Posts Tagged ‘politics’

Good Intentions, Bad Ones, and Avarice… the Road to Tyranny

Thursday, April 9th, 2015

Dear Friends,

It seems to me, the road to hell is paved with good intentions, bad ones and avarice. Through a sense of altruism, watchers will want to help those they watch, more than they can now, because to do that they always need more power, when they get that power, they find it is insufficient and so… thereby advancing inevitably to tyranny. Tyranny doesn’t require as a prerequisite, malevolent thought, not at all, tyranny can arise from perfectly altruistic intentions. Each man and woman having different tolerances for despotism will wake up and find themselves in tyranny sooner or later, but all eventually will, once it has got too late.

In our modern surveillance state there are watchers, this is a new fact of life, and if they have a sense of compassion, which is a perfectly human quality, those they watch will become like pets, to be protected, nurtured and fed. Imagine having a beloved pet and you can only splash water at it’s dish? Wouldn’t you want the power to pour water directly into it’s dish? Now that you can pour water directly into it’s dish, shouldn’t you have the power to clean it? Isn’t it cruel to force it to drink from a filthy dish? You could minimize the violence it faces by collaring and leashing it. It would get the benefit of not fighting as much and the wounds that come with fighting.

When the watchers have no one to watch them their other human traits come to the fore. Vice, avarice and opulence creeps into the lives of the watchers, with no immediate direct negative consequences, because they are above being watched. No matter if it is personally immoral, socially immoral or just plain uncivilized behavior, the whole of the nation must suffer when the watchers become corrupt. Like a volcano spewing lava from the top, society vomits corruption from the top, and it oozes from the top down, covering the rest of the mountain in due time. Once corruption has reached the lowest echelons of the bureaucracy, you know every inch is saturated.

Our watchers have no one to watch them, the proof is where there have been attempts to limit the actions, even in extreme cases, the watchers have marshaled their political power, through their unions, the political faction that derives it’s sustenance from those unions, the judicial faction that sees our Constitution as liquid, and the unbiased media… to push back those limits. During the financial crisis of 2008, it was discovered that the very people who were supposed to watch over the banking system, were instead, watching porn. When it came out that they were derelict in their duty, their right to watch porn instead of work, was upheld in the arena of political power and they enjoy their right to watch porn at work today.

Which presents us with a second means a watched society can devolve into tyranny, if the first is through a sense of compassion, the second through corruption, and a third a sense of superiority. Sitting in a dark cubicle watching the comings and goings of other people, all day and all night, either directly or indirectly using meta data, can only lead to a sense of superiority. If I am setting there watching some person make the same mistakes over and over, even if I make those same mistakes myself, gives me a sense of superiority. That is human nature.

A sense of superiority dehumanizes those the superior person oversees. They become less than a human being in his or her eyes, they may be beloved pets, chumps to be fleeced or maybe just an ant farm. If you are overseeing an ant farm, you want your ant farm to be bigger than other people’s, don’t you? That would be the goal of an ant farm. So you would do everything you could to make your ant farm bigger. You might find a better medium for the ants and so transfer them into the better sand. They might outgrow the terrarium so you might move them to a larger terrarium. Maybe, you could add some plants for your ants to crawl around on, because it amuses you to watch them crawl around plants.

There is no possible way a system where there is a caste of people who watch the rest of society, enforcing every law, rule, regulation, either civic, social, or criminal, at every moment of the day, everywhere… that doesn’t lead inevitably to despotism and is itself tyranny. If the watchers were computers, programmed to watch everyone, all the time, no matter where they are, would remove the human element. But that would not be acceptable to the elite, who make those laws, rules and regulations. Such a system would enforce their own rules on the elite, which is unacceptable, so they need a group of humans to stand in the way. But even a cursory look at a computer driven system, shows it is utter tyranny of the highest order, it’s one redeeming feature is that even the elite would chafe under it’s provisions, showing that while not being liberty itself, it would lead to liberty in short order.

While the benefits of being watched over, might seem like a good thing to some people, random violent crime would become regular, plenty of soylent green for everyone, parks to crawl around on, everyone could live in Cabrini Green, a vibrant vice economy would employ many, etc… the inevitable tyranny that would result isn’t as rosy. No matter the nature of our watchers, and the likelihood is that every type will be represented, it will initiate a slide to tyranny that will be hard to stop. A Fourth Branch, or NUMAfourth branch, might mitigate the negative side so we could get some of the positives, but that is for another blog. The takeaway point of this article, is that a system where some watch others is a path to tyranny, no matter if the watchers are virtuous or villainous. The road to Hell is paved with good intentions, bad ones, and gluttony.

Sincerely,

John Pepin

Equality, Fairness, Fraternity and Brotherly Love…

Monday, March 16th, 2015

Dear Friends,

It seems to me… liberty is the answer to all of our desires. Those who seek equality, fairness, fraternity and brotherly love, the answer is, and has always been, liberty. To seek equality through oppression is like breaking someone’s bones and expecting them to run a marathon. To try to attain fairness by force is like strangling someone with velvet rope. To achieve fraternity with exclusivity is to take a fish out of water. Finally, to create brotherly love with hate, is baking a cake with nightshade as flavoring. No matter how much someone might want to get these things, fairness, equality, brotherly love and fraternity, the means is always liberty… oppression, force, exclusivity and hate create the opposite of the desired goal. This is terribly important for people to understand, so that we can achieve these things, instead of searching for them by destroying them.

Equality is to be treated the same. It is not equal distribution of the goods of society, it is to be seen as the same as everyone else. Equality is an attitude, not a state of being, it is a state of mind. To confuse a state of mind with a state of being is the source of the misunderstanding. A state of mind cannot be got by oppressing certain people, it cannot be had by government lowering some to the state of others, it must be created by holding everyone the same. Oppression and force effect the state of being, liberty effects the attitude. An attitude can only be effected by changes to the mindset from oppression to liberty… of individuals, politicians and the cultural elite.

Fairness is another state of mind and not a state of being. One cannot force another to be fair and thought is not subject to regulation. That is absurd. To be fair a person needs first to treat all people equally. So if equality requires as a prerequisite liberty, and fairness requires treating others equally, than liberty is a prerequisite for fairness as well. It is the opposite of fairness, to damage the one to help the other, that is the definition of unfairness. Force cannot make people treat each other fairly, it is the application of unfairness to create fairness, which intuitively, is unfair. To be fair to each other, we must have the mind set that everyone is equal, to hold some more equal than others, is the very opposite of fairness.

Fraternity is a state of the heart. A state of the heart cannot be changed by force, it is not subject to government regulation and it certainly is not improved by hate. Fraternity is to both support each other and to be friends with our fellow human beings. It should be obvious that the state of the heart of fraternity cannot be created by exclusivity. How can we hold others as our fellows if we are exclusive in our love of them? Those people are bad, and so they are not deserving… is the opposite of fraternity. To be exclusive in our love cannot lead to mutual support, it cannot create friendship, no, such a feeling instead makes us angry, hateful and jealous. Fraternity is the opposite of jealousy, hate and anger, it is to support each other, to be friendly and help our fellow travelers, regardless even of their flaws.

Brotherly love is another state of the heart. Hate is the opposite of love and so cannot be the font of any form of love whatsoever. To harbor, nurse and husband hate in our hearts is to reject brotherly love. Love of our brothers and sisters improves the lot of mankind, it makes us healthier, it makes the economy work better, it enriches us in so many ways that it is hard to fathom why so many of us wax hatred in our hearts. To hold hate in our hearts is to lower ourselves below animals. A mere animal doesn’t hate, but it can love, and so to hate is to opt to be lower than an animal. Our hearts are there to love. The love of humanity, not one segment, not one economic group, and not a certain religion, is the definition of brotherly love. Hate lowers while love elevates.

The underlying theme is, to effect a state of mind and a state of heart, there must be liberty. Oppression, force, exclusivity and hate are the opposite of liberty. They are the tools of evil. It is self evident, that the tools of evil cannot lead to a good outcome, no matter how much someone might want them to, the tools of evil will never achieve good, no matter how many times they are tried, and the tools of evil always result in evil, no matter who uses them. The tools of evil must be rejected, while liberty, the tool of good must be embraced.

Liberty is the tool of virtue. To be effective however, liberty must be used, inculcated, felt and understood. We can talk all we want about liberty, but until we actually implement it, in our own hearts and minds, the result will always fall short. So we must ask ourselves, do we want equality, fairness, fraternity and brotherly love, or do we want to continue to oppress, use force, be exclusive, and harbor hate in our hearts? The two paths diverge in liberty. It is up to us what future we beget to our children…

Sincerely,

John Pepin

The Insanity of the New Class…

Thursday, February 5th, 2015

Dear Friends,

It seems to me, Obama is channeling Marx in his latest diatribe against technological growth. Along with the US President, the elite in the media chant the absurdity… that productivity innovations are bad. On Bloomberg radio yesterday, they were interviewing some CEO and the questions constantly turned to how the advance in technology is damaging the middle class, and that the reason wages are stagnant and dropping is because of the advances in productivity. The theme is that labor saving wipes out labor. To someone who is ignorant about economics that might sound logical, but it is in fact spurious logic… an argument made to sound logical but is in fact illogical and used to fool the listener. It is critically important to understand the truth behind this lie. Technological driven productivity gains are critical to an increasing standard of living. Moreover, the reason wages are stagnant and jobs are scarce in the US and around the world is that regulatory constraints on our economies have reached critical mass, and are melting down our economies.

Marx basic theme in his Manifesto was that the mechanical loom was going to drive everyone out of work. He said, “As the forest of arms looking for work grows ever thicker, while the arms themselves grow ever thinner…” Meaning the mechanical loom made the production of cloth so much less labor intensive, and most people worked in the textile industry at the time, mass starvation was just around the corner. That is essentially the exact argument Obama made about ATMs. Of course Marx was proven wrong in his assessment just as Obama is in his. The mechanical loom allowed the price of a wool coat to drop, (the evil deflation), so that the average worker could afford one! Imagine, the mechanical loom allowed a mere plebeian to wear a warm coat! Horrors! He didn’t have to stuff his shirt with straw to keep warm he could wear a warm coat!

The Bloomberg interviewer argued against the Schumpeter model, by saying that those workers in the buggy whip industry got jobs in Ford’s factories making much better wages with less taxing labor, but today, there are no new jobs for the laid off workers to go to. An ignorant argument at best and spurious at worst. The reason that wages are stagnant is that government policies, policies designed to protect the politically favored, are destroying the creation of small businesses. For the first time in US history the creation of small businesses is NEGATIVE!!! Let that sink in a moment, there are more small businesses going bankrupt… than are being created! Creative destruction needs, as a fundamental input, new businesses and new business models. Regulation, taxation and the lack of standards, have so undermined that fundamental aspect of a growing economy that small business creation is now negative.

There was a story in the media the other day about some kids walking from house to house in New Jersey shoveling driveways for spending money. I did that when I was a kid. It is a great way for children and young people to learn that labor creates wealth. In a market system that is an important lesson. In America today however, the police were called, and the kids counter revolutionary snow shoveling business was shut down by the state. There was another story recently about some kids setting up a lemonade stand, they were also shut down by the government, running afoul of some regulation. In a society where even children cannot shovel a driveway or set up a lemonade stand, without facing daunting regulation and a police investigation, how can any business get started?

Without new businesses, creative destruction is destroyed. Giant firms are not entrepreneurial, that is a basic law of economics. Large corporations are run by the new class, for the new class, and against the interests of employees, customers and shareholders. The very definition of the principle agent dilemma. Anything that threatens the status quo is to be feared. Those at the top of large corporations always pay lip service to entrepreneurial ideas, but when faced with the choice of striking out on a new path or staying on the old one, unless there is a large bonus in it for them, the old one is always preferred. That is why new ideas are implemented by entrepreneurial small businesses. If those new ideas are profitable those new small businesses grow to large ones and wealth is created, if not, the risk taker gets a haircut. That is why Capital expenditure is so low while mergers and acquisitions are so high.

The new class progressives have effectively wrested the economy from the Bourgeois, (shareholders and entrepreneurs). Large corporations are able to line the pockets of politicians to protect their businesses from competition. When they do face competition their response is telling of their utter incompetence. Blockbuster is a perfect example of this in action. When faced with competitors who provided a better product at a lower price point, Blockbuster would have preferred to regulate their competition out of business, but couldn’t because of public scrutiny, so they did the next best thing, they raised their prices and lowered the quality of their product… to maintain their profit margin. The new class executives got their bonuses. Of course in doing so, they ignored the basic mantra of any and all businesses, provide value to the customers else they will shop elsewhere. So, Blockbuster went bankrupt, wiping out the investments of the shareholders, screwing their employees and abandoning their customers. The only ones who made out were the new class executives who got their bonuses and new executive jobs.

It isn’t creative destruction that is broken, nor is it the market system, it is the nonsense of the new class, in academia, politics and business, that has broken our economy. Regulation, taxation and cronyism have combined to eliminate small business start ups. So much so that the creation of small businesses has turned negative. Creative destruction requires small businesses to implement the new ideas that every economy, everywhere need, to grow the standard of living of the people. The new class run the businesses they have wrested from the owners, for themselves, at cost to every other element of our population. When faced with competition, lowering price and raising quality are not even a consideration, raising prices and lowering quality are the norm now, to maintain the bonuses of the new class. Deflation, the normal course of price evolution in a market economy is attacked as evil, so government can continue it’s profligate spending, to hide the outcomes of their policies and their cronyism. The “journalists” at Bloomberg are inculcated in the new class way of thinking, as are the “journalists” of every other major news outlet, and so we get one unanimous voice, all agreeing creative destruction is dead and socialism is the way forward… forward into slavery. Just as Joesph Schumpeter predicted.

Sincerely,

John Pepin

Confusion About the Market System…

Monday, January 26th, 2015

Dear Friends,

It seems to me, very few people the world over actually understand what the market system really is, most have fallen into the trap set for them by new class Marxists, that the market is evil and government is good. As long as the new class elite can maintain the fiction they spew we are on a path to predestined serfdom. The global elite quake at the thought that the hoi polloi discovering the ruse. If enough of us did understand what real capitalism is, we wouldn’t stand for their bigger government solutions that never work, but only make the problems worse. That is why we are constantly bombarded by spurious arguments like, the gap between the rich and poor, the market needs regulation, capitalism only benefits the rich, the wealthy got that way by stealing, etc… always made by the uber rich to blind us to the truth that we haven’t lived under a market system anywhere on the planet for generations. Ignorance may be bliss, but it is the best way to keep us in a state where our slavery is all but guaranteed.

What the world struggles under today is called “welfare state capitalism.” It is to the market system as bone cancer is to astrology. Welfare state capitalism is a system where the government redistributes the profits of free market interactions, from those who worked and took risks for them, to those who didn’t. In doing so, the government gains terrific power to destroy businesses that are not politically favored, enrich those who are, hold people in generational poverty, wipe out class mobility, destroy the family unit and create a permanent upper class… all in the name of fairness.

In a real market system, people get rich by taking risks, providing service and value to their customers. Under a welfare state however people get rich by having political favor. When those with political favor fail, they are bailed out by the government, (you and I), but in a market system, failure is paid for by he or she who fails. Moreover, failure in a market system leads to new ideas and greater efficiency, while in the welfare state, failure leads to more of the same, since there are no consequences to the elite, only the people. That is why too big to fail banks were bailed out with enough money to pay off three quarters of all the home mortgages in the US, and QE3 was sufficient to create eighty five thousand millionaires a month! Meanwhile, you and I were stuck with falling house values, wages and financial repression. All because of the bubble created by government policies. Not a real market by any measure!

In a functional market system deflation is the norm. That is one of the ways you can be certain that we have not lived under a market system for generations. The cost of those things we need and desire gets cheaper and cheaper. This is because the market system drives down the cost of everything by increasing productivity. That increase in productivity also has the effect of raising real wages. A carpenter with a nail gun and precut studs can frame a wall in seconds, where a carpenter, even a much better trained one, using a hand saw, hammer, nails and rough cuts, takes an hour. That increase in productivity lowers the cost of the final product even as it raises the wage of the carpenter. Raising his or her standard of living and making the work easier and less taxing on the body.

In welfare state capitalism however deflation cannot be allowed. Government runs a perpetual deficit to maintain the illusion of a functional market and prosperity through bubbles, and so, if the elite were to allow the market to do it’s normal operation and deflate the cost of everything, that huge debt would quickly become unserviceable. Inflation is needed to evaporate the debt through currency devaluation. Without inflation lowering your wages and driving up the cost of everything, the government would collapse, as many have in the past, and the elite would be out of their cushy high paying jobs. A disaster that the elite cannot allow to happen. So they inflate bubbles, watch them pop, destroying the meager wealth hard working people have saved up by the sweat of their brow… and the government inflates the next bubble, to maintain the illusion of economic growth.

Welfare state capitalism is a system where the elite decide who gets rich and who doesn’t. It undermines the market’s innate class mobility. The old saw, “shirts sleeves to shirtsleeves in three generations,” is rendered inert by the state’s interference, allowing the half witted grandchildren of the elite to remain wealthy, despite themselves. This is done by the state requiring everyone to get permission from the state for every economic activity. Those who are the children and grandchildren of the elite not only get permission, but the largess to engage in market activities, (as in Solyndra), while the children of the plebeians have to fight, pay bribes and struggle to get even the smallest of permissions. Crony capitalism is created this way.

Harry Truman said, “Anyone who gets rich in politics is a God damned crook!” Since the all powerful welfare state decides who will get what, the benefits will naturally flow to politicians, their cronies and family. Others who would compete are frozen out. Ways to measure this… are the number of small businesses in an economy, how many are started in a year and the rate of expansion of small businesses to medium and large. Moreover, people will spend absurd amounts of money to gain political office… so they are the ones to decide who gets what, insuring their business isn’t destroyed, and giving them the power to destroy their competitors. In a country where welfare state capitalism is at it’s apex, small businesses cannot compete with large ones because of political favor, and therefore, there will be few small businesses, and most of them will be engaging in illegal activities, ie, doing business without the proper licenses, paying employees under the table, selling non pasteurized milk, exceeding the weight limit of a road, idling a truck so a worker can get out of the cold, hauling without the proper permits, cutting hair without a license, etc…

The new class elite have to keep us in the dark about the market system. To that end we are inculcated in a doctrine that has no basis in reality… that crony capitalism is the market system, that we need the elite to regulate the economy to protect us from it, we are taught to hate those trying to get rich by providing value to us, and love those who get rich by political action. Our children are programmed in school to have a visceral reaction to the term “capitalism,” as a bad thing, and socialism is lionized as the solution to all the world’s problems. The bloody history of socialism is glossed over with absurdities like, “Marxism has never really been tried.” If most of us understood the fiction we have been inculcated with, is just that, fiction, we would demand real capitalism, and that cannot be allowed. The elite have too much at stake… their power, wealth and prestige.

Sincerely,

John Pepin

Should GDP Include Government Spending?

Monday, January 19th, 2015

Dear Friends,

It seems to me, to bring sanity into economic figures and government decision making, government spending should not be considered part of gross domestic product. Gross Domestic Product, (GDP), is a measure of national income. The number is used in a variety of ways… to determine the wealth of a nation, the prosperity of it’s people, it is a way to compare the efficiency of various nation’s economies against each other, ETC… Basically, GDP is a benchmark of a country’s economy. GDP is figured by adding together all government, consumer and business spending, investment, and exports then subtracting imports, and you have the expenditure method of calculating GDP. Which is to say, it uses national spending as an indirect means to estimate national income. Why should you care how it is calculated? Because GDP is used for so many economic policy decisions that directly effect your personal financial well being.

Government’s addition to GDP is problematical, because government doesn’t really produce anything, it only consumes. As such, government doesn’t add to national income and does not support the economy… it is supported by it. You can’t say borrowed money should be added to a person’s income, but economists do, when it comes to government spending. Welfare spending is one example. If I take a dollar from you and give it to someone else, does that make two dollars of income? No, it still only one… counted twice. If any government spending is included, it should only be that portion taxed and spent that year, and even that would distort the real picture due to the debt that has piled up, the service on that debt, welfare spending and the negative incentives government largess creates.

If the economy outside government folds, government spending must stop as well, because it is in fact spending and not income, but if government went away the real economy would hum along fine. Oh, government alone can go on a while by printing money and buying bonds, (monetizing debt), essentially stealing the wealth of everyone who holds the currency, but even that extraordinary measure must end in hyper inflation and the repudiation of a fiat currency, as in Argentina, Hungary, Yugoslavia, Zimbabwe etc… If the currency is backed by gold or some other commodity however, government cannot print money to keep up spending, because it would have to create that backing commodity out of thin air, which is why economists and politicians hate gold backed currencies, it limits their ability to fudge the numbers.

GDP is supposed to be an analog of a nation’s economic income and so adding in what should be subtracted distorts the picture. A nation’s real economic growth cannot be effectively measured when a drag is called a boost. In the most simple terms, if you are driving to a place, and want to know how long it will take to get there, normally you would discern the distance and your speed, divide the distance by your speed to get the time it will take to get there. We have all done similar calculations in our heads when the kids in the back seat say, “Are we there yet?” But what if we stop to eat? The calculation then would have to add in the time you spent at the restaurant, what if you subtracted the time you spent at the restaurant instead? Your calculation would be very different than reality wouldn’t it? Adding in government spending is like subtracting the time you spend eating instead of adding it, performing the opposite function than is called for, it gives a very distorted idea of what is really happening.

This provides a pernicious incentive for politicians to spend more to make GDP appear higher than it really is. Let’s say a nation is experiencing a recession and it is an election year. Government officials could borrow money and increase money printing to raise government spending, making the economy appear to be growing, even as it is really shrinking. Moreover, that raise in debt and corrosion of the currency to fund the spending, actually lowers real economic growth! That might help with an election campaign but it is certainly not a real calculation of that nation’s economy or income. Further, it skews the incentive for politicians from helping the real economy with actual reforms, to fudging the numbers with government spending, to make it look better. That is a recipe for eventual economic disaster.

Take GDP per person, a typical use of GDP to figure the income of each person on average. A nation with 10 people with a GDP of $10.00 a year would have GDP per person of $1.00 a year. What if in one year, a country’s government increased borrowing and spending an equal amount to the rest of the economy? Since that spending is included in the GDP figure it would make GDP appear to grow 100 percent in a single year! Would an average person’s income double though? Of course not, they would be poorer, because they would have to carry that debt… and if the scheme went on, that country would sooner rather than later go belly up, destroying all the prosperity of the people.

In the pseudo science of economics the wants and desires of those who do the measuring are included in their measurements. Unlike a physicist weighing the mass of a particle, the economist put’s his or her wishes into the measure, because they lack the perspective, testability and observability of the assumptions of real science. An electron has a testable verifiable charge that is consistent anywhere it is done, while no economic theory can be tested, they cannot be verified and are not universal. We all have egos and want to be more important than we are. None of us have a real perspective on ourselves, it goes back to Jung’s theories, that there is that we know about ourselves, that which everyone knows, that which others know but we don’t and that which no one knows. New class economists want government spending to be included in GDP, because they can effect government spending with their theories and assertions, therefore, adding government spending to GDP makes them more important. It serves their egos and the egos of those in political power. Sadly, it doesn’t serve us at all. That is why government spending should not be included in GDP… it calculates borrowing as income and calls a drag a boost, creating pernicious incentives and distorting the real picture of an economy.

Sincerely,

John Pepin

Obama’s War on Ideas

Thursday, January 15th, 2015

Dear Friends,

It seems to me, the newest war the US and Britain are fighting, the war on extremism, is a very dangerous slippery slope. The bottom of that slope is arbitrary rule. A slippery slope is when doing a thing, leads to another, then another, until eventually you have gone far beyond where you planned to go, like sliding down a slippery slope. A lie is a form of slippery slope. A white lie leads to another, then another, until they are no longer white lies they are bold faced lies… all to cover the initial lie. Once you step out onto that slope, the slide is unstoppable until the bottom is reached, then there is usually no way to get back up. The damage is done. Those who wield political power are many things, but stupid they are not, so the fact our leaders are moving us onto that slope is telling of their diabolical nature.

I would like to remind people that scientific progress, social evolution and political evolution depends on extreme ideas. When Columbus said the world is round he was an extremist, when Kepler said Earth revolves around the Sun and not visa versa he was extreme, when Einstein came up with his theory of relativity it was extreme, when Thomas Jefferson penned our Constitution it was extreme too. Every advance of humanity was called extreme at the time! To eliminate extreme ideas is to stop humanity in our tracks. New ideas are always extreme, to stop all new ideas is a recipe for stagnation and decay of a culture, it’s people and government.

As Clausewitz said, war is politics by violence, since the government has declared war then by definition, they mean to use violence for political ends. State violence is like a Pandora’s box. Once it is opened it cannot be unopened. Once someone is dead they cannot be brought back, (except by Jesus Christ as Lazarus). Therefore, before a government uses violence, it had better make sure the violence is justified. Violence is far more horrible than people realize, especially State violence, (war). So when a state resorts to violence, the enemy must be identified, the threat must be real, the goals set and the exit strategy decided. Else a war gets quickly out of hand and becomes an unending quagmire. The question now is, who will they use violence on?

As long as a faction isn’t violent who is to say it is extreme? Extreme is in the eye of the beholder. Many think the Mennonites are extreme, but not at all violent, so does that put them in our government’s sights? What about a saint? No one is more extreme than a saint. In the war on extremism both the US and Briton made sure to inform us that violence is not the defining factor… Extreme ideas are. The founding fathers were definitely extremists, and today, agreeing with them is one of our government’s definitions of extreme. A belief in individual liberties puts you on the extreme list. An anti abortion stance is another position that puts a person on the governments hit list. In fact, anything not in the new class progressive philosophy, is extreme, as defined by our government! Well, except for violent Islamic terrorism, but then again they did tell us it isn’t about violence, it is about ideas. Basically, anyone who disagrees with the government line, is an extremist.

It is the fear of Islamic terrorism that is the foot in the door for government to declare war on anyone who doesn’t agree with their new class philosophy. Yet the US government refuses to name Islamic terrorists as the target, in fact, they are careful not to. The lists put out by the US government and the British government on whom is extreme should make any liberty loving individual’s blood run cold. Throughout the ages, whenever a government wanted to usurp power, an enemy of the state has been the means, and Islamic terrorism provides just that means, and so must be protected, nurtured and husbanded. Now that we have allowed Obama to arbitrarilly decide who should be executed, out of fear of Islamic terrorists, there is no real limit to his power. Yesterday, Obama arbitrarily ordered Anwar Al Awlaki killed, for inciting Islamic terrorism, tomorrow, it will be Joe Smith, for reading the Constitution aloud in the public square.

So what does it mean to have a war on extremism? Simply stated, it means government will do violence to anyone who they disagree with or disagrees with them. Islamic terrorism provides the propaganda, but the real war is against the citizens of the US and Britain. Those governments bend over backwards to kowtow to violent factions within the Islamic community and never miss an opportunity to poke Christians in the eye. Remember Obama’s jailing of a film maker because his film offended Muslims? Last week Obama refused to attend the rally supporting Charlie Hebdo, and do you wonder why the US CIA is sending so much money and arms to Islamic terrorists around the world? Why were Christians forced at gun point to fund Piss Christ and a picture of the Virgin Mary in dung? Feces is the sign of Baal. So, if our governments are fighting a war on extremism, why do they engage in all those counter productive things? Because their war is not on Islamic terrorists it is against their own citizens!

Why would government wage a diabolical war against it’s own citizens? To disconnect us from our founding principles and documents. Obama himself said Our Constitution is too limiting he would like to change it, to empower government, not limit it. His war on extremism is just the bill to do that. Obama, and other world leaders are willing to let a few thousand children be killed horribly, they are willing to accept violence on our streets, rape as a weapon of war doesn’t bother them, they will tolerate the slaughter and even the extermination of Christianity, as well as genocide, human suffering to them is a means to an end, in short, those who will wage war on extremism, (do violence to those citizens that disagree with the elite), have no conscience and no morality, power is their only love. Oh, they will shed alligator tears over the suffering they cause, but that is only propaganda too.

To wage war against one’s own people is a description of truly evil person. In their war on us and our liberties Islamic terrorists are the new class progressive elite’s allies. Moreover, crushing ideas that the elite call extreme, is a certain way to stop humanity’s social, cultural and political evolution. War is politics by violence and by declaring war our government has avowed to use violence on anyone they deem extreme. Since they refuse to call Islamic terrorists extreme, but do call Tea party members, anyone who speaks of individual liberty, constitutionalists, returning US soldiers, gun owners, pro lifers, etc… extreme, it is clear the citizens of the US and Briton are the target of their war. Talk about slippery slope! Now that you know your government is planning on doing violence to you and your loved ones… what will you do about it? Oh, never mind, dancing with the stars is on… go back to sleep.

Sincerely,

John Pepin

QE Insanity

Thursday, January 8th, 2015

Dear Friends,

It seems to me, if as Einstein said, “Insanity is doing the same thing over and over again and expecting different results…” then our Central Bankers are the most insane people ever born. The pseudo science of economics will not be dissuaded by mere real world observed results, that contradict their theory, no, that would be like… giving up! You have to admire their willingness to sacrifice the standard of living of the whole world to prove a point. The United States Federal Reserve has printed trillions of dollars and used them to monetize the debt. The Bank of Japan is doing the same thing with the Yen, as now Draghi is claiming he will do as well to the Euro. Despite the trillions printed and given to government and the big banks, which in a normal economic cycle would result in runaway inflation, there is no inflation as measured by the eggheads at the Fed, ECB, or the seat of Abenomics. Their failures lead to our losses, in our wages, pensions, savings, house values, and yes, our basic standard of living.

Keynesianism is a philosophy in the arena of the Wealth of Nations. John Maynard Keynes was a British economist, who posited that since an economy is driven by the demand for it’s supply, in an economic downturn, which by his thinking was a period of time where supply outstripped demand, then government spending could gin up demand and swing an economy back into growth. Basic and simple to understand, it also had another thing going for it… it empowered government officials to tax and spend more, “for the good of the economy.” What Keynes and later demand side economists fail to understand is… not all demand is created equal. Consumer demand is always the most productive and government demand is actually often destructive of economic growth.

Japan is the poster child for Keynesianism’s failure. When Japan first went into their decades long recession the government was flush with excess reserves. The government of Japan spent huge sums in typical Keynesian fashion to stimulate the economy. It failed. They raised taxes and spent more, the economy floundered, a new party was elected into office on the promise they would spend more. They regulated and spent more, and the economy went downhill even faster. Abe was elected to print more and spend more, he raised taxes, printed more and is monetizing Japan’s huge debt… to no avail.

The southern states of Europe have had a healthy government sponsored safety net for decades. As a result, today the governments of south Europe spend huge amounts of money, keeping able bodied young people out of the workforce. The drag on the economies of those countries is like pulling a three bottom plow through a swamp. No amount of government spending would be enough, to satisfy the demand for free money from government, but the politicians have promised what they have promised. The elite could never lessen their grip on the economy through regulations and taxes, buttressed with graft and bribes. If they had the ability to print their money into hyperinflation they would do it in a nanosecond.

The US Federal Reserve has gone through six incarnations of money printing, TARP, TWIST, QE1, QE2, QE3, Monetary easing, and now ZIRP. Trillions have been printed and handed to the too big to fail banks (TBTF), and government. With all the propaganda that the US government has reigned in spending, the numbers the unbiased media use are compared to the days of trillion dollar stimulus short term measures, not long term averaged spending to GDP. Today the US government spends as much of GDP as anytime in history, 36% of GDP is government spending! That means 64% of the economy is pulling the plow while 36% ride it and claim they are helping. Yet even with all that Keynesian “stimulus” the economic outcome for Americans is getting worse by the day.

The past is littered with regimes that tried to print and spend their way out of a recession, they have all failed, spectacularly. The ones traditionally cited are Wiemar Germany and Argentina, but there are many other examples of hyperinflation triggered by monetizing the debt. Hungary was the worst ever in 1946, but Zimbabwe in 2008, and Yugoslavia in 1994, were crushing… the examples go on and on. Printing money to stimulate the economy has failed every time it has ever been tried. It empowers the political elite to take more and spend more however, and with that incentive at play, it will be given many more chances in the future as well, just in case it might work sometime.

The egghead economists answer to their failure of money printing… to raise wages, lower real unemployment and underemployment, the lack of small businesses, rising food inflation even as imported goods get cheaper, stagnated housing market, and the multi trillion dollar bond bubble the Fed’s policies have created… is to do more of the same. We are told we must let them print more and blow up more economic bubbles else we would be in for it. They have become like a typical mad scientist. Despite all the monsters they have created in the past, and the destruction those monsters wrought, there is only one way, their way, the consequences be damned because someday it will work… it just has to!

Sincerely,

John Pepin

Friction

Thursday, January 1st, 2015

Dear Friends,

It seems to me, a bearing is designed to reduce friction so the shaft it holds can rotate with as little loss as possible, adding sand and thus more friction increases loss to the point the shaft fails in service. We all intrinsically understand that friction makes machines break and work less efficiently but for some reason we don’t correlate that effect to our economy. Just as the friction from sand, rust or a failed bearing reduces efficiency and eventually causes failure in a machine, economic friction from taxes, regulations, corruption and having interest rates set by unaccountable people with dubious alliances, all cause an economy to function less efficiently and eventually fail.

Economics to many seems like magic, giving economists the gravitas of Merlin, but like Merlin’s magic, economics is mere pseudo science. Economics tries to explain how an economy works, and prove it understands by correctly predicting future economic conditions, given present circumstances. A tall order by any standard. It’s fatal flaw is that one of the underlying functions of economics is the human being. We are instrumental to economic outcomes. Clearly, in any area of “science” that involves the human being our science is woefully inadequate, especially as compared to our grasp of physics, mathematics and lately astronomy.

It is our lack of perspective about ourselves that makes our research into ourselves, our nature and emotions, reactions, decision making, etc… so difficult. Without comprehensive knowledge of ourselves we cannot ever really call economics a science. Our lack of dispassion concerning ourselves results in our self interests driving our observations. It is self evident that every politician always wants more power, to do whatever she sought power for in the first place, therefore, given a choice of several options she will always choose the option that results in increasing her power, it is in her self interests. Each time this happens the friction to our economy is increased. The effect on the economic outcome of each person is small individually, but the cumulative effect is huge, and the friction adds up.

Money flows through the economy like hydraulic fluid, mechanical energy or electricity flows through a machine. In a machine the engineer strives to limit the resistance to the flow of whatever the energy the machine is processing. In an economy, the engineer is the government the blue prints, government policy. The engineer builds a machine to do it’s function as efficiently as possible but a bureaucrat builds the economy as inefficient as possible. That is because the engineer is using mathematics and physics to build her machine while the bureaucrat has only his self interest to guide him. No matter how schooled in economics he may be, the bureaucrat’s incentives are in the end, self interest. The same hold’s true for politicians only to a much greater extent.

Every tax, license, regulation, requirement, zoning law, etc… requires an entrepreneur to get a lawyer, which costs money and time, multiplying the friction of the initial rule. Where an engineer puts in a bearing a bureaucrat puts in a clamp that he can tighten at will. The politician has hands to grease, and his ability to grease those hands, is based on his ability to effect changes in economic friction. He can tighten down the clamp a bit, so only the largest company in an industry can turn a profit, returning hundreds to one to his corrupt backer, for her campaign donation. At every level of government, friction to economic operation is piled on, and our politicians lament the gap between the rich and the poor.

This is only one of the fundamental problems with the “planned” economy, and why the laissez faire economy does so well… friction. The planned economy is nothing but friction, bribes, restrictions, permissions, the list of impediments to operating a business efficiently, even with virtual slaves as workers are so pervasive, that instead of adding value at each stage of the manufacturing process the system actually destroys value. In other words, the cost of labor and other inputs become so high due to friction, the value of the manufactured good is less than the original cost of the raw material. All due to friction imposed by politicians, because economics is a pseudo science, in the hands of self interested politicians.

We all want a well functioning economy. A well functioning economy produces general prosperity, low crime, advancing standard of living as well as other social advantages like less racism, more virtuous people and a return to the nuclear family as the primary family unit, that is because in a well functioning economy, we are too hard at work getting ahead, to commit crime, if we are selling sofas we could care less if the buyer is African, Asian or space alien, it is the color of his money that counts, the effects of a well functioning economy are many and positive. The way to a well functioning economy then… is to remove friction from our economy.

Sincerely,

John Pepin

Solving Ukraine’s Problems

Thursday, December 18th, 2014

Dear Friends,

It seems to me, Ukraine’s situation is rapidly deteriorating, impoverishing it’s citizens and pushing the breakaway areas with war and the threat of war. What a sad state of affairs for people who, because of their geologic location, have taken it on the chin over and over. The political system is broken beyond repair with whomever is in power crushing any opposition at will. There is no effective protections for freedom of speech, assembly or conscience. The people of Ukraine deserve much better. Every nation on the planet could learn a thing or two, how not to run a country, from Ukraine’s example. There are answers to the thorny problems Ukraine faces, but unfortunately, real solution are being ignored for war and arbitrary power.

Ukraine’s history is one of invasion, violence and tyranny. From the dawn of history Ukraine has been invaded by empire makers. The Mongol invasions were particularly hard on the people, with whole cities raised to the ground, every man woman and child killed, even the dogs, cats and livestock! Tamerlane slaughtered the Ukrainian people with the glee of a demon. When the Soviet union controlled Ukraine, Stalin stole the food the Ukrainians had grown themselves, selling it on the world market, starving to death millions of human beings! The poor Ukrainian people have suffered for centuries under the heavy hand of sadistic invaders and despots. It is past time for those sturdy people to have a measure of freedom and prosperity.

President Petro Pososhenco continues in the footsteps of the man he deposed. Instead of ushering in an era of peace and prosperity he has turned to war and autocracy. While it is only human to want revenge for grievances suffered, when a politician does it, the lot of the whole people is lowered. Today the Ukrainian central bank is broke with all of Ukraine’s gold stolen. The war with separatists sporadically flaring up, and now with US lethal aid going to Ukraine, the likelihood of a shooting war with Russia becomes a real possibility. Crimea is lost to Russia, for now, and the Eastern cities are in the hands of separatists, which would be a blow to any sovereign nation. Sadly, Ukraine is used to blows, and is likely punch drunk.

A better option, in my humble opinion, would be to sign a peace accord granting the breakaway areas autonomy, as long as they don’t formally become part of Russia. This would stop the bleeding, both of human blood and economic red ink. War is never a good option especially when there is an alternative. Of course it take two for peace and only one for war, with the Russian Ruble in free fall, the Russian people looking at hyper inflation and the Russian economy collapsing, war becomes more probable, since war is a traditional way to make patriots of starving people. Nothing rallies a people like a rip snorting war. Granting the breakaway areas autonomy would take the possibility of outright war off the table.

The next thing Ukraine should do is get their political house in order. To that end, I have advocated for all nations, including Ukraine, a NUMA or Fourth Branch. It would chain the lawmakers to their own laws and Constitutional limits. Of course the Fourth Branch option would require a Constitutional rewrite. If done right such a rewrite would have many beneficial effects. The US Constitution should be the basis of any new Ukrainian Constitution… with the addition of a NUMA. A Constitution that strictly limits the role, scope and power of government, would allow the free market to do it’s thing. For a better explanation see an excerpt from my last blog here.

If these two things were done Ukraine’s economy would start flourishing. The Ukrainian people are smart, hard working and risk takers, all of which are essential to a rapidly growing economy. Until the war is ended, and the government retreats to it’s rightful role, the Ukrainian economy cannot possibly get on solid footing. If the economy of Ukraine becomes dynamic, the gross domestic product per person would skyrocket, or in other words, the Ukrainian people would see prosperity they could have only dreamed of before. Once that happens the breakaway areas will almost certainly petition the Ukrainian government to allow them back in. Self interest trumps all other considerations. Ukraine could slowly rebuild itself without the exigencies and ruin that protracted wars always bring on. This would be a peace and prosperity based solution to the fundamental problems of Ukraine. Wise leaders would take the path of peace and prosperity, while foolish ones, war and poverty… Let’s pray the leaders of Ukraine are wise and not foolish.

Sincerely,

John Pepin

Regulation in Canada and the US

Thursday, December 11th, 2014

Dear Friends,

It seems to me, the contrast couldn’t be more stark between the policies of Canadian Prime minister, Stephen Harper and the US President, Barak Obama, the difference being their exuberance to regulate. I am of course talking about Stephen Harper’s response to new regulation over Canada’s oil and gas industries. Harper called the idea, “Crazy economic policy…” While at the very same time, Obama is implementing new regulations to limit the amount of potentially explosive gasses in crude, shipped out of North Dakota. The first protects the wealth and freedom of the people while the second corrodes our economy, wealth and liberty. Unless we grasp this fundamental difference between sound economic policy, and poison pill economic policies, we will be forever trapped in an ever downward spiral of poverty and despotism.

Stephen Harper was the only head of state that successfully navigated the financial crisis with his country’s economy intact. Canada didn’t see the collapse of it’s economy like every other nation on Earth did, (including China), and it’s banking system emerged as one of the most stable on the planet. Today, Canada is experiencing a decline in their fortunes due to the floor dropping from commodities prices, because Canada’s economy is dependent on natural resources as the primary growth mechanism. Yet even with the steep decline in commodity prices the Canadian economy is still firing on all eight cylinders. Because of Harper’s policies.

The US on the other hand, was the primary cause of the financial collapse. The policies that led to the crisis had their roots in Congress’ desire for economic tinkering. Democrats had become incensed by what they called “Redlining of neighborhoods.” To rectify that “unconscionable” situation, they forced lenders, via regulation, to give loans to people who the lenders knew couldn’t pay back. Economics is like water, no matter how tight you hold your hands, you cannot squeeze water, and like water those regulation caused the banking and financial system to have untended consequences. The financial system had to create new and innovative ways to mitigate the risks of default by borrowers, through bundling huge numbers of mortgages together, including many good loans with a few bad loans, (a derivative), with the idea that if a few went underwater, the rest would be fine and the underlying security would be solvent.

When the housing market went into bear territory the whole scheme came crashing down. More loans were going into default than projected, due to home owners not only unable to pay their loans, but unable even to refinance, because their principle had now become higher than the underlying asset price, IE, their homes. Many lost their homes and many voluntarily gave the keys to the bank. This caused the whole economic system to become unbalanced, (since no one could determine the real value of those derived financial products). With no one able to fix the value of the derivatives, the banks balance sheets became opaque, leading to them looking to their insurers to re balance their books. The giant insurers like AIG became insolvent with so many claims, and the house of cards came crashing down… all because of the government meddling in the economy to give a politically favored class an advantage in an otherwise free market exchange.

Canada changed course when they elected Harper. They went from an uber progressive state to a conservative one… just in time. Harper has been trying to remove burdensome regulations from the books and standing strong against new economy destroying regulations. This latest statement from Harper is telling of how cagey he is when it comes to economics. He rightly realized that further hobbling an economy that is already being slowed by external forces, (the global slowdown), would be counter productive if Canada is to see economic expansion and an improving standard of living. The difference was further highlighted by the Canadian dollar versus the US Dollar, during the financial crisis, for the first time the Canadian dollar became more valuable than the US dollar!

Regardless of the economic weakness, Obama and his new class progressives are increasing regulations at light speed. The newest regulations on the US oil and gas industries is supposedly to protect people from exploding rail cars like in Quebec. Now, that makes perfect sense, unless you know the facts of what happened in Quebec. The cause of the accident that burned Lac-Megantic to the ground, was faulty brakes that allowed the untended full train to roll seven miles down a hill, and derail near the waterfront. It had nothing to do with any explosive gasses it had everything to do with the brakes on the train. Moreover, if safety is the real concern, then a pipeline could easily be built that would transport the crude more efficiently and more safely, but the downside of that idea, is that politically favored Warren Buffet would loose millions, since his trains are the ones that transport the crude.

Today the US is mired in an economic depression in some ways more pernicious then FDR’s. The reason is the incessant meddling in the economy by the elite to enrich their cronies at cost to everyone else. Thousands of hard working bureaucrats tirelessly writing new regulations to destroy the world’s economy has become the norm. Canada is trying to chart another course, piloted by Stephen Harper, that will enrich the average Canadian. Every time deregulation has been tried, it has resulted in economic prosperity, and every time the elite have become enamored with economic shenanigans, the economy has gone into depression. This time is no different. What I hope will be different, is that we will learn our lesson, that heavy handed regulation of an economy, destroys that economy. Sadly, with all the hard lessons we have ignored in the past, I doubt we will learn it this time, but at least Canada is on the right course… for now.

Sincerely,

John Pepin