjust for inflation correctly, instead of using the CPI.

The GDP value is in billions of dollars. The population is in thousands. "Per cap GDP" is GDP divided by Population.

Surprisingly, the data changed compared to last year! That makes no sense at all!

YearGDP ($B)Pop (k)Per Cap GDP

M2 and M3

In previous versions of this post, I also used M2 as my inflation index. I decided to stop doing that when I noticed that the Federal Reserve retroactively changed M2 data.

According to the Federal Reserve, M2 growth in 2009 was only a couple percent. That seems wrong.

The Federal Reserve ceased publishing M3 in 2006, so I can't use M3. Superficially, the Federal Reserve says it stopped publishing M3 because the data was too hard to collect. That reason is invalid. Instead of publishing M3 weekly, the Federal Reserve could have published M3 quarterly or annually.

The Federal Reserve stopped publishing M3 because they wanted to cover up how bad inflation really is.

When the Federal Reserve stopped publishing M3, it was growing at a rate of 15%/year. Some people have reconstructed M3 from other available statistics.

Even though M3 is no longer available, there's another unbiased measure of inflation.


The increase in the price of gold should track true inflation pretty closely.

If you believe "Gold is money!", then the FRN-denominated price of gold is a fair and unbiased measure of inflation. There are short-term fluctuations, but the over a 5-10+ year period, gold should track true inflation pretty closely. Over the past 5-10 years, the price of gold has risen substantially faster than M2.

Unlike Federal Reserve Points, gold is real money. The purchasing power of an ounce of gold has remained mostly constant for 100+ years. Some people say the purchasing power of gold has been constant for thousands of years. I don't know any reliable source for the price of a loaf of bread 1000 years ago. I saw one article where salaries in the Roman Empire were converted to gold, and compared to present-day salaries. The salaries, in ounces of gold, were pretty close.

For example, the price of a Model T car, quoted in gold, is approximately the same as the price of a car in the present. A modern car has more features than a Model T, but the total price is the same. When comparing goods available now to goods available 100 years ago, the price quoted in gold is usually similar. Of course, no amount of gold would have bought you a computer or cellular phone 100 years ago.

Over a period of several years, the gold price is the least biased measure of inflation.

I used these two sources for the price of gold.

The price is the price on January 1 of that year.

January YrPrice% chg

Gold's price has risen substantially so far in 2010. Gold is currently over $1200/ounce. (I put this post in my draft queue a few days before finishing it. The price of gold is jumping around a lot!)

There's still plenty of room for the FRN-denominated price of gold to increase. There continues to be massive inflation to bail out the financial industry and other insiders. Eventually, this will show up as an increase in the price of gold.

There has been extensive manipulation of the gold price. Central banks have nearly exhausted their gold reserves. They are losing their ability to suppress the gold price.

The bad guys really want gold to be discredited as an investment. Physical gold probably is a better investment than stocks! Even though corporations receive massive government subsidies, there also is a massive amount of fraud and waste. Corporate management is more concerned with lining their pockets than creating value for shareholders. It is possible that gold are silver are the only investments that yield a 0% inflation-adjusted return (minus transaction costs)!

Some people are saying "gold is experiencing an asset bubble". The price of gold/$ is skyrocketing. Compared to other commodities, the price of gold is relatively constant. The price of gold/silver or gold/oil is mostly unchanged. It is inaccurate to say "the price of gold is skyrocketing". It is more accurate to say "the value of the dollar is crashing".

Pro-State trolls say "Gold ran up in 1980 and then crashed. Gold is going to crash again." I don't see a bubble forming in gold.

If you believe "gold is money", then the price of gold is the least biased measure of inflation. For me, this is a definition.


Here, I share the result of my calculations.

Inflation Adjusted GDP

I calculate inflation adjusted GDP. I adjust for inflation correctly, instead of using the CPI. I use gold as my inflation index.

Per capita GDP and gold are copied from my previous tables. "GDP/gold" is GDP measured in ounces of gold. That's my index for how much the US economy is growing or shrinking. "% gain" is the % gain relative to the previous year. "Cum % gain" is the cumulative percentage gain from that year to 2009. For example, in the row for the year 2000, the "Cum % gain" is -65.54%. This means that the US economy shrunk by 65.54% from January 1, 2000 to January 1, 2010. "Ann %" is the "Cum % gain" converted to an annualized percentage.

YearPer Cap GDPPriceGDP/Gold% GainCum % GainAnn % Gain

200946370.69$874.50 41.347-23.75%-23.75%-23.75%
200847421.93$846.75 54.2275-1.58%-24.96%-13.37%
200746655.2$639.75 55.0991-21.39%-41.01%-16.13%
200644839.37$530.00 70.0889-13.00%-48.68%-15.36%
200542697.3$444.74 80.5609-11.44%-54.55%-14.59%
200440456.39$409.72 90.9664-2.75%-55.80%-12.72%
200338324.69$363.38 93.5387-8.00%-59.33%-12.06%
200236945.38$309.73 101.6715-12.66%-64.48%-12.14%
200136054.74$271.04 116.407-10.46%-68.20%-11.95%
200035237.4$279.11 130.00818.36%-65.54%-10.10%
199933485.72$290.25 119.97329.36%-62.31%-8.49%
199831842.74$288.70 109.7083.76%-60.90%-7.53%
199730526.31$287.05 105.73714.44%-59.16%-6.66%
199629062.27$369.00 101.244634.32%-45.14%-4.20%
199527813.33$387.00 75.37498.47%-40.50%-3.40%
199426893.4$383.25 69.4923.97%-38.14%-2.96%
199325616.06$391.75 66.8396.07%-34.38%-2.45%
199224685.7$333.00 63.0139-11.22%-41.74%-2.96%
199123634.68$353.15 70.9758.11%-37.02%-2.40%
199023185.21$386.20 65.6526

The data in this table is really disturbing. From 2000-2010, the US economy was shrinking at an annualized rate of 10.1%. Notice how the rate of shrinkage is accelerating!

If you use gold as the index of inflation, the US economy has been in severe recession/depression every year since 2000.

A depression is defined as "20% shrinkage in the economy". However, this is calculated relative to the CPI rather than true inflation. This allows State parasites to claim "There's no depression!", when things are really bad. Inflationary bailouts provide the illusion of economic growth, because inflation is severely underestimated by the CPI.

Gold has risen substantially so far in 2010, and that trend should continue all year. In 2010, we're on pace for another 10%+ shrinkage in GDP, when measured in ounces of gold.

If you go back to the 1990s, the results aren't as bad. In the 1990s, the world's central banks were selling off their gold supplies to manipulate the price of gold downward. Recently, they have nearly exhausted their gold reserves. They are no longer able to manipulate the gold price as much. Even with that manipulation, the gold-denominated GDP has been decreasing by more than 2% per year since 1990.

There are price variations in any given year. My analysis covers several years. Over that time, any short-term fluctuations should be smoothed out.


Contrary to official government reports, the US economy is in really bad shape. All my data comes from official sources. With a little independent thinking, you can manipulate government data to tell the true story.

Government policymakers/terrorists use the CPI as their measure of inflation. The CPI is biased and severely understates inflation. Relying on this corrupt statistic, they see an unfairly optimistic picture of the US economy. If you use the CPI as your index of inflation, then money supply inflation is misreported as economic growth.

State comedians use the CPI instead of true inflation measures. This allows them to claim "The economy is getting better!" By objective standards, the economy is still crashing.

I only performed this calculation for the US economy. Many of my readers are located outside the USA. I suspect a similar calculation in other countries would show a similar result. The economy in Canada, the UK, the EU, and Australia is probably just as bad.

If you use the price of gold as your index of inflation, then the US economy is in a severe prolonged depression. If you use gold as the index of inflation, then the US economy has shrunk by 65% since 2000!

Criticism of Using GDP

One valid criticism of this post is "GDP is a meaningless statistic." However, GDP is the best broad measure of the US economy that's widely discussed. There's also GNP, which is highly correlated with GDP.

Parasitic economic activity is included as part of the GDP. The salaries of lawyers, bankers, accountants, etc., is 100% directly backed by State violence, yet their work has no economic value. It is inaccurate to include this as part of GDP. Psychiatrists perform negative work, murdering millions of people, but their labor counts towards GDP. State violence causes doctors to earn above-market salaries. It is wrong to include all of their salary in GDP. If the "rate of parasitism" is constant over time, then using GDP would still be reasonable. The "rate of parasitism" appears to be increasing rather than decreasing.

There's no easy way to measure "GDP minus parasitic activity", so I just use GDP.

GDP doesn't accurately measure true economic activity that occurs in the USA. Suppose a lead-painted toy is imported from China for sale in the USA. If the toy has a value of $3 when it comes off the boat, and a retail value of $20, then this counts as $17 towards US GDP. All the US corporation did was import, market, transport, and sell the product. The US corporation didn't really add any tangible value, but most of the value of the sale counts towards GDP. Such a practice is only sustainable because China and other countries are willing to trade tangible goods for a piece of paper.

Counter-economic activity does not count towards GDP. The economy is really bad. Some people may be working off-the-books, just so they can survive.

The size of real GDP pretty tightly correlates with the evil power of the State. The "grey market" and "black market" economy is not included in official GDP. That is fine with me, because that wealth isn't being used against me!

As the State economy collapses, State parasites will lose their ability to enforce illegitimate laws. It's a type of positive feedback.

My information comes 100% from mainstream sources. By doing a correct analysis with the numbers, I get a true picture of economic growth in the USA. The CPI is a biased measure of inflation. This causes money supply inflation to be misreported as economic growth.

I use gold as the index of inflation rather than the CPI. By this standard, the US economy is in *REALLY* bad shape.

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