Government bailouts and Inflation

Milton Friedman
Milton Friedman

No matter how you calculate the economic repercussions of the government bailouts. It will to some degree directly correlate to monetary inflation. I don’t believe this country fully understands how bad and destructive inflation is.

I recently watched a ten episode documentary by Nobel Prize winner Milton Friedman in 1980 called “Free To Choose”. I highly recommend it. Here are a couple quotes I liked regarding inflation.

Inflation is just like alcoholism. In both cases when you start drinking or when you start printing too much money, the good effects come first. The bad effects only come later. That’s why in both cases there is a strong temptation to overdo it. To drink too much and to print too much money. When it comes to the cure, it’s the other way around. When you stop drinking or when you stop printing money, the bad effects come first and the good effects only come later. That’s why it’s so hard to persist with the cure. In the United States, four times in the 20 years after 1957, we undertook the cure. But each time we lacked the will to continue. As a result, we had all the bad effects and none of the good effects. Japan on the other hand, by sticking to a policy of slowing down the printing presses for five years, was by 1978 able to reap all the benefits, low inflation and a recovering economy. But there is nothing special about Japan. Every country that has had the courage to persist in a policy of slow monetary growth has been able to cure inflation and at the same time achieve a healthy economy.

And another…

There is nothing which will destroy a society so thoroughly and so fully as letting inflation run riot. He must come to recognize that he doesn’t have any good choices. That there are no easy answers. That once you get in this situation where the economy is sick of this insidious disease, there’s gonna be no miracle drug which will enable them to be well tomorrow. That the only choices he has, do I go through a tough period for four or five years of relatively high unemployment, relatively low growth or do I try to push it off by taking some more of the hair of the dog that bit me and get around it now at the cost of still higher unemployment, as Clarence Brown said, later on. The only choice this country faces, is whether we have temporary unemployment for a short period, as a side effect of curling inflation or whether we go into a period of still higher unemployment later on and have it to do all over again. That’s the only choice we face. And when the public at large recognizes that, they will then elect people to Congress, and a President to office who is committed to less government spending and to less government printing of money and until that happens we will not cure inflation.”

Bonus: As you hear all these large numbers talked about in the news, here is something to help you keep them into perspective:

One million seconds equates to about 11 DAYS
One billion seconds equates to about 31 YEARS
One trillion seconds equates to about 317 CENTUREIS

Biggie Size Big Brother

Take a guess at how many U.S. Federal government employees you think there are? I’m not talking about state, local municipalities or teachers, Just federal. Hint: It’s probably bigger than the number of dollars your home is worth, a lot bigger in my case.

Wait! before you guess, I want to ask another question. How many employees do you THINK there should be? In order to answer that question, it’s helpful to review what the purpose of the federal government is.

I’ll sum it up with the following

[To] establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity

The latest numbers I could get were from December 2007, so these numbers will likely be higher today, especially post economic bailout.

Total Number of Employees = 2,462,127
Total salary budget for 2007 = $14,426,625,181
Average annual salary = $70,312

We have almost three million federal employees costing you and I over 200 billion annually. If those employees were spread out equally among the states that would be 53,980 federal employees per state.

How big was your gap between actuality and what you THINK there should be?  Leave a comment below, I’m curious.

Thanks for the “free” book everyone

The Big Read

I was at my local library today when I was given a “free” copy of To Kill A Mockingbird.

Who: The book comes from the National Endowment for the Arts as part of their The Big Read project.

Why: Their motive is summarized by this statement, which was a conclusion of their own study.

“…literary reading in America declining rapidly among all groups, but that the rate of decline has accelerated, especially among the young…”

Now, if you were trying to find people to read books, would you target the patrons of your local library? Not sure I would. Where would you go? Leave a comment and tell me where.

The bigger astonishment for me however is not the location they chose, but how they are using OUR tax dollars.

Yes, YOUR tax dollars were spent to buy books for library patrons across the country. Our library received $10,000.00 to purchase these books. At $8 per book that’s 1,250 copies.

I just had my television upgraded at the expense of your tax dollars, now I was just given a book. Wow, isn’t life just fantastic with big brother.

The NEA is a federal agency funded by taxes. One interesting thing about the NEA and the NEH (National Endowment for the Humanities), is that they both came out of one bill passed by congress in 1965. With a brief view of the bill I don’t see how TWO agencies should have been created from one bill called the “the National Foundation on the Arts and Humanities Act“. Oh well, give them an inch and they take a mile.

I don’t think I like the idea of the Government taking my money by force to buy books for library patrons. Do you? I thought this quote from the text of the bill was interesting.

Such funding should contribute to public support and confidence in the use of taxpayer funds.”

Does The Big Read project build confidence in how your tax dollars are spent?

Here is one more quote from the bill.

“While no government can call a great artist or scholar into existence, it is necessary and appropriate for the Federal Government to help create and sustain not only a climate encouraging freedom of thought, imagination, and inquiry, but also the material conditions facilitating the release of this creative talent.”

Just because the cause is good, that doesn’t justify the Government’s involvment… does it? Please leave your comments below.

Irrigate the Arrogators

A force that many politicians greatly under estimate

There are two words that have more meaning to me now.  They are irrigate and arrogate.

Irrigate: To flush or wash out a desired substance.

Arrogate: To assume, or claim as one’s own, unduly, proudly, or presumptuously; to make undue claims to, from vanity or baseless pretensions to right or merit.

They sound alike but don’t share much in meaning.  In fact I’d be willing to bet that they rarely (if ever) get put in the same context with each other.  But, oh how nicely these two words work with each other in the context I’m about to put them in.

It’s time!  Time, to flush out all the substance from political office across this great nation who have proudly, presumptuously, and unduly claimed unjust powers and over-stepped their bounds.  It’s time, to irrigate the arrogators.

Let me give you an example.

Twelve years ago Chris Cannon was elected as Utah’s third district Congressman on November 5, 1996.  He started out great, but slowly lost touch with his constituents and subsequently lost their favor.  Sound familiar?  It should, because Congress is full of these arrogators.  Problem is, that these politicians are extremely hard to get out of office.

This year at the Utah State Republican Convention Chris Cannon came only nine votes short of being eliminated.  Later at the June 24th Primary Chris Cannon was finally eliminated by a wide margin, sixty-forty.

His opponent was a fairly unknown Jason Chaffetz, who didn’t have nearly as much going for him as Cannon did.

  • Cannon has run this race victoriously six times.
  • Cannon has the Insight and benefit of his brother being the former Chair of the State Republican Party.
  • Cannon out spent his opponent nine-to-one prior to the county convention, and seven-to-one during the Primary.
  • Cannon has an entire staff of paid experienced campaign workers.
  • Jason Chaffetz didn’t have a single paid staffer.  All volunteer based, with many of them not very experienced.
  • Cannon had the endorsement and support of President George W. Bush.
  • Cannon had the endorsement and support of long time Senator Bob Bennet, as well as Senator Orrin Hatch, the longest-serving senator in Utah’s history (since 1977).
  • Cannon lives in district three (Chaffetz was able to beat an incumbent without living in the district).

With all the endorsements, experience and money…  Cannon’s campaign turned out to be a failure.  How could this happen?

Some would call it a revolution, others call it a conservative movement.  But many seem to be in agreement that it’s time for “we the people” to take back this country.  It’s happening on a national level with Ron Paul, and is popping up in local races coast to coast.

The power behind these historic races is you and me along with many others.  Just plain regular folks who have a love for God and Country, who understand that our Constitution is worth a lot more than Congress is giving credit to.  It’s a bunch of ordinary people putting in extraordinary efforts.  When organized, becoming the most powerful force this country and the world has seen in a long time.

They realize that ALL the power this Nation holds is harnessed by them… “We the people”.

They have a trained ear.  They can tell when they hear a statesman talking or a future arrogator.  They have a foundation based on original intent principals eloquently taught to them by this Country’s founders.

When a person stands up to reclaim an office, “We the people” hear the rare voice from the crowded political noise.  They rally together and wield a force that many politicians greatly under estimate.

And when this happens, great things follow.

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

April Fools Joke from the U.S. Census Bureau

Census Bureau LogoUnlike most April fools jokes that bring a smile to your face, this joke is bound to make you angry.  I’m speaking of a “joke” that is going to happen on April 1st 2010.  It’s the U.S. Census or enumeration.  Taking a census is nothing new, it’s been going on since 1790.  Only the next one which happens on April Fools’ Day in 2010 is going to be very different than previous ones.  Which brings me to why I’m calling it a joke.  Until recently we’ve been able to take a census of the country with relatively little costs associated.  This time, because of incompetent federal politicians this census is going to cost a whopping $14 billion!  To illustrate how fool-ish that figure is, let me graph it for you.

U.S. Census Costs


Along with the historical Census costs I’ve also overlaid the population to prove that the rising costs are NOT correlated with the rising population.

Census PCYou might ask why the explosive rise in costs this time…  I’ll save you from all the ugly and irrelevant details, and summarize it for you.  Back in 2006 the government had the wise idea of using technology to aid in the census (sounds familiar doesn’t it?… electronic voting machines).  The government awarded a $600 million contract to Harris Corp to build 500,000 hand-held computers to collect the data.  This week the Census Bureau announced that the the hand-held computers are “unacceptable” and failed because of “A lack of effective communication“.  They are scrapping the entire program and reverting back to a paper based system.  Don’t bother asking for a refund from Harris corp.  Due to these reasons and “other” factors the cost has just risen to $14 billion!

Did you ever have an April Fools Joke pulled on you that went overboard, and wasn’t funny?  Did you retaliate?  What should we do to retaliate against the federal government for this joke gone bad?  Leave your suggestions below in a comment.  Then, call your congressman and tell them you are not going to enjoy the joke.

Census 101
Why do we take a census? Because the constitution tells us to in Article I Section 2 of the United States Constitution states “…[An] Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct.” It also states that this must be done to calculate the apportionment of representatives to U.S. Congress.  States are allocated Congress seats based on their population.

What happens if you refuse to answer the census? If you refuse to answer the census you could be fined up to $100.  If you give false information it’s $500.

Why do they do it on April Fools Day? They might have several reasons :-), but the main one being that it says so in Title 13 Section 141 of the U.S. Code.

Leave a comment about what you think of this “joke”.

UPDATE 4/10/09: Census Bureau was just bailed out with one billion dollars.

What to do with a million dollars?

I recently finished reading “The Millionaire Next Door”, which was a mega-bestseller about a decade ago (yeah, I’m pretty late to the party).  This book was the most recent in my list of personal finance books I’m reading this year.  The first half of the book is pretty much what you would expect: this is how millionaires made their money, this is how they keep their money, this is the type of person they are, etc.  Then the book suddenly veers off course and starts talking about why you shouldn’t spoil your kids with your money if you are a millionaire.  The book is fairly preachy throughout, but it becomes especially so in the second half.   One reviewer on amazon.com summed up the book this way “You can be a millionaire if you never spend any money.”  And yes, that’s the gist of the book.

However, when the authors talk about how money spoils the 2nd and 3rd generation, they paint themselves into a corner.  They make a pretty good case for not throwing money at your kids, which basically just demotivates them and sets them up for hedonism and failure.  However, I kept waiting for the explanation about a “good way” to give your money away, but it never really came.  Basically, they sort of punted, saying that you can give your kids money once they are older (40+) and are incredibly frugal, like yourself (at which point they will never spend the money anyway).  All the way throught the book, the authors are praising people who accumulate money and never spend any, even to the point of not enjoying the finer things that money can buy.  The only moral good in the book is accumulation, which the authors never seem to understand is only a means, not an end.  I guess I wouldn’t be spending so many words on this point if the book weren’t so preachy – I guess I’m trying to refute the dead-end message of the book.

It’s actually a pretty interesting book, which is probably why it sold so many copies.  I guess the reason for this post is to pose a question – if you were one of these frugal millionaires who isn’t going to spoil his/her kids by leaving them all the money, what would you do with it?  I like some of the things that the Gates (Bill Gates) Foundation is doing, like trying to wipe out malaria, buying AIDS drugs for people who can’t afford them, etc – those ideas seem like good ways to spend money which help a lot of people.  I also like the “microcredit” movement, where you can lend money in small amounts to 3rd world small businesses and help “bootstrap” them.   What would you do with your million(s)?

Who owns the gold at Fort Knox?

What building lies on the corner of Bullion Blvd and Gold Vault Rd. in Kentucky?Fort Knox  Answer: Fort Knox, or U.S. Bullion Depository if you want to be official.  Next question, who owns the gold at Fort Knox?  Yes, there still is gold at Fort Knox a significant amount in fact.  If you took all the gold and formed it into a cube it would be 20 feet tall and wide.  The U.S. holds more gold than any other country in the world.  Again, who owns that 20 foot cube of gold.  I’m not going to directly answer that question.  I’ll let you decide.  But first let me provide some historical information.

U.S. Monetary System
The gold standard is when currency is backed by gold.Gold Bars  Meaning that the issuing entity (United States Government) guarantees to redeem the note or currency for gold valued for the same amount.  Believe it or not the United States used to follow the gold standard all the way up to 1971.  To be more accurate it effectively came to an end in 1933 when President Franklin D. Roosevelt outlawed private gold ownership.  Then we were completely severed from the standard on August 15, 1971 with President Richard Nixon.  We replaced the gold standard with a system called fiat currency.  Fiat money is currency that is not backed by anything but the good faith of the government and that the currency will continue to be stable, trade-able and of some “value”.  It is NOT redeemable for precious metals or anything else.

The Dollar
To further clarify the point of the gold standard take a look at the partial image of the one dollar bill.  Do you notice anything different?Crop of old dollar  There are two subtle but extremely substantial phrases on this bill that you don’t see on your bills today.  They are “United States Note”, and “Will pay to the bearer on demand”.  On our notes today the first phrase is replaced with “Federal Reserve Note”.  If you think the Federal Reserve is a government agency then the difference between the phrases may seem insignificant.  But, the Federal Reserve is NOT a federal agency, it is a private organization.  The U.S. government is no longer in control of printing our currency.  The second phrase was replaced with “”, that’s right nothing!  This is what leaving the gold standard means.  You no longer can redeem your note for anything of “real” value.

The Heist
Your ancestors held notes, currency, dollars or whatever you want to call their money.Fort Knox Building  The notes they held was representative of actual gold sitting in a vault somewhere that they were entitled to.  They could at anytime walk in hand over their notes and receive that amount of gold in return.  So in effect all (or a substantially large percentage) of the gold at Fort Knox was owned by our ancestors, the common hardworking God fearing men and women who made this country great and worked hard to earn that gold.  Then, the U.S. Government decides to stop backing the notes in gold, and refuses to redeem notes for gold.  I now repeat my question one more time.  Who owns the gold at Fort Knox?  Did the government just steal all the gold from every single American in the entire country?  Or, are they just keeping it “safe” for us?

Please… do your research and come back and tell me the answer.  I want to know.

Allegiance to the Flag

US FlagThis may come across a bit nit-picky or trivial in nature, but I think it is important in principle. I assure you that I only have the best intentions, and don’t want to offend anyone, or sound un-American or un-patriotic. I merely hope to cause you to think more about what you are saying when you recite the U.S. Pledge of Allegiance.

To start off let me make one point clear about the origin of the pledge. I’m sure there are many people that ignorantly think the pledge of allegiance came from our founding fathers. The reality is that the pledge came about over 100 years after the Declaration of Independence and the creation of our Constitution. It was authored by the Christian Socialist Francis Bellamy in 1892. It was another 53 years before Congress officially recognized it as the national pledge in 1945. So it was well beyond the “founding fathers” time period.

One part of the pledge I’d like you to consider is the phrase, “I pledge allegiance to the flag of the United States of America, AND to the Republic for which it stands…”. What does this mean?

We are clearly pledging our allegiance towards two entities, the flag, AND the Republic. I understand and agree we all should have allegiance towards the Republic. But, what does it mean to hold allegiance to a flag?

A flag is simply an object which represents our country. We shouldn’t pledge allegiance to the flag itself, it should be to the Republic. And the Pledge already clearly contains a separate pledge of allegiance to the Republic. So, why do we pledge an allegiance in a material flag?

Having an allegiance, duty, obligation or loyalty to a flag seems odd. In fact there are some groups who feel this is idolatry. I wouldn’t go that far, but I certainly see how they can come to that conclusion. From an outsider it could easily be misconstrued as a type of worship. Worship means to adore and pay divine honor to; to reverence with supreme respect and veneration; to perform ritual exercises in honor of. When a U.S. flag passes by do we not stand in silent reverence, salute, and even recite our obligatory allegiance towards it. Before World War II we saluted the flag by extending the arm toward the Flag at moment the phrase “to the Flag” was recited, and it remained outstretched during the rest of the pledge, with the palm facing upward, as if to lift the flag. With this in mind, I think I know people who pay more respect to the flag than they do to their own religion.

If we are trying to protect the sacred and honor of the flag and what it represents, there is no need for a pledge of allegiance to it, we already have our U.S. flag code which protects the flag and defines how it is handled and treated.

Do you feel that the beginning of the Pledge of Allegiance should be changed to read…

“I pledge allegiance to the Republic for which it stands, one Nation under God…”?

Let me know by leaving a comment below.

Paying for your neighbors TV upgrade

digital converter boxBecause of the Digital Television Transition and Public Safety Act of 2005, analog television broadcasts are going to end on February 17 2009. What this means is that after this date you will no longer be able to watch a TV signal using the traditional roof antenna or rabbit ears. The broadcasts will still be transmitted over the airways just like the analog signals except for one import difference. The signal will be encoded in a digital format. This requires that your TV must know how to decode the signal into an analog signal to view on your TV. Most newer TV’s come with a built-in digital tuner, but many of the existing TV’s out there do not. In fact the government calculates that there are around 73 million sets without digital capabilities.

Now, here is where it this program starts to smell bad. The government is going to subsidize (pay for your digital converter box) up to 80% of the price of the converter box. Not just one converter box but TWO of them. The program works like this. They allocated $1.5 billion dollars to this subsidy program. It’s a first come first serve program, if they run out of money then you lose out. There are two ways to request the coupon. Either by this telephone number 1-888-DTV-2009, or their website, dtv2009.gov. You will then be mailed a coupon worth up to $40 towards the purchase of a converter box (including a remote control). The coupon expires however within 90 days.

I hope by now you are wondering why your tax dollars are being spent to support others TV habits! Does the government have the constitutional right to spend your money in this fashion? Even if they do justify the right some how, do you think they should be doing it? It really blows my mind, that I pay taxes to help my neighbors upgrade their television sets. This is just another example of the poor fiscal responsibility of our congress. I’d recommend you let your congressmen know you are displeased with him/her, and then try to find a replacement to elect in their stead :-). I’d love to hear your thoughts and feelings on this program, feel free to leave a comment below.

Oh, I almost forgot… my recommendation is not to partake in this filthy subsidy program… all such socialistic programs have a corrupting and addicting nature to them.

Eternal Vigilance: Our Civic Duty

I’ve heard the saying that eternal vigilance is the price of liberty since history class in junior high.  I grew up thinking my parents were eternally vigilant. Every election I would watch the ritual of civic duty performed as my parents watched a debate or two and heading down to the local elementary school to vote.  With freedom firmly secure they would return home with an “I voted” sticker displayed on their shirt and we’d all feel warm and fuzzy that democracy was alive and well.  They followed the voting example of their parents and for many years I followed theirs.  I believed my duty was to check my media outlets against the one or two debates I had watched and wisely vote for the lesser of two evils. 

Then came the opportunity to host a book group in my community. The subject: America’s Founding Documents.  I wasn’t well-versed in these documents, but found the deadline for accomplishing a monthly reading appealing. With my love of history in tow along with my conservative religious views I began a journey that I thought would confirm my views of one’s civic duty.

 My journey has taken me through the writings of Locke, Montesquieu, John Stuart Mill, Machiavelli, The Cato Letters, Thomas Paine, The Declaration, The Articles of Confederation, The Constitution, The Federalist Papers, The Anti-Federalist Papers (fyi, the origin of the Bill of Rights), The Northwest Ordinance, Washington’s Farewell Address, multiple Founder’s Inaugural Addresses, Lincoln’s Inaugural Address, The Gettysburg Address, The Making of America, The Communist Manifesto, Animal Farm, 1984, The 5,000 Year Leap, and one of my personal favorites The Adams – Jefferson Letters. I am sure I left some out.

I list these not to brag, but more to show the ignorance that existed.  I was fully content believing that my eternal vigilance was fulfilled at the ballot box until the principles of correct government were exposed by these readings.

These readings exposed to me the three keys of eternal vigilance.  Each key is essential to  each other.  If one of the three keys is missing you pass the next generation either bad information, the wrong example (like my idea of civic duty growing up), or nothing at all.

The first key is devotion to truth.  This requires the dedication to acquire knowledge and an openness to seek truth.  Abigail Adams said, “Learning is not attained by chance, it must be sought for with ardor and attended to with diligence.” One must purposefully seek for the acquisition of knowledge.  It will not find you, you must seek it. If the goal is truth, then humility and courage are essential; humility to admit when you were wrong and ask for direction when needed, and courage to communicate the truth with others.

The second key is a lifelong commitment to activism.  Contrary to public opinion pushing buttons on a voting machine at your local school does not constitute your civic duty.  One must know what to protect and then protect it.  All government originates locally, each communicating with the next level.  Your city government coordinates with your county and your county with your state and your state with the federal.  Protecting liberty must happen on a local level to ensure its protection elsewhere.  This means you will sit through more than a couple boring meetings to hear the one thing you needed to hear, or say the one thing that needed to be said.

“But you must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing.  It behooves you, therefore, to be watchful in your States as well as in the Federal Government.” –Andrew Jackson

The third key is to teach.  Make converts of those who are sitting on the fence. (There’s a good good and bad way to go about this.) But most importantly, teach your children.  If you know it they need to know you know it.  Governmental principles like virtues do not teach themselves.  They must be identified and emulated.  If our generation does not acquire it for ourselves and then teach the next generation then all will be lost.  I love the fervent regard for posterity and the emphasis placed on responsibility from the founding generation. Their aim was to make all decisions in regard to its effect on the next generation.  We owe them much and should aspire to do like-wise. John Quincy Adams said,     I Like this quote I dislike this quotePosterity: you will never know how much it has cost my generation to preserve your freedom. I hope you will make good use of it.

May we all reconsider our obligation to those who came before and those who will come after.  And maybe someday when we recognize those like us, or see our efforts in our children we will receive a truly legitimate warm and fuzzy figurative sticker of approval.

 

 

 

 

 

 

 

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