I've mentioned this topic in other posts. After seeing people Google searching for "How does monetizing the debt work?", I decided to make a post dedicated to this topic.
Money is continually destroyed due to the Compound Interest Paradox. Almost every day, the Federal Reserve needs to create new bank reserves so that the Fed Funds Rate equals the target rate.
The Fed Funds Rate is the rate that banks charge each other when they lend each other surplus reserves. Banks with surplus reserves loan them out to other banks. Banks with a shortage of reserves borrow reserves from other banks. Only the Federal Reserve has the power to create new reserves, via its "Monetizing the Debt" trick.
Suppose the Federal Reserve decides that it needs to increase bank reserves by $1B so that the Fed Funds Rate target is at its target rate. The Federal Reserve buys Treasury Notes that are nearly expired. Suppose these Treasury Notes have a market value of $999M. The Federal Reserve creates $999M of new money in the account of the bank that sold the Federal Reserve the Treasury Notes. The Federal Reserve's account looks like:
debit: -$999 million (money just created)
asset: $999 million (Treasury Notes with a market value of $999M)
A few days later, those Treasury Notes expire. The Federal Reserve redeems them with the government for $1B, the face amount. Now, the Federal Reserve's account looks like:
debit: -$999 million (money just created)
credit: $1 billion (redeemed Treasury Notes)
In other words, the Federal Reserve has a profit of $1M. The Federal Reserve makes a guaranteed riskless profit as long as interest rates are positive. The scam is that the Federal Reserve has no cost of capital. It was able to create the $999M out of thin air. The $1M that the Federal Reserve collected in interest payments was never created. It came from other loans that were taken out.
There is now a PERMANENT money supply shortfall of $1M. Every time the Federal Reserve "monetizes the debt", it puts society in a deeper and deeper debt hole. The $1M required to pay the interest was NEVER CREATED or put into circulation.
Instead of an outright purchase of Treasury Notes, the Federal Reserve sometimes does a "repurchase agreement". The Federal Reserve agrees to buy Treasury Notes for a few days, creating reserves, and then sell them back in a few days, destroying reserves. The interest accrued in those few days is subject to the Compound Interest Paradox, just like when the Federal Reserve makes an outright Treasury Note purchase.
It is only at this step in the money creation process, when the Federal Reserve "monetizes the debt", that the Compound Interest Paradox operates with the full force of law. When a bank loans out customer deposits, all the loan revenue is recycled as interest payments and bank expenses and profits. However, banks in aggregate need to borrow from the Federal Reserve every day. The Federal Reserve keeps creating new money to subsidize negative real interest rates.
Whenever someone gives you a hard time about the Compound Interest Paradox, construct an example. Once you see an example of debt-based money in action, the Paradox stands out. If you look at the books of any individual bank, their books balance. If you look at the books of "society as a whole", the Paradox is obvious.
Friday, January 18, 2008
The Monetizing the Debt Scam
Thursday, January 17, 2008
The Ultimate Seduction Technique!
I've read a whole bunch of these "how to meet women" guides. Assuming that there is a worldwide conspiracy to enslave everyone, most of these guides naturally have an unhealthy mixture of good advice and bad advice.
By having "seduction guides" contain carefully planted bad advice, this guarantees that everyone in the world will be emotionally crippled.
Some gay men claim they have an ability called "gaydar". This allows them to tell, just by looking at an unknown man, if they are straight or homosexual. This avoids the obvious embarrassment of flirting with a straight man.
I have discovered an equivalent ability, which I call "straightdar". This allows you to tell, just by looking at someone, if they are available, interested, and worth pursing. I only discovered straightdar a few days ago, so I haven't yet successfully used it to attract a date. In just a few days, I am amazed by straightdar's incredible power!
The application of straightdar is very simple. You look directly at the other person's eyes, without flinching or looking away. Don't say a word at all; just look into their eyes. Your gut reaction will be to look away immediately, but you should learn to resist. The more the other person is interested in you, the stronger your desire to look away will be! No matter what the other person does, keep looking at them. If they don't react at all, move on to someone else.
After awhile, you will learn to identify the most promising candidates with a brief glance.
The vast majority of people will not notice you at all. They will experience a vague uneasiness, but will say nothing.
A fraction of people will react with strong hatred. Do not let them discourage you from using this technique. When you get this response, move on to the next target.
A very small fraction of people, around 1% based on my estimate so far, will react favorably. These people are your seduction targets. Do not say a single word to the other person. Do not approach them or talk to them UNLESS they are able to return your eye contact and hold it. Only then, you should go over and talk to them.
I am male, so I have only tried this technique from a man's point of view. I don't know if it works with women. With women, you run the risk that the male might get overly aggressive and confused. My advice to women using this technique is to only acknowledge the man if he's able to return eye contact. If the man comes over and starts talking to you, say nothing unless he makes eye contact with you.
After discovering this technique, I'm so angry nobody explained it to me earlier. It's so simple! Try it out! If you already have a regular partner, try it out on them! If they don't respond favorably, my advice is to dump them.
I predict that it would take a novice 6-12 months to master this technique. The useful part about this technique is that it involves *NO* verbal rejection. This seduction technique relies 100% on nonverbal communication. If the other person is uninterested, they won't notice you. If the person is obviously angry, give up and move on; IMHO, this reaction means the person is attracted to you, but too brainwashed to respond favorably. It's worth it for the occasional success. They key is to AVOID AT ALL COSTS your gut reaction, which is to look away the instant the other person notices you. Move on to another person if your target is obviously angry or offended.
The really amazing part about this technique is that the more attractive the target, the more effective it is!
Once you've mastered this technique, the global conspiracy to enslave everyone is *OBVIOUS*. After discovering this technique, I can't believe how incredibly emotionally crippled everyone is!
I'm deeply offended that nobody explained this technique to me when I was in college.
Let me know if you experiment with straightdar and find success!
Wednesday, January 16, 2008
FSK Asks - Should I Try Podcasting or Vlogging?
Should I start uploading webcasts or videos to YouTube? I would need to buy a camera.
I'm considering making audio podcasts. Would there be a demand for that?
I don't think that would be worth my time right now.
Would I reach a wider audience if I uploaded voice/video content instead of written content?
What do you think? Do you prefer text, voice, or videos?
IMHO, text is good enough. I prefer text, because I'm a fast reader and I can rapidly figure out if a post is worth fully reading or not. However, there may be a benefit to having someone explain it instead of reading.
Tuesday, January 15, 2008
Reader Mail #27 - Free Bill Stickers!
I liked this post on "Digg is Dead". Apparently, there is active censorship at Digg. A surprising number of people are disgusted with Digg.
I heard that some people claim to have "teams" of Digg-ers. If you subscribe to their service, they will make sure your articles will get lots of Diggs. Also, they will make sure that certain articles get buried.
IMHO, the problem with Digg is that each article is assigned a unique global score. If your preferences don't match the aggregate bias of Digg users as a whole, you won't like the content presented on Digg. I consider blogs, combined with "Feed Aggregators", to be a much better source of information.
I made a "Request for Diggs" on the Market Anarchist Blog Carnival, which someone else submitted to Digg. That article acquired 1 extra Digg, for a grand total of 5, after I asked for Diggs. I know that my site has around 300 regular readers. I assume that anyone who actively reads my blog *AND* is an active user on Digg would have Dugg in response to my request. Therefore, I conclude that less than 1% of my blog's readers are active Digg users.
I'm not going to waste time on sites like Digg. I'm better off focusing on creating good content on my own blog. Google Search seems to lead to some visits and regular readers. Organic growth is best. Remember: If you like my blog, link to it in your own blog or E-Mail it to others. Even if your blog only has a handful of readers, you're still helping me. The "long tail" effect is noticeable!
If I had time, I would write a better Digg-like engine. I think that Google Reader, combined with "Shared Items" and feed aggregators, is good enough. Right now, blogging appears to be a more effective use of my time than writing software.
Does anyone subscribe to my "Google Reader Shared Items"?
I liked this picture on Out of Step.
I liked this article on the Ron Paul Forum. The value of an apartment in Manhattan, quoted in gold, has dramatically tanked.
I don't like owning a condo or co-op as an investment. You have to pay property taxes and a "management fee" to the corporation that technically owns the building. Owning only one unit, you have no real say in the management of the building. When you consider "implied rent", including the management fee, you can get much better returns in the stock market. A real estate investment has HUGE transaction costs compared to a stock investment.
With real estate, you can use leverage. Who wants to refinance their mortgage every few years to make sure they're maximizing their leverage? As you pay down your mortgage, and the value of your apartment increases due to inflation, you need to refinance to get the maximum benefit of maximum leverage.
I noticed another Federal Reserve media myth.
People anticipate the Federal Reserve's monetary policy moves. This minimizes the Federal Reserve's power.
This is not true. Anticipating the Federal Reserve's moves does not minimize its power. The new money isn't printed until the Federal Reserve makes its move.
All a professional trader accomplishes by "anticipating the Federal Reserve" is that he claims a share of the new money printed by the Federal Reserve.
I saw an interesting comment on an article about the NFL's drug policy. It was coming under criticism for some reason. I think the NFL fired a bunch of its urine collectors because the IRS ruled they were employees instead of contractors.
The interesting bit is that the NFL spokesman said "The NFL drug policy is the 'gold standard' of league drug policies." In this context, "gold standard" meant "high quality". It's amusing that the common usage of "gold standard" still means high quality, even though economists trash-talk it whenever possible.
I don't understand why oil companies get blamed for "price gouging" in the face of rising oil. Why don't people blame inflation and the Federal Reserve? If you print more money, prices go up. What's complicated about that?
This post on no third solution was somewhat interesting. It says that the Nuremburg trial standards should also be applied to US soldiers. If a superior orders you to do something, that is not a defense if what you were doing is obviously wrong. For example, suppose you are a US army sniper and your superior orders you to kill someone who's obviously unarmed and not threatening anyone. If you follow that order, you are committing a crime. Of course, this standard is not applied to US soldiers. "I was following orders" is *ALWAYS* a valid defense for a soldier.
What this article fails to mention is that policemen in the USA should be held to the *SAME STANDARD*. If a policeman enforces a judge's illegal/immoral order, that policeman is technically guilty of a crime. Of course, policemen are not expected to think independently. In fact, policemen capable of thinking independently are rapidly weeded out.
"I was following orders" is never a valid excuse for doing something wrong. It doesn't matter if you're a soldier, judge, policemen, bureaucrat, or corporate executive.
I liked this quote on Life, Love, and Liberty.
“Every actual State is corrupt. Good men must not obey the laws too well.”
This website outlines in this page a list of reasons why the 16th amendment to the US Constitution was fraudulently declared ratified.
That's focusing in the wrong direction. After allowing the income tax for almost a century, the US Supreme Court isn't going to say "This amendment was never properly ratified." or "The income tax, as currently implemented, is illegal."
People interested in tax resistance should focus on the *MORAL* argument. Saying "The income tax is immoral" is a lot easier to explain than "The income tax is illegal."
The best argument is "Working is a natural human right. No government has the right to tax or restrict a person's ability to work." Remember that the income tax means the Americans need permission from the Federal Reserve in order to work!
I liked this article on the Liberty Papers. Should the US Postal Service filter out junk mail from people who do not want it?
With E-Mail, the cost of E-Mail is typically paid by the recipient. Spam E-Mail is very lucrative. Even though only a handful of people are dumb enough to fall for it, the cost per item is very small. The best proposal I ever read for combating spam E-Mail is a micropayment system. If you want to send E-Mail to someone not on your "approved senders" list, the cost is $0.01. If you nominate someone as an "approved sender", the cost is zero. This would make spam unprofitable. The value of $0.01 is arbitrary. Some people could set it at $0.10 or $1 or higher. For example, a celebrity might charge $100,000 for the privilege of sending him E-Mail.
The problem with junk mail is the USPS has a monopoly. Only the USPS may deliver mail to private mailboxes; it is illegal to develop a competing service. With junk physical mail, the sender still bears the full cost of delivery. However, what about the rights of the recipient? Technically, if you receive unwanted mail, you are the victim of littering or trespassing. With free market mail delivery, you could refuse to accept delivery from a service that sends junk, or have a valid tort claim against someone who delivers junk.
I liked this post on Scholars and Rogues.
today’s workplace shootings are akin to slave rebellions
A student or corporate worker who "goes postal" is merely a slave reacting to his oppression. After all, a school is really a brainwashing center. A corporate worker is practically a slave.
I liked this post on the Picket Line.
The word scruples comes from the Latin word for “pebble.” Scruples, like sharp stones in a shoe, can hinder a retreat from danger.
This is another variation of "killing the cop in your head". Sometimes, your "scruples" are merely part of your pro-State brainwashing. You have to consider what is a genuine good ethics, and what is State brainwashing. If your education was 100% useless propaganda, it wouldn't stick! It's the carefully calibrated mix of truth and lies that makes pro-State brainwashing successful.
BTW, the Picket Line isn't including me in their list of "Favorite Links". I feel slightly offended.
I liked this post on Overcoming Bias.
Pro-State trolls like to say "There's no such thing as objective truth. There's only shades of grey." If you're a fool who can't tell the difference between right and wrong, then everything seems grey to you. The people who say "There's no absolute objective truth" are the ones who benefit from people's ready acceptance of propaganda.
It's a good idea to not be absolutely 100% certain of any statement. It's a good idea to question things. However, you should know what you're relatively certain is true and false.
When I say "Government was a bad invention and needs to be eliminated", that's actually my objective unbiased conclusion. From the point of view of a pro-State troll, I have an "agenda".
If you say "Science is based on faith just like other religions", the priests science have the benefit of being able to perform specific, repeatable miracles. No other religion can perform the repeatable miracle of a working light bulb or a computer. Beware the false prophets of science! They're the most dangerous fakes of all. For example, I consider a "Keynesian economist" to be a false prophet of science.
I liked this post on the Freedom Outlaw. Was Alan Greenspan merely clueless in his mismanagement of interest rates? Or, was he actually being very clever, trashing the US economy on purpose, in a true Ayn Rand style.
The Compound Interest Paradox is fully baked into the rules of the US monetary system. Periodic economic crises are built into the rules of debt-based money. That will occur no matter what the Federal Reserve does. I'm not sure you can give Alan Greenspan "credit" for wrecking the US economy on purpose.
I read somewhere that Alan Greenspan once dated Ayn Rand. If I had the opportunity to interview Alan Greenspan, I would make sure I asked:
- What was it like to f*** Ayn Rand?
- You used to be such a strong supporter of the gold standard. When you signed up as Federal Reserve chairman, did your d*** fall off?
I liked this article on Techdirt. Someone bought a high-definition monitor. Their PC is powerful enough to stream HD-TV signals. The DRM software that powers the monitor is written in a way that DRM-crippled content from multiple vendors can't be used simultaneously.
In other words, the DRM-crippling feature is BUILT INTO THE MONITOR. There is no workaround! Alternatively, Microsoft's driver for the monitor insists on being DRM-naughty. It was unclear from the article whether the "DRM blame" falls on the monitor manufacturer or Microsoft.
I like this article on Techdirt. Some companies make rules that their products cannot be sold or re-sold below a specific cartel price. For some bizarre reason, the Supreme Court ruled that such restrictions are legal. Some people were selling used products on eBay. They were being busted for violating the "minimum pricing" rule.
The companies were sending DMCA takedown notices to get these below-price auctions removed from eBay. That is an abuse of the DMCA, by DMCA standards. EBay is now suing the companies for sending frivolous DMCA takedown notices.
Many of these Internet legal disputes are interesting. When both parties to the lawsuit are a large corporation with deep pockets, that means the lawsuit will actually be resolved based on the issues. For an individual vs. corporation lawsuit, it is very hard for an individual to finance a lawsuit that will likely take multiple years.
I liked this article on Techdirt. New Boeing 787s are equipped with in-flight Internet use for flyers. Unfortunately, the customer Internet service is on the SAME NETWORK as the airplane's software!
I liked these quotes from Life, Love, and Liberty.
“The news and the truth are not the same thing. ”
- Walter Lippmann
“It takes less effort to condemn than to think.”
- Emma Goldman
I liked this article on ProBlogger. A good blog has an average of 1 post/day. If you have too many posts, people stop reading them.
Some bloggers said the opposite works for them: a lot of short posts. I get disgusted by blogs with lots of small posts, unless they're of a very high quality.
Whenever I see something that only merits a short post, I put it in a "Reader Mail" post.
I liked this post on Overcoming Bias.
In the ancestral environment, anyone who says something with no obvious support, is a liar or an idiot. You're not likely to think, "Hey, maybe this guy has well-supported background knowledge that no one in my band has even heard of," because it was a reliable invariant of the ancestral environment that this didn't happen.
Conversely, if you say something blatantly obvious and the other person doesn't see it, they're the idiot, or they're being deliberately obstinate to annoy you.
These techniques are very effective in a tribal environment, where everyone has a shared knowledge base. It's harder explaining things like the Federal Reserve, the income tax, and the evils of government. When I ask someone "Explain to me how taxes and stealing are different.", they think that it's obvious that they're different.
What do you do if the world appears to be populated almost entirely with idiots?
I liked this post on Overcoming Bias.
If even the proponent of science admits that science is less than perfect, why, it must be pretty much worthless.
When discussing a non-standard idea, why must the proponent be ABSOLUTELY CERTAIN?
Why is showing doubt considered to be the equivalent of showing weakness?
The problem comes from religion. People are asked to accept, without evidence, the existence of God. There is a requirement to obey all of God's arbitrary rules, as told by priests. The priests are absolutely certain they are quoting God verbatim.
A scientist, who says that it is possible he is wrong, is inferior to a priest, who claims absolute perfect certainty.
If God personally manifested himself in front of you, would you say "Hello, God!" or "That's a very clever magic trick! How did you do that?"
There is difference between a Mathematical proof and political debate. A Mathematical proof must have absolute certainty at every step in order to be valid. Political debates are full of phony assumptions and invalid reasoning. Once you discover "Taxation is theft!", it's very hard to assign nonzero legitimacy to any government that collects taxes via force or implied force.
I have a new blog pet peeve. Blog pet peeve #1 is partial RSS feeds. Blog pet peeve #2 is a post that's just a link, WITHOUT ANY MEANINGFUL DESCRIPTION. What kind of blog post is just a link? I have nothing better to do than follow random links? If you want me to follow the link, you could at least give me a reason.
From now on, any blog that makes a post that's just a link, gets a '-1 demerit' on my blog rating scale. The blogs with partial RSS feeds are slowly being banished to my "Rejects" folder.
If I had to name a 3rd blog pet peeve, it would be "tagging". It's like a chain letter, but blog-based.
I liked this post on Do it Yourself. There's the "official, taxed economy". There's also the informal, unpaid economy. Suppose you help a friend or relative solve a computer problem. That's valuable work, but it's untaxed labor.
Paradoxically, the red market wants the "informal economy" to be as small as possible. The government doesn't want people to work without paying taxes. From the government's point of view, it's much better for elderly to be cared for in an old age home, where the labor is taxed. If people can directly take care of their parents, that's untaxed labor.
The agorist wants the "informal economy" to be as large as possible.
Whenever possible, the red market tries to regulate and disrupt mutual aid groups.
The article calls the "informal economy" the "core economy". The red market does the best it can to destroy the "informal economy". Paradoxically, if the "informal economy" is destroyed, society completely falls apart!
Most of us at some stage will have come up against accusations that the community groups in which we work are ‘un-democratic’. I know I have, many times. While I suppose it is the nature of politicians generally to want to do things, there is too often general mistrust of any group trying to do things for themselves rather than waiting for the local Council. This is more serious than simple petty mindedness. It impinges on the legitimacy of community-based action – action by and for local people.
In the eyes of a government bureaucrat, a group of people getting together solving a problem is bad. People acting independently of the government is a threat to the government's monopoly. If that happens too much, people will start having ideas like "Who needs a government?"
Most independent community groups are not democratic. Usually, there's one person who contributes most of the effort and does the organizing. Of course, a democracy isn't accountable either! A democracy is easily exploited. However, someone independently solving a problem can't be controlled.
Local Government over the past 40 years has been subject to greater and greater control by central government, to the point where it could be argued that they are no longer ‘local’, but simply agents of the national state.
I liked this webpage, referred by No Third Solution.
In a free market, the world's supply of oil can never be completely exhausted. As oil becomes scarce, prices will rise. This makes alternative energy sources more profitable. Oil usage goes down, and usage of alternates goes up. Eventually, as non-renewable energy sources are used up, the world will be using only renewable energy sources. A free market guarantees that the path to this equilibrium will be smooth.
However, there is one major flaw in both articles. The USA is not a free market! In a free market, the arbitrage between energy sources will occur smoothly. In a non-free market, there usually is a crisis. A free market adapts smoothly to crises. A non-free market does not.
On No Third Solution, David_Z is talking about the Labor Theory of Value. Under the current corrupt economic system, it is possible to spend a lot of time without producing something of tangible economic value. This does not contradict my definition of the Labor Theory of Value, because the current market is not a free market. In a truly free market, a business that was wasteful would go out of business. Currently, large corporations receive massive government subsidies that more than make up for their inefficiencies.
Regarding stateless free-market justice, there are two types of law: common law and contract law. Common law covers "You can do whatever you want unless you injure someone else". Contract law would usually have its disputes specified by the terms of the contract.
A dispute involving someone breaking into your house and stealing something would have the case resolved by a criminal court.
A dispute between a grain farmer and a baker would be resolved by a court that specialized in business disputes. Even if it wasn't specified in the contract, it would be understood that businesses have their contracts disputes settled by experts in their business.
Regarding the gold standard, it's very easy for Congress to return to the gold standard. All they have to do is repeal the taxes and regulations that prevent people from using gold or silver as money. The market will naturally set the exchange rate between Federal Reserve Points and money. With true competition between money and Federal Reserve Points, people will choose to use money. In other words, removing these taxes and regulations is logically equivalent to returning to a gold standard!
All you have to do to "return to a gold standard" is remove the state violence that prevents people from using gold as money!
According to Google Analytics, my search traffic from Google Search has dramatically increased recently. Something must have boosted my PageRank. I think it may be due to my blog being cited on Kevin Carson's blog.
Kevin Carson says I'm an "Austrian Economist". That isn't entirely accurate. I consider Austrian Economics to be far superior to Keynesian Economics. However, Austrian Economics is still a pro-State theory of economics.
A lot of people are saying that the vote count in New Hampshire was rigged against Ron Paul. My reaction to this is "Duh!" Some people say that Ron Paul had 15,000+ known active supporters in New Hampshire, but he received fewer votes than that. In some districts there were people who *KNEW* they voted for Ron Paul, yet his official total was zero.
Elections are rigged whether the votes are counted fairly or unfairly!
Gold went over $900/oz. Did you notice that?
There's no need to rush out and buy gold yet.
IMHO, I am not convinced that a stock market investment will outperform a gold investment over the next 10 years. In the long run, a stock market investment is worthless after the inevitable collapse of the US economic system.
On How to Run a Successful Hedge Fund, an Anonymous reader wrote:
If you borrow from the Fed, you are supporting its operations and ethos. This makes you like the people who run it.
Most of the people who are aware of the flaws in the monetary system are currently profiting from those flaws. There is no incentive for them to fix it.
As a non-insider, knowing the flaws helps you be a better investor. However, you'll never have the perks that insiders get. If you know in advance what the Federal Reserve is going to do, that's a HUGE advantage.
David Gross has left a new comment on your post "Reader Mail #26":
You complain here (and have before) that war tax resisters are of a statist, lefty bent. This is true enough, in many cases, but I think you have the complaint backwards.
Why don't anti-state anarchists and minarchists have anything approaching the organized, long-term tax resistance movement that the largely-leftish peaceniks have?
You speak of how nice it would be to have an underground banking system, a gold standard, agorist barter programs, etc. But the reason this anarchist is happy to hang out with largely-leftish, largely-statist war tax resisters is that they don't just wish: they actually resist their taxes, they join mutual-support networks, they create alternative funds and mutual insurance programs, they educate and agitate and recruit and run workshops, they share practical knowledge gained from hard experience fighting the IRS (and not just theories gained from arguing about Mises, Hayek, and Rand like so many "anti-state" lib/ana-caps I read about).
Some of them, indeed, are anarchists and unlike the theoretical branch who talk a great game about what a great idea it would be and why the state is illegitimate, these anarchists live their lives to match their views.
I agree that war tax resisters who believe (often enthusiastically) in taxes to support the welfare state are suffering from a weird contradiction. But I see more hope for them than I do for all the libertarians and anarchists and minarchists I read about who have nothing good to say about the state whose support they can't seem to stop themselves from providing.
You're still missing the point. Is it possible to be a "tax resister" *AND* a "pro-State troll"?
It's silly to say "The only thing the State does that I don't like is war. I'm willing to pay taxes for other purposes." First, if you're reporting ALL your income to the IRS and only pay part of the tax, you make it very easy for the IRS to collect. Second, it's hypocritical to say you disapprove of some forms of State violence and not others. Tax collection is the ultimate form of State coercion.
If you're resisting taxes on income the IRS already knows about, you are following an extremely ineffective form of tax resistance. The real goal is to do useful work without the State confiscating the fruits of your labor.
You are following another fallacy. You say "An underground agorist economy has not developed in the past. Therefore, it will not develop in the future." The Internet has enabled individuals to share information in ways previously impossible. Suppose that would-be agorists have a population density of only 0.1% or 0.01%. Isolated, they cannot be effective. The Internet allows these people to find each other and share information. If you live in a city with more than 1M people, there probably are at least 100-1000 potential agorist trading partners, if only you could find them!
There is a valid reason to assume that the future may be different from the past.
Is it hypocritical for me to simultaneously work in a corporate slave job, while working towards agorism? I'm unsure. If an anarchist is willing to hire me for the same after-tax wage as my corporate slave job, I'll do it. Until them, I'll stick with my corporate job and pursue agorism in my spare time.
Remember: One of the themes of agorist-style resistance is: "Resist the State, *WITHOUT* sacrificing any of your personal lifestyle."
I am looking for agorist free market business opportunities. I'm not quite ready to start experimenting. At this point, raising awareness is more important.
On Bring Back Gold Clauses!, David_Z writes:
I don't have it handy, but in my learnings I read about a case in the U.S. court system (probably 80 years ago, now) where a contract included just such a gold clause. I believe the contract was a bond, but I'm not certain. In any regard, when the debtor tried to pay his obligation in debased FRNs, the creditor took him to court, where the government held that paper currency was legal tender for all debts public and private, thus invalidating the gold clause in the contract.
To add insult to injury, if my memory serves me right, the terms of the contract were drawn up and agreed upon years prior to the Federal Reserve Act and prior to repudiating the gold standard - when all U.S. currency was (allegedly) redeemable in specie.
The incident to which you are referring occurred in 1933. I wrote about this before. Reviewing, in 1933, President Roosevelt confiscated all the gold of US citizens and declared gold ownership illegal. After the gold seizure, Roosevelt devalued the dollar from $20/oz to $35/oz.
Anticipating a default on the gold standard, smart creditors before 1933 inserted "gold clauses" into their loan contracts. They specified that if the dollar were devalued relative to gold, the amount of dollars paid would be increased. After the gold seizure, Congress declared these "gold clauses" to be illegal, usurping Congress' power to regulate the value of money. In other words, Congress ripped off all the creditors and provided a huge subsidy to all the debtors. As usual, people who knew about this in advance made a huge profit!
I tried researching this, and IMHO it's a legal grey area if a court would enforce a gold clause. If you tried inserting a "gold clause" in any employment or business setting, the corporation you're dealing with would rapidly tell you where to go.
Based on my interpretation, when US citizens were allowed to own gold again, gold clauses were legalized again. The ban only applies to pre-1933 gold clauses. (Some very long-term bonds pre-1933 haven't been fully repaid yet.) I believe that *NEW* contracts may include a gold clause, if both parties agree. Under normal circumstances, a gold clause is not obtainable.
On Bring Back Gold Clauses!, gilliganscorner writes:
The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress codified in Pub.L. 93-373 which went into effect December 31, 1974. P.L. 93-373 does not repeal the Gold Clause Resolution of 1933, which makes unlawful any contracts which specify payment in a fixed amount of money or a fixed amount of gold. That is, contracts are unenforceable if they use gold monetarily rather than as a commodity of trade.
The attack on gold as money was now complete. What parties would deal with each other in gold now? In the event of contract breach the contract would be invalid if payment was in gold. The injured party would have no recourse through the corrupt court system.
I'm not sure if this is correct. I read another source that said the ban on gold clauses was lifted.
That is funny! A group of us are wondering "Are gold clauses legal in the present?", and none of us knows the answer! We could hire a lawyer and *STILL* not get a straight answer, because there's no guarantee the lawyer would give the correct answer. There's no guarantee a lawyer could research this issue better than us!
On Bring Back Gold Clauses!, an Anonymous reader writes:
I thought this was an interesting read, relating to this post. Goes to show you the length the government will go to preserve their FRN paper franchise:
http://www.lvrj.com/news/9893062.html
I've seen this criminal case cited many times.
Summarizing, the US government issues 1 ounce gold coins with a face amount of $50. Obviously, this is wrong, because the fair value of a 1 ounce gold coin is $900. Of course, the government sells the coins for the fair market value, not the legal tender value.
These coins have a legal tender value of only $50. An employer paid his employees with these $50 gold coins. The legal tender value of the transaction meant that it was below the IRS reporting threshold. The employer and employee acted as if the only income were the "legal tender" value of the gold coins.
The IRS pursued criminal charges against the employer and employees for tax evasion. The IRS argued that income tax should have been paid based on the fair market value of the gold. They were all acquitted.
This was roundly hailed as a win for the average person. However:
- The defendants still may be facing CIVIL penalties for failing to pay the tax.
- The defendants do not recover their legal fees. The defendants do not recover the time and energy wasted on the case.
- The IRS can still pursue criminal charges against other people who attempt the same trick. This case is not "precedent" that can be cited in other cases. Only a judge's rulings can be cited as precedent. A jury acquittal can not be cited as precedent. Someone else defending themselves against the exact same charge could NOT cite the defense used in the other case.
Even if juries routinely acquit people in cases like this, the IRS is willing to invest a lot of resources pursuing people who try to "honestly" resist taxes.
On General Blogging Thoughts, David_Z writes:
I've found that WordPress automatically truncates your posts in RSS, despite what you've set your "preferences" to display the full feed. I use the Full Feeds Widget to overcome this problem, I recommend it for anyone else using WP.
I don't use WordPress. I've noticed that a lot of WordPress blogs have partial RSS feeds. MY #1 BLOG PET PEEVE IS PARTIAL RSS FEEDS!
Someday, I may move my blog to a self-hosted format. In that case, WordPress is the obvious choice. For now, I'm going to use the free service provided by Google.
On Reader Mail #4 - The Compound Interest Paradox is Real, an Anonymous troll writes:
"After receiving the $50 million in interest payments, the Federal Reserve uses it for its own expenses or turns that money over to the Federal government. However, the "rest of society" still has a money supply shortfall of $50 million."
Uh... when either the Fed or the government incurs expenses, that $50m would go back to "the rest of society" of course.
WRONG! Go back and reread the examples. It's obvious you didn't understand them. This comment shows such a lack of understanding that it's in the "troll" category. On the other hand, the Compound Interest Paradox is *REALLY COMPLICATED*.
The $50 million in interest payments is NEW MONEY, that was issued LATER, AFTER THE ORIGINAL LOAN. The only way a loan can be repaid is with more loans! Continue with that example, but assume the Federal Reserve stops creating new money by issuing loans. You'll see that THE DEBT CAN'T BE REPAID!
On Nepotism Capitalism" , lordjek writes:
May it be the problem in nepotism is in the goverment part? If I make buisness with friends, it is not nepotism. But if I hold some power over some people, and then I use it to promote my friends buisness, it is corruption?
Yes, that's entirely the problem. In a TRULY free market, if you're inefficient you're subject to competition. Government means that inefficient business can afford to do stupid and wasteful things, without suffering negative consequences.
In a free market, if I hire my friends over more qualified workers, those people will start competing with me. In a free market, if I deny a qualified worker a raise, he will go to a competitor or start his own business.
The *ENTIRE* problem with "capitalism" is the barriers to competition imposed by the government. When people say "capitalism", they mean an economy with a central bank, an income tax, and extensive government regulations. In other words, what is commonly understood as "capitalism" is *NOT* a free market.
Monday, January 14, 2008
Oops - Double Posted
A "double post" is one of my personal blog pet peeves. I was guilty of that infraction just now.
I published a post with the wrong timestamp. It would have totally messed things up if I didn't fix it.
Communism Defeated the Free Market, 192-0
Socialism defeats capitalism because it is intuitively more appealing. The idea of everyone cooperating is more attractive than the idea of everyone competing. In a democracy, there is an overwhelming temptation for the majority to vote themselves the property of the minority.
Newspapers promote socialism, because it's an excuse for the red market to seize more wealth. A small slice is returned to the people as welfare payments, and the rest is given to the wealthy people who control the government.
Capitalism lost because there never was true capitalism. There always was interference from the government. There always was interference from international banks. International banks manipulate the money supply for their own benefit. International banks started almost as soon as free trade started.
The "greedy wealthy people" are blamed for the problems of the poor. Their evils are touted in newspapers controlled by the wealthy themselves! The taxes and regulations enacted make poor people poorer, and transfer massive amounts of wealth to the people who are already wealthy. Nobody winds up questioning the fundamental flaws in the economic and political system that are responsible for poverty in the first place.
In a truly free market without government coercion, it's actually possible to be greedy and help other people at the same time. A truly free market is a positive-sum game. The current economic system is a negative-sum game.
People never recognized the problems of the poor as imperfect capitalism. After all, most people would work if given the opportunity. People never noticed that poverty was caused by a defective monetary system and taxation system. It's much easier to blame the wealthy. It's kind of ironic, because the wealthy are the ones who benefit from the corrupt monetary system and taxation system.
The problem is that there are two types of wealthy people. There are people who gained and maintain their wealth through political connections. There are people who are wealthy due to hard work and providing useful goods and services.
There are people who gained their wealth through political connections and abuse of government power. These are the true bad guys. However, since they are the ones who control the government, is it realistic that the government would pass laws that confiscate their own wealth? The wealth and politically connected do pay income taxes. However, the value of the government subsidies they receive is far greater than the amount of taxes they pay. Capital gains are taxed at a far lower rate than regular income. Taxes on corporate profits are just passed on as higher prices.
The primary effect of socialist government regulations is that they prevent honest accumulation of wealth. Someone who tries to accumulate wealth the honest way is facing a massive handicap. A handful of people are talented enough to succeed in spite of the huge handicap, but that is not proof that the system itself is fair. Income taxes don't hurt wealthy people, who have many ways to shield their income and receive massive government subsidies. Income taxes hurt the average person trying to accumulate wealth who doesn't have tax shelters. Taxes and inflation steal away the wealth of the average person trying to accumulate wealth by working.
In every country in the world, socialism or communism is the economic system. Without exception, every country everywhere has a corrupt monetary system, taxation system, and corrupt government regulations. Communism have achieved a perfect 192-0 victory over the free market. Small countries are required to enact an unfair monetary system and taxation system, as a condition for being allowed to trade and for receiving foreign aid. Any small country that refused to comply would have its government overthrown.
The current global economic system is a global communist dictatorship. The current global economic and political system is a system of absolute perfect enslavement.
Sunday, January 13, 2008
Nepotism Capitalism
According to Google Analytics, a bunch of people have found my blog by searching for "nepotism capitalism". I feel morally obligated to write a full post on the subject.
There are two ways to build a successful business. The first way is the honest way, by providing something productive and useful. The second way is to use government force to support your business. This dishonest method of forming a business can be called fasco-capitalism or nepotism capitalism. In the present, most businesses that are successful succeed the second way.
The primary distinguishing feature of nepotism capitalism is that a person's political contacts are more valuable than their skills and abilities.
Let's consider some examples.
The most famous example is Enron. They practically wrote the energy industry deregulation laws, and then proceeded to exploit those laws to the maximum extent possible. Of course, they're a failed business now, but the Enron insiders made a ton of money.
Consider all the private military contractors like Blackwater. They have used their political connections to make a very profitable business.
Consider pharmaceutical companies. They lobby the FDA for extensive regulation of the drug industry. This squeezes out smaller competitors. They even managed to arrange for certain herbal treatments and vitamin treatments to be declared illegal, or regulated so much to make them unprofitable.
Consider Microsoft. They were basically handed their monopoly by IBM. Bill Gates' connections at IBM enabled him to create a very profitable business. Intellectual property laws, restrictions on reverse-engineering, and DRM laws all work to support Microsoft's monopoly.
Most media companies have "preferred voting shares", which means that insiders control the company even though they only own a small percentage of it. A handful of people control all the media companies.
Doctors have a very strong union, the AMA. By artificially restricting the supply of doctors, doctors are guaranteed a high salary. The idea that government licensing requirements improve the quality of doctors is a complete lie. With a restricted supply, there's no mechanism for incompetent doctors to be removed from the market. Doctors use government force to improve their salaries. Most individual doctors are not aware of this massive government subsidy they receive.
Similarly, lawyers have a very strong union. The demand for lawyers is literally backed up with government force.
There are so many examples of nepotism capitalism that I could write many pages listing all of them.
There are so many groups of people using government force to profit. Most of those people would be better off if they all simultaneously agreed to stop exploiting government for their own interests.
Many large corporations have "interlocking directorships", meaning that the same person serves on the board of several companies. This helps the large corporations act as a cartel. This guarantees that only people with the right connections or right attitude will be chosen as CEOs. The idea that CEOs are chosen based on merit is a media lie. CEOs are chosen based on their political connections.
Most large corporations receive massive government subsidies. They receive subsidies in the form of artificially low interest rates. Government regulations squeeze out smaller competitors. Government subsidized transportation also benefits large corporations. They can distribute from a centralized factory without paying their true distribution costs.
The USA does not have a free market. The USA is a communist dictatorship. The Federal Reserve, income taxes, and government regulations completely destroy a free market. The economic system in the USA can be more accurately described as fasco-capitalism or nepotism capitalism.