Archive for October, 2013

The Rise of the Proletariat

Thursday, October 31st, 2013

Dear Friends,


It seems to me, the two parties in the US don’t represent the people, they represent two factions of the elite. The democrat party represents the so called “New Class” while the republican party represents the bourgeois. In this struggle they both have as their primary adversary, and pawns to the game, the American people. In this they are united, that is why the Tea Party, a grass roots organization that actually does represent the needs and wants of the vast majority of the American Electorate, must be destroyed. The two old parties exploit the people to their own ends… not ours. This is a paradigm that must be overturned else we will become serfs in all but name.


The “New Class” as it has been termed are the intelligentsia. Those with advanced degrees. If we examine who has led every socialist revolution in the past, they have never been led by the proletariat, (as Marxists doctrine claims they would be), they have always been started, funded and the ideologically fueled by the academics, and professional revolutionaries, who exploited the peasantry to do the dirty work. In all cases the working people have been the victims of socialist revolutions. This new class becomes more Marxist the higher you go in academia, wealth and political power. If we examine the top echelons of Harvard, Yale and the other Ivy league schools, we will find a plurality of revolutionary Marxists and anarchists. Neither of which have the best interest of the workers at heart. The unbiased media are also members of this new class.


What I mean by the bourgeois, is the owners of the means of production, as Marx did. The definition of the owners of the means of production however are not what you might think. If you have an IRA or 401K, you are the bourgeois, if you own stocks or bonds or if you have a well stocked tool kit, you are the owner of the means of production. Entrepreneurs are a faction of the bourgeois as are family run business men. The CEO and the board of directors of a company are not the bourgeois however, those people, (who control the means of production as opposed to own it), are members of the new class.


Unfortunately it is not quite that simple. Both parties have at the top members of the new class. They run both parties. That is why they fight over trivialities, like the magnitude of a tax hike, when what we the people want are lower taxes. They agree that they should control everything… but each wants the power for themselves. They consider themselves superior to us because of their academic achievements. They hold us in disdain, believing us incapable of running our own lives, and so we are in need of their enlightened guidance. Both parties have this as their fundamental ethos.


The Tea party however was formed by the people. We sought a seat at the table of power. But the elite hold us in even greater contempt for it. They see the Tea party as upstarts who should bow to the great wisdom of the elite, in moving our society to a socialist one, where the State is the arbiter of everything and the goods of society are distributed by political favor. Since they have the political favor, this paradigm that they espouse, is a nakedly self serving one. The Tea Party is just as guilty of this as are the elite. We seek to meet our self interests by having a seat at the table too.


The primary difference is that we don’t seek to wrest the power of the State for our own aggrandizement or personal enrichment, we seek to limit the power of the State, so we won’t have to labor under the yoke of tyranny. As Thrasymachus said in The Republic, Most people only want to live their lives in peace, but great men want power… We seek a society where we can get ahead if we earn it, and where political favor is less of a factor in where we end up in society, than our personal merits. In short we seek a meritocracy. This entire thought process is an anathema to the elite in both parties.


This is why both the Republican old guard and the entirety of the Democrat party are so vicious in their attacks on politicians who back the Tea Party. There is no limit to the vitriol they will dump on the Tea Party, and by extension, us. The Constitution is a road block and so must be changed, by hook or by crook, but changed it must be. Remember, you don’t have to change the words in a Constitution to change it’s meaning… only the meaning of the words.


To the person with his or her eyes open, the new class is in fact a very old class… the aristocracy, seeking to reestablish their old privileges. So, the Tea party is in fact the true proletariat uprising, struggling against the chains the old powers are trying to bind us with… as Marx envisioned. We don’t want violent revolution, or blood in the streets, we just want peace, prosperity and liberty. To the wannabe dictator however there is nothing as distasteful as a pawn that has an opinion. Pawns are to be sacrificed for the greater good… the good of the elite, or in other words, the new aristocracy.





John Pepin

Arbitrary Power

Sunday, October 27th, 2013

Dear Friends,


It seems to me that since the dawn of time, city states, nations and empires have warned of the dangers of arbitrary power. Throughout history rulers that attained arbitrary power have brought their people to ruination. The lessons of history are stark and unanimous in their critique of the dangers of giving anyone arbitrary power. From Solon to Stalin the worst atrocities of man upon man have been committed by those with arbitrary power. Yet despite all the warnings, philosophy, and empirical data, we choose to ignore them and bestow Obama with arbitrary power. There can be no good end of this newest experiment in the annuls of Man.


Solon, the lawgiver of Athens, warned of the profound dangers of arbitrary power. He was elected to solve the debt crisis in ancient Athens. He did so in a fair way, and went on to make a proscription against arbitrary power, the ostracism. Never a hypocrite, Solon gave himself up to his very own system and submitted himself to the ostracism, for becoming himself a danger to liberty. He was banished from Athens for several years. In those years he saved Croesus of Lydia from being burned at the stake by giving that tyrant sage advice.


After the horrors of Tarquinious Superbus, the last Etruscan king of Rome, the people began the Consular system, whereby the rule of Rome would be separated into two men, similar to the Spartan system of two kings. This way no one man could attain arbitrary rule. The system held out for hundreds of years, but was overthrown when Julius Caesar gained popular support, installing himself as emperor… with arbitrary power. Once his nephew was crowned and instituted the Praetorian guard the heart of the Roman nation rotted from within. Within two hundred years, a nation state that had lasted almost a thousand years and had conquered the known world, was destroyed completely. Only the Eastern part, the Byzantines, survived for a few more years, only to be utterly wiped out and the people enslaved, by the Muslim invasion.


The many republics of Europe that started as a result of the Renaissance, rose in democratic representation, but fell into tyranny by the executive who wrested arbitrary power for himself. The history of Europe is rife with examples of those who gained this most pernicious form of power and visited slavery, oppression and destruction on their people. Yes, history is unambiguous about the danger of arbitrary power, especially in the hands of an egoist.


Democratically elected leaders are no exception. Remember, Hitler was elected in a free and fair election. Tyranny doesn’t necessarily come at the point of a gun it can come from the ballot box as well. That a person is elected by a popular majority, like Caesar, can become a despot, is proven conclusively by history. No matter how a person gets arbitrary power, be it by revolution, machination or the suffrage, arbitrary power always brings with it oppression. It is a factor of human nature.


Despite all the warnings from history, philosophy and recent events, a large part of the American people are comfortable giving our elected President… arbitrary power. He has usurped the power of the Legislative branch by arbitrarily enforcing the law, he has silenced the free press through intimidation, he has armed drug lords in a neighboring country, he has taken over a third of the economy by simply deeming a law passed, he ignores court orders with impunity, he abandoned an ambassador and several Americans to torture and death at the hands of our avowed enemies, while at the same time arming those very enemies, then lied about it, he uses the power of the government against his political opponents, he uses the paranoia of national security to record our personal phone conversations, (us and our allies), the list goes on and on, moreover, anyone who stands in his way, like Ted Cruz, is vilified by the political establishment as well as the media that calls itself unbiased. Yes, Obama wields arbitrary power in all but name. History shows us where this will end… unless we stand and demand Our Constitution be followed. If we do not, we deserve what we get… too bad our innocent children don’t.





John Pepin

Why We Have School Shootings

Thursday, October 24th, 2013

Dear Friends,


It seems to me, the raft of school massacres, drive by shootings, gang rapes and other heinous crimes perpetrated by our children should make us question… what in our society has gone so terribly wrong? The callousness of the crimes our teenagers are committing is astounding. This is a recent trend however. Prior to the 1980’s there were no school shootings despite the ready access to guns. I grew up with a gun in my bedroom closet. The thought never occurred to me to shoot anyone… especially my fellow teens! I was picked on, I was bullied, but the last thing that I would contemplate would have been to kill someone. In this article I hope to explore some of the reasons our society has started breeding killers instead of producers.


In order to even think about acting in such a violent way a person must lack empathy. If we dehumanize others it then becomes possible to kill without remorse. We see this in the dehumanizing propaganda of the Nazis… calling Slavs, Jews and Gypsies untermensch, the communists with bourgeoisie and modern progressives with “Tea Baggers.” This is a necessary prerequisite to carrying out a Columbine type massacre. Those who identify with others as fellow human beings, have empathy for their fellow man, and cannot murder without remorse. This is common sense. Therefore, those children who act violently lack empathy, for whatever reason.


Hsun Ching said, the congenital nature of Man is evil, the good in us is learned. If we take this to be true then it is clear that empathy is a learned trait. Children are not born with it. It is parenting that teaches us the good from the bad, aided by religion and to a lesser extent society. From this it becomes obvious that the civilizing of children is being undermined by something new, since this is a new phenomenon.


The incidence of violent crime committed by teens before 1990 was very low and concentrated in the inner cities. This is a point at which to start our inquiry. Children raised in the hinterlands had almost universal access to guns, but the incidence of violent crime was almost non existent. Clearly something that was effecting children in the inner cities prior to 1990, that was absent in the country, had the effect of lowering the empathy of children. If we examine the factors that were common in the inner cities back then, but were absent in the rural areas, we might get a handle on why we are facing such violence from our youth.


The culture of the inner city is society’s culture today. Rap music is all the rage with it’s violent lyrics and sexist themes, video games become more violent daily, and hard drug use is rampant. To blame all the violence we see on a single genre of music or violent games would be lazy. Other human factors we see in the inner city are a lack of fathers in the home. The welfare state provides powerful financial incentives for women to have children out of wedlock. Other things we see in the inner city are a lack of religion among parents. Children are raised without the moral teachings of any religion at all. They are universally inculcated to atheism, which is taught in the state run school system. These are potent factors in the moral teaching of children that were lacking in the inner cities prior to 1990 that have migrated to the suburbs and now the rural areas of our country.


Those who are taught atheism by the public schools have no spiritual underpinnings. There is no fear of hell, or love of God, only the empty ideology of hedonism. The hedonist who has no fear of certain immortal punishment, only the possibility of temporal punishment and then only if they are caught, have limited incentives to be good. I recall setting in Church on Sundays and attending Catechism after school. This had a long lasting influence on me. Without the moral imperative that a belief in God bestows to children, who are human beings and have an innate desire to believe in something, become easy victims of pernicious teachings. From this we can conclude that the atheistic state monopoly schools have some culpability in the violence.


Fathers are integral in the raising of children. This cannot be denied, but often is, by the secular atheists who run our government. The State has usurped the role of father in the modern family. Gay marriage is only a symptom of this. The role of mothers has traditionally been to provide a safe loving home setting for children, while the role of father is to provide the discipline that civilizes us. I remember, the mere threat of my father coming home and hearing of something I did wrong, was enough to snap me back in line. How sad that so many children have no such figure in their lives. The State is a very poor replacement. From this we can see that the incentives the welfare system gives to people, to be unwed mothers and absent fathers, has culpability as well.


The lack of fathers providing a civilizing and stabilizing effect on children, along with the lack of religious teaching providing moral grounding, have the negative effect of disconnecting children from civilization. A person who is disconnected from their civilization believes he or she has no stake in society. Those with no stake in society see others as mere tools, there to meet their hedonistic wants and needs, and so have no empathy. Empathy is built up over time in children, by families, religion, discipline and social interaction. Human beings who lack some, or all these things, are far more susceptible to the negative influences of violent video games, pernicious music, gang culture and the dehumanizing effects of hard drugs.


These evils have migrated from our inner cities to the suburbs and farms to dehumanize our children. Clearly, not all children are committing such acts of violence, but if you look into it you will find that all the children who do act in such anti social ways, have one or more of these negative influences in their lives. The answer to this violence is not to limit guns, outlaw video games or censor rap music, it is to restore the good influences and empathy our institutions used to instill in children, institutions that are under siege today. It is the lack of these good influences that are the real culprits… promoted by the atheistic welfare State.





John Pepin

The Religion of Socialism

Monday, October 21st, 2013

Dear Friends,


It seems to me that socialism is a religion. The committed socialist behaves exactly as if he or she is a member of a cult. A body where their God is the collective, to be sure, but a religion nonetheless. If we think of socialism and socialists in this way it explains a great deal of the twentieth century. This ability to understand the mind of socialists, gives those who don’t follow their religion the ability to effect the future, in a way that allows humanity to escape the horrors of the last century. Perhaps this understanding could give us leverage over those who are falling into the socialist sphere, such that they could be convinced of the true religious nature of socialism, or at least plant a seed of truth in some, that may sprout into a hedge… protecting us all from the sinister winds of socialism.


Socialism is based in the Christian faith. If you read Acts, Chapter 4, Verse 32-37 you can see that Marx’s famous saying, “From those… to those,” has a basis in that scripture. Marx’s father was a Jew who converted to Lutheranism. As such Marx would certainly know scripture. From this we can see that socialism is a perversion of the Christian faith. Further it becomes obvious that socialism could never have gained adherents among any people other than Christians. Since Socialism is a misreading of the Christian faith no one can deny that there is not at least some religious component.


If we examine the actions of socialists we see their fanaticism. Whenever someone disagrees with the socialists they treat the disbeliever as a heretic. Look at the way Lenin and Hitler, among others, have been worshiped as prophets. Socialists have murdered millions of people, simply because those victims disagreed with the socialist ideal, or for matters of expediency. The true socialist is a zealot. There is no bridge they will not cross and then burn, if it furthers their push for socialism. These are the actions of a religious fanatic, not a scientifically minded pragmatist.


All the high minded claims of the socialists are nothing but empty rhetoric designed to manipulate those who are weak minded or lost. The peasant who joins the party and engages in the most heinous atrocities, is weak minded, while the scientists who justifies those barbarities, are lost. Since, as I have written many times before, human beings need something to believe in, those who are lost will turn to a belief that is always pernicious. In this the scientist is especially vulnerable.


Many scientists revel in their faith in a mechanistic materialist nature of the universe. In order to have a mechanistic, materialistic view of existence, one must eschew the concept of an almighty God, which is an anathema to them. In this, they demonstrate their hubris… and their ignorance. Since a scientists who believes in a mechanistic, materialistic version of the universe, must disbelieve in a creator, they search frantically looking for a replacement. The socialist is happy to provide that replacement in the form of socialism.


Socialism takes the place of a belief in God, replacing it with atheism, or in other words… a hatred of God. The State then fills the void this hollows out in their souls. This is why so many absurdities are professed by the socialist scientists. The logically minded scientist socialist ignores all facts and steadfastly adhere to their doctrine instead. But, science is supposed to make predictions, test those predictions, and if observation disagrees with theory, theory is tossed out for one that better explains observation. To the socialist scientist… theory trumps observation.


Examples abound, the fiction of anthropogenic climate change, ignoring the atrocities committed by socialists and a blind faith in Keynesian economics, among others. The socialist worships a notion, and anyone who disparages that notion, is met with violence and derision. The Muslim who beheads an infidel, shows no more religious zealotry than the socialist who herds human beings into the killing fields, or the scientist who rationalizes it. To commit such atrocities against humanity, requires a deep religious fanaticism, fueled by a hatred for God. This is why Obama was so willing to cut the baby, (the US economy), in half… by refusing to negotiate with republicans at all. To him it is a spiritual imperative never to bend to such heretics.


If we want to effect the future for the better we need to understand the facts. Socialists are fanatics who will brooch no logical argument, all the while claiming to be the logical open minded ones, and will put no limit on their actions. History teaches us this. Socialist rhetoric belies their fanaticism. Fanatics cannot be reasoned with, they must be defeated, and never allowed near the reigns of government. Those who are not members of that pernicious and evil cult, but who are falling into line, must be shown the true nature of it. It is our duty. Remember… Jesus said there would be many false prophets after him and many would come to ruin because of them. In this the socialists are the very epitome.





John Pepin

Our Constitutional Crisis

Thursday, October 17th, 2013

Dear Friends,


It seems to me, the debt ceiling and government shutdown is not about spending, and it is not about winning or loosing a mere political battle, it is a Constitutional crisis. The needless rhetoric that has been thrown around during this debate has been a way to change the subject to mere name calling and fear mongering. The malpractice of the media that calls itself unbiased has been even more pathetic than usual and is a large part of why the real issue has been overlooked. Our republic is jeopardized by this type of emotional manipulation of us, by the political elite, the media and intellectuals.


The Constitutional principle in question is separation of powers and the power of Congress to control spending. This is the only fundamental power left to the neutered legislative branch of our government. In this debate, as it now appears, the Executive branch has seized almost all of the powers the Constitution bestowed on the Legislative branch. The power of the purse, as it is called, has now fallen to the Executive as has the power to legislate via the Bureaucracy. Once this episode is over the Legislative branch will have no power whatsoever. Even the power of oversight has been taken from the impotent Legislature by Executive privilege, stonewalling and outright lying under oath.


The rhetoric that has been used by Obama, the media and the democrats has been over the top. They have called the Tea Party wing of the republican party, bomb throwers, terrorists, and hostage takers among other detestable things. The toadies in the media have backed the progressive elite up even to the point of agreeing with them. Elenore Clift is one such example Sunday on the McLaughlin Group. To draw a moral equivalence between people who engage in such evil acts as killing innocents, with people who are making a principled stand for Constitutional rule, shows one of two things. Either those who draw the equivalence are horribly broken inside or they are liars. Both disqualify them from holding any power over anyone.


I hadn’t written The Frog and the Scorpion a month before the AP phone scandal broke. We later found out FOX news reporters phones were being tapped as well. The press feigned outrage but in fact quivered in their boots. Terrified of the power they had bestowed upon the new imperial President. Today news reporters have few sources and those they do meet them in dark alleys and fear they are being followed. Story after story has come out describing the fear the press holds of this president. In this latest struggle between the imperial president and the legislature, the media has uniformly followed the the talking points of their oppressor. Perhaps they have Stockholm Syndrome? Regardless, if it was out of fear, cognitive dissonance or blind obedience, they have done themselves and our country a great disservice.


The separation of powers was supposed to be a bulwark against an executive becoming imperial. Our republic was founded on the knowledge, historically tyranny has risen from the executive branch, in a republic. Montesquieu made the argument that the Judiciary should be separated from the Executive Branch to further weaken it and prevent this outcome. Our founding fathers agreed and placed the Judicial Branch into our Constitution. The provision for a free press was an idea incorporated into our Constitution as another means to prevent tyranny. As this sad episode has shown us, this president has effectively neutered the Legislative Branch, he has whipped the unbiased media into line, he disregards Judicial rulings, he enforces the law arbitrarily and he is caught lying to the American people without consequence. In the Federalist Papers Madison, Jay and Hamilton warn this would be the end of our republic and limited government. I fear that unless drastic measures are not taken, like impeachment or installing a NUMA, to reign in this president, WE will be the generation that lost liberty… to our eternal shame.





John Pepin

I Pencil and Complexity Theory

Monday, October 14th, 2013

Dear Friends,


It seems to me, the most commonly known analogy in economics is, I Pencil. This narrative shows that the capitalist system produces things of such complexity it would be impossible for a central authority to do it. Moreover this story illustrates what can be produced at extremely low cost opening up their availability to the masses of people. What is not well known about I Pencil. is that it also illustrates the complexity theory of economics. This is a very important point that the writer of I Pencil couldn’t have known because complexity theory had not been invented. What makes this important for the average person to understand is that it shows the futility of government control over an economy. If we as a people understood this very important concept, we would stop undermining our own economic prosperity by electing progressives, who only seek power and authority over everything.


I Pencil. is a story of how a pencil comes into being. If you or I set out to make a 10 cent pencil the cost to us would be extraordinary. The cedar in a pencil is from the Appalachian mountains, the graphite and glue from where ever they are cheapest made, the paint from China, the eraser from rubber made in south America and the brass ferrule from who knows where. For you or I to gather all these components and assemble them into a pencil would be prohibitively expensive, yet they are produced by the market system so cheaply they can be thrown away, if the eraser is worn. All the inputs are from diverse parts of the world, made by diverse people for diverse reasons. The point is they are all available to the capitalist to produce something that is fundamentally different in kind from the original inputs.


All of the advancement of Western society has been through the innovation of the market system. Innovation that is made possible by the diverse products the market provides. As new products are made available by the market more innovations are available to the entrepreneur. If graphite were not available the pencil would not be possible. People, not governments, make innovations. Governments stifle innovation through regulations that, while well meaning, serve to undermine the availability of new products. This is usually done to protect some job or politically favored industry. The result is always lower wages, lower productivity and high unemployment. All add up to a lower standard of living.


The various inputs to a pencil are manufactured probably for other reasons than to make pencils. Glue is made for furniture and a myriad of other reasons by the glue industry. These divers industries can also be considered components in the complex system that is the market or an economy. These diverse actors in the economy are interdependent, are able to learn, they communicate, and they respond to their environments, IE, the demand for their products versus the cost to manufacture them. Firms within industries are another example of complex actors that lower the granularity of the approach. Each has an interest in creating new products that can be used in new ways.


As new products come onto the market more products can be made or perhaps made cheaper. Like the mechanical loom made it possible for the laborer to have a wool coat, because coats became cheaper, new products allow entrepreneurs to come up with new products and services that further improve the lot of Man. The new products are different in kind from the inputs. Like a pencil is different in kind from rubber sap, graphite or cedar, new products that could have never been predicted emerge from old and newly made available products. No one ever born, let alone a bureaucrat, could have predicted that an innovation devised by Bell Labs, the transistor, coupled with another Bell Lab invention, PCM, would enable the innovations we live with today.


Just as the digital computer is different in kind from the transistor the transistor must have been invented before the computer would be possible. The original innovation as well as the emergent innovation could only come about under a system of bottom up emergence into a viable product. Once government eliminates the complex system of the economy, breaking it to the whims of the political elite, innovation will necessarily stop. The standard of living of the people of the world will stagnate and then decline. We see this in every nation that has risen up under capitalism and fallen under socialism. England used to be the world’s super power until it destroyed itself with socialist regulation. Japan rose under laissez fair capitalism and now is grinding to a halt under socialistic friction, Hong Kong has maintained laissez fair market regulations and continues to see a steady increase in the standard of living of it’s inhabitants as well as huge immigration.


The best way to understand this fact is by watching human emigration. The mass of people move from places where the markets are limited by regulation for whatever reason, socialist, religious, protectionist or any other, to places where the market system is more free to work. That they often undermine the market in their new homes by calling for protectionist measures, socialist “fairness” or demand religious exceptions, is a tragic consequence of freely moving people. That governments go along with these anti market regulations is a sure sign of the decline of that nation. Soon the people will vote with their feet to leave that weakened magnet and are drawn to the new country that has embraced laissez fair. Let it work, should be the motto of every nation on the planet, because it works.





John Pepin

Janet Yellen’s Federal Reserve

Thursday, October 10th, 2013

Dear Friends,


It seems to me, Obama’s pick to head the Federal Reserve, Janet Yellen, will continue down the treacherous path Ben Bernanke has put the US and the World on. The huge amount of money printing will continue perhaps at an even faster pace. This has huge implications to the future of the world’s economy. Wall street is excited about Yellen’s pick because she will continue the printing. We are told that this time it will be different because there seems to be no inflation. But if I wind a spring in a clock there appears to be nothing happening, until I wind it too tight and the spring breaks and the clock ceases to function. This may be a good analogy of where we are going with inflation. Once the springs snaps inflation will show it’s ugly head in a hyper way.


Today there is very little inflation despite the 4 trillion dollars the Federal Reserve has added to it’s balance sheet. This money printing has amounted to 25% added to the money supply. In Milton Friedman’s theory of money, if the economy grows at 1% and 3% is added to the money supply, assuming full utilization of resources, there will be 2% inflation. You simply subtract the amount of money added to the system from GDP growth to get the expected inflation number. Over the last 5 years we have experienced no more than 9% GDP growth, while the money supply has grown 25%. This implies that when our economy gets near full utilization we will see 16% inflation. If that was where it will stop, it wouldn’t be that bad, it would be disruptive but the economy would adjust and after a few years the problem could be absorbed.


The conundrum is that the money supply is not only increased by the Federal reserve, the banking system itself also increases the money supply. When the Federal Reserve buys a bond, the person or institution that sells the bond gets a check. This check is then deposited in a bank. That bank returns the check to the Federal Reserve who then adds that amount of money to that bank’s Federal Reserve account. The bank that cashed the check then has more money to meet it’s reserve obligation. This frees up money for the bank to loan. When banks loan money part of the money loaned is made up. It is not depositor’s nor is it the bank’s, the money is simply invented. This magnifies the Federal Reserve’s money printing by orders of magnitude.


Moreover the Federal reserve has been buying US government bonds faster than the US government has been issuing them! That means the private sector is selling their US government bonds into the marketplace. To keep the interest rate government pays low, so the US government can afford the huge debt and deficit, the Federal Reserve must sop up the access bonds. This implies the apatite for US debt is decreasing while the elite argue about raising the debt limit. As nations, firms and people the world over sell US debt, and the Federal Reserve buys that debt, the amount of US government debt held by the Federal Reserve grows. This is called monetizing the debt.


Monetizing government debt has been shown to lead to hyper inflation. The most famous case was Wiemar Germany, but there have been many notable cases throughout history, none of them ended well for the country that nationalized it’s debt. Economists will argue that the US is a special case because the dollar is the World’s reserve currency. It is directly convertible into any other currency and all oil is bought with dollars. This means that if you live in Zimbabwe and want to buy a widget from Brazil, you must convert your currency into dollars then dollars into Brazilian currency. This creates a huge cache of dollars held by foreign nations for purposes of trade in commodities and oil.


Most of the nation’s of the World understand this and the devaluing of the dollars they hold comes directly out of their national coffers. As a result they are selling US government debt and are seeking ways to directly convert their currencies to any other. Thus eliminating the dollar as the World’s reserve currency. When this happens, regardless if the US economy is at full utilization, the US will experience out of control inflation. As the Federal Reserve winds the inflation spring the tension builds. Eventually catastrophically failing and plunging the World into recession.


The only answer is to balance the US budget and reduce the regulatory friction before the spring snaps. The Federal Reserve under Yellen can be expected continue to print money in hopes the US economy will get back on track. As we have seen, even the hint that the free money will slow down has sent the markets into a tail spin. Therefor, to keep Obama’s economy growing at even the pathetic rate it is, the Fed must continue the printing. To get the US Gross Domestic Product growing at the pathetic rate of 300 billion a year the Federal Reserve is printing a trillion. So instead of a magnifying effect the money that is being printed is seeing a negative return in the real economy. If you think about it, these facts make the budget battle in Washington far more important than an obstinately recalcitrant President’s argument with Congress over the debt ceiling and Obama care, it could mean the whole sale closing of all the programs people have become dependent on. If that happens, there will certainly be wide scale social disruption including violence in our streets.


To argue that this or that billion dollar boondoggle is so important it cannot be defunded is absurd, especially when you consider the consequences of a true default, which would happen if the US dollar looses it’s reserve currency status. Imagine the value of your IRA falling to zero? Imagine if the value of your bank account fell to zero? Imagine if the Social Security administration went bankrupt? Imagine the military being laid off? Imagine no welfare, no Medicaid, no Medicare and all the functions of government going away… instantly. Do you think that would generate anger sufficient to promote violence or even war? That is why we have to get government regulation, debt and spending under control, to do otherwise is to run at a real cliff, like lemmings… ignorant of the danger until it’s too late. Now that you are no longer ignorant, what are you going to do about it? Keep running, or stop, and demand fiscal responsibility?





John Pepin

Government Shutdown

Sunday, October 6th, 2013

Dear Friends,


It seems to me, Obama is saying to the American people, “resistance is futile.” In the science fiction series Star Trek Next Generation, the Borg were an evil alien race that lived in a collective. The Borg assimilated other people into the collective against their wills. Just as Obama care does. In many speeches Obama made before his election campaign and subsequent election he avowed he was in favor of nationalized health care. The speeches are freely available on line for anyone to see. The strong arm tactics of this administration will brooch no resistance to the collectivization of our health care. Judging by the Obama administration’s all too willing use of the mechanism of government, to punish political opponents, the seizing of American’s health care by government will give this administration hitherto unprecedented power over the lives, health and fortunes of every American.


We are told by the collectivists that America needs more diversity. This has become a mantra. Diversity is raised to a sacrament by the progressives, the incarnation of the collectivists in America. Now this is strange because real diversity in thought is not allowed by the progressives, in both the democrat and republican parties. Instead, anyone who believes differently than the collectivists are called, terrorists, anarchists and hostage takers. It would seem that anyone who truly believes in diversity would welcome a debate and encourage diverse ways of looking at a problem. So we have a dilemma, do we believe the words of the progressives, or their actions?


Obama will broach no discussion of the law that has savaged the American economy, and in doing so has lowered the economic outlook for people the World over. As I have written before in many blogs, the law that is called Obama care, (The Affordable Care Act), is an economic catastrophe. Those that understand this have taken a stand against this collectivization of the health care system in America. As the new leviathan of a law is implemented it is becoming plain to see that it not only doesn’t work but produces tremendous economic friction. Obama care will be the death knell of small business. This works to the collectivist’s favor. Schumpeter said that government must fetter business so that all businesses become giant, and thus will be easier for government to take over when the time is right.


Scott Brown was elected in Massachusetts simply to stop Obama care. His election in that uber left state was a testament of how much the American people didn’t want a collective thrust upon us. This is a clear statement of the wants of the American people at the time, never mind the polls showing the utter disdain we hold for Obama care today. The progressives would broach no stopping their assimilation of the American health care system under political control so they simply “deemed” the law passed, to undermine the results of an election. I would love to deem my taxes paid, but I suspect that tactic is closed to you and I.


Obama has said he believes in collective salvation. This pernicious theory is predicated on the notion that the rest of us must be forced to believe as the collective, else no one will be saved. This stands in direct contradiction to the teachings of the prophets of every religion. But is in line with the teachings of Marx and Engels. Collectivists demand we assimilate else we are to be destroyed… personally, (like they did Sara Palin), politically, (like they did Michele Bachman) and economically, (like they are doing to America).


History is the best means of divining the future. That which has been done in the past clearly can happen, but that which has never occurred may not be possible. The Nazis brought nationalized health care to Europe, reducing the fortunes of all the people in Europe to political favor. Dissension under a collectivist regime is never allowed, despite their calls for diversity, (until the collectivist gains power). The collectivist will undermine the will of the people if it suits his or her ends and even salvation is collectivized by the progressives. Because to the true believer in the collective, the Borg is the ultimate goal, where our species consciousness supersedes our individuality and we are relieved of our humanity in favor of the collective. So when Obama claims Obama care is settled law, and refuses to negotiate with his political opponents, he shows his true intentions by parroting the Borg, “Resistance is futile.” To that I would answer, “Resistance is divine.”





John Pepin

Our Bright Future

Thursday, October 3rd, 2013

Dear Friends,


It seems to me, I usually warn about potential threats to our liberty and prosperity, but that gives a skewed impression of my true beliefs about the future. I do see many possible dangers facing us, some are from our government(s) running amok and others are foreign in nature, while they have the potential of lowering us and our children to serfs and slaves, the future in the long term, is bright. Mankind has never advanced in a straight line. The progress in human understanding has always been through fits and starts. Sometimes reversing direction for a long time but always eventually getting back on track. The Dark ages were just such an example. Mankind taken as a whole, is a complex system, complex systems have a way of finding equilibrium. This equilibrium of the complex system that is humanity, is generally to improve the standard of living, increase the liberty of individuals and limit the power of political favor as well. In the long, or perhaps short term, this bodes well for the future of humanity.


If we look back at the arc of human history we can see that people’s lives used to be short, violent and brutish, (to use another’s phrase). This is still true in some parts of the World. The evils that humanity has seen are largely a result of our own ignorance and self indulgence. Slavery for example has largely been eliminated from human existence. Unfortunately, there are those who enslave others still, but they are almost universally criminal and not State sanctioned. This is a huge step for mankind. That slavery is becoming more and more detested, by people the World over, is a sure sign there is hope for us.


Thrasymachus said that most people want to live their lives in peace. This is true enough but he went on to say that the great men want power over others. This always manifests itself in the form of political power. The “great men” that he spoke of were and are the political elite. It is human nature to seek power over others. This is the thesis of Freud’s concept of the id. Irrational, lusting after whatever the id wants. Power being at the top. That human governments have put in place checks and balances to limit and minimize this aspect of our nature is another sign that we are able to learn. That the majority of us want to live in peace is another source of hope.


The founding of the United States and the subsequent writing of our Constitution was a seminal event in human history. It was an evolutionary step in limiting the power of the political elite. Rome had limited the elite through the use of the Consular system, which worked well for them for hundreds of years, but eventually failed. Ancient Greece used the Ostracism to limit the power of the elite to some avail, but in the writing of a constitution the power of government was enumerated in a written document, open for all to see, but most importantly… enforceable. The true innovation in the American Constitution was stating overtly, that the power of government comes from the people, not that the people’s liberty comes from the government.


Of course the elite have always sought to free themselves of whatever shackles that are placed on them. This is why there have been so many failures of governmental systems. This is as inevitable as the sun rising in the east. The attempts of the elite to throw off any limitations on their power are the reason humanity has retreated so often. We can expect this to continue as long as there are people. That we have advanced so far is reason for optimism. Perhaps we will loose our liberty to the elite today but it would be foolish to believe future generations will not again win it back. The nature of complex systems are that they have long tailed events. Unlikely happenings, that change the system profoundly, and sometimes in kind.


Capitalism has proven itself to be the most efficient means to advance mankind’s humanity to man, as well as generate prosperity, whenever and wherever it is used. This knowledge is like a genie escaping from a bottle, it cannot be put back in. Limited government through constitutionalism has proven itself to be the best way to insure that the elite don’t misuse the power invested in them. Western Philosophy, while often nonsensical, has brought us the Renaissance, the Reformation, the Enlightenment and constitutionalism as well. Eventually teaching the basic truth that all men are created equal. The future of mankind is bright. Our children, or maybe great great grand children, will inherit the stars. When that happens humanity will have suffered, loved and matured. Isn’t that the way all things grow? To start as an infant, grow to be self indulgent adolescents and eventually to mature into productive adults. Hsun Ching said the congenital nature of man is evil and that the good in us is a learned trait. I expect humanity is no different… we are learning to be good, and good we will eventually be.





John Pepin