Monday, June 09, 2008

The real cause in rising gas prices is the shrinking dollar and the Federal Reserve

For the first time in history, the average price of a gallon of gasoline reached over $4.00, with no end in sight! How high can prices go? Who is to blame? The CEOs of Exxon, Chevron, and Conoco? The "soccer moms" riding around in their SUVs? Or is it the "nasty" free-market at work?

Part of the answer lies in understanding the economic bubbles and monetary inflation, but the root of the problem lies in the Federal Reserve System (which causes the economic bubbles and monetary inflation in the first place). The Federal Reserve is charged with controlling the money supply through interest rate manipulation. However, as most of us failed to realize, creating money by raising or lowering interest rates is its only tool. When the Federal Reserve creates money by lowering interest rates, more people will want to borrow, the banks will satisfy the need, and new money is injected throughout the economy. That creates an economic bubble. But also, when more money is chasing the same amounts of goods, that's the text-book definition of inflation, and prices will rise. But in reality, it is actually the fall of the dollar which causes the price to rise.

Let us take an example. Let's say the only thing you can buy in "Thomas' fantasy world" is widgets, and it is a finite amount of widgets. Let's say there are $1 million in the world, and there are 100,000 widgets, so a widget is worth $10. You need 100 widgets to accomplish your goal, so you take $1,000 to buy 100 widgets (in Thomas' world, there is no sales tax, or any tax, as I requested). But you are tired, so you put your money in a safe, went to bed, and planned to buy widgets tomorrow.

But during the night, the Federal Reserve (it has the Feds in my world too, in spite of my rants) printed $1 million more dollars, out of thin air, so there are $2 million and the same 100,000 widgets. I go to the store with my $1,000, but 100 widgets now cost $2,000! The Feds cut my money in half! Now you know why the Federal Reserve, through inflation, is robbing us blind, and there is nothing we can do about it.

Federal Reserve notes (aka US dollars) are nothing but ink and paper, and tended to be inflated. Precious metals (e.g., gold and silver), on the other hand, are "inflation-proof" (you can't print more gold!). As for gas prices, in reality, the price will remain the same. In 1947, the average price of a gallon of gas was 23¢ (i.e., slightly below a quarter). In 1947, a quarter was composed of ¼ ounce of fine silver. Today, an ounce of silver costs around $17.00, so ¼ ounce of fine silver costs around $4.25, so the average price of a gallon of gas is slightly below ¼ ounce of silver--the same! Inflation caused by the Federal Reserve caused the dollar to plummet in value, not the gas prices to rise! The Federal Reserve is evil in my mind.

The bottom line is average Americans are being seriously hurt by these flawed policies, and they are not getting good information about the true dynamics at work. The important thing concerning monetary concepts is to address the subjects of central banking and fiat money, and the destructive tendencies of both in our financial lives. The only way to have stability is to get rid of the Federal Reserve and introduce sound money (money backed by gold and silver) again. Government needs to get out of the way, so that the people can go to work and correct government's mistakes. By doing that, we can get our economy back on stable ground. If we continue to do what we are doing before, the American economy is doomed.

Monday, May 26, 2008

Is the price worth it?

Was getting rid of Saddam Hussein worth it? I mean, Saddam was a brutal dictator. He murdered millions of Iraqi people. But he didn't hurt Americans, or even threaten to hurt us. Other dictators murdered millions of his own countrymen, and those dictators are friends of the U.S.A. So was getting rid of Saddam worth the price?

In 2003, George W. Bush and Dick Cheney said that invading Iraq in order to get rid of Saddam wouldn't cost that much. Among other terrible things in order to scare the people to attacking Iraq (WMD the most prominent), they said the Iraqi people could bear the brunt of this war.

That isn't so. After a year or so, it was obvious that either the Iraqis wouldn't handle the load, or they was too broke to do so.

Bush and Cheney also said Iraqi oil will pay for the majority.

But that isn't so either. According to an article in the Washington Post, Iraqi oil production went down after the invasion than before. Part of the reason for this is that Iraqi insurgents are skimming large portions of the oil profits to fund the insurgency, with bribes playing a major role in the operation.

In the mean time, it wasn't the "surge" that caused the casualty levels of U.S. troops to go down. It was the American officers bribing the Iraqi insurgency to switch sides and fight al-Qaeda. Better to pay Iraqis to fight al-Qaeda than to fight them yourselves! But those bribes are costing hundreds of thousands of dollars per year, and obviously must go on indefinitely since everyone knows what will happen if the bribes stop.

So, what’s the cost of getting rid of Saddam Hussein?

For one, there are over 4,000 dead American soldiers since the war began. But those deaths are worth it, right?

And there is an estimated one million dead Iraqis in that time. But, according to retired general Tommy Franks, "We don't do [Iraqi] body counts." So those deaths are definitely worth it.

What about the over 30,000 injured, maimed, and disabled U.S. soldiers, and countless of Iraqis. Is the price worth it?

There is also the total destruction of Iraq and the millions of Iraqis who have had to flee the country. By and large, Americans feel that that cost has been worth it.

And now, the Federal Reserve, in obvious panic over the state of the financial markets, was working overtime to come up with a bailout plan for Bear Stearns, also using the opportunity to lower interest rates again rather than simply wait until its regularly scheduled meeting on Tuesday.

A Nobel Prize winning economist Joseph Stiglitz, who has co-authored a book with Linda Bilmes, former assistant secretary of commerce, entitled The Three Trillion Dollar War: The True Cost of the Iraq Conflict. According to them, the U.S. government has spent $600 billion on the wars in Iraq and Afghanistan.

As when Americans are losing their homes to foreclosure, and as the dollar continues to crash in international markets, at least Saddam Hussein is dead.

Is the price worth it?

Monday, May 05, 2008

Freedom and God

I love liberty. I have a passion for being free. I want to live my life anyway I choose, as long as I don't hurt or interfere with anybody else, and I want others to live their lives as they choose, so long as they don't hurt or interfere with anybody else, including me. If I want to paint my house a different color, I should be free to make my decision. If my neighbor wants to move and sell his house, and another person wants to buy and move in next to me, I have no right. That decision is between my old and new neighbor, not me. And the government has no right to tell me what color my home ought to be, or what kind of neighbor ought to live in my neighborhood. In fact, the only role of government (in my utopia) is to secure each individual's rights, and the people have carte blanche on what their rights are (as long as our "rights" don't imply another's obligations). That is the epiphany of liberty.

I also love the Lord. I love God, His Son Jesus, and the Bible is God's Word. Even though I found libertarianism recently (in '02), I was a Christian as long as I remember (I was saved when I was 8 years old). As the definition of Christian means (literally) "like Christ", I follow the famous initials, WWJD (What Would Jesus Do?; if Jesus would do it, then I would do it too). I follow the Ten Commandments, and all God's teachings through the Bible. And (in Matthew 22:37-40), the first and greatest commandment is to love God with all of my heart, sole, and mind, and the second is to love my neighbor (i.e., mankind) as myself, and I obey God's scripture. The Bible is just like a user's manual for my life. But, in reality, obeying God's teachings are irrelevant. The only thing God asks of you is to let God come inside your heart, confess your sins, and He will save you. And I did that when I was 8.

Did I sin after I have been saved? Unfortunately, yes. In Romans 3:23, all people have sinned and fall short of the glory of God, including me. The only man who didn't sin is Jesus, and Jesus died on the cross for our sins, past and the future. So if you confess your sins, and believe with your heart, God will forgive you. Combining freedom and God, I am a Christian libertarian.

Some will say that "Christianity" and "libertarianism" are an oxymoron. Christians, to them, means teaching God's word, and if someone refuse to obey God, those Christians want to force the unbeliever to "straighten the course" (the antithesis of libertarianism). And libertarians, to them, means conservatives who smoke pot, do other drugs, sleep with prostitutes, and do other victimless but immoral behavior (the antithesis of Christianity). In other words, the two don't mix.

But you know what? Jesus Christ is a libertarian! The Lord is an all powerful God Who is willing to permits humanity to turn its back on Him. Is there any better way to show tremendous respect for individual will and free choice than that? The greatest gift God bestows for all mankind is the gift of free will.

Do you remember in Matthew 19:16-22, and again in Mark 10:17-22 (et al), as Jesus was walking down the road, a young rich man approach Him and said is there anything he can do to inherit eternal life. Jesus answered the 1st thing is to know and follow the Ten Commandments. The young man replied he did that and will do that; what more? Jesus answered again and said to the man to sell his belongings, give the proceeds to the poor, and follow Me. Unable to part with his possessions, the young man walked away sad.

What did Jesus do to the young rich man? Remember, He fed 5,000 men and women with five loaves of bread and two fish, walked on the sea, healed a girl from death, cured the sick, and made a deaf-mute hear and speak plainly. Do you recall the two greatest commandments are to love God and our neighbor. But the young rich man turned his back on his neighbor. What was Jesus' reaction? Did he cause the money to float in the air from the man to the poor and needy? When the rich young man was asleep, did Jesus cause his wealth to disappear and reappear in the arms of the poor?

On the contrary, when the young man made his choice, Jesus simply permitted it and then live with it. Isn't this what liberty is all about? Each person is free to love God...or not. He is free to love his neighbor...or not. If the government is permitted to interfere with the choices by coercing people, through fines and imprisonment, into loving God or their neighbors, then it diminishes God's gift of free will.

It all boils down to this: all mankind are endowed by God with unlimited freedoms, and all governments want to take their freedom back; different degrees with different governments.

The basic principle of libertarianism is not anarchic. There are real limits. My freedom will end where yours begins. Neither the community nor I have any claim whatsoever on your property or your life.

And what about the Christian element? Christianity is integral to the core philosophy of libertarianism, as without the spiritual core of its demand for individual liberty and personal responsibility, libertarianism has a tendency to devolve into simple utilitarianism, which eventually leads to the very collectivism it was conceived to oppose. Christianity is timeless and so provides the inexhaustible spring of moral refreshment that is necessary to any political ideology that hopes to resist corruption over time.

The link between Christianity and libertarianism is very simple. The Christian moral philosophy includes the libertarian principles that it is wrong to initiate violence and it is wrong to steal. Christianity is, therefore, a libertarian religion. Since Christians accept the premises of libertarianism, they should, logically, reach the same conclusions about the morality of government. If it is morally wrong for a Christian to steal or to initiate violence, it should also be morally wrong for a Christian to advocate, condone, recommend, approve, or authorize someone else committing these crimes in his or her behalf. So it is morally wrong for a Christian to advocate, condone, recommend, approve, or authorize government taxation, punishment, legislation, war, or violence of any kind. The only role of government is to secure people's unalienable rights. The rest is voluntary interaction with each other--there is no government.

To love Christ and to love liberty; that is what it means to be a Christian libertarian, and that is me.

Monday, April 21, 2008

Lusitania, Pearl Harbor, Gulf of Tonkin....9/11?

Who is the culprit(s) who caused 9/11? Was it the government's story? The government claims that Osama bin Laden and al-Qaeda who's at fault; your friendly government was caught completely by surprise. Or was it the "9/11 truthers" who don't believe the government? Those people claim the government was responsible ("9/11 was an inside job!"); people like bin Laden and al-Qaeda have nothing to do with the crime. Now although I don't trust the government either, I believe that 9/11 was in the middle, and I base my facts on history.

Take a look at the RMS Lusitania. The official government story is that Lusitania was torpedoed by a German submarine. But in reality, the British purposely planned the sinking of that ship so that to infuriate the American people so much that they decided to go to war against Germany during World War I. Woodrow Wilson knew that the Lusitania would be sunk. The British government knew that the Lusitania would be sunk. Even the New York Times knew that the Lusitania would be sunk. So much so in fact that it ran ads in New York telling Americans don't get on board that ship. But both Britain and America dismissed these reports as scare mongering.

When Lusitania was sunk, Wilson refused to take the bait, while demanding an end to German's attacks. Germany complied. But after Wilson was elected a second term (by promising to keep America out of war), he asked Congress to declare war, which Congress did. He blamed his decision on Lusitania and the British telegram supposedly showing German talking to Mexico about joining the war as Germany's ally (which Mexico never did). In point of fact, Winston Churchill planned the sinking of several ships, among them the HMS Hampshire and the RMS Lusitania, in an effort to stoke American opinion against Germany. Meanwhile, the U.S authorities were aware of his plan, but turned a blind eye because it suited their own purposes.

Take a look at Pearl Harbor. The official government story is Pearl Harbor was a surprise attack by the Japanese Navy which cost almost 2,500 American lives--the most lives lost by an attack before 9/11--and it cost America entry into World War II. But in reality, Franklin Roosevelt knew beforehand the plans of Japan. Now since the first world war was fresh on American's minds, they don't have to face a second world war, and Congress was listening.

Roosevelt tried everything to fuel America's fire. First, he violated fundamental principles of neutrality under international law by assisting and arming one of the warring sides. Through Roosevelt's lend-lease plan, millions of dollars of American military hardware was shipped to Great Britain, encouraging Germany to counterattack. But Germany refused. Then He began using American military convoys to ship goods to Britain - another act of war under international law. But Germany again refused to attack America's ships. Finally, desperately trying to goad the Germans into an attack, Roosevelt ordered American ships to begin searching out German submarines and reporting their positions to the British. One American ship finally was attacked. But America, and thus Congress, told Roosevelt to "stay out of this war!"

Roosevelt was at his wit's end, until his focus shifted to the Pacific, his "back door to war" in Europe. On the west coast of the Pacific, Japan and China were fighting. Now, China had ties with Russia, and Russia had ties with England and France, while Japan had ties with Germany, so America was on the side of China. But the American people, and thus Congress, had no interest in getting the US involved in another foreign war. So Roosevelt starting tightening the noose around the Japanese necks: first, Americans gave assistance to the Chinese; second, with help from other Allied powers, the American people refused to sell Japan oil (Japan had no oil for itself; it was dependent on others). As a front, Roosevelt told the Japanese if they back off China, America will release the embargo. Unfortunately, Japan had too much pride, so it prepared for its attack on Pearl Harbor.

And all of Japan's messages were read by Roosevelt! He cracked the Japanese code! Did he warn Hawaii of the attack? Of course not! In fact, he told the Hawaiian Head Admiral to line all the ships in a row (like sitting ducks). The admiral refused. So Roosevelt fired the admiral and promoted a new admiral, and the new admiral submitted. Pearl Harbor took place, Roosevelt made his "infamy" speech, America declared war against Japan (and Japan reciprocated), Germany declared war against America (and America reciprocated), and the rest is history.

What about the Gulf of Tonkin? The official government story is that there were two attacks by North Vietnam ships against American destroyers (USS Maddox and USS Turner Joy) which led American forces into a large-scale involvement in Vietnam. But in reality, it was a hoax. There was no attack. The facts as recorded was not true. Take a look at James Stockdale. Stockdale was a Navy aviator who responded to the "attacks" on the Maddox and Turner Joy, and, in 1992, Ross Perot's running mate. He said it didn't happened.

"[I] had the best seat in the house to watch that event, and our destroyers were just shooting at phantom targets - there were no PT boats there. There was nothing but black water and American firepower," Stockdale wrote in his 1984 book, In Love and War.

Congress, however, responded to Lyndon Johnson's call to arms, giving him a veritable blank check to make war.

Looking back at history, do you know what happened at 9/11? The facts are that bin Laden and al-Qaeda was responsible for 9/11. How do I know this? Osama admitted it himself, several times! Although he is a terrorist, he doesn't lie, unlike George W. Bush. But like FDR before, Bush knew about 9/11 beforehand...and did nothing. In fact, he caused part of the destruction. Watch the video for yourself. It compares the controlled demolition of buildings imploding with the Twin Towers imploding. See it for yourself; do you see the resemblance? In 30-40 years or so, we will know the truth.

Tuesday, April 01, 2008

The true meaning of rights in the Bill of Rights, including the right to carry a firearm

Two weeks ago (March 18), the Supreme Court heard oral arguments in the case District of Columbia v. Heller. Walter Dellinger argued for the District, Alan Gura argued for Heller, and U.S. Solicitor General Paul Clement argued for the federal government. You might say, "2 against 1; it's not fair!", but you are wrong. Make it 3 against 0; Gura didn't give the Court a too compelling argument.

Also, due to the controversial nature of the case, the Heller case filed 67 amicus curiae ("friend of the court") briefs (47 urging the court to affirm the case and 20 to oppose it). When the USA Today looked at all the briefs which had been submitted, the editors decided to use the brief written by attorneys Bill Olson and Herb Titus. Olson and Titus explained in a 300 word op-ed the primary reason for the Second Amendment. It is titled, "An unambiguous right", and I couldn't agree with it more. You can read it for yourself.

Let's look at the structure legally of the 2nd Amendment. There are two clauses in that amendment: the first starting with, "a well regulated militia...", and the second starting with "the right of the people...". Which clause is a complete sentence on its own? The second clause. That is why the D.C. Circuit's ruling labeled the first clause "prefatory" (i.e., preliminary introduction) and the second "operative" (i.e., producing an appropriate effect). In other words, the main clause in the 2nd Amendment is "the right of the people to keep and bear Arms, shall not be infringed."

Now, what is the meaning of the phrase "right of the people" (or the word "people") and the word "arms" in the 2nd Amendment? When you placed the 2nd Amendment beside the other amendments, you will see the word "people" in the first, fourth, and ninth amendments; your right to be secure, or your unenumerated rights (both of the people) are yours alone. And Webster's definition of "arms" is "a means of offense or defense, especially firearms". So when you put the two together, you have a right to carry firearms individually.

And what is the meaning of "rights" anyway? The Declaration of Independence states (in part), "[A]ll men (including women--including you, me, and anyone out there) are created equal, that they are endowed by their Creator with certain unalienable rights". The first 10 amendments (including the 2nd) are called the "Bill of Rights". Looking in Black's Law Dictionary, a "right" is defined as "something that is due to a person by just claim". In other words, you don't need a higher authority; you are it. In that aspect, a right is the opposite of a privilege (take a look at chapter 2 of Michael Badnarik's book, Good to be King [.pdf]). And thus, you don't need government's permission to exercise your rights (e.g., your "right to bear arms", you don't need a CCW license). And the last 4 words, it can add to the end to imply "reasonable nor unreasonable, with no regulation." Else, the 2nd Amendment wouldn't be a right at all.

Now, I know I am correct on this. But I am not a Supreme Court justice. I don't know whether or not the different justices may see things differently than I. I guess we have to wait until summer to see their ruling.

Friday, March 21, 2008

There is another reason to own gold

Everybody knows that gold is an inflation hedge. That’s why most people buy it. They know from experience that the purchasing power of all national currencies is being constantly eroded by inflation. But they also know that their purchasing power is preserved by owning gold.

For example, the price of crude oil has been rising for decades when viewed in terms of dollars or any national currency. But when the cost of a barrel of crude oil is viewed in terms of ounces or grams of gold, its price is essentially unchanged. In other words, the dollar price of crude oil and the dollar price of gold are both rising more or less lockstep. By owning gold instead of US dollars, you can today purchase basically the same amount of crude oil as at any other time in history.

In other words, gold is an inflation hedge. But that is only one of gold’s advantages. There is also another valuable reason to own gold, and significantly, this other reason is becoming increasingly important.

Gold is also a catastrophe hedge. Gold enables us to protect our wealth from a financial meltdown because it does not have counterparty risk.

The monetary and financial system is rapidly spinning out of control. We are witnessing the unwinding of decades of reckless credit expansion. Borrowers--corporations, hedge funds, homeowners, etc.--who no longer have the financial capacity to repay their debts are defaulting on their obligations in increasing numbers. In that environment, the safety of one’s wealth becomes paramount, to protect against the catastrophe of default in all types of financial assets.

In short, promises are being broken, so in an environment in which financial assets are becoming increasingly doubted, one needs to own tangible assets. Own things instead of promises, and there is only one money that is not dependent upon someone’s promise and that’s gold. So buy gold; it is the best catastrophe hedge. But also buy gold because it remains the best inflation hedge.

For example, gold was $670 per Toz in August of 2007, and crude oil was $71.50 per barrel. In other words, the ratio was 9.37 Toz of gold per barrel.

Gold today is $992 per Toz, and crude oil is $109 per barrel. So both prices have risen considerably in dollar terms (i.e., inflation), but the price of crude oil today is 9.10 Toz of gold per barrel, less than last August, but essentially unchanged. Gold performed as expected, being a nearly perfect hedge against inflation.

So when considering all of its advantages, gold provides what everyone wants: peace of mind knowing that the portion of your wealth placed in gold is safe.

Monday, March 17, 2008

Loving my country while loathing its government

Last October, a reporter asked Barack Obama why did he refused to wear his American Flag lapel pin. He, as well as other Congressmen, wore the pin right after 9/11 as a sign of unity and American pride. But October 2007, Obama said refusing to wear the pin was from principle: "You know, the truth is that right after 9/11, I had a pin. Shortly after 9/11, particularly because as we’re talking about the Iraq war, that became a substitute for I think true patriotism, which is speaking out on issues that are of importance to our national security, I decided I won’t wear that pin on my chest."

Some of the neocons might get steamed. Neoconservatives--and the rest of the conservatives, and liberals today--think that refusing to wear his American Flag pin is the opposite of patriotism. They say the act is a lack of this noble gesture.

Although I find fault with many of Obama's positions, I applaud him for that. I know there is a difference between loving my country and loving its government, and Obama knows it too. As for me, I love my country, but I don't trust its government.

In fact, the Founders and many important people in government in the past think like me. Thomas Paine said, "It is the duty of every patriot to protect his country from its government." Carl Schurz said, "The peace and welfare of this and coming generations of Americans will be secure only as we cling to the watchword of true patriotism: 'Our country -- when right to be kept right; when wrong to be put right.'" Theodore Roosevelt said, "Patriotism means to stand by the country. It does not mean to stand by the president or any other public official, save exactly to the degree in which he himself stands by the country." Are all three men unpatriotic?

Even the founding documents had a difference between the country and the government. When you look up the Preamble to the Bill of Rights, you will see that the "Bill of Rights" doesn't give us rights at all. On the contrary, the Bill of Rights is actually a bill of restrictions restricting the government from interfering with our unalienable rights!

If you ever want to befuddle one of these people who conflate the government and the country, remind them that the very purpose of the Constitution, with its equal but separate branches of government, those branches are checked and balanced by the other branches, and adding a Bill of Rights before ratification, is to protect the country from the government. Their systems will begin to short-circuit as they try to figure out a response.

A perfect example of true patriotism was the White Rose. The German newspaper, consisting of a number of the University of Munich students, was a resistance leaflet opposing Adolf Hitler and Nazi Germany during World War II. All of the students were beheaded because of it. You tell me, were members of the White Rose patriotic, or they were just traders?

That's why John McCain, Mitt Romney, Rudy Giuliani, and the rest of the Republican presidential candidates were angry and confused when Ron Paul said the reason for 9/11 is American foreign policy and "blowback". In fact, Rev. Jeremiah Wright (Obama's pastor) preached the same thing during his "America's chickens are coming home to roost" sermon (except both speakers use the word "we" too much--it's more accurate if they would switch "we" with "the American government"--I didn't nuke Japan, or I didn't starve Iraqi children or make them have diseases) . But the other Republican candidates can't understand the reality that the country and the government, including our foreign policy, are completely different. In their minds, Paul's philosophy is to "blame America", because (in their minds) the federal government and America are conflated into one entity.

But don't blame it solely on the conservatives. In 1995, when the Alfred P. Murrah Federal Building was bombed (I live and was living in Midwest City OK, a suburb of Oklahoma City, when the bombing occurred), I felt a lot of emotions. But when I asked the reason why the terrorist(s) wanted to do this, I made the correct conclusion and concluded that the OKC bombing was exactly two years after the fire and deaths of 74 innocent victims outside of Waco (the OKC bombing killed 168 innocent victims), so OKC was a reaction to Waco. Many people made the correct conclusions also. And the reasons that the Murrah building was the building to be bombed was most of the ATF and FBI agents was stationed in that building. Some people (including me) made Timothy McVeigh seem almost human (although I totally condemned his actions). When word came to Washington, Bill Clinton was flabbergasted. He said in disgust, "There's nothing patriotic about hating your government or pretending you can hate your government but love your country." He can't understand how Americans could love their country while disapproving of the government's massacre of innocent men, women, and children at Waco.

Many conservatives and liberals can't understand it either. They would rather put on your American Flag lapel pin, recite the Pledge of Allegiance, wear red, white, and blue clothing, and never question the government's motives. That, to them, would be a true patriot.