The Deflation Bugbear

Posted on November 10, 2013 by john

Dear Friends,

 

It seems to me, when economists worry about deflation it is like a doctor worrying about a runny nose, they both are concentrating on a symptom, not the underlying disease. The consensus among economists is that deflation is so bad a little inflation is needed to insure no deflation occurs. The possibility of deflation is why most economists agree we cannot go back to the gold standard, and why all the proven dangers of fiat money must be tolerated, else we would get the dreaded deflation. But, as we all know putting leaches on a patient because he has high blood pressure is not a viable solution, persistent inflation is as bad and probably worse than a little deflation. The safety of your IRA account and job security depend on this question.

 

The economy of a country is like the body of a person. The corpus economic is a complex system that reacts to stimulus as is the human body. If we give a person lead oxide, (as they did in the Roman times) it may have a temporary palliative effect but the long term effects will be profoundly negative. The state of modern economics is about where the Romans were in medicine. Our very limited knowledge gives our economists the hubris to prescribe lead oxide when penicillin is what the patient needs.

 

The argument against deflation is this; if a person knows his money will be more valuable in the future, a rational maximizer will not spend money and instead save it. Using the aggregate supply aggregate demand model as described by John Maynard Keynes, this incentive to save instead of spend, lowers aggregate demand below aggregate supply and this results in economic recession. This logic depends on the aggregate supply, aggregate demand model being an effective analog of how an economy works, it also presumes the incentives will outweigh the needs of individuals.

 

So, what he is saying is that we wont spend our money, if we know it will be more valuable later. Let’s look into this presumption. If I have a dollar in my pocket, and I know that next year it will be worth one dollar and one cent, is that sufficient incentive against my rumbling stomach? Further, if my washing machine breaks down today, is it logical that for the gain of a penny or two in a year, I will put off buying a new one, and instead wash my clothes in a creek with a washboard? Moreover, if we take the opportunity cost into consideration, in other words the good I could have today weighed against the good I could have tomorrow, it only makes sense to buy the things I need today.

 

Deflation does provide a greater incentive to save just as inflation does a disincentive to save. If we consider the effects of a greater savings rate in a country, say, the US, we can see a lot of good that can come of it. The balance of trade is effected by the savings rate in a country. Balance of trade is both in goods and money. If the demand for money, capital, exceeds the savings rate money will flow into that country. This importation of money is counted in the balance of trade. If the savings rate exceeds the demand for capital then money will flow out, again effecting the balance of trade, but for the good.

 

Another effect of a greater savings rate is that more capital would be available for entrepreneurs to invest in ideas, small businessmen to invest in equipment or start businesses and more money available to build homes, cars and washing machines. A greater availability of capital means lower capital costs. But this doesn’t come at cost to savers because the money they have put away is growing both by compounded interest and deflation. There is no need for government to use lead oxide to gin up the savings rate against the disincentives inflation creates.

 

Economists will scoff at he idea pointing to the Great Depression as historic proof that deflation is a bad thing. In doing so they will confuse the fact that deflation was a symptom not the cause. The cause was government’s tampering in the economy. Price controls, regulations about what farmers could plant, how much any given product could be made, what could be made and making it nearly impossible to start a business. The result was the lowering of the demand for labor, this caused high unemployment and lower wages, lowering demand below aggregate supply. The government poisoned the patient and economists blamed the symptoms not the cause.

 

Some of the times where growth was highest was in times of deflation. During the 1800’s there were times where the Dollar was deflating… but the economy was growing. This further undermines the historical argument that the consensus of economists use. Economists use this spurious argument against deflation while ignoring the pernicious effects of inflation, negative incentive to save, negative balance of trade that the low saving rate creates, perpetual lowering of wages through the devaluing of the wages that are paid, allowing government to run up huge deficits, all the negative effects of fiat currency… among many others.

 

Inflation is simply a modern form of seigniorage. Seigniorage is where kings would collect all the money, shave a bit from them all and reissue the coins a little smaller. Inflation allows Governments to rack up huge deficits and have confidence that those deficits will evaporate due to inflation. History shows us that where deficits were too big and money printing got out of control the effect has always been runaway inflation, or in other words, hyper inflation. This is far more destructive of the wealth of a nation than anything proposed by economists about deflation.

 

So, when you hear that government must do this or that, to defend against deflation, (like monetizing the debt), you will know they are engaging in group think. Today economists are giving the corpus economic lead oxide and leaches when what the economy really needs is the penicillin of deregulation and the nutrition of lower taxes. This doesn’t serve the interests of the elite however, who want more control, not less. So we will continue to be bled, suffer heavy metal poisoning and all the while our leaders will claim it has to be done. To the destruction of the wealth of our nations… and by extension, us.

 

 

Sincerely,

 

John Pepin

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Obama’s Kraken

Posted on November 7, 2013 by john

Dear Friends,

 

It seems to me, the catastrophe that is Obama care is showing the deep level of incompetence and duplicity of the Obama administration, in reality, Obama care is a modern Kraken, released to destroy our healthcare system and level the ground for single payer. The fiasco of the web site is only the smallest problem. The roll out gets worse every day and the administration along with democrats are determined to get the Kraken out onto our streets. The damage it will wreak on our economy, jobs, and personal health is astounding, let along the profound damage it is and will do to our Constitutional rights.

 

The web site is the most simple type of HTML code to write. It is nothing more than a self populating database that emails the data to an insurer! This type of web application is available free over the internet for web site sign up and news letters. To have failed so very badly having taken so much money, between 100 million and 600 million, depending on the source, and time… 2 years, shows a level of incompetence that boggles the mind. The excuses the White House are coming up with would be laughable, if the money didn’t come from you and I. They didn’t expect a lot of people would sign on? Seriously? They mandated we all sign on! I suppose they were hampered by the web being so new, the sun was in their eyes and their shoe laces came untied…

 

As I said before, the web site is the smallest part of the problems with Obama care, a far more serious issue is that so many people are getting cancellation notices from their insurance providers because of the mandates in the law. This could be mitigated if other similar policies were available at the same or lower cost but the costs are skyrocketing! In many if not most cases the monthly premium is double what people were paying before the Kraken was released. Moreover the co pay and deductibles are getting insanely high. It was foretold by the market that this would happen. The prices of health insurance stocks rose dramatically when Obama care was deemed passed. The costs, deductibles and co pays are so high that the policies are basically useless. Expensive useless policies we are forced by law to buy!

 

Meanwhile, as our insurance premiums are going into orbit on a ticking ICBM the hours for those with jobs are being cut! I am agog that this isn’t the story of the day. Obama care creates the incentives for firms to cut the hours of employees so they don’t fall into the most expensive mandates of Obama care. Job growth, due to Obama Care, is almost non existent… which has the effect of lowering wages. As demand for labor goes down and the amount of labor from new graduates and illegal aliens made legal go up, wages MUST go down! This is economic 101. Even a simpleton should understand this… so why doesn’t Obama. Is he less than a simpleton?

 

Roe v Wade was based on doctor patient privilege. A doctor cannot be forced to disclose a client’s personal information to government due to Constitutional limits on the government’s ability to seize our personal data. Obama care turns the whole idea on it’s head, with doctors being mandated to ask if their patients have guns in the house, then reporting the answer to the government! That is the tip of the iceberg poking into the hull. Every single aspect of our lives will be open for any government bureaucrat to see… and law enforcement officer as well.

 

Imagine, someone goes to the doctor, the doctor asks if they are taking drugs. They must answer no, else it will be reported to the government, so the doctor performs surgery based on this wrongful information. The patient then dies because she is taking Ecstacy and it reacts with the doctor’s medicine. Human lives will certainly be lost due to the pernicious incentives of Obama care.

 

Now that the Kraken has been released we are at it’s mercy. Those intrepid would be Perseus that fought valiantly to stop the opening of the monster’s cage were vilified and denigrated… it continues today even with all the horror stories coming out. The victims litter the beach, human liberty, Constitutional rule, our economic well being, our children’s futures and our very lives. It looks increasingly like the problem is not so much incompetence but duplicity by this administration. Government is the only human institution that the more it fails the more powerful it gets. Until we have single payer, or in other words, Nazi health care… As the Kraken wanders through our cities and towns it will be as Godzilla stomping through Tokyo… except we will be the helpless people on subway trains scream bug eyed as he looks in on us...

 

 

Sincerely,

 

John Pepin

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The Republican Party is Dead… Long Live the Tea Party

Posted on November 4, 2013 by john

Dear Friends,

 

It seems to me… the republican party is in a death spiral of it’s own making. No political party can stab it’s base in the back, over and over, and survive as a viable party for long. That the republican party has gotten away with it for so long, and not succumbed to extinction, is testament to the hope of the American people for limited government. This trend has been happening for a long time but has accelerated of late. This bodes ill for American democratic representation and Constitutional rule unless the trend can be stopped. The means are at hand however.

 

In the last Presidential election only a paltry 40% of the electorate cast a ballot. This historically low turnout means that Obama won the election with only 20-25% of the American people voting for him. A pathetic quarter of the people voted the president into office. If you think about it, 20% of the people also believe in aliens, ghosts and vampires! (I would argue they are the same people who voted for Obama). Low voter turnout has been a mainstay in American elections for decades. The thing that is pitiful however is that politicians blame the voters and not themselves.

 

No one blames themselves for their own problems. It is a function of human nature. We all prefer to point the finger of blame at someone else. That this goes on in political circles is not hard to understand. Politicians however have paid consultants that get huge sums of money to explain to politicians why they loose elections. These highly paid eggheads should have the ability to see beyond their own noses and mine the data as to why so few people turn out. In this they fall into a thought trap, or in other words, group think.

 

This group think permeates the highest echelons of the republican party. They believe the only way to win elections is to go after a smaller and smaller faction of the electorate. Romney won the highly touted “undecided” but lost the election. This is clearly because he was a fatally flawed candidate. Obama’s biggest weakness, Obama care, was taken off the table by Romney’s presidential bid. Obama care is only a symptom and not the disease however. Romney never went after the republican base. He instead ignored and even vilified them. As a result, they didn’t vote for him.

 

This is typical of republican politics. They despise their base as upstarts, who want more liberty and less government, when the “enlightened” republican elite want more government and less liberty. The only difference between the republicans and democrats is… who controls the tyrant’s power. Neither wants to limit the power, scope and role of government, both want to increase it. Republicans believe their base is so stupid they will fall into line even when the republican elite spit in our faces.

 

This is proven by the Bush presidency. The republican party controlled a plurality of seats in both houses of congress and the presidency. Did we see a diminishing of the scope of government? No. Did we see balanced budgets? No. Did we even see a walking back of entitlements? No! What we did see, was a new entitlement, prescription drug coverage. We got higher deficit spending and thousands more pages of regulation. The republican base is not blind, they are not stupid, they know a liar when they see one, and refuse to participate in the destruction of the United States, by giving these liars and frauds legitimacy by their vote.

 

This is why the Tea Party faction has grown so powerful, despite the vilification of us. The Tea Party, teabaggers as the elite call us, are a truly grass roots movement. Those who understand that the republicans, as well as the democrats, want unrestricted illegal immigration, ever increasing government, taxes and regulation, regardless of the consequences to the American people, want to change course, but we all know, to a man, that neither the republican old guard, nor the democrat party, will give us what we demand and OUR Constitution requires.

 

That is why the republican party is in a death spiral and the democrat party is joining them. They both stand against the will of the people, the dictates of our Constitution, and both lie to our faces. They go after an increasingly small lunatic fringe of the public for votes. We are standing up however, wiping republican and democrat spit from our faces, and making ourselves heard. Obama care is only the latest in a series of slaps of our faces and knives in our backs, we refuse to sit any longer. Once Tea Party people get more seats at the table, we will see more turnout of an electorate, that today, increasingly feels disenfranchised. Until then, the republican elite should be on warning, the jig is up.

 

 

Sincerely,

 

John Pepin

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The Rise of the Proletariat

Posted on October 31, 2013 by john

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.

 

 

Sincerely,

 

John Pepin

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Arbitrary Power

Posted on October 27, 2013 by john

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.

 

 

Sincerely,

 

John Pepin

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Why We Have School Shootings

Posted on October 24, 2013 by john

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.

 

 

Sincerely,

 

John Pepin

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The Religion of Socialism

Posted on October 21, 2013 by john

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.

 

 

Sincerely,

 

John Pepin

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Our Constitutional Crisis

Posted on October 17, 2013 by john

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.

 

 

Sincerely,

 

John Pepin

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I Pencil and Complexity Theory

Posted on October 14, 2013 by john

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.

 

 

Sincerely,

 

John Pepin

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Janet Yellen’s Federal Reserve

Posted on October 10, 2013 by john

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?

 

 

Sincerely,

 

John Pepin

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