Archive for January, 2013

Economic Contraction Q4 2012, What does it mean?

Thursday, January 31st, 2013

Dear Friends,

It seems to me that if we don’t change headings, our economy will crash, bigger than 1929. The 4th quarter 2012 GDP figures that just came in showed a contraction. If we have another 2 quarters of contraction we are in recession. I don’t know if this quarter, 1st quarter 2013, will show decline or growth. I have strong suspicions that we are at the beginning of a pernicious downturn however. This would be tragic for the World Economy, the United States economy and the fortunes of every American.

When Obama came into office the economy was at the perihelion of a recession. Bush had enacted the Troubled Asset Relief program that became know as TARP. Bush had also began the bailout of AIG, to stop the cascade of bank failures, that seemed on the horizon at that time. The Swearing in ceremony in 2009 was at the very bottom of the recession.

Obama came in and immediately called for most of a trillion dollars to be spent on his “stimulus.” He claimed the US economy would hit 9% unemployment if he didn’t get the money, (it did anyway). $800 billion was borrowed in your name, and spent on pork, political slush funds and handouts to political backers. The idea was to stimulate the economy with all that added spending. Like Keynes urged government to do when in recession… spend spend spend, to drive up aggregate demand.

Not only did Obama get most of a trillion dollars to spend as he saw fit, (and has yet to meet his obligation to report to Congress the results), he got additional stimulus money, as well as an open checkbook. The US Senate has not passed a budget for the last 4 years! The House has for the last 2 but the Senate has not even voted on them. In Obama’s first 2 years in office the House was as indolent as the Senate. As a result the US budget deficit and debt has skyrocketed under Obama.

Obama care is starting to hit the American consumer and worker this year. Waves of taxes will be washing the cash from American consumer’s pockets from it. The economic impact will be bolstered by the tsunami of regulations that will hit American industry. The cost of health insurance is poised to double driving up the cost to business for every employee. All this will create a strong incentive, for firms to lay off as much of their work force as possible, simply to stay in business. Giving Obama care profound negative impacts on the economy.

The media is now starting to report, in the foreseeable future, the US debt will exceed 200% of annual GDP! This level of spending cannot continue. The bond market vigilantes will put an end to Obama’s profligate spending before that… I hope. No government can sustain this level of deficit spending and remain a viable concern. It is not possible. Historically, most countries that have found themselves in this situation, have printed money to get out, and slipped into a hyper inflationary cycle.

The Federal Reserve is printing money at $85 billion a month in their attempt to pull this economy out of the ditch. The money supply has grown under Obama and Bernanke at an extraordinary rate, (30% in the last year). This phenomenal printing of money has not resulted in fast GDP growth or inflation, countering traditional money theory. This is made possible by both the zero velocity of money and most other countries on Earth printing in a race to the bottom. And so, as more money is printed the tension builds, like winding a spring, at some point either the spring gives or the mechanism breaks. Neither outcomes are good especially in our economy.

Obama has made the political climate very hostile to profits and markets. People are not willing to take a chance and start a business in this anti business climate. Yet today, when the shocking numbers came out, Obama blamed the republicans! Claiming that their intransigence over the debt ceiling and fiscal cliff was the reason. His hypocrisy, due to his own intransigence, was never pointed out by the unbiased media… because that would be biased. So the irony is lost on the public. He also made the siren call for more government spending. As if the trillion dollars plus each year deficit he is racking up is not spending enough!

The fact is, we are heading to economic oblivion if we don’t change the course we are on. No nation can tax, print and spend it’s way to prosperity. That road only leads to calamity. Haven’t enough nations of people traveled down that road to ruin already? How many more millions will suffer oppression, poverty and subjugation, at the hands of those who claimed to be the protectors of the people? The only way to change direction is to call your Congressman or woman. Let them know you want the budget balanced, regulation lowered and stop the crony capitalism! In short… tell them to get off their fleshy derrieres and do their jobs!


John Pepin

Can Government Solve All Our Problems?

Monday, January 28th, 2013

Dear Friends,

It seems to me, the primary difference between what in America are called liberals and conservatives, boils down to the question, can government solve our problems. As a society we have many difficulties, some have been with us since the dawn of time and others are more recent, but people, society and civilization have problems. So, can government solve these problems for us, or should we do it ourselves? How you answer this question largely determines who you generally vote for. (Or should vote for). We all have a stake in this question, whether we want to or not, so it is best if we examine it to see if our preconceptions maybe clouding our judgment.

No one is unable to point out inequities in our society and civilization. Our pundits are paid handsomely to do this endlessly. We are regaled daily how this or that aspect of civil life is threatened by this or that action. The problems get bigger and more intractable and we shrink at the very thought of addressing them. The unbiased media play one string, that string is that if only a new law were passed… proving to us how they answer the question.

Everyone wants to point out a trouble but very few ever have any ideas how to solve them so most of us, or maybe not, turn to government. If a thing seems to us to be too big for us to handle, as individuals, we feel overwhelmed. This feeling of being overwhelmed induces in us another feeling, that of powerlessness. Anyone who feels powerless to meet a societal issue turns to whomever seems to have the power they themselves lack. Government has that power, it is titanic, rich… and is always willing.

People who feel government is the best able to solve the issues facing Mankind, are more likely to vote democrat/progressive, while those who believe government is as often as not the font of these problems, is more likely to vote republican/conservative. The political divide in the US is far more nuanced than this crude representation, but to reduce the granularity would be far too time consuming, and wouldn’t further our understanding. There is some merit to both arguments, the one is more pleasing to the emotions, and the other, to reason.

The argument that government can solve our problems is based in emotion rather than logic. As I indicated before, the main reason we turn to government, is due to our emotion of being overwhelmed and thus powerless. Government, being huge, powerful and wealthy, is seen as having the most ability to enact some solution that eases our feeling of powerlessness. Even if they don’t fix anything or even make it worse… responsibility will be lifted from our shoulders. In our emotionally induced blindness, we fail to see that the very power that government wields, is a derivative of our own massed power, but the feeling of powerlessness and the desire to be unburdened, makes that option the most glittering.

Those that consider government a poor choice to repair all the problems in society and culture, base their arguments more in reason, than in emotion. Clearly some of the problems we face as human beings is and was generated by government. To deny this would be to deny the Sun comes up in the East and sets in the West. Logic further dictates that government is made up of people, with flaws and foibles, just as any group of human beings, this gives us the insight that they may or may not be the best people to solve a variety of issues, in fact they may be the exact wrong people to be given such power. Especially if the trouble they are given to fix is based outside their sphere of reality. These considerations, along with the inescapable unintended consequences that go along with every government action, give us a strong argument that society is in fact not best served, when government is the solution to every question.

Emotion is as valid a reason to make a decision as logic. When faced with a hungry lion we use emotion to great effect. But, emotion is in the sphere of animals and reason is the attribute of Mankind. Government is a fabrication of mankind. When faced with a danger that is based in nature, we are well served to use emotion to get us out, but when faced with a non natural danger, we are best served to reason it out. The focus of a natural danger being time dependent, and one of our own construction being situationally dependent, we are smart to keep them each in their respective universes. So, to use emotion where logic is due, is as foolish as to use logic where emotion is called for. In all things… including government.


John Pepin

A Solution for Too Big To Fail.

Thursday, January 24th, 2013

Dear Friends,

It seems to me, the too big to fail dilemma gets worse, every time our legislators have a go at it. The Elite’s regulations always result in pernicious incentives that, instead of preventing banks from becoming too big to fail, actually create the conditions where banks must become too big to fail, else they cannot compete. The new regulation bears such an associated cost that it makes small banks uncompetitive, not due to market forces, but to regulatory causes. Of course, the Elite only take, they never give, their solutions are always more regulation, as we have opined in the past, so their solution must add to the problem, no matter how well crafted their regulation is. This increases the chance for great disturbance to our financial system. The same system your 401K is invested in, as well as your checking account, your savings account and any other account you have of M2 or M3 money. This makes the too big to fail problem your problem too.

Too big to fail is a result of old bank regulations, passed in an earnest effort to solve issues that became apparent after the 1929 banking crisis. As with all regulation, it created more problems than it solved, requiring more regulation. Banks actually create money, just like they had a printing press in their basements, but to create money, they need to have deposits and make loans. Obviously, creating money is a strong incentive to bankers to get deposits like, checking accounts, savings accounts, money markets etc… All a bank’s insured deposits are guaranteed by the Federal government through the Federal bank, (The Fed).

Banks are required, by regulation, to have a certain amount of the money deposited in their bank available as M1 money. The theory is, in normal times, a bank will never see 10% of it’s deposits withdrawn in a day. The problem is… our economy is a complex system. In complex systems, rare events graph in long tails instead of bell curves. Very unlikely occurrences are not only possible in complex systems but are certain. Because of this, there are times when more money is demanded than the bank can produce, if that happens the bank is in bankruptcy and must close it’s doors. It becomes the property of the Fed, it’s assets sold, and it’s debts paid. The Fed then insures every depositor’s first 200K of money if the assets don’t meet the debts.

When a bank becomes too big to fail it means that if it were to fail and go bankrupt the entire economic system would be put in jeopardy. The daily debts and outlays of a tottering, too big to fail, institution would be disrupted if it were to fail. Checks would bounce even though sufficient funds were available, paychecks couldn’t be cashed, large money changers could be shut down for a period of time like PayPal, inter bank payments would be disrupted, and the Fed would be handed a steaming pile to deal with. This could lead to a cascade of possible bank failures as the debts one bank owed another were disrupted by failures causing more failures. Banks that survived the first round would stop lending and hoard assets to stay alive. The entire monetary system could collapse if this were to happen… and it almost did! The 2008 banking disaster could very well have led to the very cascade of bank failures I have explained.

Therefore, a bank that is too big to fail will be bailed out, no matter how far off the rails it goes. This gives their debt issuance the implicit backing from the US Government, further exacerbating the problem. Because a smaller bank doesn’t have the implicit backing of the government and so must pay a higher rate on it’s debt! Plus a higher regulatory cost to nominal deposits makes it a virtual commandment for all banks to get… too big to fail! If you think about it for even a moment, even a fool would realize, we need to get a handle on the too big to fail dilemma.

The answer is as simple as it is hard for the Elite to swallow. Remove as much banking regulation as possible. Leave only standardizations eliminating regulations. This would level the playing field for the smaller banks and credit unions. Then, determine an upper level of bank holdings, that would make a bank become a systemic risk. Reduce that by 10% and set this as the upper limit for protected managers. Banks would be allowed to grow beyond this limit, but if they failed for any reason, the board of directors, the president, the CEO, the CFO and all the vice presidents would go to jail, even past bank officers up to the time the bank passed the limit. They would serve not less than 4 years and no more than 10 years. Make the law as simple as possible with no wiggle room for an especially weaselly CEO to worm through. Make them personally liable for the bank’s solvency if it grows past this point… and it won’t.

The self interest of every member of a bank’s board of directors will make absolutely sure, every bank in which he or she is a member of the board, will remain well under the limit. No bank president will allow his or her bank to grow beyond the limit, and top quality candidates for vice presidents, will be non existent. This would solve the too big to fail problem simply and efficiently. Our economy would be allowed to grow at an expanded rate due to less regulation, money would be more available to small businesses and entrepreneurs because small banks usually lend to these important economic actors, and a major systemic problem will have been addressed, once and for all.


John Pepin

Government Thinks We are Stupid

Monday, January 21st, 2013

Dear Friends,

It seems to me, a fundamental problem with most regulation, is that they require as a precondition, people are stupid. This premise of regulation doesn’t comport with reality. People are smart, self interested, and for the most part rational maximizers. The ability to reason, makes our desires like water, they will seek any opening to flow downhill. Regulation that seeks to stymie some want or need of people, whether to be free, to be able to engage in the business that best suits them, to be famous, to be wealthy, to take drugs or whatever their heart desires… usually drives that activity underground. Those with sufficient desire and enough craftiness will find some loophole in the regulation that they can slip through. If not then violence is the next choice. In the face of more regulation, the desires that self interested individuals will seek, will not be stopped, they will only become more pernicious, more damaging to society and more inhuman, warping our society by the tensions built up from the disparities regulation creates.

Regulation always has, as it’s justification, the intent to stop the meeting of one’s interests by damaging the interests of another. In this, regulation has a noble intent, but as we all know, the road to hell is paved with good intentions. Regulation is usually not put in place to protect citizens, regulations are, more often than not, enacted to allow an oligopoly to form. Governments believe oligopolies are in their economic self interests, and so, are always trying to help them form. Proposed regulation, that is actually to protect some economic interest, cannot be sold to the public as such. That would be a certain kiss of death. It has to be sold to the citizenry, how it is to protect them from “unlicensed” practitioners, or “unscrupulous” businessmen. Reality being that the very people protected by the regulation are often the unscrupulous ones, the ones barred, the entrepreneurs.

Think about a group of people walking through the woods. A large tree has fallen across the path. They will quickly find the easiest way around the obstacle. Once the most effective path is found the majority of the group will take this path. The path will be enlarged, and made easier to go around the tree, for the next group that stumbles across it. Regulations for economic interests, are like cutting brush and filling in the path you have made around the obstacle, enhancing the barrier of the fallen tree to those who will come later. People however, have the inherent ability to size up an obstacle, and find a way around it, even enhanced ones. Regulation is no different than any other obstacle, if someone wants to get by it, they will. Therefore, regulation is only a true obstacle for people inclined to follow it anyway, or those dumb enough not to be able to find a way around it. Those that have the desire, intellect and daring, will find a way.

There are many kinds of regulations that this philosophy applies to. Sin tax regulation for example, The higher the government taxes cigarettes the more the black market for cigarettes grows. No one is foolish enough to believe that the black market is a benevolent phenomenon. Therefore the government, through regulation, provides the incentive and ensures the profitability, of bad actors. Obama’s fiat regulation, that mental health care givers, report on patients that have guns is another example. This sets up an entire universe of negative incentives and feedbacks magnifying those incentives.

Remember our premise is that “people are not stupid.” The information that Obama has ordered this new law by arbitrary rule, and so it is now the law of the land, will not be lost on those people who self identify as needing mental health help. Being self interested they will forgo treatment, even where they themselves understand it is necessary, because they understand that the person who administers to them, will be nothing more then a government snitch. If this is the case with those who self identify, then how much more, for those who do not?

I am sure all of you know of many other examples to go along with these. It is a fact that human beings are sly. This makes it true, that regulation is merely an obstacle, and we are smart enough to get around obstacles, cannot be overstated in the case of regulation. As additional poorly considered regulations, build more tension and further warps our society, the functions of civil life, our standard of living, our emotional well being, our safety and the safety of our children… will be put more at risk. The answer, is to remove the distortions in our civilization, with more liberty, more standards and less regulation.


John Pepin

On the Debt Limit Debate

Thursday, January 17th, 2013

Dear Friends,

It seems to me, the upcoming debt ceiling debate could be won handily by the republicans, if they only use some good old down Eastern shrewdness. The debate has been framed by Obama, the democrats and the unbiased media. They have established a false narrative. The future of the United States is at stake, so to allow a false narrative to not only be established, (republicans have no control over the unbiased media’s narrative), but to allow it to become commonly understood, would be tantamount to stabbing the republican voters in the back. Unfortunately the republican Elite specialize in stabbing their base, conservatives and libertarians, in the back. Not only the future of the United States is at risk from the gamesmanship the Elite in Washington are playing, the very threat of the American government defaulting on it’s debt, the US being the World’s bank, puts the whole of the planet at risk as Obama score points on republicans. We are poorly served by both parties in this, the republicans due to their love of the unbiased media and hatred of their voters, and the democrats who push down the gas peddle of spending even as the ultimate debt cliff looms closer…

The unbiased media are working as hard as they can to insure that Obama and the democrats win the hearts and minds of the American people. To the power structure in Washington, Constitutionalists are the enemy, we the people are cannon fodder, in their war against the Constitution. We are to be cajoled, bullied and forced if need be, to agree that the Constitution of the United States is the real problem. The Elite use every underhanded means to this end. They call anyone who brings up the Constitution an extremist. It is perfectly acceptable for an economist to attack a conservative or libertarian, for fighting that the government live within it’s means, but if they attack the policies of democrats, that are demonstrably damaging our economy, they are attacked, even tenured professors are threatened with loosing their jobs if they speak out. The Elite in both the media and Washington have never seen a Right they didn’t want to take away. The debt limit debate is another manufactured “crisis” they can exploit in their war on liberty.

To counter such powerful propaganda and outright lies, Conservative, libertarian and any politician who shuns the progressive agenda, must be wise as an owl and sly as a fox. No matter what the constitutionalists do or say, in an effort to limit the growth of government taxation, spending and intrusiveness, the unbiased media will misquote, demonize and even doctor video or audio tape, to make their point. Newt Gingrich’s Contract With America was called his Contract On America by the unbiased media. To expect different would be foolish.

In order to counter such powerful political riptides, the US House of Representatives should pass a bill numbering priorities to spending… if the debt ceiling is not raised by the deadline. Such as, making debt payments number one, Social Security payments number two and continuing listing all departments in priority, not only for today’s debt ceiling debate but for all that come in the future. Then send it to the Senate.

Harry Reid would have to allow a vote especially as the debt limit ceiling gets closer. With a bill on his desk, to spare the United States and the rest of the World, from the worst case scenario if the limit is passed, even the unbiased media would have to question it. Pressure would mount on Reid both to suppress the bill and to allow it to come to a vote. Obama would want such a bill suppressed because the lack of it gives Obama the upper hand in the propaganda wars. If such a bill were to land on Obama’s desk he would not sign it. Doing so would let republicans off the hook but not signing it would give Obama the blame. Obama would be faced with a political loose loose.

No matter if Harry Reid suppresses this bill, or President Obama refuses to sign it, all the political shrapnel would squarely hit the democrats and Obama. Even the most unbiased media person will be forced to report the truth… (most likely a distorted version of the truth), that a bill to eliminate the worst effects of a debt ceiling, not only for today’s debate but for future debt ceiling debates, being passed in the House, was suppressed by the Senate or was vetoed by Obama. This would infuriate foreign countries and their news outlets, because Obama would be directly threatening their countries as well, with his brinkmanship. The World’s economy would continue to be put at risk by future debt standoffs, a way out was at hand, but Obama and the Democrats stood in the way.

The answers the Elite are giving are simply laughable. (Or they would be if there wasn’t such import in the question). Bernanke, claiming the US should eliminate all debt ceilings, is just plain stupid. That is telling your wife, “The new gold card is maxed out already honey… what we need is an unlimited platinum card.” Clearly this is stupid writ large. The trillion dollar coin idea is just as ludicrous. If the US minted a trillion dollar coin, and deposited it with the FED, it would be instant hyper inflation. The raising revenues siren call is blatantly self serving for the Elite. That is obvious because there is no amount of revenue, the system the politicians have created out of our Constitutional republic, could ever meet the greed of the Elite. For every dollar in gained revenue these reprobates will spend two. More revenue is like tossing more kindling on a fire. It might suppress the flames for a moment but when the fires poke through they will only get higher.

There are always revenues coming in to government from the various taxes. This revenue is sufficient to pay for the most basic services of government like debt service, social security and scaled back defense, the entirety of the bureaucracy would have to be shut down though. The problem comes in when the President seizes the power of the purse from Congress and uses it for political purposes. Power of the purse was given to Congress, intentionally, by the framers of our Constitution. It is supposed to limit the power of the executive. This executive however, has wrested the power of the purse from Congress, largely due to Harry Reid and the Senate abdicating their responsibility to pass a budget. Obama can simply use his power to spend, or as in this case, not to spend, to strategically punish the American people and institutions, ginning up anger against republicans who the unbiased media will be vilifying for Obama’s choices.

The debt limit debate is perfectly suited for Obama to exploit to his advantage unless the House makes a decisive move. Passing a bill into law, that enumerates the spending priorities by congressional mandate, would not only set the World’s minds at rest, knowing the US will not default on it’s obligations, but would return the power of the purse to it’s rightful owners. The spending could be debated without catastrophe looming, and any political backlash would be a worry of all factions, not just the one who wants our Constitutional republic to endure.


John Pepin

Guns Trust and the Elite

Monday, January 14th, 2013

Dear Friends,

It seems to me, a government that trusts the people with firearms, is a government that can be trusted. The opposite holds to be true as well, that a government that doesn’t trust citizens with guns, is a government that cannot be trusted. We can further say that, to the extent the government is wary of armed citizens, that government itself is dubious. This is important for people to understand, our standard of living, liberty and posterity are all endangered by government that seeks to disarm it’s citizens.

The Elite’s answer to every question that arises, is with more laws, more regulation and less liberty. They are a one stringed banjo. The answer is never less regulation, or more liberty. Our freedoms are always eroded while their reach into our lives becomes ever more intrusive. The Elite want to control more and more of our lives, for our own benefit “to be sure,” but no big brother is ever going to govern well, regardless if it is from a revolution or evolution. Human beings all seek liberty while the State always progressively seeks tyranny.

The progressives believe that society and government can be evolved to the perfect socialist State. They think that we can be trained into ants in their ant colony. The progressive ideal is a communist government without the revolution. They only differ from communists in the implementation of their ideology. In order to evolve society into an ant farm they first must disarm us. Our ability to defend ourselves gives us some protection from a tyrannical State, and a sense of individuality, which is antithetical to a “liberal.”

Individuality is both loved and hated by the progressives. They want unanimity of political thought, to do this, they splinter all other thought into warring factions, within society. Progressives love the artist who immerses a crucifix in urine, they adore Che Guevara the mass murderer, and they worship the emotion driven politician who doesn’t bother read the laws he or she passes. The progressives hate people who are self reliant, those people don’t need government handouts, socialists despise businessmen, businessmen allow people to be self reliant by providing work, and most of all, the progressives detest politicians who stand in their way.

Look at some of the things the Elite have been saying about our Rights and Our Constitution. Obama made it clear he this our Constitution is a charter of negative liberties, the Supreme Court judge, while on foreign soil, said, she would not us the American Constitution as a model for a new State forming today, the new amendment in the House to repeal the Constitutional limit on how many terms a President can serve, the list is as scary as it is sobering. Does this sound like people interested in limited government? Obama’s Homeland Security Department has called anyone who has more the a month’s worth of food a potential terrorist! Does that mean he could legally go house to house, seizing surplus food from people’s cupboards? The citizenry would have to be unarmed for this to happen. It has been done many times in the past by the progressive’s ideological peers.

A government that has no desire to overstep it’s Constitutional bounds will be neutral to guns. If the Elite have no intentions to intrude into the lives of the citizens then that Elite will no be threatened by guns in the hands of free men and women. Government that guarantees the liberty of it’s citizens would welcome an armed people because that nation would be impossible to invade. This would, does, naturally lower the cost of a standing army. The IJA didn’t even consider the thought of invading the US mainland due to the widespread proliferation of guns in the hands of Americans.

The progressives on the other hand, who seek to evolve government into their socialists ideal must, as a matter of expediency, disarm the citizenry, else those self reliant among us can stand up to their intrusions. The more relentless the progressives in power are, for their evolution of society, the more ardent they will be in gun confiscation. If there isn’t enough gun violence in the news they can exploit, to grab the Second Amendment away from the people, they can always create some in Mexico. Therefore, the level of their ardor can be reliably measured, by their distaste to having guns in the hands of free citizens. That’s why I say, the more the Elite want a disarmed people, the less we can trust them.


John Pepin

Crime, Incentives and the Elite

Sunday, January 13th, 2013

Dear Friends,

It seems to me, a lawmaker who doesn’t subject himself to his own law, is like a cook who won’t eat his own cooking. In the case of a cook this can lead to gastrointestinal distress, but in the case of a lawmaker, it leads to economic depression, rising crime rates, societal breakdown and eventually tyranny. The negative consequences of a lawmaker who refuses to follow his or her own law is very much more dangerous than a careless cook.

Not only today but throughout human history we see that lawmakers are loathe to follow their own laws. Thrasymachus said it best, the great men among us only seek to appear just while being unjust. He thought that in order for society to work, the people must be just in action, but the powerful among us need not be. Harry Truman had a saying for this type of politician, “Anyone who gets rich in politics is a God damned crook.”

No greater incentive can be foisted on society to break the law than when we look up at our leaders and they don’t follow the law themselves. They break their own rules and get rich doing it. Until recently, a legislator in the US could engage in insider trading, without breaking the law. You or I would be prosecuted to the full extent of the law for that. Yet those that made that law refused to be subject to it, because to be just and follow their own law, would hamper their ability to get rich in politics.

Confucius said that people follow their leaders. If those leaders are corrupt then we will follow them into corruption and when they are virtuous we will follow them to virtue. This seems like a self evident fact but is lost on most of humanity. We look to the Elite for guidance in what is a good life. Then we emulate them in their choices. We go where they lead us.

A few examples of the Elite leading us astray are, a vice President caught blatantly violating campaign finance laws saying, “There is no overriding legal authority,” the Treasury secretary caught cheating on his taxes, rampant vote fraud, constant coverups, those lawmakers who are a broken radio calling for higher taxes chiseling on theirs, a Legislator for hire caught with cold cash in his freezer, the President sending guns to Mexican drug lords and vilifying honest legal gun owners for it, coupled with untold sex scandals.

This is why we see so much disease in our societies. Divorce is rampant, abortion is so common… Planned Parenthood, (An ironic name if ever there was one), murders a baby every ninety seconds, school shootings fill the news, drug use is rampant and there is not a community that hasn’t seen an epidemic rise in embezzlement. These things are all results of us following our leaders. We have become miscreants just like the people who make our laws.

That is why the Elite need to monitor us with such intrusive measures. Our streets are filled with video cameras, our emails and tweets are stored on a government computer, (how long until they are opening our mail), the unbiased media is filled with calls to outlaw the Second Amendment to the US Constitution, in fact, the Constitution itself has become despised by those very people who are supposed to be bound by it! This must be done because we have emulated the Elite too well.

Our liberties are threatened at every turn while the Elite accept less and less controls on their actions. It is getting so out of control that people, on both the right and the left, are talking about armed insurrection! This is pure childishness! The answer is not violence, it is to monitor the Elite, and force them to follow the Constitution as well as their own laws. Until we do that our society and civilization will continue sliding into the abyss of oppression. We have followed those reprobates and have become reprobates ourselves. God help us if we slide much further. This is no mere bellyache… It is an assault on us, our society and our rights. Isn’t it about time for a NUMA?


John Pepin

Obama’s Depression

Monday, January 7th, 2013

Dear Friends,

It seems to me, a magician directs the audience’s gaze away from the real action, as does a scam artist, to allow something to happen they want to keep hidden. The story the unbiased media and the political class have been telling us, about the poor performance of our economy, is an example of this. It is a red herring. The reality is, that while the fiscal cliff negotiations have some bearing on economic consideration that businesses must make, there are far more important government policies that have a much larger and more direct impact. The tax question is now settled and the new spending ceiling is now being debated. They both are important for the economy to function properly, but their effect is muted, compared to the impacts of Obama care. These are important considerations. Since everyone has a stake in the economy, even those who don’t work or own businesses, are poorly served when the debate about the state of our economy is filled with political rhetoric, misinformation and outright lies.

We see the reality of this in the December 2012 job numbers. More to the point, buried in the job numbers, the BLS put out. In it we see that there was essentially no small business hiring. They have been on a hiring freeze since the 2008 recession and following economic depression. Obama’s depression. Small businesses play a fundamental role in the job economy and especially economic recoveries.

Small businesses generally provide the bulk of new jobs. This is an economic truism. Small businesses not only provide the lion’s share of job creation; those jobs are often introductory. They are filled by people with less job experience, training and education. These jobs, that small businesses create, are the entry level positions that allow teenagers and under served minorities an opportunity to start engaging in the workforce. Larger firms pay better and as a result require more skilled workers. Workers that small businesses have trained to engage in the working economy. This was shown in the job numbers by the extremely high unemployment rate among minorities and young people.

Small businesses are the drivers of economic recoveries. Creative destruction is the term coined by Joseph Schumpeter. It is a theory to explain the growth cycle of economies that use the Capitalist mode of production. In it, a new process, way of organizing, or innovation, increase the efficiency of the economy. These new ways make the older ways less competitive and the outmoded go into bankruptcy. The new means open up better paid jobs that are less strenuous, because they are more efficient in some way. The creation is the new way of doing business and the destruction is the bankruptcy of the old firms using the old ways. Entrepreneurs are the creators of innovation, and so, are the drivers of economic growth. Therefore they are the source of recoveries. Large firms are like an old growth forest, they are mature and so don’t expand, therefore hiring is primarily a means to replace retiring employees. Small businesses are all about expansion; unless government policies get in the way.

Obama care has led to Obama’s depression by creating a universe of negative incentives to small businesses. Many of the provisions don’t kick in unless a firm reaches 50 employees, therefore, small firms have a strong regulatory incentive, to stay under 50 employees. If they are rapping against that ceiling, they do everything they can to stay under it, and if they are just above, they will lay off just enough employees to get back under it. Obama care also creates unknowables in the cost structure of a small business. Uncertainty is a killer of jobs because firms cannot, with any certainty, know what profit they will make from a new hire, or even if the regulations will cause them to loose money, if they employ that new worker. This is magnified, by the annual tranches of Obama care regulation, that will be implemented until it is fully functional in 2016, further increasing uncertainty. Under these conditions, no smart small businessperson would hire new employees, or expand… and they aren’t.

Large firms have the ability to absorb more regulatory costs than a small firm. Large firms have the financial wherewithal to hire lawyers, to get them through a regulatory maze, but small businesses, with their smaller profit margins and dramatically smaller staffs, must use scarce revenues and time to muddle through regulation. Often with disastrous results. Large businesses usually have the ear of several politicians, who will pave the way for them, but small businessmen have no such political favor. This results in larger firms being less impacted by regulation than small firms. This is exemplified in the carve outs that many large firms got under Obama care… like McDonalds. Since McDonalds got an exemption, how can a start up expand and compete, with the large corporation that has a lower cost per employee, due to political favor?

The upshot of all this is, entrepreneurs, the drivers of economic recovery, are being squeezed out of the economy. Every business must get more efficient, to control costs, in the face of the Leviathan of regulation that is steaming down on them, but those very regulations undermine the process. The creation part of creative destruction is hampered, and the destruction is accelerated, by the new costs of Obama care regulation. Regulation that lowers small businesses profits and raises their costs. Because of this, every business person is hunkered down, trying mightily to simply keep his or her business afloat. Smaller businesses more than larger ones. The fiscal cliff negotiations have far less impact on small business, than the tsunamis of Obama care regulation, that will wash the shores of every firm in the economy, for several years to come. The fact that the unbiased media are all abuzz with, the debt ceiling, a balanced approach to the deficit (that is all tax increase and no spending cuts), and political finger pointing, is a sure sign that they are diversions, to keep us focused on the lure, and not the real source of our economic troubles; the democrat’s and Obama’s penchant for regulating, taxing and deficit spending… which is the source of that fishy smell.


John Pepin

Iranian Nuclear Program and Our Demise

Thursday, January 3rd, 2013

Dear Friends,

It seems to me, a winning tactic in chess is to look ahead a few moves. When players are in the middle game, focusing on the next few moves will assure good results, for the player that does, especially when the opponent focuses on past moves. This holds for any struggle, even between men’s ideologies… and never more so than in war. It is a sign of a foreword looking general, to keep his opponent focused on the past, to win in the future. Today, we are engaged in an existential struggle, between barbarians and civilization, (the normal state of affairs in human history at this point in civilization‘s rise and fall curve). The barbarians are looking to the future, while the Elite in the media and politics, keep us focused on the past. In this mortal clash between cultures we are presently engaged in, whether we want to be or not, it is in our interests that our Elite play to win. Else the barbarians win.

Iran is rapidly reaching the capability to build nuclear weapons. That is just the simple facts. There is no political will to stop them. They know it, we know it, Israel knows it. The fact is not much of a secret. The Elite vomit platitudes that they will not allow it while undermining an organic democratic uprising in Iran. The Elite in Iran are running centrifuges twenty four seven enriching uranium. There are reports in the Israeli press that the Iranians have sufficient enriched uranium for two to three Nagasaki strength bombs. Now there has been a radioactive leak from one of their enrichment facilities. Poisoning not only their own children but ours as well.

Our Elite keep us focused on sanctions and the myth that sanctions will in any way slow the suicidal apocalyptic theocracy that rules Iran. They are not subject to the same morality the Russians were. They joyfully strap bombs to their own children’s backs and send them into buses loaded with civilians. Someone that has such a twisted sense of right and wrong cannot be reasoned with logically or morally. They know only power and weakness. Sanctions work on logical and moral levels, to a barbarian they only show weakness.

What we need to really be looking at is how we will respond when Iran uses their nukes on Israel, Europe, Saudi Arabia and or the US. As I have pointed out, there is no will to stop Iran, therefore it is only logical to look to the next play. When they attack the US mainland what will be the response of our Elite? They will be safely ensconced in protective bunkers when the bombs turn our children into smudges in the pavement. What can we expect them to do, to exact some kind of revenge or suppression of Iran, once millions of us and our children are dead?

I bet the Elite will whine how bad we were to so offend the Iranians they had to kill us. To appease the Iranians they will immediately send economic, famine, and military aid to Iran. Perhaps they will round up some prominent Christian evangelists and send them in chains to Iran as tribute. The hostages will be carrying clay pots. One filled with earth, the other filled with water, and the last filled with blood. The pots will show the suicidal apocalyptic theocracy we accept our Dhimmi status. Europe will follow and the Iranians can turn their attention to Russia and China. Or do you expect any other response from this bunch? The people who knowingly let it happen.

The Iranians are thinking beyond this move even farther. While our Elite focus on strip searching old women, to prove they are not racists, Iran is enriching uranium at an ever increasing pace. If only they could show how weak we are, they believe, the Evil actors in the World will leave us alone. But, I ask you, are they really that stupid? Have they become the Elite because they are ignorant and foolish? The Elite are as selfish as can be, and they always look after themselves, no matter the cost to others. So we can expect they are looking to protect themselves and their families. Ours are expendable.

Of course Saudi Arabia will not lay back and be nuked. The moment Iran tests a nuke Saudi Arabia will begin a nuclear program of it’s own. The race will be on. Fueled by fear and ambition the World will race to a fiery finish. This age will end and the next one might start. That is not what I call a good outcome of the “game.” Unfortunately the Elite have rigged the game. They have set it up so we can only elect a patrician. Not only just a patrician but a patrician from a certain faction. They put one in a red jersey and the other in a blue jersey, and we can root for the jersey, the men wearing them are the same. The modern Chamberlain will both stand by while Iran prepares then uses their arsenal. Those that would stop the madness are vilified by the Elite as crazy war mongers. As they did Ronald Reagan.

Remember when Obama said, “America is the greatest Nation Earth, Let’s change it!” It was a rare moment of honesty from this President. By focusing us on the past and the latest fad he is a long way to accomplishing that goal. Those that are smart look at future moves not past moves. The Elite want us to focus on past moves so to keep us separated and befuddled. Lets start looking to future moves else our children will pay a heavy price.


John Pepin