Category Archives: Sovereign

Right to Travel vs. Right to Bear Arms

If I had a nickel, as the cliche goes.  If I had a nickel for every time I’ve heard this false equivalency, I’d be a very, very wealthy man.

You can license driving because it occurs on public roads. You cannot license people for firearms because there is a right to keep and bear arms.

This has taken on new and more troubling implications in the years since the attacks on 9/11, with the development of the no-fly list for terrorists that the government barely admits exists on the one hand, and their willingness to apply it to other things like weapons purchases so that suspected terrorists can be kept from buying guns as well as not being able to fly on the other. That latter proposal, weapons purchases, has its own share of problems, many of which echo the core problems in the title and the argument quoted above.

As I’ve said before on this blog, I have a serious problem with cognitive dissonance on the subject of firearms.  But when it comes to contrasting travel with firearms, I have a few things I think I can say without reservation.

Occupy Posters

Just to be clear what the subject is here, it really isn’t travel vs. firearms. Even though most gunnuts (ammosexuals) want you to think about the subject in these over-broad general terms, the subject is properly generically stated as travel vs. self-defense or more specifically driving vs. firearms.  Public transit vs. firearms in the case of the no-fly list.

And right off the bat we run into this glaring problem.  Travel generically is a more important right than owning a firearm, specifically. Travel is instrumental in the ability to defend oneself, the ability to remove from one location, where your life is under threat, to a new location where it theoretically is not. Access to public transit, which includes air travel, is far more important than even being able to drive.

The ability to move is just about as fundamental as it gets. It is why the human species has adapted to so many different climates on this planet.  We travel and set up shop somewhere else where there isn’t already ten thousand other people trying to live. Where resources aren’t already owned. Where our lives are not threatened by a greater number of others who want what we have and/or need to survive. A classic defensive strategy, not to be where your enemies are looking for you.

Travel is a right. Limitations on travel without due process is a violation of our rights, what the government is supposed to be safeguarding for us. So the existence of the no-fly list outside of due process is a constitutional violation of our rights.  I’ll get back to that.

First let’s tackle the specifics of driving and firearms. I want to draw some parallels to illustrate why the arguments I’m about to present are not some wingnut conjecture. An automobile is deadly. It may not be designed to kill, but it is a very effective killer all the same. It is a tool designed by humans to serve humans as a replacement for large animals who were used in a similar fashion before the industrial revolution.

fivethirtyeight.com

A firearm is another man-made tool. This tool serves a specific purpose, or a variety of purposes all related, much like the automobile was designed to serve a specific purpose. Refined and perfected over the years, modern firearms are some of the most effective killing machines we’ve ever invented. They fire repeatedly and use standard rounds that can be purchased almost anywhere.

To purchase an automobile you need to have a license to drive. There are cases in which you can buy a car without a license; methods to circumvent regulatory guidelines allowing you to buy a car without a license.  But the regulatory purpose of the driver’s license is clear, and only those intent on obfuscation offer arguments to the contrary.  The purpose is to restrict vehicle operation and ownership to those people who have demonstrated a proficiency with the dangerous tool in question.

We license and regulate drivers because automobiles are dangerous and not because roads are public. You will find sovereignty arguments all over the place that make noises about common modes of travel, public conveyance, etc. None of them amount to anything in the face of a police officer who wants to see your driver’s license.  You can operate machinery on your own property without a license because law enforcement officers cannot enter your property without probable cause. It is actually illegal to drive on private property without a license in many jurisdictions. Not in Texas, apparently.

Now we come to the right to keep and bear arms, the murky waters created by the second amendment to the United States Constitution.

The second amendment is perhaps the most misunderstood piece of legalese still in place in the Constitution. It ranks right up there with the attempts to legislate the value of Pi or what we call rising sea levels in Florida. It has caused at least as much harm as it has good especially in the modern age of repeaters, automatics and semi-automatic weapons.

The problem here is two-fold. The ability to defend oneself is primary. This is demonstrable, as I illustrated above. Self-defense though is not limited to and may not even include access to firearms generally. But the right to defend oneself is not mentioned in the constitution, the right to keep and bear arms is. This is most likely an outgrowth of the views of the time. Dueling was still a common practice. Although it was made illegal around the time of the revolution in many places, it’s practice continued well into the middle of the next century and became the basis for the near-mythical quick draw gunfight. It is worth noting that some Western municipalities attempted to put an end to dueling with some of the first gun carrying restrictions in North America, the precursors for modern gun control.

Hunting with long guns (rifles were not yet invented) was commonplace and essential for many Americans if they wanted to eat. Between these two purposes, self-defense and hunting, it was rare to find a man who did not know how to shoot. On top of this we have the demonstrable attempts by governments all across the world, down through history into the modern day, to render their populations defenseless.  It is easier to control people who do not understand how to defend themselves. Historically this has been done by hoarding weapons under the guardianship of the local authority. If the authorities know where all the guns are, they will know who can and can’t defend themselves.

There are other ways to defend yourself, short of firearms. Denied access to firearms and even knives, it is still possible to mount a defense if you know how. Knowledge is power, in more ways than one. Revolution need not be violent in order to be effective. So the question is, what role do firearms play in modern society, how do we secure our right to defend ourselves while at the same time avoiding becoming the victim of the very same weapons we keep for defense?

unregulated militia

The second amendment speaks to two things; a well regulated militia and the right to keep and bear arms individually. The recent Heller decision struck down blanket bans on firearms that had evolved from the earlier attempts at gun control I mentioned previously.  Personally I think that is an accurate reading of the second amendment. What remains to be realized is that we need licensing and regulation of the citizenry for firearms proficiency. That is what well regulated militia means in the modern age.

The militia are the people, the citizenry. There has been a historical disconnect between the concept of militia and what the militias became as government evolved over the last two centuries. What the originating documents of the United States called militia we would probably see as the various state guards and national guards today. In those days all able-bodied men and boys were expected to participate in guard duties to some extent or other, a practice that fell to the wayside as our cities and states became more populous and our experiences more segmented and separated.

However, the language in the Constitution still states a well regulated militia, and since there is an individual right to keep and bear arms, that means that we the people have to decide what well regulated militia means in the scheme of all of us potentially being armed at any given time. Regulation is necessary. We want to keep the Trayvon Martin encounters to a minimum. We definitely do not want cities of Zimmerman‘s stalking all the suspicious-looking people they don’t like, just waiting for a chance to act in self-defense. We do not want a return to the old West stereotype of guns at High Noon, or pistols at ten paces. A near-certain death sentence with the accuracy of today’s weapons.  Just as there are limitations on who can drive or travel in what kinds of cars and trucks, limitations based on objective standards, so too there should be limitations on who can own a firearm and what kind of firearms can be owned.

Now we’ve come full circle, you readers who are still with me. we’ve circled back to the initial parameters of the argument; driver’s licenses, firearms licenses, and no-fly lists for terrorists.

In the light of objective standards as a guide, the use of the completely subjective no-fly terrorist list to also ban firearms purchases is essentially a patchwork way of applying suspicions more broadly whether those suspicions are well-founded or not. Automobile ownership and weapons ownership are almost identical for comparison purposes, but the right to use public transit should not be so easily infringed. With no way for the list to be challenged, no standards beyond mere suspicion by a federal agency, the use of this list should be stopped altogether, not applied to another related subject.

What needs to happen is for there to be actual discussion of these problems. What is needed is standardized national identification for the purposes of travel (there is a twisted can of worms) so that citizens can be assured that they will gain access to public transit. Me personally? I’m tired of that argument.  Let me just use my palm print. Mark of the beast be damned, I just want to stop standing in lines everywhere I go. Can we just get over this crazy notion of anonymity? Make a provision for those people who really need to remain anonymous? I have no problem with driver’s licenses, and I say this as a guy who will likely be forced to surrender his license in the next decade or so, as my ability focus and balance is degraded by disease.  Subjectively I resent not being about to get around on my own; objectively I have to say most of you will be safer if I can’t. If this disease gets worse.

I’m not even going to try to broach the discussion necessary to outline what objective standards for firearms proficiency might be. I’ll leave that argument to people who have more education and understanding of the subject. People like Jim Wright over at StonekettleStation (yes, him again)

Over time, just like with the drunk driving laws, enforcing the NRA’s own rules, the same basic common sense rules that are used in the military, in law enforcement, on civilian gun ranges, and were taught to most of us by our fathers, will change our culture from one of gun fetishists to one of responsible gun owners. And that will reduce gun violence, just as the same approach has significantly reduced drinking and driving.

Go over and read the article once you stop screaming at your computer screen. You might learn a thing or two from the (more than a dozen) articles Jim has written on the subject of America’s gun culture; or as he refers to it Bang, Bang Crazy and Bang, Bang Sanity. He has far more patience for the gun fetishists that surround us than I do.

I do want to make one thing crystal clear before ending. The second amendment is a two-edged sword, in more ways than the one I’ve just outlined. The other argument which can be (and has been) made is the original intent of a well regulated militia. If the people tasked with keeping us safe deem that the requirement is impossible with the rules now in place, they can and probably should conscript all able-bodied persons into the military for the purposes of weapons assessment.

That is one sure-fire way to make sure we know who should and shouldn’t have a weapon. I’m as opposed as I can get to the idea of a return to the bad-old days of the draft, but if anyone can have a weapon, and if no other laws are possible to fix the problem of weapons in our midst, then the only remaining solution is the one where everyone is trained and everyone is armed to their proficiency. What we need to decide is, which kind of America do we really want to live in? The time for that conversation is rapidly passing us by.

Conspiratorial Fantasies

Other98

Going to dive right into this. The image at right appeared on a friend’s Facebook wall recently.

The correct interpretation of facts currently on the ground is that anyone running for public office, from any party, is subject to the will of the people who fund their campaigns.  If they do not pander to the big spenders in the current climate (i.e. the corporations) then they will not get the funds they need to win.

Winning is key. Without a winning strategy, what occurs is just;

a tale [t]old by an idiot, full of sound and fury,
Signifying nothing.

All of them are working for the corporations, even the third party candidates. The Kochs owned the LP for a long time before they shifted to the Republicans. The Kochs represent some of the worst of corporate behavior, strong-arming groups that they fund trying to force them to echo the policies that the Kochs find favorable.  This will continue to be true until we get money out of politics, plain and simple.

I really have no problem with the image.  I probably don’t have a problem with the website it came from, although I haven’t spent any real time on it. What I had a problem with was where the conspiratorially motivated fantasists took the image in the wild.

I have culled most of the incorrigible conspiracists from my Facebook wall.  Every now and then a new one pops up and I subject them to the ban hammer; but generally my wall is free of their posts. Some of my oldest friends indulge in conspiracy fantasies though; and as a consequence of this I still have to deal with the odd reference to a conspiracy theory even though I find the entire subject of grand conspiracies completely ludicrous.

Let’s start with the phrase conspiracy theory. It really isn’t a theory at all.  A theory not only explains the facts in evidence, it survives rigorous testing through trial and error.  The theory of evolution is an excellent example of this. It has survived test after test, and has made predictions about evolutionary history which have been proven to be true. It is a robust theory, accepted by nearly all of the scientific community.

They aren’t conspiracy hypothesis either, which is the step in evidence below theory. A hypothesis of necessity must explain all the predominant facts it is attempting to address.  It has to be testable to be acceptable as a scientific explanation.

What we are left with is conspiratorial conjecture. They are stories that are told to entertain, for the most part. They are, as the title of this piece states, conspiracy fantasies.  When you start allowing your fantasies to replace the reality around you, a whole host of bad is waiting in the wings to descend upon you.

When my friend made a tangential reference to the Rothschild family in his Facebook post the image was attached to, rather than argue with his conspiratorial mindset directly, I linked this recent video discussing scientific studies showing that the conspiracy fantasists were more gullible than other people;

Unfortunately for all concerned, the only fact that penetrated was that “the Pink Haired Lady says chemtrails aren’t real”  which lead him and his friends to try to convince me they were real.

Well, they aren’t real. Of course chemicals are delectable in contrails. The planes that create them are shedding molecules into the atmosphere everywhere they fly. The combustion engines they are powered by emit exhaust chemicals, which are also detectable. This really isn’t that hard to figure out.

…Unless you have a ready-made market of science denial set up specifically to use the tools of science against it. An entire method of approaching the world around us that paints the activities of others as nefarious and unscrupulous. This says more about the conspiracy fans than it does about the rest of us, but there is a large group of people out there ready to confirm your suspicions about any activity that concerns you. All you have to do is go look and leave your critical thinking skills behind.  That is, if you ever learned to think critically in the first place.

Without critical thinking we are all babes in the wilderness.

The Rothschild thing? That is an old anti-Semitic/White supremacist fabrication.  Like the whole sovereign thing. There is no sound basis for asserting that the fantasy has any reality to it, unless you have a problem with Jews. Which again, says more about you than about anyone else.

If you think the pink haired lady only dismisses chemtrails, then conspiracy theorists are as gullible as the study she talks about shows.  They lack the ability to detect when they are being subjected to satire and ridicule, and repeat satirical posts as if they are real. If I felt like messing with conspiracy fans (and I don’t) I could feed them all kinds of crazy stuff which they would buy right into. So if that kind of trolling is something you enjoy, have at it. They’ll never know you’re pulling their legs.

The conversation spiraled into a discussion of various other conspiracy tales.  Haarp was mentioned. Like Agenda 21, it isn’t anything close to what conspiracy fans think it is.  Monsanto was raised, Godwin style. It was at that point that I knew I was quite literally wasting my time.  I didn’t want to have yet another conversation where the fans throw each conspiracy they’ve heard of at me one at time, each time certain that it can’t be explained. All of them can be explained, and not with grand conspiracies. Good luck getting one of the fans to notice this fact.

Perhaps the reason why so many American’s subscribe to conspiracy theories is because they understand their culpability in allowing their government to go so far astray.  Like all the guilty parties of the world, they are quick to point to those shadowy others out there “Them! They did it! It wasn’t me!” rather than take the blame for their own inaction, their unwillingness to sully themselves with real politics.  I mean, if lizard people are running the world, why bother with democratic participation?


I really should have mentioned the latest conspiracy fantasy that has taken Texas (my state) by storm. Ever ready to believe anything said of President Obama (except this) when the military announced their latest round of training exercises Operation Jade Helm 15 the entirety of conservative Texas lost its collective mind.

My favorite clown head politician, Ted Cruz, took to the internet and the news to predict dire consequences if these maneuvers were allowed to happen (as if they don’t happen pretty much every year) Even our sitting governor had to get in on the act, saying he would call up the Texas State Guard to protect the state from the federal military. (h/t to Skeptoid for a link to Abbott’s letter)

I’ve been to Camp Mabry. I have a lot of respect for soldiers, but if that’s what is going to protect us from the US military, I think we’d be better off pleading for mercy from the feds and then asking for reconstruction aid, rather than rely on the Texas Guard to fend off the largest military the world has ever seen.  No offense fellas, but you’re just a bit outnumbered and outgunned. Just a bit.

I’d like to second the observation of a friend that suggested the US government should simply offer to pull all military bases out of Texas as a gesture towards non-aggression. All those tax dollars in the form of soldier’s pay, base construction, etc going to another state instead of Texas.

What was that? You weren’t serious? No, no I think you were serious. Seriously deranged, anyway.  You might want to get some help with that.

“Paranoia is a mental illness, not a super power.” – Jim Wright Stonekettle Station


The latest fantasist appears to be Seymour Hersh; which is too bad.  Too bad because the guy really had a marvelous resume. Not too long after his revelations on Abu Ghraib, he seemed to lose his grip on what we colloquially refer to as reality, mistaking his desire to see grand conspiracies everywhere for the demonstrable facts in a story;

Perhaps the most concerning problem with Hersh’s story is not the sourcing but rather the internal contradictions in the narrative he constructs.

Most blatant, Hersh’s entire narrative turns on a secret deal, in which the US promised Pakistan increased military aid and a “freer hand in Afghanistan.” In fact, the exact opposite of this occurred, with US military aid dropping and US-Pakistan cooperation in Afghanistan plummeting as both sides feuded bitterly for years after the raid.

Hersh explains this seemingly fatal contradiction by suggesting the deal fell apart due to miscommunication between the Americans and Pakistanis. But it’s strange to argue that the dozens of officials on both sides would be competent enough to secretly plan and execute a massive international ruse, and then to uphold their conspiracy for years after the fact, but would not be competent enough to get on the same page about aid delivery. 

From: The many problems with Seymour Hersh’s Osama bin Laden conspiracy theory by Max Fisher

Don’t get me wrong here.  I’ve never accepted Pakistan’s denials of knowledge concerning Osama Bin Laden’s location, since he was living near their military training academy. What surprises me on that subject is we haven’t been able to demonstrate what classes he was teaching there.  Which high-ranking official in the Pakistani government helped him take up residence in Abbottabad.

That aside, not even the Obama administration accepts that Zero Dark Thirty is anything aside from a Hollywood fantasy attempting to make sense of the disparate narratives that could have lead to OBL’s killing. They have denied that torture lead to information on OBL’s whereabouts, and have maintained that key evidence was provided by a walk-in source voluntarily, not through any kind of intense interrogation.  Only Cheney and his ilk insist that torture produced anything useful, and I’ve already said my piece on that subject. So the accusation that Hersh himself levels at the Obama administration is largely incorrect.

I offer the previous as an attempt to disarm the fantasy believer, so that when I observe that Hersh is engaging in conspiratorial fantasies it in no way means I accept any other particular narrative on the subject.  Rather it is an observation like this one detailed over on Slate;

It’s this commitment to counternarrative totality—the idea that a few legitimate questions make the entire official narrative a lie, accompanied by a certainty in a counterhistory based on theory, suggestion, and a relatively negligible amount of secondhand evidence—that make Hersh’s account reminiscent of what you might see from the professional conspiracy theorists at InfoWars. It privileges the accounts and suggestions of a few vaguely connected ex-insiders over other, more exhaustive accounts based on the testimony of people who are in a much better position to know at least some of the facts. 

It is Hersh’s tone and his spittle-flecked denunciation of the US government’s complicity and cooperation with Pakistan in the killing of OBL as a publicity stunt that gets him marked as a fantasist, not the content of his counter-narrative.  Most of what he has to say on the subject really isn’t even news, if it is at all believable on its face.

This story is a baseline for conspiratorial fantasies. A gateway drug.  A building 7 in 9-11 truther language. If you can get past the point where you stop wondering how hundreds of civil employees and soldiers could have been motivated to keep silent on this subject, then you can get busy embroidering Hersh’s revelations with details of your own.

The detail of size is what makes the likelihood of this conspiracy being true so improbably remote.  Fantasists who support Hersh point to the Guardian / Edward Snowden revelations as proof that massive conspiracies can and do exist. However, it is that very story that illustrates the problem with massive conspiracies and the theories spun about them.  The NSA spying was anything but secret.  Oh, it was officially denied, and the US government would love to punish Snowden for his revelations. But the spying was itself an open secret.  Anyone interested in the subject knew that the NSA was involved in a dragnet of information across the internet.

It is a lot like the people who point to the denials of Groom Lake (area 51) being a location for testing new Air Force technologies, and then conclude that the stories of alien visitations are true.  The locals knew it was testing facility for decades. The official denials proved nothing aside from the fact that they were conducting secret tests there at some point. They certainly don’t point to any factual truth concerning extraterrestrial contact.

The NSA’s spying program is the hallmark of the inability for large conspiracies to remain secret. It is only a matter of time before the secret becomes common knowledge.  The fact that Hersh’s fantasies concerning OBL contain so little new reliable information proves that they are just that.  If they weren’t, he’d have solid witnesses willing to swear to the veracity of his complete story.  Those simply don’t exist outside of his imagination.

Emergent Principles of Human Nature; Inalienable Rights

Part 1 of a series of posts defining Emergent Principles of Human Nature; an outgrowth of a challenge issued to me ages ago by a fellow libertarian that I “explain inalienable rights without including god“.  Like most challenges of this type, the work is larger than the speaker or hearer understands at the time. 

This post will be updated and reposted ahead of each subsequent post in the chain, with links to each as they are completed. A lengthy endeavor, but hopefully worth the time and effort for both writer and reader.

Throughout human history we have attempted to find meaning in the world around us.  We do this imperfectly because we are imperfect beings in an imperfect universe; perfection is an unattainable unknowable state which only the deluded think they understand.

As a group we have tried many approaches to find this meaning.  We have given this discipline a name, Philosophy, and established schools of thought within the discipline as varied and as many as there are philosophers in history.  Down through the ages we have dallied with gods and flirted with the idea of the absence of gods, and fooled ourselves that we group of blind men can fully describe the elephant with only our hands and words.

I do not harbor any delusions about the ability of one uneducated man to be able to perfectly describe the universe or establish it’s meaning; for myself, I can only hope to find my meaning within the universe.  To this end I have pursued my lifelong obsession with philosophy; and when I say obsession I do not mean that I have exhaustively read the treatises of other philosophers.  I have done some of that, but I have found that most philosophers aren’t actually interested in exploring naked truths.  They are more interested in explaining why the world is the way they perceive it.

After that fashion, I guess I’m no different than they are.

However, I think that meaning can be found that is universal, objective.  It was because of the word Objective that I first allied myself with Objectivists.  Ayn Rand in her ultimate folly thought she understood the natural universe perfectly. Her writing on the subject, compelling as it is, is incomplete at best.  At worst, her work is used as it is today; to justify horrors by those willing to enact them, citing her works in ways that the author herself would never have condoned. Her claiming of the title Objectivism for her philosophy is illustrative of the massive ego of the woman herself, made obvious by the study of her life, if you are simply inquisitive enough to take up the challenge.

Within every lie is a kernel of truth, as the saying goes, and within the brashness of Objectivism is the truth of materialism, the denial of post-modernism and it’s still-born sibling, solipsism.

The original challenge to define inalienable rights was issued because god; and yet god himself is a hopeless contradiction, a failure of man’s imagination to grasp that the complexity around us is achievable through time multiplied by error alone. The uncreated creator is a substitution for understanding, not an explanation. Accepting this conclusion, it fell to me to offer a real explanation for the concept of rights; an explanation grounded in science out of necessity, since scientific evidence is the only demonstrable way to objectively prove anything.  At least, the only way that we’ve yet discovered.

Aristotle’s unmoved mover may indeed exist, the god of scientists and philosophers, the natural god, but that god does not offer explanations beyond mere existence itself.  It falls to us to explain what things mean to our own satisfaction.

The title of this piece was chosen consciously and deliberately. There are many philosophers who have written over the years of natural rights and inalienable rights. why what I am writing about cannot be simplistically pigeonholed as natural rights will be discussed in the next piece. This piece hopes to offer up a bare bones explanation of inalienable rights, and their grounding in science.  The planned series of posts to follow will embroider nuance into the bare structure I’m presenting here.


The theory of emergence  provides the grounding for inalienable rights.  While rights are vested in the individual, it is only through seeing the interactions of individuals that the pattern of rights becomes clear. There is no concept of property when alone on a desert island (where Rothbard’s simplistic outline of rights fails) all of everything the sole inhabitant of the island touches is his property by definition; but the individual marooned on a desert island cannot hope to do more than survive while his health endures, alone on an island.  Simple survival is the least of any of our human aspirations.

Most of the concepts we deal with on a daily basis emerge from our interactions with others.  Money is a concept that becomes useless in a social grouping small enough to provide for it’s own needs. Families everywhere struggle with introducing money into the social structure of the household, grapple with educating children on what money is, what it means, what is it’s value. If you corner any given individual and challenge them to define money, most of them will be unable to do so beyond showing you a physical representation; which is not of itself a definition.

In groups large enough that the contributions of the individual cannot be valued and compensated accordingly, money becomes a necessity. How else is the individual who makes widgets all day to be afforded to directly purchase food and shelter for his continued existence? When the value of the widget cannot be directly translated by the average person into a quantity of food, the quality of shelter? Money makes that possible, however it is defined. Money is an emergent system, an outgrowth of human interaction.

But rights are not systems themselves. Rights are principles that systems are based on.  Like systems which emerge from human interaction, the principles that those systems are based on are also emergent; revealed through the interactions of individuals.

That money should have a definable value to the individual is a principle (albeit flawed) of the monetary system.  All of the systems around us that we take for granted are based on these principles that most of us never even bother to seek out, let alone question.  Jefferson’s (through Locke) immortal listing of Life, Liberty & Pursuit of Happiness is, as it says in the Declaration, truncated. There are many other principles that can be inferred from the interactions of individuals, there for anyone to see if they simply take the time to look.

Which is why what we are wrestling with here is Human Nature, not ideology, theology, or the natural world as revealed in the study of other animals. How we as humans value each other, or fail to value as the case may be. The nature of the human animal, as it relates to other human animals within the structures we create for ourselves. As I observed in my first outing on this subject;

A prisoner has rights. Not because we ‘allow’ them; but because his [human nature] enables them. The fact that there are prison breaks is merely proof that the prisoners maintain their rights in spite of the full force of government and the people being intent on denying them the exercise of same. 

In the broadest sense, Emergent Principles of Human Nature represents what most people mean by inalienable rights; what has been lacking up to now is some way of objectively defining why rights cannot be separated from the person; this is satisfied in the concept of emergence.  They cannot be separated from the person, because they are only revealed through common interactions with other individuals. Without them, survival in a group is impossible because the basic needs of the individual cannot be met; and any system created that doesn’t take them into account will fail through the actions of individuals intent on fulfilling their own needs.

Rights are not listed on some government document. They aren’t granted by sovereignty, even your own.  They emerge from the requirements for human life, and the process of securing those requirements on an individual basis.

I finished my first entry on this subject with the observation;

That’s about as far as I’ve taken it. Much more to be written…

Apparently I have the gift for understatement, as the length of the many posts to follow should reveal.

Ideally There Would Be No Idealists; the Sovereign Version

Crazy shit of the moment I stumbled across on a BBS I frequent;

Jim Sanders, 45 of Mulberry, Indiana says that he is a “sovereign man,” who is not subject to the laws of Indiana and or his local governments, That’s why — after amassing over $900 dollars in fines for traffic violations and refusing to pay – his driver’s license got suspended. With no license, he says that his “only legal mode of travel is walking,” apparently making an exception for the law that requires a driver’s license.

Apparently he never talked to one of them, or he’d know (well, think. Believe. Something) that you don’t carry a drivers license, don’t buy a car with a title, don’t put tags on your car, etc. You just continue to drive without all that and when the cop stops you, you talk his ears off about all this kooky stuff until he lets you go before he breaks and shoots you.

This is one of those wacky but true stories. The kind of thing I only share when I’m enjoying my preferred spirits.

This whole “Sovereign Citizen” thing was making the rounds right about the time I bailed on the LP (at least  one prominent leader of the Texas LP, at the time, was into this) You never could nail down exactly what the system was, but it was purportedly to do with admiralty law, and yellow fringed flags, and your name in all caps on legal documents. You had the right to drive common vehicles without a license, because you didn’t have to have a license to ride a horse or drive a wagon; consequently all those laws didn’t really apply and so you could just ignore them PROVIDED your car wasn’t titled by and purchased from the state. So you had to buy a car from outside the country, essentially. Then what you get is a transfer deed (or some such) not the official title. You can drive that car without a license. So they claim.

Weirdly the cops never had heard of any of this when they stopped you, and these guys were always having to recover their vehicles from impound.

The tax- and fine-free driving was just one of the perks. You also could skip out on property taxes, income taxes, sales taxes, etc. If you aren’t a subject of the federal government, then none of that stuff applies to you. Just as weirdly, the counties will still repossess your property for not paying taxes, no matter how many different ways you try to explain your exemption to them.

The article jogged my memory about the Sovereign Citizen movement, something I’d heard recently on a podcast or news show. Something to the effect that Sovereign Citizen is a known White Supremacist tactic/ideology (ah, the wonders of the internet) Low and behold, when I look on the SPLC website, I find this;

The strange subculture of the sovereign citizens movement, whose adherents hold truly bizarre, complex antigovernment beliefs, has been growing at a fast pace since the late 2000s. Sovereigns believe that they — not judges, juries, law enforcement or elected officials — get to decide which laws to obey and which to ignore, and they don’t think they should have to pay taxes. Sovereigns are clogging up the courts with indecipherable filings and when cornered, many of them lash out in rage, frustration and, in the most extreme cases, acts of deadly violence, usually directed against government officials. In May 2010, for example, a father-son team of sovereigns murdered two police officers with an assault rifle when they were pulled over on the interstate while traveling through West Memphis, Ark. 

The movement is rooted in racism and anti-Semitism, though most sovereigns, many of whom are African American, are unaware of their beliefs’ origins. In the early 1980s, the sovereign citizens movement mostly attracted white supremacists and anti-Semites, mainly because sovereign theories originated in groups that saw Jews as working behind the scenes to manipulate financial institutions and control the government. Most early sovereigns, and some of those who are still on the scene, believed that being white was a prerequisite to becoming a sovereign citizen. They argued that the 14th Amendment to the Constitution, which guaranteed citizenship to African Americans and everyone else born on U.S. soil, also made black Americans permanently subject to federal and state governments, unlike themselves. 

The Sovereign Belief System
The contemporary sovereign belief system is based on a decades-old conspiracy theory. At some point in history, sovereigns believe, the American government set up by the founding fathers — with a legal system the sovereigns refer to as “common law” — was secretly replaced by a new government system based on admiralty law, the law of the sea and international commerce. Under common law, or so they believe, the sovereigns would be free men. Under admiralty law, they are slaves, and secret government forces have a vested interest in keeping them that way. Some sovereigns believe this perfidious change occurred during the Civil War, while others blame the events of 1933, when the U.S. abandoned the gold standard. Either way, they stake their lives and livelihoods on the idea that judges around the country know all about this hidden government takeover but are denying the sovereigns’ motions and filings out of treasonous loyalty to hidden and malevolent government forces

I have never, NEVER been happier to be divorced of the LP than I am right as this minute. I think I’ll have another glass.

I also found this tidbit;

I don’t want to appear flippant, because the interviewer references a police shooting incident (actually, it’s the one before last, because the last one was the two crazies kicked out of the Bundy Ranch group) but I swear I’ve listened to about 10 guys ramble on like that for hours on the subject.



A small “l” libertarian acquaintance of mine took me to task for the observation of “many leaders” of the Texas LP following this ideology.  I had to admit that I could name only one, so I revised the blog entry.  Still, it bears mentioning that the LP (like the Republicans, and the Democrats) is informed by an even larger group of hangers on, like-minded individuals who won’t join the party per se, but feel that the party can benefit from their insight on the ideology; consequently there were many others who felt that the LP was on a fool’s errand, attempting to alter government.  That the true purpose of anarchists was to end government and assert the rights of sovereign individuals. 
The idea that anyone can be sovereign or should expect to be considered sovereign is laughable; this is entirely aside from having the ultimate authority on what you personally will do or not do, will continue to exist or not. Sovereign is a completely different approach to the subject of authority.

Republic of Lakotah?

From RepublicOfLakotah.com:

We as the freedom loving Lakotah People are the predecessor sovereign of Dakota Territory as evidenced by the Treaties with the United States Government, including, but not limited to, the Treaty of 1851 and the Treaty of 1868 at Fort Laramie.

Lakotah, formally and unilaterally withdraws from all agreements and treaties imposed by the United States Government on the Lakotah People.

Lakotah , and the population therein, have waited for at least 155 years for the United States of America to adhere to the provisions of the above referenced treaties. The continuing violations of these treaties’ terms have resulted in the near annihilation of our people physically, spiritually, and culturally. Lakotah rejects United States Termination By Appropriation policy from 1871 to the present.

The video presentation is also on YouTube.
I wonder what the response will be?

Declining Dollar is only the First Symptom

While this story is a year old already, Why the global financial system is about to collapse remains scarily accurate in its analysis of the problems faced by fiat money systems around the world.

The global financial system is about to collapse because the US dollar is about to collapse.

The US dollar is about to collapse because of a simple economic fact that no one has the power to change or conceal.

The fact is that the spontaneous remonetization of the precious metals is a Nash equilibrium.

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Confused? Keep reading.


…and then you find the blog is gone. Never fear, that’s what archives are for:


Why the global financial system is about to collapse

May 19, 2006
The global financial system is about to collapse because the US dollar is about to collapse.
The US dollar is about to collapse because of a simple economic fact that no one has the power to change or conceal.
The fact is that the spontaneous remonetization of the precious metals is a Nash equilibrium.
What this means in English is that an ideal financial strategy for everyone on Earth is to buy as much gold and silver as they can, as soon as possible.
To oversimplify wildly, the reason to buy gold and silver is just that everyone else should buy gold and silver, too. There are two reasons to do it as soon as possible.
One is that anyone with an investment account can move money into gold and silver with a few mouse clicks. They trade on the US markets as the stock symbols GLD and SLV.
Two is that once this information becomes widely understood, US and probably global financial markets will be closed.
There is no way to know when this will happen. It could be tomorrow. It could be a year from now. It could be longer. Since the only way this kind of a financial panic meme can spread is through the Internet, history tells us nothing.
And the good news is that if governments manage the situation well, it does not have to be a global economic and political disaster. Quite the opposite, in fact.
Remonetization of precious metals is the next step in the slow, difficult reconstruction of the peaceful and prosperous liberal world that World War I destroyed. The lights are not going out. They are coming back on. The return to classical liberalism, which some call globalization, has barely started. It has already rescued hundreds of millions of people in liberalizing countries like China and India from lives of poverty and depression. Its only opposite is nationalism, which is a recipe for war and misery. It is not perfect, but nothing is, and it must continue.
These are obviously provocative assertions. I explain them below. My hope is that you will evaluate them by thinking for yourself, rather than trusting me or any other authority.

Overview

The first rule of investing is that it’s never a good idea to buy anything just because everyone else is buying it. When the price of an asset is the result of herd behavior, not fundamental value, it’s called a “bubble,” and bubbles always pop.
This rule is absolutely right – except in one case.
In English, a bubble that doesn’t pop is called “money.” Money is always fundamentally overvalued. Its purchasing power is independent of its direct physical usefulness to anyone. This is obvious for paper money, but true even for gold and silver.
For example, premodern monetary systems did not value gold above silver because gold has a higher specific gravity, because it’s harder to oxidize, because it’s yellow, etc. They valued gold higher because there is more silver than gold on earth, a fact that makes no difference to any direct user of silver or gold.
(I should note that there are some rare historical cases of fundamentally valued currency, such as tobacco in colonial Virginia. I prefer to define this as a kind of barter on steroids, but most writers disagree. And some assets that have never been used as currency, such as diamonds, fit my definition of money. All of this is just words, but words matter.)
The most important fact about money was described by economist Carl Menger in 1892: money is a consequence of its own history. Not every asset can serve as money, but not every asset that can serve as money will be used as money. As economists put it, money is “path-dependent” – it is a stable result of events that may be completely accidental.
We can call the transition from fundamental to monetary value “monetization.” Menger and other early economists analyzed monetization in a primitive barter economy. They showed that money is a market phenomenon – that it can develop spontaneously without any official seal of approval.
It’s not widely appreciated that the same monetization process Menger described can also occur in a modern financial market.
Of course, modern economies already have money, so the right word is “remonetization.” Instead of replacing barter with exchange, remonetization replaces official currency or bonds with the new monetary commodity or commodities.
The closest relative of remonetization is hyperinflation. But traditional hyperinflation is a relatively slow process. Remonetization, like any bank or currency run, is a panic. With modern financial networks to move money and the Internet to move dangerous ideas, a remonetization event can be almost instantaneous.
Remonetization has two prerequisites. One is a free public market in one or more monetizable commodities – such as gold and silver. The other is an unstable and mismanaged official currency – such as the US dollar.
In theory, reversing either of these factors could prevent remonetization. In practice this is probably impossible.
Before a remonetization event, the austerity measures necessary to fix the dollar are politically unlikely. Afterward they would be too late. And any preemptive deliberalization of the gold and silver markets would have to come with a remarkably convincing excuse to avoid triggering what it sought to prevent, especially since the US no longer dominates the global financial system.
The best way for the US and other countries to deal with this situation is to accept remonetization and manage it wisely. This will cause a lot of short-term pain for many people. But it will rebalance the global economy, and should lead to a new period of sustainable prosperity.
All this is yet another stack of unsubstantiated assertions. Rather than quoting dead white economists or filling the water with inky clouds of mathematics, let’s work through the situation step by step and see if we agree.

An illustration

Let’s start by comparing two hypothetical cases.
In case A, a million Americans decide right now to move all their savings into Dell stock, buying at the current market price no matter how high.
In case B, a million Americans decide right now to move all their savings into gold, buying at the current market price no matter how high.
In both cases, let’s say each of these test investors has an average of $10,000 in savings. So we are moving $10 billion.
Neither gold nor Dell can instantly absorb $10 billion without considerable short-term increases in price. Because it would require us to predict precisely how other investors would react, we have no way to precisely compute the effects. But we can describe them in general terms.
In case A, the conventional wisdom is right. Our test investors should expect to lose a lot of money.
This is because Dell has a stable equilibrium price which is set by the market’s estimate of the future earning power (price-to-earnings ratio) of this fine corporation. Because it is not the result of any new information about Dell’s business, the short-term surge should not affect this long-term equilibrium.
Since there will almost certainly be a short-term price spike, many of the test investors will be buying at prices well above the stable equilibrium. In fact, the more investors we add to the test, the more each one should expect to lose. Doh!
But there is no way to apply this analysis to case B.
Precious metals have no price-to-earnings ratio. With gold formally demonetized (that is, with no formal link between gold prices and currencies such as the dollar, as there was until 1971), there is no stable way to price it. There is no obvious equilibrium to which the gold price must converge.
It is true that gold has industrial uses. It can be priced on the basis of industrial supply and demand. The conventional wisdom is that it is.
Thus we can say that gold, for example, is overvalued if gold miners are selling more gold than jewelry makers and other industrial users want to buy. At present (with gold near $700), they probably are. So if you follow this reasoning, the right investing decision is not to buy gold, but to sell it short.
But this just assumes that there is no investment demand for gold. On the basis of this assumption, it shows that gold is a bad investment. Therefore there should be no demand for it.
The popularity of this logic is remarkable. However, it is a safe bet that most people who own gold do not follow it.
(In fact, most of the gold demand from the jewelry industry is actually investment demand. Women in many traditional Asian cultures, especially in India, store their savings as gold jewelry, which they buy by weight. It is difficult to guess what the price of gold would be if no one at all held it as an investment. But $100 an ounce is probably too high.)
Therefore, when our case B investors put $10 billion into gold, that money has to be used to bid gold away from its current owners, many of whom already believe that the price of gold in dollars should be much higher than it is now.
So the result of case B is that the gold price will, as in case A, rise immediately. But it has no reason to fall back.
In fact, quite the opposite. Because the gold price is largely determined by investment demand, any increase in price is evidence of increasing investment demand. Mining production, noninvestment jewelry demand, and industrial use are relatively stable. Investment demand is a consequence of investors’ opinion about the future price of gold – which is, as we’ve just noted, largely determined by investment demand.
This is not a circularity. It is a feedback loop. Austrian economists might call it a Misesian regression spiral.
Of course, the same mechanism can drive the gold price down as well as up. When savings flow out of gold, the price must drop. The reputation of gold as a volatile investment is by no means undeserved. There is a trading range within which the price of gold can fluctuate arbitrarily. The range is limited at the bottom by the industrial gold price when investment demand is zero. It’s limited at the top by… well, we’ll see in a moment.
It generally takes a significant external change to affect the long-term direction of a big feedback loop like the gold market. Thus, it is rational for the market to actually treat the price spike caused by case B as a signal that the feedback loop is accelerating, and buy more.
So the case B investors are more likely than not to profit on their trades. Obviously the trades must happen in some sequence, and the earliest will do the best. But all have a good reason to participate, even the last, because their purchase will signal other investors who are not in the case B group to enter the market after them.
Suppose you believe this. It’s all well and good. But what does it really prove? Couldn’t gold still be just another bubble?
And why should gold be a better investment because it has no earnings to price it by? This makes zero sense.
To answer these sensible objections, we need a few more tools.

Nash equilibrium analysis

The Nash equilibrium is one of the simplest and oldest concepts in game theory. (Nash is John Nash of A Beautiful Mind fame.)
In game theory jargon, a “game” is any activity in which players can win or lose – such as, of course, financial markets. And a “strategy” is just the player’s process for making decisions.
A strategy for any game is a “Nash equilibrium” if, when every player in the game follows the same strategy, no player can get better results by switching to a different strategy.
If you think about it for a moment, it should be fairly obvious that any market will tend to stabilize at a Nash equilibrium.
For example, pricing stocks and bonds by their expected future return (the standard Wall Street strategy of value investing) is a Nash equilibrium. No market is infallible, and it’s possible that one can make money by intentionally mispricing securities. But this is only possible because other players make mistakes.
(Nash equilibrium analysis of financial markets is not some great new idea. It is standard economics. The only reason you are reading a Nash equilibrium analysis of the interaction between precious metals and official currency now on the Web, not 30 years ago in the New York Times, is that the Times gets its economics from real economists, not random bloggers, and the profession of economics today is deeply tied to the institutions that manage the global economy. Real economists do not, as a rule, spend time thinking up clever new reasons why the global financial system will inevitably collapse. They’re too busy trying to prevent it from doing so.)
What Nash equilibrium analysis tells us is that the “case B” approach is interesting, but inadequate. To look for Nash equilibria in the precious metals markets, we need to look at strategies which everyone in the economy can follow.
Let’s focus for a moment on everyone’s favorite, gold. One obvious strategy – let’s call it strategy G – is to treat only gold as savings, and to value any other good either in terms of its direct personal value to you, or how much gold it is worth.
For example, if you followed strategy G, you would not think of the dollar as worthless. You would think of it as worth 45 milligrams, because that’s how much gold you can trade one for.
What would happen if everyone in the world woke up tomorrow morning, got a cup of coffee, and decided to follow strategy G?
They would probably notice that at 45mg per dollar, the broad US money supply M3, at about $10 trillion, is worth about 450,000 metric tons of gold; that all the gold mined in human history is about 150,000 tons; and that official US gold reserves are 8136 tons.
They would therefore conclude that, if everyone else is following strategy G, it will be difficult for everyone to obtain 45mg of gold in exchange for each dollar they own.
Fortunately, there is no need to follow the experiment further. Of course it’s not realistic that everyone in the world would switch to strategy G on the same day.
The important question is just whether strategy G is stable. In other words, is it a realistic possibility that everyone in the world could price all their savings in gold? Could all rights to dollars, euros, etc, just be converted to gold and resolved? Or would there be some pressure to revert to paper currency?
If gold atoms were the size of poppyseeds, divisibility would pose an obstacle. But measuring arbitrary small weights of gold is not a difficult technical problem.
It’s true that there are serious inefficiencies in circulating actual coins made of precious metals. Spend too much time reading financial history and you’ll be deluged with frightening facts about agio, gold points, clipped and worn coin, and so forth. Perhaps the worst problem is just that since metal coins have all these problems, there is a strong incentive to replace them with paper notes which are redeemable for actual metal on demand. Unfortunately, the note issuer then finds it very easy to print more notes than it holds metal.
These problems are all solved by the Internet. In a modern gold standard or other precious-metal monetary system, there is no reason for “money” to consist of anything but secure electronic claims to precise weights of allocated precious metals. The metal itself should stay in independently audited vaults.
This mechanism is already being used by new “digital gold currencies” such as e-gold and GoldMoney. These have only accumulated about 10 tons of gold, because they are not well-connected to existing financial networks. But the gold and silver ETFs, GLD and SLV (GLD has 350 tons of gold, more than the Bank of England; SLV has 2000 tons of silver) are similar if more primitive. Converting them to support direct payment would be a small matter of programming.
I don’t intend to get into any open-ended theological disputes on economics. But I do have to mention the 19th-century Banking School doctrine, inherited by both Keynesians and monetarists, that an expanding economy depends on an expandable currency. Please excuse me while I rant.
Gilded Age financiers did succeed in embedding this principle in the institutional DNA of the West. But it has no rational explanation. At least, if it does, I have never heard it. Of course the status quo need justify itself to no one, and it is possible that if monetary expansionism felt institutionally threatened it could present a more coherent narrative.
But to me the idea seems to rest on the understandable, but essentially numerological, connection between X% new money and X% growth, and on the indisputable fact that turning off the money printer tends to result in a recession. Since today’s economists (except of course the Austrian School) have abandoned the the apparently unfashionable concept of causality in favor of the reassuringly autistic positivism of pure statistical correlation, it has escaped their attention that when you stop shooting heroin, you feel awful.
It is also bruited about that without money-printing to dissuade savers from just hoarding cash, no one will lend or take any entrepreneurial risks. Someone should tell this to the Dutch, who ran a 100% hard-money economy for 150 years and were the most prosperous nation in Europe. Perhaps if Lord Keynes had sent wooden sailing ships on three-year trading voyages to Indonesia, he would have rethought his views on lending, interest and risk. In general, stable periods of hard money have been among the most prosperous in human history, and even Friedman and Schwartz admit it. When the value of your money grows with no risk or financial overhead, it may actually be a good thing.
So, absent of course any errors in the above polemic, strategy G is in fact a Nash equilibrium. A direct gold standard in which private citizens own allocated gold would be a viable foundation for a new global financial system. There are no market forces that would tend to destabilize it.
Or are there? Actually, it turns out that we’ve skipped a step in our little analysis.

Levitating collectibles

The problem is that the exact same analysis works just as well for any standardized and widely available asset.
For example, let’s try it with condoms. Our benchmark of all value will be the standard white latex condom. We can have a “strategy C” in which everyone measures the worth of all their assets in terms of the number of condoms they exchange for. Cash payments will be made in secure electronic claims to allocated boxes of condoms, held in high-security condom vaults in the condom district of Zurich. And so on.
This is obviously ridiculous. But why? Why does the same analysis seem to make sense for gold, but no sense for condoms?
It’s because we’ve ignored one factor: new production.
Let’s step back for a moment and look at why people “invest” in gold in the first place. Obviously they expect its price to go up – in other words, they are speculating. But as we’ve seen, in the absence of investment the gold price would be determined only by industrial supply and demand, a fairly stable market. So why does the investment get started in the first place? Does it just somehow generate itself?
What’s happening is that the word “investment” is concealing two separate motivations for buying gold.
One is speculation – a word that has negative associations in English, but is really just the normal entrepreneurial process that stabilizes any market by pushing it toward equilibrium.
The other is saving. We can define saving as the intertemporal transfer of wealth. A person saves when she owns valuable goods now, but wishes to enjoy their value later.
The saver has to decide what good to hold for whatever time she is saving across. Of course, the duration of saving may be, and generally is, unknown.
And of course, every saver has no choice but to be a speculator. The saver always wants to maximize her savings’ value, as defined by the goods she actually intends to consume when she uses the savings. For example, if our saver is an American retiree living in Argentina, and intends to spend her savings on local products, her strategy will be to maximize the number of Argentine pesos she can trade her savings for.
Here are five points to understand about saving.
One is that since people will always want to shift value across time, there will always be saving. The level of pure entrepreneurial speculation in the world can vary arbitrarily. But saving is a human absolute.
Two is that savers need not be concerned at all with the direct personal utility of a medium of saving. Our example saver has little use for a big hunk of gold. Her plan is to exchange it for tango lessons and huge, delicious steaks.
Three is that from the saver’s perspective, there is no artificial line between “money” and “non-money.” Anything she can buy now and sell later can be used as a medium of saving. She may have to make two trades to spend her savings – for example, if our saver’s medium of saving is a house, she has to trade the house for pesos, then the pesos for goods. If she saves directly in pesos, she only has to make one trade. And clearly trading costs, as in the case of a house, may be nontrivial. But she just factors this into her model of investment performance. There is no categorical distinction.
Four is that if any asset happens to work well as a medium of saving, it may attract a flow of savings that will distort the “natural” market valuation of that asset.
Five is that since there will always be saving, there will always be at least one asset whose price it distorts.
Let’s see what happens when that asset is condoms. Suppose everyone in the world does adopt strategy C, just as in our earlier example they adopted strategy G. What will happen?
Just as we predicted with gold, there will be massive condom buying. Since condom manufacturers were not expecting their product to be used as a store of wealth, demand will vastly exceed supply. The price of condoms will skyrocket.
Strategy C looks like a self-fulfilling prophecy. Condoms will indeed become an costly and prized asset. And the first savers whose condom trades executed will see the purchasing power of their condom portfolios soar. This is a true condom boom.
Let’s call this effect – the increase in price of an good because of its use as a medium of saving – “levitation.”
Sadly, condom levitation is unsustainable. The price surge will stimulate manufacturers to action. Since there is no condom cartel – anyone can open a factory and start making condoms – the manufacturers have no hope of maintaining the levitated condom price. They will produce as many condoms as they can, as fast as possible, to cash in on the levitation premium.
Levitation, in other words, triggers inventory growth. Let’s call the inventory growth of a levitated good “debasement.” In a free condom market, debasement will counteract levitation completely. It will return the price of a condom to its cost of production (including risk-adjusted capital cost, aka profit). In the long run, there is no reason why anyone who wants condoms cannot have as many as he or she wants at production cost.
Of course, condom holders will realize quickly that their condoms are being debased. They will pull their savings out, probably well before debasement returns the price of a condom to the cost of producing one.
We can call the decrease in price of an asset due to the flow of savings out of it “delevitation.” In our example, debasement causes delevitation, but it is not the only possible cause – savings can move between assets for any number of reasons. If savers sell their condoms to buy Google stock, the effect on the condom price is exactly the same.
Because condom debasement is inevitable, and will inevitably trigger delevitation, savers have a strong incentive to abandon strategy C. This means it is not a Nash equilibrium.
The whole sad story will end in a condom glut and a condom bust. The episode will be remembered as a condom bubble. In fact, if we replace condoms with tulips, this exact sequence of events happened in Holland in 1637.
So why won’t it happen with gold?
The obvious difference is that gold is an element. Absent significant transmutation or extraterrestrial trade, the number of gold atoms on Earth is fixed. All humans can do is move them around for our own convenience – in other words, collect them. So we can call gold a “collectible.”
Because it cannot be produced, the price of a collectible is arbitrary. It is just a consequence of the prices that people who want to own it assign to it. Obviously, the collectible will end up in the hands of those who value it highest.
Since the global bullion inventory is 150,000 tons, and 2500 tons are mined every year, it is easy to do a little division and calculate a current “debasement rate” of 1.66% for gold.
But this is wrong. Gold mining is not debasement in the same sense as condom production, which does not deplete any fixed supply of potential condoms. In fact, it only takes a mild idealization of reality to eliminate gold mining entirely.
Gold is mined from specific deposits, whose extent and extraction cost geologists can estimate in advance. In financial terms, gold “in the ground” can be modeled as a call option. Ownership of X ounces of unmined gold which will cost $Y per ounce to extract is equivalent to a right to buy X ounces of bullion at $Y per ounce.
Since this ownership right can be bought and sold, just as the ownership of bullion can, why bother to actually dig the gold up? In theory, it is just as valuable sitting where it is.
In the form of stock in mining companies which own the extraction rights, unmined gold competes with bullion for savings. Because a rising gold price makes previously uneconomic deposits profitable to mine – like options becoming “in the money” – the total value of all gold on earth does increase at a faster rate than the gold price. But the effect is not extreme. 2006 USGS figures show 30,000 tons of global gold reserves. This number would certainly increase with a much higher gold price – USGS reports 90,000 tons of currently uneconomic “reserve base” – but the gold inventory increase would be nowhere near proportional to the increase in price.
In practice, modeling unmined gold as options is too simple. Gold discovery and mining is a complex and political business. The important point is that rises in the gold price, even dramatic rises, propagate freely into the price of unmined gold and do not generate substantial surges of new gold. For example, the price of gold has more than doubled since 2001, but world gold production peaked in that year.
The result is that gold can still levitate stably. Even if new savings flow into gold stops entirely, debasement will be mild. The cyclic response typical of noncollectible commodities such as sugar (or condoms), or theoretical collectibles whose sources are not in practice scarce (such as aluminum) is unlikely.
Of course, if savings flow out of gold for their own reasons, it can trigger a self-reinforcing panic. Delevitation is not to be confused with debasement. Again, it is important to remember that debasement is not the only cause of delevitation.
What we have still not explained is why gold, which is clearly already levitated, should spontaneously tend to levitate more, rather than either staying in the same place or delevitating. Just because gold can levitate doesn’t mean it will. (And note that we still haven’t looked at silver at all.)

Money in the real world

In case it’s not obvious, what we’ve just done is to put together a logical explanation of money, using gold as an example, and using only made-up terms like “collectible” and “levitation” to avoid the trap of defining money in terms of itself.
Now let’s apply this theory to the money we use today – dollars, euros, and so on.
Today’s official money is an “artificial collectible.” Money production is limited by legal violence, not natural rarity. If in our condom example, the condom market was patrolled by a global condom mafia which got medieval with any unauthorized condom producers, it would resemble the market for official currency. No one can print Icelandic kronor in the Ukraine, Australian dollars in Pakistan, or Mexican pesos in Algeria.
It may be distasteful to hardcore libertarians, but this method of controlling the money supply is effective. There is minimal unlicensed production of new money – also known as counterfeiting.
It should also be clear from our discussion of gold that there is nothing, in principle, wrong with artificial paper money. The whole point of money is that its “real value” is irrelevant. In principle, an artificial money supply can be much more stable than a naturally restricted resource such as gold.
In practice, unfortunately, it has not worked out that way.
Artificial money is a political product. Its problems are political problems. It does no one any good to separate economic theory from political reality.
Governments have always had a bad habit of debasing their own monetary systems. Historically, every monetary system in which money creation was a state prerogative has seen debasement. Of course, no one in government is unaware that debasement causes problems, or that it does not create any real value. But it often trades off short-term solutions for long-term problems. The result is an addictive cycle that’s hard to escape.
Most governments have figured out that it’s a bad idea to just print new money and spend it. Adding new money directly to the government budget spreads it widely across the economy and drives rapid increases in consumer prices. Since government always rests on popular consent, all governments (democratic or not) are concerned with their own popularity. High consumer prices are rarely popular.
There is an English word that used to mean “debasement,” whose meaning somehow changed, during a generally unpleasant period in history, to mean “increase in consumer prices,” and has since come to mean “increase in consumer prices as measured, through a process whose opacity makes chocolate look transparent, by a nonpartisan agency whose objectivity is above any conceivable question, so of course we won’t waste our time questioning it.” The word begins with “i” and ends with “n.” Because of its interesting political history, I prefer to avoid it.
It should be clear that what determines the value of money, for a completely artificial collectible with no industrial utility, is the levitation rate: the ratio of savings demand to monetary inventory. Increasing the monetary inventory has a predictable effect on this calculation. Consumer price increases are a symptom; debasement is the problem.
Debasement is always objectively equivalent to taxation. There is no objective difference between confiscating 10% of existing dollar inventory and giving it to X, and printing 11% of existing dollar inventory and giving it to X. The only subjective difference is the inertial psychological attachment to today’s dollar prices, and this can easily be reset by renaming and redenominating the currency. Redenomination is generally used to remove embarrassing zeroes – for example, Turkey recently replaced each million old lira with one new lira – but there is no obstacle in principle to a 10% redenomination.
The advantage of debasement over confiscation is entirely in the public relations department. Debasement is the closest thing to the philosopher’s stone of government, an invisible tax. In the 20th century, governments made impressive progress toward this old dream. It is no accident that their size and power grew so dramatically as well. If we imagine John F. Kennedy having to raise taxes to fund the space program, or George W. Bush doing the same to occupy Iraq, we imagine a different world.
The immediate political problem with debasement is that it shows up in rising consumer prices, as whoever has received the new money spends it. If we think of all markets as auction markets, like EBay, it should be clear how this happens.
There is no perfect solution for the problem. But there are quite a few imperfect ones.
The simplest is just the increase in productivity due to new technology, which would otherwise tend to make prices fall. For example, Moore’s Law tells us that the cost of a transistor halves every two years. If all consumer products were made entirely from transistors, Moore’s Law would support some pretty tasty debasement. Sometimes productivity improves quality rather than lowering price, but (even before the notorious “hedonics”) price indexers have always tried to capture this gain.
When productivity counteracts debasement, what’s happening is that progress that normally would have been improving peoples’ lives is being confiscated by the government. Since no one ever sees how cheap everything would have been without debasement, they tend not to whine about it so much.
Another approach is to use debasement for corporate welfare, by subsidizing low interest rates (“easy money”) or bailing out the financial industry when risks go bad (“injecting liquidity”). If this is done properly, it can actually lower consumer prices by decreasing production costs. Prices only start to rise when booming producer industries start to bid up the costs of the commodities and labor they need to produce. Economists of the Austrian School consider this corporatist approach to finance responsible for the business cycle, and I believe them.
This essay, though it’s probably too long, is nowhere near long enough to explain all the games that today’s governments and government-managed financial systems play with debasement. Here are three points worth noting for the moment.
One is that a conservative estimate of today’s dollar debasement rate, as measured by the Fed’s M3 number, is 10%. European numbers are similar. Chinese debasement is more like 20%.
Two is that most debasement today takes the form of insured credit expansion: debt that is guaranteed explicitly or implicitly by the government. Any loan which will be repaid unless the US financial system collapses is as solid as the dollar by definition. This is obviously true of sovereign debt, such as Treasury bonds, but implicit guarantees now cover many forms of private risk. By assuming responsibility for defusing financial crises and assuring continued prosperity, the Fed has converted vast reams of otherwise dubious paper into the effective equivalent of dollars. Because it is hard to even define this guarantee, accurately measuring debasement is impossible.
Three is that debasement creates dependency. For example, when debasement is used to subsidize interest rates, businesses and homeowners become dependent on cheap, easily rolled-over loans. When the debasement rate is 10% and interest rates are 7%, the negative debasement-adjusted interest rate is a debt factory. It is easy for borrowers to make decisions that assume these rates will continue. If they end, the typical result is a recession. These kinds of dependencies make it very hard for politically sensitive authorities to end debasement, or even significantly reduce it.

Debasement and investment

We haven’t even seen the most pernicious effect of debasement.
Debasement violates the whole point of money: storage of value. As such, it gives savers an incentive to find other assets to store their savings in.
In other words, debasement drives real investment. In a debasing monetary system, savers recognize that holding money is a loser. They look for other assets to buy.
The consensus among Americans today is that monetary savings instruments like passbook accounts, money market funds, or CDs are lame. The real returns are in stocks and housing.
When we debasement-adjust for M3, we see the reasons for this. Real non-monetary assets like stocks and housing are the only investments that have a chance of preserving wealth. Purely monetary savings are just losing value.
The financial and real estate industries, of course, love this. But that doesn’t mean it’s good for the rest of us.
The problem is that stocks and housing are more like condoms than they are like gold. When official currency is not a good store of store value, savings look for another outlet. Stocks and housing become slightly monetized. But the free market, though it cannot create new official currency or new gold, can create new stocks and new housing.
The result is a wave of bubbles with an unfortunate resemblance to our condom example. When stocks are extremely overvalued, as they were in 2000, one sign is a wave of dubious IPOs. When housing is overvalued, we see a rash of new condos. All this is just our old friend, debasement.
This debasement pressure answers one question we asked earlier: why should gold tend to levitate, rather than delevitate? Why is the feedback loop biased in the upward direction?
The answer is just that the same force is acting on gold as on stocks and housing. The market is searching for a new money. It will tend to increase the price of any asset that can store savings.
The difference between precious metals and stocks or housing is just our original thesis. Stocks and housing do not succeed as money. Holding all savings as stocks or housing is not a Nash equilibrium strategy (though for housing in some neighborhoods it comes close, because various restrictions have given buildings in older city centers near-collectible status). Holding savings as precious metals, as we’ve seen, is.
Presumably the market will eventually discover this. In fact, it brings us to our most interesting question: why hasn’t it already? Why are precious metals still considered an unusual, fringe investment?

The politics of money

What I’m essentially claiming is that there’s no such thing as a precious-metals bubble.
This assertion may surprise people who remember 1980, when gold touched $850 and silver $50. In the ’90s gold bottomed at $250 and silver at $3.50. These numbers are even more extreme when we factor in debasement. Doesn’t this look like a bubble?
It does, and it obviously represents a cycle of levitation and delevitation. The only sense in which there is no such thing as a precious-metals bubble is the one in which a “bubble” is sure to pop, like our condom bubble. Remember, markets are perfectly free to store all human savings in a single precious metal, or (if they find some other store of value which seems to work better, such as an artificial collectible) to store no savings at all in any of them.
What happened in 1980 is that the Fed, under the great Paul Volcker, successfully defended the dollar (and other national currencies, which are and were all backed by the dollar) against exactly the same event I’m predicting now: a currency crisis with self-accelerating flight to precious metals.
Volcker faced an existential threat, and he used every weapon at his disposal. The most obvious, and the one he is best remembered for, was ending almost all debasement and letting the market set interest rates. Short-term rates went well above 20%, considerably exceeding the official value of the I-word, and certainly into positive debasement-adjusted territory.
But for another example, one action the Fed took was to just tell banks, on the basis of no legal authority at all, to stop lending to anyone who was buying gold or silver.
This illustrates the tenor of the times. Finance in 1980 was a tame little pussycat. Hedge funds barely existed. Today, the Fed would never do this, not because banks would disobey – banks are still pussycats – but because today’s global financial market is a huge, snarling wolf-dog, and displays of fear are unwise.
Markets do not, in general, think. Most investors, even pros who control large pools of money, have a very weak understanding of economics. As I’ve already mentioned, the version of economics taught in universities has been heavily influenced by political developments over the last century. And your average financial journalist understands finance about the way a cat understands astrophysics. The business section is not exactly where anyone who plans to be the next Bob Woodward wants to end up. This has an obvious effect on retail investor psychology.
The result is that historically, the market has had no particular way to distinguish a managed delevitation from an inevitable bubble. Because of Volcker’s victory, and the defeat of millions of investors who bet on a dollar collapse, the financial world spent the next twenty years assuming that there was some kind of fundamental cap on the gold price, despite the lack of any logical chain of reasoning that would predict any such thing.
Even now, there is no shortage of pro-gold writers who predict gold at $1000, $2000 or $3000 an ounce, as though they had some formula, like the P/E ratio for stocks, that computed a stable equilibrium at this level. Of course, they do not. They are only expressing their intuitive feeling that gold is very, very cheap right now, and tempering it with the desire to be taken seriously.
In fact, precious metal prices will only stabilize when they either defeat artificial currency completely, or are completely defeated by it – either by some new financial technology which permanently precludes debasement, or by a forcible end to the free trade of precious metals.
Central banks – and through them, governments – always want to minimize the levitation of any collectible that could displace their artificial currencies. Obviously this includes precious metals. And obviously, owners of precious metals want to maximize their levitation.
The result is a giant tug-of-war on a global, historic scale. It is no accident that until the 20th century, the nature of money was one of the most controversial political issues in the United States. It is a matter of historical fact that the pro-banking forces won in 1913, and took the question off the political table. There is no reason to assume this victory will be permanent. But there is also no reason to assume it can’t be.
So, to come up with an educated guess as to the winner, we need to take an objective look at the artillery on each side.

Government’s weapons against gold

The dollar’s most obvious weapon is just that gold, although it is to some extent money, is not currency. No one accepts gold in exchange for goods and services. The digital gold currencies could change this, but if they do it will be far in the future.
The obvious impact is that to save in gold, you have to pay round-trip conversion costs, including your own time in managing the conversion. “Insulation” is a good name for this phenomenon, because it makes it hard for money to flow back and forth between gold and the dollar. Another form of insulation is capital-gains tax, which under US law is particularly harsh on gold.
A less obvious form of insulation is that there is no real loan market for gold. (Actually, there is a gold lease market, but it is not for ordinary schmoes – more on this later.) So if you know you want to hold your gold for a substantial period of time, there is no way to earn a direct return by lending it out. Of course, you have an expected return in dollars which should average out at the dollar debasement rate, but there is no reason in theory that you couldn’t earn gold interest as well. But, in reality, you can’t.
A less passive weapon is the large gold reserves that central banks hold. Central banks have somewhere between 10,000 and 30,000 tons of gold. They use this to manage gold prices.
Or at least, presumably manage gold prices. If you go out on the Internet today and research gold, you will find a lot of writers who accuse central banks of managing gold prices. The facts that these writers present are very plausible. But their tone implies that central bankers are committing some kind of heinous crime, an imputation I find unlikely. I’m sure the legal department signs off on everything. The fact is that managing gold prices has been a core element of central bankers’ jobs since the Bank of England was founded in 1694, that they have no legal obligation to disclose their actions, that keeping gold prices stable and low is very much in their professional interest, and that therefore the burden of proof should rest on anyone who insists that central banks do not manage gold prices.
Of course, the tools of the trade have changed a bit since 1694.
At first, banks just issued more gold-redeemable notes than they held gold. Obviously the fundamental value of a gold banknote is whatever weight of actual gold it commands. If you have one million ounces of gold and you issue two million notes, the fundamental value of each note is half an ounce, whatever you print on it. But if authorities are obliging, banks can manage the exchange rate between notes and gold, by “selling” gold for notes freely at the face value. As long as not too many people took them up on this offer, banks could create free money that traded at no discount to gold. A modern, electronic financial market would detect this scam and vaporize it instantly, but in the days of paper ledgers it worked just fine as long as the ratio was not pushed too high.
In other words, once a bank issues more banknotes than it has gold, a banknote becomes its own artificial currency. There is no objective difference between a redemption policy and a currency peg, like the mechanism China uses to control exchange rates between the dollar and the yuan. Even in the days of the “classical gold standard,” these fractional notes were the norm.
After World War I, the world went on a “gold exchange standard” which restricted redemption in various ways, enabling further banknote expansion. After World War II, only the US redeemed in gold and only to other central banks, giving us still more banknote expansion. In the late ’60s, the French became fatigued with exchanging their excellent wine for slips of green paper, and actually took the US up on its redemption policy. In 1971 Nixon “closed the gold window” and the redemption era was over.
Since then, central banks have had two general strategies for managing gold. The simplest is “bombing” the gold price by just selling the stuff. This creates a perfect economic illusion of debasement – in fact, it is exactly what an alchemist would do if she discovered a secret new process for manufacturing gold. Intellectually the market can tell the difference, but markets, as we’ve noted, are not intellectual.
Or not very intellectual. But Western central banks are political institutions and have to report their reserves. A downward trend would be disconcerting and too easy to game.
So someone came up with the idea of leasing gold. In a lease transaction, the central bank lends the gold to a Wall Street bank, which sells it into the gold market and invests the proceeds as it sees fit. This works as a “carry trade,” because central bank rates for leasing gold are very low, and the Wall Street bank can earn a higher return on the cash. Of course the Wall Street bank has to pay the loan back in gold at some point, but the central bank is always happy to roll it over.
The neat trick is that, even though the central bank’s gold has been sold to make jewelry or coins, and it has had the same negative impact on the gold market that any sale of gold does, central banks typically do not report how much of their gold they have leased out. In other words, they count actual gold and gold IOUs as the same thing. Hello, Enron!
The cover story is that gold leasing lets central banks “earn a return” on a “dead asset.” No ordinary person could possibly believe this; you would have to be a financial journalist. First, turning a profit is the last thing on central bankers’ minds; it is not even clear what return means for an entity that can print its own money. Second, this story chimes oddly with central banks’ official motivation for keeping this prehistoric asset rather than selling it all in one giant auction, which is that gold is a money of last resort in a crisis. As, of course, it is. But leased gold will not magically reappear in a crisis.
Some analysts estimate that since the 1980s, central banks have lost more than half of their gold through leasing. Portugal released this figure, perhaps accidentally, in 2001; it had lost 70% of its gold.
Leasing is not the only way central banks use their gold to influence financial markets. For example, they can also write call options, and so on. The power to print money and use it to buy arbitrary financial assets, at any valuation the bank deems appropriate, also doesn’t hurt.
But even these “gold derivatives” are probably not the most significant impact of governments on the gold market. The main weapon of governments against gold is simply gold mining.
As we’ve noted, gold mining is a generally uneconomic process. If rights to underground gold were politically secure, exploration and measuring of gold deposits would be sufficient to value them financially.
Political risk varies, of course, by country. But since there is really no country where these rights are totally secure, or at at least as secure as a vault in Zurich, digging up gold makes sense.
What doesn’t make sense is selling it.
Investors buy gold-mining stocks as a way to buy gold. In general, gold investors value gold above the quoted market price – if they didn’t, they’d sell it. It is unclear at what price your average “goldbug” would give in and exchange her gold for dollars, but for many it must be well over $1000 an ounce.
So a mining company would almost certainly increase their value to its owners by not selling gold at all, and just holding it on the balance sheet. Of course, some gold sales go to paying mining costs, but even this could be eliminated. When companies discover a new gold deposit, they could finance its extraction by issuing shares. This business model would optimize mining as a mechanism for converting dollars into gold. Since miners do not practice it, we can infer that their motivations are political.
The result is a continuous stream of gold entering the market at the current spot price, whatever that price may be. Again, this serves as a simulation of debasement, and confuses markets into treating gold as an unlevitated commodity, which would have an equilibrium price as determined by industrial supply and demand.
And government’s last weapon against gold is the physical power to just confiscate it, as the US did in 1933. What circumstances would make this politically realistic? But we’re starting to get into gold’s weapons against government.

Gold’s weapons against government

Gold’s main weapon is one we alluded to already: a sudden, self-reinforcing, and complete collapse of the dollar and all other artificial currencies (except maybe the Swiss franc). It’s time to look at exactly how this would work.
In a nutshell, the problem with the dollar is that it’s brittle. It’s hard to imagine a Volcker-style, contractionary defense of the dollar today. When Volcker did his thing, the US was a net creditor nation with a balance-of-payments surplus. Its financial system was relatively small and stable. And it had much more control over the economic policies of its trading partners – the political relationship between the US and China is very different from the old US/Japanese tension.
Fed policy since the crash of 1987 has been to insure against risk by stabilizing crises with liquidity injections – that is, hefty dollops of new money. It’s no secret that the financial industry has responded by taking on more and more risk. This vicious cycle of “moral hazard” is a policy that’s hard to change. For today’s Fed, short-term rates of 5% are dangerously high. 25% is not a serious option.
Any fractional-reserve banking and monetary system, like the US’s, is destabilized by any outflow of dollars. For the Fed, what is really frightening is not a high gold price, but a rapid increase in the gold price. Momentum in gold is the logical precursor to a self-sustaining gold panic.
In a self-sustaining panic, flight to gold destabilizes the banking system and the bond market, causing waves of bankruptcy across the financial industry. The Fed’s cure for bankruptcy is more liquidity – but monetary expansion only increases the incentive to buy gold. In the endgame, money flows out of the dollar as fast as the Fed can pump it in. This is the collapse scenario that leads to remonetization.
One of the reasons the gold price has been rising lately is that central banks’ ability to inject gold into the market, whether by leasing or outright sales, has become quite limited. The US needs congressional approval to sell gold. European banks used to be enthusiastic sellers and leasers, but are not unconcerned about the longevity of the dollar, and agreed in the 1999 and 2004 Washington Agreements to restrict their gold disbursements.
And one problem with gold leasing is that a gold lease has to leave someone with the obligation to return that gold. If the gold is sold for dollars, the seller is short gold, and loses a dollar every time the gold price goes up a dollar. Central banks are not known for refusing to roll over gold leases, and their rates are very low (under 0.20% these days). But public companies have to report these losses on their balance sheets. In the ’90s, when the gold price seemed to be under control, borrowing gold for a carry trade seemed like a good idea. The gold price is unstable and going up these days, and new leases are the last thing on most people’s mind.
Of course, the US government can play the other side of the ball and – at the very least – limit purchases of gold. But this, as we’ve seen, means showing fear. Dogs have nothing on hedge funds when it comes to smelling fear. And it’s an illusion to think that the US and its allies own the global financial system.
If the US imposed exchange controls on gold, the instant result would be a replacement of dollars with gold as a global reserve currency by China, Russia, and the Arab oil bloc. It is hard to imagine, for example, Dubai, closing its gold market. The result would be an international exchange rate between gold and dollars, and a black market in the US. Economists understand this very well, and I can assure you that no one wants to go there.
One significant mistake which makes a collapse much more likely was licensing the gold ETFs. It is easy to underestimate the value of mere insulation in protecting the dollar.
In 1980, to buy gold, you had to go to a coin dealer and pay as much as 10% in round-trip transaction costs – and then, of course, you had to store the stuff. If we imagine an ordinary corporate stock which you had to buy at a “stock dealer” in the same way as 1980 gold, it’s easy to see how few investors it would attract. Similarly, bullion was off the reservation for almost all money managers. Sure, eccentric oilmen, Bond villains and South American dictators could hold bullion in Zurich. But how many South American dictators can there be in the world?
In retrospect, remonetization of gold in 1980 had no chance at all. What the goldbugs of 1980 failed to see was that physical currency of any kind, paper or gold, was a relic. Gold could not compete with dollars because there was no way to hold or move it electronically. The only electronic market for gold was the futures market. And since most futures market trades do not exchange actual metal, but are settled for cash, futures trading in gold did not perform the critical market function of shifting physical gold from people who valued it less to those who wanted it more. Retail investors certainly did go to their coin stores and buy Krugerrands, but the Fed could move faster and harder.
It’s interesting to note that this kind of insulation, in the form of small overheads in shipping and redeeming gold, also played a large part in managing fractional-reserve gold currencies in the 19th century. If, as I think, it was also crucial in the Fed’s 1980 victory, why do we have gold ETFs?
The gold ETFs (GLD and IAU) let anyone move any amount of money into or out of gold at minimal cost. Investors who value everything in gold can use the gold ETFs to treat the dollar the way our retiree in Argentina treated the peso. They can work and spend in dollars, and save in gold.
So why would a financial system that has spent the last century insulating itself against gold turn around and plug the dollar directly into the stuff?
The answer is just that the Fed didn’t approve the gold ETFs. The SEC did. And yes, if the Trilateral Commission was still in charge, this never would have happened. But in reality, the US government is not a single big conspiracy, but an enormous jumble of individually gigantic agencies, each of which has its own internal culture and is utterly convinced that its own goals are identical to the public good.
To the SEC, free markets are always a good thing, and the idea that the dollar could owe its life to suppressing them is not one that comes naturally. Even at the Fed, I’m sure almost no one worries about gold, and those who do don’t run their mouths off about it. The Fed certainly does communicate with the SEC, but there is a process for these things. Washington certainly has its secrets, and one man’s secret is another man’s conspiracy, but there is no such thing as an interagency secret.
If the US federal government was a perfectly executed and utterly malevolent conspiracy to dominate the world, let’s face it. The world wouldn’t stand a chance.
In reality, it’s neither. So a lot of things happen in the world that Washington doesn’t want to see happen, and that it could easily prevent. Anticipating surprises is not its strength.
The real surprise is not just the ETFs. It’s the combination of the ETFs and the Internet.
In the end, gold is a democracy. The gold price is not set by the LBMA or the Comex. It’s set by the opinions of all the people who have savings. If you could buy an ounce of gold for $1, pretty much everyone would buy all they could. If you could sell an ounce of gold for a villa in Portofino, pretty much everyone would sell all they could. Somewhere in between is the current price of gold, and all that sets it is public opinion. Of course, peoples’ opinions are weighted by the size of their savings, but that’s the free market for you.
The dollar is a democracy, too. I’m indebted to Dallas Fed President Richard Fisher for the phrase “faith-based currency.” As we’ve seen, all money, natural or artificial, is faith-based. Gold is only different because no one can print it. The price of gold will never fall to zero because gold is good for capping teeth and plating plumbing fixtures. The price of dollars will never fall to zero because a dollar is made from fine rag pulp with quality recyclable fibers. But everything else is faith.
What can change this faith? And how fast can it change?
Right now, our assumption is that the answers are “very little” and “very slowly.” But this may no longer be true.
I don’t think it’s an accident that the 20th century was the golden age of both artificial currency and broadcast news. When licensed airwaves and monopoly newspapers were the only ways for for people to update their knowledge of the world, paper money could sleep well at night.
For example, let’s try a thought experiment.
Suppose the New York Times is taken over, tomorrow, by goldbugs. Let’s say all of its editors, reporters, and columnists read this essay, find it plausible, and decide to really speak some “truth to power.”
From tomorrow on, the Times puts all its weight into reminding its readers of the undeniably true and objective facts that the dollar is a faith-based currency; that new dollars are being created at about 10% a year; that the current US financial system was designed a hundred years ago, in the age of Morgan, Hearst and Rockefeller, to create a steady flow of new dollars for both federal spending and corporate welfare; that the global financial system is now completely dependent on money creation, and could not survive in anything like its present form with a static money supply; that remonetization of precious metals is a Nash equilibrium; and that if remonetization happens, the first people who move their money into gold will profit the most.
How many weeks do you think it’ll take before the Gray Lady’s pulp supply starts to turn a little green?
Of course we’ll never know, because this will never happen. For the last century, the first commandment of the mainstream media has been responsible journalism. Promoting financial panics is not exactly responsible journalism.
I’m afraid anonymous bloggers have no such inhibitions. More on this in a little bit.

The silver factor

You’ll notice that I mentioned silver at the start of this essay, but I haven’t touched it since.
One question about remonetization that’s essentially impossible to answer is, assuming remonetization of metals, which metals exactly will become monetized.
Over time, the Mengerian process of standardization will tend to reduce the number of monetized commodities, possibly to one. Standardization favors the leader, and it is an unstable game: since losers by definition delevitate, it makes sense to flee them as soon as possible. Since gold, just for historical reasons, is the leader, it may be the only survivor.
On the other hand, on a modern electronic market, it’s not clear how important Mengerian standardization is. According to Menger’s model, money standardizes because it is inconvenient to be constantly converting value between multiple moneys. But it’s a lot easier with computers. And one effect that tends to counteract Mengerian standardization is the obvious desire to diversify one’s savings.
What’s interesting right now is that monetization seems to be affecting a wide range of nonferrous metals – not just those traditionally considered “precious.” This makes sense, because the only reason precious metals are precious is that they are rare enough that it’s easy to store and handle significant levels of collectible value. Since warehouse costs for base metals such as copper, lead, or zinc are not high, there is no reason why electronic claims to these metals cannot be monetized.
An alternative would be the equal monetization of all precious metals. The conventional precious metals are gold, silver, and the platinum-group metals: platinum, palladium, rhodium, iridium, ruthenium, and osmium. Perhaps, for example, an equal percentage of the global inventory of gold and osmium would have the same monetary value. If so, it’s time to stock up on osmium.
But a good guess is that if a new monetary system levitates one metal, it will be gold. If it levitates two, it will be gold and silver. It’s not the physical properties of these metals, but their historical and cultural associations, that make them more likely to displace the others.
Silver is interesting because it was demonetized before gold, and has (except for the 1980 episode) been priced mostly as an industrial metal in the modern era. However, because silver was a monetary metal for most of human history, central banks built up vast stockpiles. After World War II, banks felt the need to keep their gold but not their silver, and they sold the latter to industrial users, generally at very congenial prices. The silver market has seen net dissaving, mostly from these government hoards, for most of the last 60 years and all of the last 20.
The result is that most of the world’s silver, certainly in the tens of billions of ounces, has been consumed in nonrecoverable industrial uses such as photography and electronics. Estimates for the global supply of silver bullion vary widely, but are generally under 1 billion ounces. Since the ratio of silver to gold price by weight is about 50 to 1 at the moment, by value there is perhaps 200 times as much monetary gold as monetary silver in the world.
The silver market has become very comfortable with net dissaving, and any serious reversal of this trend seems likely to cause an ugly increase in the price. The recent (April 28) opening of a silver ETF, SLV, makes such an increase likely; in fact, the silver price doubled while the ETF was going through the approval process. Since its approval the ETF has been sucking down about 3 million ounces of silver a day, which is clearly unsustainable.
So there are three factors favoring the parallel remonetization of gold and silver. One is the traditional monetary relationship between the two metals. Two is the fact that since central banks hold very little silver, it’s hard for them to manage the price. Three is that since no one really has much silver at all, any flow back into the ETF will cause some serious levitation.
One Nash equilibrium strategy for gold and silver – we could call it strategy GS – is to value the extractable quantity of silver and the extractable quantity of gold on earth equally. This seems to be the strategy that people followed before the age of artificial currencies.
Obviously if silver is remonetized, silver stockpiles will have to increase, and the process may be chaotic. However, balancing the two diversifies against fluctuations in either, and natural fluctuations – for example, as a result of mining exploration or technology discoveries – are inevitable in any metallic monetary system. So a parallel standard may actually stick around.

A plan for structured remonetization

Who knows with these Internet things. I have no idea of how many people will read this essay. But I have never liked people who complain and don’t offer constructive solutions.
And since it is, in theory, possible that this link will spread virally and actually cause a remonetization event, I think it would be irresponsible of me not to include a few simple suggestions for how to handle it right.
First, the financial markets should be closed. This is obviously not a permanent solution. But why operate without anesthetic?
Second, the US federal government should be restructured as if it were a bankrupt company, distributing the US gold reserve of 8139 tons among holders of US liabilities, including both dollars and debt, and both explicit liabilities such as Treasury notes and implicit ones such as Social Security.
The result will be a new financial system in which the legal currency is directly allocated gold without any fractional pyramiding. The new government should be fiscally stable as a long-term operating concern. It will have to be, because it will be unable to print money.
Some federal programs will probably have to be cut. At a minimum, the practice of defining national security as global security is probably unsustainable. The US should retain a small strategic and conventional force which can deter terrorist and other attacks by proportional response, and secure its borders. It should adopt Switzerland’s foreign policy and modify it as circumstances demand.
All federally guaranteed liabilities of the United States should be valued equally at their price or estimated price before the crisis. For example, Federal Reserve Notes and FDIC insured bank deposits should have equal value and seniority, Treasury bonds should be valued at their current discounted price, and so on.
Both the Federal Reserve and the entire banking system should be treated as part of the US government, because they both are. Any institution that is not allowed to fail is effectively part of the government. Shares of stock in banks and other lenders engaged in mismatched-maturity (fractional-reserve) banking should become US liabilities at the current dollar price. Loans held by banks should be redenominated in gold according to the calculated exchange rate (see below) and sold at auction.
The entire US gold reserve should be converted to an electronic account system in which individuals and companies hold directly allocated gold and can redeem, deposit, and make payments. The system should also support accounting for silver and all other precious metals. Ownership of the gold should be distributed equally among holders of US liabilities, not discriminating between domestic and foreign creditors. This calculation will generate a final exchange rate between dollars and gold.
In some cases, as in Social Security, the US may hold its own liabilities, and it may maintain a small fiscal reserve. However, because of the inevitable temptation to create more virtual than physical gold, the US gold system should be broken into interoperable parts and privatized as soon as is practical.
The new US currency should be the gold milligram. Stock markets should be repriced in milligrams according to the dollar exchange rate, and reopened as soon as possible.
Property rights of existing gold holders (such as, of course, myself) should be respected. However, some gold confiscation is inevitable. Since the concept of capital gains on gold becomes meaningless with a gold currency, all holders of gold or silver who are US persons should pay an immediate 28% tax on their entire stash, in lieu of the existing rate on bullion gains. 28% is large enough to be significant and small enough that it won’t stimulate excessive evasion. Similarly, mineral rights should be preserved, but a similar royalty should be applied.
There, that’s my plan. I think it’s a good one. But I would, wouldn’t I?
By switching the currency completely to gold and converting US debt as well as US dollars, the plan provides one last blast of monetary expansion while precluding any further debasement, except of course as the result of new discoveries and technical advances in gold mining. Of course, people who hold dollars or dollar bonds will get jacked. But because of the volume of dollar claims, which must be handled fairly and equally, there is no way around this. And people who hold dollars or dollar bonds have been getting jacked for years, which is why they’ve been so eager to move them into stocks or housing.
I don’t think there is a realistic way to only partially revalue the dollar, maintaining some kind of artificial currency, sovereign debt, and fractional-reserve banking system. I think any attempt to switch to gold that does not go all the way in one step is likely to collapse itself and cause further chaos. But of course, I’m sure others will disagree.
And of course, there is no way to remonetize to precious metals without either providing enormous profits to present holders of said metals (such as, again, myself), or installing a new police state that would treat gold as if it was cocaine. The reason I recommend buying gold ETFs, rather than burying Krugerrands in the backyard, is that I don’t think the kind of grassroots political support for state power and central planning that allowed the confiscation of gold in 1933 exists these days. I hope I’m not wrong about this.

So you say you want a revolution

I’ve tried to maintain some small shred of objectivity here. But I admit it; I would like to see a remonetization. I think our current system of government needs a serious reboot.
I respect and understand people who disagree with me on this, or who think it’s a bad idea to work for change outside the normal political process. From my perspective, the influence of the political process over the actual operations of government is small. It does not strike me as increasing.
One interesting fact about US history in the postwar era is that since the 1930s there has been no effective force in American politics focused on resisting the growth of the US federal government. The last antifederalist Democrat was John Nance Garner. The last antifederalist Republican was Robert Taft.
In general it is always difficult for an antifederalist party to exist. It tends to get taken over by interests ambitious to use the power of state to some political advantage. But since federal institutions have grown continuously since the country was founded, and since an omnipotent national government is so obviously contrary to the intent of the founders, who set down their plans in documents that still exist and that anyone can read, reactions against the size and power of the state have been frequent, including the original Democratic-Republicans, the Democrats of Jackson and Van Buren, Grover Cleveland’s hard-money Democrats, and Harding’s “return to normalcy” Republicans.
In contrast, since World War II, the political dialogue in the US has pitted voters who think Washington should guarantee global security against those who believe it should insure general public prosperity. Of course, Republicans can reliably raise support by appealing to those who oppose welfare and central planning, and Democrats are happy to accept the votes of anyone who is unhappy with the Pentagon and its imaginative projects. But in practice, as the Bush Administration has shown, the path of least resistance is to expand both sides of government.
Not all the political rhetoric in the US today is positive. There is a lot of fear and loathing between “red-state” and “blue-state” factions.
It’s very easy for red-staters to think that because blue-staters believe the US should not guarantee global security, that they do not believe in global security, but think that everyone can just be nice. In some cases, this may be true.
It’s very easy for blue-staters to think that because red-staters do not believe the US should provide general public prosperity, that they do not believe in general public prosperity, but only in their own prosperity. In some cases, this also may be true.
But I have trouble believing that these stereotypes are broadly accurate. They seem too politically useful for that.
It’s hard to avoid noting that this structure of opinion looks like a very effective strategy of divide and conquer. I am not suggesting that anyone had a meeting and came up with this strategy, any more than anyone has a meeting and decides what the price of gold should be today. The market tends to discover effective strategies and stick with them, and political power is no less a market than any other kind of human action.
Perhaps you are happy with the growth of the US government. Perhaps you feel it is not large and powerful enough, that it needs to be larger and more powerful. In that case, preserving its power to print money is clearly necessary, and you should oppose anything that would threaten it. You should under no circumstances buy gold. In fact, if you have a few dollars to spare, you should probably short it. If the world agrees with you, gold will probably go down.
Please excuse the snarky tone. In fact, I respect people who hold this perspective. It’s a fact that the US government has done a lot of good things in the world. It’s a fact that all, or at least almost all, the people who make up this organization have nothing but the best of intentions.
US foreign intervention has done away with all kinds of vicious thugs, from Adolf Hitler to Pablo Escobar to Slobo Milosevic. In many cases, these thugs were not replaced by new, equally vicious thugs. In other cases, due to US money and influence, the thugs never got past the Tony Soprano stage. Today’s US military is the most principled and effective force the world has ever seen. US foreign aid has also provided famine relief, medical care and vital emergency services around the globe.
US domestic programs have controlled pollution, bought medical care for sick people, persecuted white supremacists almost entirely out of existence, paid for a lot of good scientific research, improved the living standards of the elderly, etc.
Perhaps none of these things would have happened if the US did not have the power to tax by debasement. Perhaps many similar good things will not happen in the future if it loses this power. And perhaps all the harmful actions the US government takes – always, in general, with the best intentions – will continue.
But since most Americans seem to see their government as a supersized charity, which may waste a lot of money on the opposing party’s imprudent schemes, but is otherwise out there doing the right thing, there are only two conclusions we can draw.
One is that if the US government lost its power to tax by silent debasement, Americans would vote to fund these valuable programs by ordinary taxation, or better yet support them directly and voluntarily as normal charities. (There is no reason military intervention cannot be run as a charity. For example, some have proposed exactly this to end the genocide in Darfur.)
Two is that Americans are a bunch of damned hypocrites. I hope it’s obvious which one I believe.

What you can do

If you disagree with my economic analysis, or if you’re not sure but you think this “remonetization” thing sounds like a really bad idea, nothing. You’re probably a reasonable person. Most reasonable people will probably agree with you. I wouldn’t worry at all.
If you have any amount of savings, I do recommend holding a little gold. All kinds of things can happen in this world. Even if gold goes down, I think it’s always good insurance.
If you do buy the economics and the politics, you can take two steps.
One is to buy a prudent amount of gold and/or silver.
Two is to email this link to anyone you know who might find it interesting, especially to people who are active politically, work in the financial industry, or just have a lot of money.
Either of these steps will help. But if you’re doing both, you might want to do step one first. I mean, you never know.
You can also post this essay yourself, anywhere you want. It’s in the public domain.
Obviously “John Law” is not my real name. Freedom of economic speech does not seem to be a judicial priority at the moment. Maybe I’m just being paranoid, but I feel like I can write more freely with a pseudonym.
The best way to ask questions is to comment on this blog. But you can also write me at wal.nhoj@yahoo.com.

Further reading

An excellent primer on US monetary history in the 20th century, from the same general Austrian School perspective I follow, is Richard Ebeling’s “Monetary Central Planning and the State”:

http://www.fff.org/toc/monetarypolicytoc.asp

Wikipedia has a good rundown of Nash equilibria:

http://en.wikipedia.org/wiki/Nash_equilibrium

The best writers on gold anywhere on the Internet, in my opinion, are Bob Landis and Reginald Howe at Golden Sextant. All their essays are worth reading. Here’s a fun piece about the real John Law:

http://www.goldensextant.com/GreenspanLaw.html

For an Austrian perspective on how a fractional-reserve banking system works, and how the Gilded Age saddled us with this strange creature, Murray Rothbard’s “Mystery of Banking” rocks. Murray is not actually from Austria, but he does have a funny accent:

http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf

A comprehensive history of money and banking from the Greco-Roman era till now, with an emphasis on legal principles, is Jesus Huerta de Soto’s “Money, Bank Credit, and Economic Cycles”:

http://www.mises.org/books/desoto.pdf

Ted Butler is a crazy man. You should know this. I’m a little crazy myself, obviously, so I don’t say it lightly. But if you want to know what a crazy man thinks about silver, listen to Ted:

http://www.investmentrarities.com/tb-archives.html

The Silver Users Association didn’t get what it wanted, but its opinion is still interesting:

http://www.sec.gov/rules/sro/amex/amex2005072/pamiller021306.pdf

If you too want to blog anonymously, I recommend the wonderful tool I use, the EFF’s Tor. Send them a Krugerrand for me:

http://tor.eff.org

An invaluable resource for tracking dollar credit expansion is Doug Noland’s Credit Bubble Bulletin. Doug capitalizes his nouns just like James Frey, but all his stories are actually true:

http://www.prudentbear.com/creditbubblebulletin.asp

If you’re wondering what this thing called “the State” is and why all these people seem to hate it so much, Murray lays it down:

http://www.mises.org/easaran/chap3.asp

Here’s what Alan Greenspan thought about gold in 1966. Or has he changed his mind? Maybe he’ll let us know in his new book.

http://www.321gold.com/fed/greenspan/1966.html

And Carl Menger said it first:

http://www.mises.org/web/2692


I don’t know who John Law is (or was) but he made some interesting points. If someone does know, I’d love to give him credit for his work, or point to where his work currently resides. Drop me a line and let me know.

The Vote

Took the time to go out and vote today, just like I always do. I generally ignore the comments from some of my Anarcho-Capitalists friends, the types of comments that amount to “Voting is two wolves and a sheep deciding on what’s for dinner.” Not that I disagree with the sentiment concerning voting. It’s just that I’m a realist (unlike most of them) and I play the hand that has been dealt to me. Part of playing that hand is participation in the process. If you don’t participate, you really don’t have any room to bitch about the outcome.

Case in point, these Anarcho-Capitalists who don’t vote, who go to great pains to not vote, who spend a lot of energy convincing others of the futility of voting; these self same Anarcho-Capitalists will proceed to laugh at the sorry returns for Libertarian candidates (or mainstream candidates and issues that they might be in agreement with) and say, “see how pointless it all is”. It’s a self fulfilling prophecy.

I’m sorry, but that minuscule return is there to ridicule because people like me haul our sorry butts out on election day and cast ballots for the candidates and issues that conscience dictates we support. If we relied on your holier-than-thou selves, there wouldn’t be any candidates, or any numbers to ridicule, at all. The truism “All that is necessary for evil to succeed is that good men do nothing” can’t be shown any clearer.

Not that I want to force them to vote. I just wish they’d think before spouting off about how pointless it all is. It’s real easy to sit on your hands and moan about how helpless you are; it’s another thing to expend your best effort in defiance of the naysayers, committing yourself to an effort that you essentially know is hopeless, but you would kick yourself if you didn’t at least try.

My hat goes off to all the Libertarian Party (and other third party) candidates and their staff tonight, for putting themselves through hell, and then some, for nothing more than the simple need to see something better than “politics as usual” on the ballot. For supporting people that they believed in, no matter what the odds were.

And the odds were pretty insurmountable. I can say, in Texas, that we didn’t win any major victories, although it looks like we may have squeaked out the percentage needed to stay on the ballot for another 4 years. (Texas election Returns) That, in itself, is quite a victory. Getting back on the ballot is an expensive process that should be avoided if possible.

Someone noted, during the last election, that the Libertarian candidates in most races had vote totals larger than the number of votes separating the winner and the looser of that race; the observation still seems to be true. More than that can be said, though. The Republicans lost the house and Senate because they betrayed the small government conservatives who make up a good portion of the libertarians out there. And many of the small gov’t social liberals consciously shifted their votes to Democrat (there was a lot of talk about this on CATO unbound and CATO podcast recently, as well as on Daily Kos) as the founding of Democratic Freedom Caucus (the Democrat version of the Republican Liberty Caucus) should have signaled to anyone who was paying attention.

[For more on this, check out the Op. Ed. Examining the Libertarian Vote in Depth by David Boaz and David Kirby]

So there were a few beacons of hope out there, if you were looking.

However, property owners in Austin (the sheep in the scenario above) once again were shafted on all 7 propositions put before voters this year; all of which passed, and all of which will raise property taxes.

Those of us who were cheering for a return to divided gov’t have reason to celebrate. The two parties will at least have to pretend to hate each others ideas for the next two years. It should slow down the juggernaut that the federal deficit has become. I doubt that anything is going to save the economy, though. And if the economy goes South, there’s only one possible outcome…

Hillary in 2008. Now that’s a nightmare.

But, that nightmare is two years away. Now is the time to get back to building the Libertarian party, fixing the defaced platform, and the hundred other thankless tasks that need to be done behind the scenes; just so that our erstwhile brothers in the libertarian movement can cast aspersions on our (in their very vocal opinion) hopeless efforts.

Here’s to making them eat their words next time around.


Mea culpa review 2017. I have eaten a Big Bowl of Crow since publishing this and other thoughts on many subjects. The wife of the blowjob president was the nominee for the Democratic party and I voted for her. Donald Trump holds the office of president. I refer to him as His Electoral Highness. It is a weird world we live in. I still have libertarian delusions but I have medications that keep those in check.

I have become a supporter of mandatory voting and mandatory service.  I blame the people who delude themselves into thinking they are sovereign and don’t need other people to survive. Sociopathy appears to be running rampant on the internet. 

Constitutional Money

Every time I get into a discussion of money, someone brings up the Constitutional limitations on states, including the limitations of what can be accepted as money, which is found in Art I, Sec. 10, Clause 1, it reads:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

They always point to the Federal Reserve and say “see, the FRN isn’t constitutional money!” Which is patently obvious, given the facts.

They never reverse it, which is something I find quite curious; why the several states don’t abide by the constitution themselves? Why don’t they refuse payment in fiat notes (the standard FRN baseless paper bills) and demand payment in gold and silver coin, as is required by law? Why do they continue the self-destructive delusion that there is real value in the US dollar? Value other than “the full faith and credit of”…? Whatever that’s worth.

Can you imagine what the results of that would be?

“No, I’m sorry Mr. President, but I have to abide by the rule of law, and the law states that gold and silver coin is the only thing we can accept as payment for the federal gov’ts debts. If we don’t receive your payment in gold and silver, I’m afraid we will have to put a stop to payments of our citizens tax monies into the federal treasury…”

To be present in the Oval Office to get a picture of that event. Priceless.



My only reaction to this article for the mea culpa review process in 2017? Coded language. I hate coded language. FRN is Federal Reserve Notes. FRN is newspeak of the sovereign movement and its wrong-headed ideas about currency and value. I really can’t broach my current thoughts on money as a mere addendum to this post. They warrant a much longer piece which I truthfully haven’t started writing yet.

A decade and more of listening to economist podcasts and reading economic books (as well as others) has radically altered my understanding of money in ways that are hard to describe without digging into the meat of philosophy and economics. Suffice it to say that my thoughts on money at this point in 2006 were truly infantile.

Which is sad, because I’ve always thought I had a pretty good idea what money was and what trade for value meant. I’ve been a hard bargainer at the negotiating table and have generally secured better than average compensation for my work, lower than average outlay for the goods I need. I understood it better than most people around me seemed to then, and I understand so much more about it now that it makes reading these old posts quite painful.

Still, I never did get an answer beyond the obvious one as to why the states have not made a fuss about the federal government subverting the Constitution with its current money not based on gold and silver as the document demands. Obviously they want the carnival ride to continue, that is why they haven’t. But the question still needs an answer, and the deviation from code should be corrected by updating the code itself.

Which is why the longer post about the nature of money is something I really should take the time to write.

America: From Freedom to Fascism

I invited a friend along and went out to take in America: From Freedom to Fascism this last Sunday night.

As a long time member of the Libertarian Party, I was already pretty familiar with a large portion of the central argument in the film; the unconstitutional nature of the Income Tax and the Tax Honesty movement that is trying to shed a little light on the subject. However, the film certainly doesn’t limit itself to this subject alone.

Done much in the style of Bowling for Columbine and Fahrenheit 9/11, which brought Michael Moore critical acclaim, Aaron Russo is trying to bring some popular attention to arguably the most serious problem in America today, the growing size and power of government.

So I was prepared for sensationalism, and I was prepared to hear many arguments I’d heard before. What I wasn’t prepared for were the interviews with several former IRS agents who are now the targets of the agency they worked for. I wasn’t prepared for the frank conversation with a juror from a failure to file case who simply states “they never produced the law”. I wasn’t prepared for the (former) IRS commissioner who showed nothing but contempt for court rulings and questions from citizens concerning the nature of the laws that govern us all.

I found these sequences to be the most illuminating, since they involved people who aren’t in the “tax honesty” movement. Not that G. Edward Griffin, Bob Schulz and others don’t deserve respect for at least standing up in the face of tyranny that is the IRS; but that these people had no axe to grind, and yet found themselves unable to answer the very simple question “what is the law that requires an American to file and pay income tax?” In the case of the (former) commissioner, he could not present a reasonable argument concerning the existence of the law, even though he ‘wrote’ the tax code.

In the end, it was Dr. Ron Paul’s answer that I think is the most ‘truthful’. To paraphrase the gist of it, he said he knew of no law that requires Americans to file and pay the income tax on the face of it; but since those who carry the guns and enforce the IRS code think they are authorized to do so, it makes very little difference.

…Which is pretty much my opinion on the matter in a nutshell.

The remainder of the film tallies up a rather frightening list of programs, executive orders, and laws that together with the current electronic voting nightmare, and police largesse, paints a pretty grim picture of the future. Anyone who has visited Alex Jones‘ sites is probably familiar with the gist of it. Whether you take any of it seriously is entirely up to you.

The problems with the film are visible the moment you sit down and it starts rolling. First, the film was shot on DV, and hasn’t been transferred to film for projection purposes (at least it wasn’t in the theatre that I went to) so the quality of the viewing experience is less than most people would expect. The pixelization on the screen makes the production appear to be amateurish, something I’m sure Russo wasn’t looking for when he made the film. If the theatre had been equipped with a decent DLP projector, the results might have been different.

Second, the theatre I attended was only about a third full. The people who need to see this film will never attend it of their own free will. They are far to willing to have their minds numbed by watching films of the caliber of “You, Me and Dupree” to ever do the requisite thinking required to appreciate the message Aaron Russo is trying to communicate.

…And since they make up the majority of “We the People”, the sovereigns who are supposed to be “Eternally vigilant” in order to preserve our freedom, it leaves me very little doubt that the future described in “America: From Freedom to Fascism” really isn’t too far away.

What War

This was one of the speeches I wrote for Politimasters.


Some say that war is a necessary evil. Others say that antiwar is the ultimate good. I propose that choosing between a war & antiwar stance is like choosing between Republicans and Democrats; it’s an example of a false dichotomy. There are other choices that can, and should, be made.

Necessary evil is a contradiction in terms (otherwise known as an ‘oxymoron’) it is an impossibility for something to be both necessary, ergo good, and evil, ergo bad. (I see your hand up back there, I’ll bet you think you’ve got an example to prove me wrong. I would suggest that you check your precepts, there is a logical flaw in your argument somewhere.)

War is a many faceted concept. One of its facets, the right to defend oneself against aggression, is necessary. It is only through the ability to defend ones rights that the rights themselves can be secured; even if that defense requires violence in response to violence.

However modern warfare, wars of conquest, wars of aggression, are evil. Modern warfare, which is exemplified by large groups of soldiers highly trained and mechanized, able to wreak great destruction and death from a safe distance, is very hard to legitimize. Conquest and aggression violate the rights that we hold dear, and so should be avoided at all costs.

On the other hand, the antiwar movement has breed its own evil, and cannot possibly be the ‘good’ as currently constituted. Watch any antiwar rally, listen to nearly any antiwar protestor talk, and you will hear and see hatred of America, and the demonization of the American people.

This begs the question, if they are Americans, and all Americans are bad, how can they possibly be good? Are ‘we’ bad as libertarians? Of course not; and Americans in general are not evil or bad. Misguided, yes. America is the most generous nation on the face of the planet, and I have a hard time believing that is a sign of evil as well.

A facet of the antiwar movement, is the pacifist movement. Pacifism, in my opinion, is evil in its own right. True pacifism does not allow for a credible self defense; if you cannot mount an equal or superior force, then the consequences for aggressive actions are not sufficient enough to give an aggressor pause. Just like the possibility of being shot in states that allow concealed carry curbs crime, the knowledge on the part of an aggressor nation that the population of its ‘target’ is prepared to defend itself will tend to dissuade it from carrying out its aggression there.

In light of the above, let’s analyze the current conflict in the middle east. Are we involved in a war of aggression, or are we engaged in self defense?

Do we face a real & credible threat? If you travel to New York city, and look into the pit that was the base of the World Trade Center, I think you will have to agree that there is a credible threat to us. The ‘terrorists’ who flew the planes into those buildings were part of a larger religious sect, and that religious sect has declared war on us. There may be no governments that have declared war on us in the middle eastern region, but several governments support this religious sect. That constitutes a threat in my opinion as well. In light of these facts we could be said to be engaged in self defense.

But why Iraq? They don’t support the religious group who has declared war on us; and while they do train terrorists there (we should know, we funded them for many years) there has been no provable link between Iraq and the 9-11 attacks. The answer is: strategy. If you listen to the spokesman for StratFor (www.stratfor.com) he’ll tell you what the governments won’t: The real reason we are in Iraq is for long term strategy. We destroy the strongest army in the area, we have large numbers of troops on the ground in the region and we get to remove our troops from Saudi Arabia where they are causing problems. (in fact, their presence there lead indirectly to the 9-11 attacks, but I digress) all good strategic reasons to be there.

Isn’t that by definition a war of aggression? It sure looks like it on the surface. In reality, however, how can we know? The ‘top secret’ information that our governments is acting on is not available to us. No discussions of the facts behind our current conflict have been allowed so far. Very few public discussions of a factual nature have been conducted at all; generally all we get are propaganda based posing on either side (war and antiwar) which are framed in such a way as to create a rift amongst the American people.

So, here we are, libertarians all. What should be our response to this. I’ve got one for you: What war?

There has been no declaration of war. There has been no request for one. The president has gone out of his way to stress to insurance companies that there is NO war, so they have to honor the claims of businesses and people harmed by the current conflict.

We have no ‘real’ information. The CIA doesn’t report to any of us, and how could we know whether to trust them or not, even if they did? The only people that know what’s going on are the men in the field, and most of them are too close to the action to be objective about it.

We have a genuine need to remove real and credible threats, but is this the right way? Do we have to subjugate the entire middle east in order to remove the current threat? That certainly seems to be where we are headed, and without any direction from the people who will have to foot the bill for all this. I welcome discussion on the facts, Mr. President, members of congress; give us the facts. Give us the chance to judge the truth of the matter as sovereign individuals, as is our right. What are the long range intentions in relation to the middle east, and militant religion in particular.

So the next time (Did I hear you say “Hey the wars over, we won.”? Right…) someone asks you “what do you think about the war?”, just ask them “What war?” I guarantee it will be a conversation they’ll remember.


In hindsight, it strikes me as funny that Bush declared victory in 2003, but we’re still fighting battles over there on a daily basis. What does ‘victory’ mean? Doesn’t sound like the war is over from where I’m sitting.

The thing I got the most trouble over from people who heard the speech is that I needed to revise my views concerning necessary evil; it was deemed to be a sign of naivete, that I didn’t understand the issues well enough to understand what evil was and why it might be necessary to do evil. Nearly three years later, I simply feel stronger about it. Most people who use this phrase are just looking for an excuse for supporting something that they ‘know’ is evil. The problem remains in the unrealistic definition of what evil is, as I asserted originally.

If you find yourself mouthing the phrase ‘necessary evil’, you better be 100 percent sure of the necessary part.