Tuesday, April 24, 2018

Touch Three

Come on, come on, come on, come on now
Touch me, babe
Can't you see
That I am not afraid
--The Doors

Continuing our yield watch, 10 yr yields briefly touched 3.03% this morning and marked four year highs before pulling back below the three percent maginot.


On a multi-year chart, 10 yr yields can be seen as tracing out a large inverse head-and-shoulders pattern. This is bullish for yields but bearish for the bond prices. Also bearish for an over-leveraged economy dependent on perpetually low rates.

When higher rates begin to 'matter' is anyone's guess. Because the charts are suggesting that yields want to go higher yet, it seems likely that the issue will arise sooner rather than later.

no positions

Monday, April 23, 2018

Peace by Force

"By condemning an old friend without hesitation, I shall be feared."
--Messala (Ben-Hur)

Garet Garrett describes the ultimate barbarian fantasy--that world peace must be imposed by force.


The folly does not just have an external component, i.e., a country must make its military the Policeman of the World in order to keep the peace. It also applies internally, i.e., the State must police its citizens and limit freedom in the name of social harmony.

The notion that peace requires force constitutes one of the foremost oxymorons of mankind.

Sunday, April 22, 2018

Back to the Highs

"You back again?"
--Floor Specialist (Wall Street)

Ten yr yields closed their strong week at, or even kitten's whisker higher, the mid February highs.


The highs of human beings and trading robots will be trained on this coming week's action. Will T-note yields be repelled by resistance here? Or will they power thru to new highs for the move?

no positions

Saturday, April 21, 2018

Equitable Solution to Urban Decay

When you said goodbye
You were on the run
Tryin' to get away from the things you'd done
Now you're back again
And you're feeling strange
So much has happend, but nothing has changed
--Glenn Frey

How to prevent or reverse accumulative decay in cities? Walter Williams suggests the officials skew provision of city services toward neighborhoods that house the highly productive. Keeping the best and brightest increases the likelihood of 'net positive fiscal residual' necessary to fund city services.

As Prof Williams notes, some people might find this type of discrimination distasteful or unfair.

A far more equitable solution would be to cut back on city services altogether. No public education or libraries. Allow local residents to contract with private providers for services such as street and park upkeep.

Less 'positive fiscal residue' would be required to fund city services. Plus, the highly productive would have greater capacity to shape their urban environments. The positive spillover from productive activity would once again create opportunity in cities for lower income individuals.

Friday, April 20, 2018

Paul's Penny Plan

"How many are left?"
--Col Robert Gould Shaw (Glory)

Senate rules say that if leadership and the Budget Committee do propose a budget by April 1st, then any senator can do it. Because no budget has in fact been put forward by the hierarchy, Senator Rand Paul plans to do so.

Paul's proposal is based on a 'penny plan' design. The penny plan idea is that small cutbacks in spending--just a penny on each dollar spent--add up to big savings over time.  His version of the penny plan proposes annual spending reductions of one percent annually over the course of the next five years, at which point a balance should be achieved between revenues and spending. Where precisely those one percent cuts would come from would be up to Congress.

Paul's budget also includes reconciliation instructions to provide for expanded Health Savings Accounts (HSAs) to lower health care costs. Health care is by far the fastest growing category of federal spending.

Perhaps the most intriguing part of Rand Paul's proposal is that it promises to smoke out hypocrites--those who talk smaller government but act like statists. One he puts the proposal forth, Paul intends to force a vote on the Senate floor.

Will anyone stand with Rand?

Thursday, April 19, 2018

TIPping Off Higher Yields

Ah you're breathing faster
Silence the only sound
There's no need to be nice on the way up
'Cause you're not coming down
--Genesis

After a pullback lasting about two months, 10 Year yields are suddenly striding back toward previous highs. Perhaps the recent pullback has been a classic rest period in order to build energy prior to a new leg higher.


Here's an interesting chart below that suggests motivation for the persistent 'bid' in yields. The red line plots the ratio between the TIP and IEF bond ETFs. Because TIPs (Treasury Inflation Protected Securities) are adjusted for inflation, higher inflation expectations increase demand for them, thus elevating the price. Unprotected Treasuries, such as those in the IEF basket, should not benefit from higher inflation expectations and in fact may experience outflows under such circumstances. Thus, uptrends in the TIP:IEF ratio should signal higher inflation expectations among bond investors.


The white line in the graph is crude oil. Note the trend higher in the TIP:IEF ratio since early 2016. More importantly, note the strong correlation between this ratio and the price of crude. Although the price of crude can change for many reasons, one important factor is the extent to which investors think a depreciating dollar will require more greenbacks to be surrendered to purchase a barrel of oil.

If expectations of lower purchasing power of the dollar is increasing prices of commodities like crude, then perhaps bond investors are beginning to demand higher yields to fairly compensate them for holding Treasury paper.

no positions

Wednesday, April 18, 2018

Accumulative Decay

The city desert makes you feel so cold
It's got so many people but it's got no soul 
And it's taken you so long
To find out you were wrong
When you thought it held everything
--Gerry Rafferty

Many US cities that were major population centers in the early 20th century are less so today. Some, such as Detroit, Cleveland, and St Louis, sport less than 50% of their previous pops. People have left these cities in droves, primarily for the suburbs where schools were better and property was more secure.

During the 1960s, civil rights advocates claimed that urban decline was due to racism--'white flight' to the suburbs. However, as Prof Williams notes, blacks were fleeing many of these cities at higher rates than whites.

Central to this phenomenon is a process Williams terms 'accumulative decay.' When schools, neighborhoods, and city services become run down, the first people to leave are those who care the most about their quality of life and have the resources to move. Because this inaugural group tends to be the most productive, they tend to put more to city coffers than they take out.

Once this group leaves, it is replaced with people who care less about things like schools and city amenities. Moreover, since the city has lost tax resources from the productive group that has left the area, officials must either raise taxes or allow city services to deteriorate further. This the next round of people who can do better to leave.

And the downward spiral of accumulative decay gains momentum...

To reverse the cycle, Williams suggests that city officials must recognize that their first order of business is to retain what economists call 'net positive fiscal residue.' This means creating conditions that makes the most productive people want to stay in city environments. This might mean discriminating when it comes to the provision of city services. For example, provide better lighting, libraries, schools, and other amenities in more affluent neighborhoods.

Although some might argue that city service discrimination is unfair, Williams counters that it is even more unfair for cities, once magnets of opportunity for low income individuals, to devolve into economic wastelands.

Tuesday, April 17, 2018

Taxpayer Mind Trick

Storm Trooper: Let me see your identification.
Ben Kenobi: You don't need to see his identification.
Storm Trooper: We don't need to see his identification.
Ben Kenobi: These are not the droids you're looking for.
Storm Trooper: These are not the droids we're looking for.
Ben Kenobi: He can go about his business.
Storm Trooper: You can go about your business.
--Star Wars

As another Tax Day looms over us, many people maintain the charade that we live in a free country. When government can forcibly take the fruits of one's labor, then people are not free.

It is often said that taxation is theft. But theft is generally a one-off event, and is usually unanticipated by the victim.

Taxation involves routine expropriation of production. It is more akin to slavery. Taxpayers are today's slaves.

That many of these taxpayers believe that they live in a free land is a mind trick worthy of Jedi status.

Monday, April 16, 2018

Radicalism

"So, here's to the men who did what was considered wrong, in order to do what they knew was right...what they KNEW was right."
--Benjamin Franklin Gates (National Treasure)

Murray Rothbard elaborates the concept of radicalism in the libertarian sense. Radicalism can be seen as:
  • "being in total, root-and-branch opposition to the existing political system and to the State itself."
  • "having integrated intellectual opposition to the State with a gut hatred of its pervasive and organized system of crime and injustice."
  • "deep commitment to the spirit of liberty and antistatism that integrates reason and emotion, heart and soul."
Statism has been the default condition of social life. It is the status quo, and demands conformity and compliance.

The radical idea continues to be liberty. Its institution, by definition, will require the work of radicals.

Sunday, April 15, 2018

Letters of Hypocrisy

All for freedom and for pleasure
Nothing ever lasts forever
Everybody wants to rule the world
--Tears for Fears

Right on cue, Justin Amash shares letters warning two different presidents about commencing offensive strikes against Syria. The first letter was written in 2013 to President Obama:


The second letter was written last week to President Trump:


The first letter was signed by 119 Republicans and 21 Democrats. The second letter was signed by 15 Republicans and 73 Democrats.

There are few repeat signatures.

Saturday, April 14, 2018

Constitutional Convenience

And the parting on the Left
Is now parting on the Right
And the beards have all grown longer overnight
--The Who

How Democrats and Republicans evoke the Constitution only when it is convenient is well demonstrated when war is in the air. The constitutional requirement is that approval for war must come from Congress.

Both Democrats and Republicans know this. Unfortunately, each party prefers to evoke the requirement only when the other party occupies the Oval Office. Thus, Democrats generally call for congressional approval when a Republican administration is in place, and Republicans call for congressional approval when a Democrat sits in the big chair.

We observed the hypocrisy once again this week during the Senate confirmation hearing of Secretary of State nominee Mike Pompeo. Responded to questions from Senator Rand Paul, Pompeo said that the power of the president to authorize military strikes "has not been disputed" for some time.

In addition to observing that this power was well disputed by our founding ancestors, Paul observed that Pompeo himself, when a member of Congress, claimed that then President Obama needed congressional approval to strike Libya in 2011.

Demonstrating once again that, when your guy is in charge, you tend to put that nagging set of restrictions called the Constitution away.

Friday, April 13, 2018

Government Spending and GDP

We decided that we would have a soda
My favorite flavor, cherry red
I sung my song to Mr Jimmy
And he said one word to me, that was "dead"
--Rolling Stones

Dan Mitchell shares some graphs from a recent empirical study of the relationship between government spending and economic output. Various countries, regions, etc all show same thing. The higher the government spending, the lower the GDP.


R-squares, ranging from .24 to .67, are quite high considering other factors that could be at work.

Just one more brick for the Keynesian crypt.

Thursday, April 12, 2018

Don't Dream It's Over

There is freedom within
There is freedom without
Try to catch the deluge in a paper cup
--Crowded House

Bulls breathing another sigh of relief as their defense of the 200 day moving has held once more. Several pundits seem to think that the battle is over.


I wouldn't let my guard down so quickly. Perhaps this lift is merely relieving some oversold pressure on the stochastics before the bears muster another assualt.

position in SPX

Wednesday, April 11, 2018

Will We Ever Learn?

This is what we've waited for
This is it, boys, this is war
The president is on the line
As ninety nine red balloons go by
--Nena

Presidential threats of missile strikes against Syria and indirectly against Russia once again remind us of the dangers (frequently discussed on these pages) of permitting the executive branch to assimilate powers not expressly granted in the Constitution. Constitutional power to declare war rests with Congress.

Yet, since the beginning of WWII, Congress has abdicated its responsibility and effectively delegated the initiation of war to the president. And every administration since then has used that power to entangle the United States in countless conflicts that have cost millions of lives.

Trample the Constitution and get burned. Will we ever learn?

Tuesday, April 10, 2018

Institutionalizing Aggression Among the Peaceful

"There will come a day when you will wish that you had done a little evil to do a greater good."
--Sybilla (Kingdom of Heaven)

Statists prefer to employ the strong arm of government to advance their interests, whether those interests involve material gain or psychic income obtained from furthering a social agenda. Most statists do not consider themselves violent sorts. Yet they are serve as principals of violence who contract with government agents to exert force on others for personal gain.

Statists face a cognitive dissonance problem. Although they view themselves as peaceful, they sanction acts of aggression against others.

To cope with the mental stress generated by this inconsistency, statists must interpret reality in a manner that provides psychological relief. Some statists might view some offensive force as necessary for the advancement of society. However, that explanation would keep their psyches on the hook for fostering violence. As such, it should be a minority justification among statists.

Statists are more likely to rationalize government as an instrument of peace rather than of aggression. Government is seen as an institution of benevolence. Or, alternatively, government is a defensive mechanism that engages in actions that protect people from harshness in the world. In either case, the strong arm of government is seen as furthering good.

To cope with the obvious counter that doing good for some might mean, for instance, taking property from others under threat of force, statists must once again construct explanations that keep mental stress to a minimum. One such argument is that actions such as paying taxes are 'voluntary' acts, not a shakedowns. Rather, people have implicitly agreed to paying taxes as part of a latent 'social contract' in force as a condition of living in 'civil' society.

Such rationalizations create one of the great paradoxes of social life. They serve to institutionalize aggression among people who view themselves as peaceful.

Monday, April 9, 2018

Wait a While

"I'll wait a year or two."
--Liesl von Trapp (The Sound of Music)

This tweet gets right to the point.
They'll be waiting a while on that one.

Sunday, April 8, 2018

Liberty Pole

Benjamin Martin: May I sit with you?
Charlotte Selton: It's a free country. Or at least it will be.
--The Patriot

Early American coinage sometimes captures Ms Liberty clutching, or in the vicinity of, a long stick with a brimless cap on the end. This is a symbol of freedom called a liberty pole.


1856-O 50c PCGS AU55 CAC

In republican Rome, slaves who were granted freedom were often given a soft felt cap. When Julius Caesar was assassinated, the cap was placed on top of a pole to symbolize that the Roman people had been freed from tyranny. The liberty pole was born.

Before and during the American Revolution, colonists erected liberty poles in town squares and on public land. Violent struggles sometimes ensued as British soldiers sought to strike down the symbol. This proved difficult, as it was hard to eradicate such a simple-to-make symbol.

Perhaps we will see a renaissance of liberty poles as the modern struggle for freedom continues.

Saturday, April 7, 2018

Not Working and Dependent

"From East Egg, then, came the Chester Beckers and the Leeches, and a man named Bunsen, whom I knew from Yale, and Docter Webster Civet, who was drowned last summer up in Maine."
--Nick Carraway (The Great Gatsby)

With headline unemployment numbers at decade lows, one would think we would be enjoying a period of prosperity that we haven't experienced in some time. However, when you look under the hood of the jobs numbers, there are several eyebrow raisers.


An important one is the labor force participation rate, which as been been marking multi-decade lows for years. This means that less able bodied people are actually working as a fraction of the total.

How do people who are not working get by? Some may be living off past savings (either their own or perhaps inherited). Given our low saving rate, the number of people in this group is likely low.

Others may have retired early due to rich pension plans. Instead of drawing from past saving, early retirees draw income from the production of others to fund their lifestyles. Stated differently, early retirement involves people with productive capacity are sitting it out in favor of living off the backs of others.

Still others, as noted by Dan Mitchell, are on simply on the government dole. They are not working because can live off the welfare state.

Early retirement and the welfare state create conditions of dependence, They leech productivity, and perhaps even morality, from economic systems, thereby hindering prosperity.

Friday, April 6, 2018

Battle Cry

"It's trench warfare out there, pal."
--Gordon Gekko (Wall Street)

Trench warfare continues in the Battle for the 200 Day Moving Average. Bulls made 'em bounce the last two days but early indications today suggest the bears might press them back toward the maginot.


My growing sense it that the more drawn out the battle here, the greater the chance that the winner will let loose with a powerful victory lap.

position in SPX

Thursday, April 5, 2018

Lawless Special Counsels

"And when the last law was cut down, and the devil turned 'round on you, where would you hide, the laws all being flat?"
--Sir Thomas More (A Man for All Seasons)

Judge Nap notes two of the most glaring problems with the Mueller investigation--and with nearly all 'special counsel' investigations for that matter. One is the FISA warrant charade. By seeking a search warrant via the FISA court, investigators circumvent the Fourth Amendment requirement to produce evidence of probable cause. This is clearly unconstitutional.

The other involves the practice of indicting 'low level' individuals in the investigative food chain--often of trivial crimes unrelated to the investigation--and then offering them leniency in exchange for information that the prosecution can use against 'high level' individuals in the investigative food chain.

This is a form of bribery. You tell us what we want to hear on the witness stand and we'll go easy on you. The courts have granted only prosecutors with the ability to commit such bribery. If a defense counsel offered a gift to a witness in exchange for favorable testimony, that attorney would be indicted.

People tend to look the other way when this lawlessness occurs in pursuit of an enemy. You can bet that those same people will view the process differently when the counsel turns on them and their interests.

Wednesday, April 4, 2018

Hampered Money, Hampered Economy

After three days of the desert fun
I was looking at the river bed
And the story it told of a river that flowed
Made me sad to think it was dead
--America

Stated differently, when the monetary system is hampered, then capitalism cannot exist in full form. Yes, some people may act in capitalistic manners. Some people might save and invest, for instance.

But when money is messed with, distortions build, moving the economic system further from the capitalism pole and toward the socialism pole.

A destination that can never be reached.

Tuesday, April 3, 2018

Trench Warfare

 "We went up and down that dirt pile for six days and nights. Fixed bayonets. Hand-to-hand. Fought them something fierce."
--Sgt Major J. Choozhoo (Heartbreak Ridge)

Battle for the 200 day moving avg continues. Bears breached the line yesterday but couldn't hold onto big inroads yesterday afternoon. Bulls reclaimed the line this am.


Robots sit in the wings awaiting guidance from the trenches on which way to jam 'em.

position in SPX

Monday, April 2, 2018

Breaking to the South Side

We chased our pleasures here
Dug our treasures there
--The Doors

Heavy action out of the gate this morning finds the SPX thru the 200 day moving avg. Key will be where it closes.



Should we remain on the south side, then the trading robots may find cause to turn their hats around and look to sell 'em.

position in SPX

Sunday, April 1, 2018

Life and Freedom

Miriam: I am afraid.
Esther: No cause. The world is more than we know.
--Ben-Hur

Christ's death and subsequent resurrection reminds us of the sanctity of life. Not just life on earth, which is fleeting. But of eternal life. Death is not to be feared, as it is the gateway to eternal life.

Easter is also a celebration of freedom. Just as Jesus was free to walk the path to the cross, or not, so too are we free.God created each of us in His image.

As He is perfectly free, so are we.

Saturday, March 31, 2018

Always Zero

Maybe someday
Saved by zero
I'll be more together
--The Fixx

Great insight by Thomas Sowell.


And when the government imposes its own 'minimum wage' by law, more zero wage situations occur.

Friday, March 30, 2018

Baseball's Back

"You know what we get to do today, Brooks? We get to play BASEBALL!"
--Jimmy Morris (The Rookie)

Opening Day in Cincinnati used to happen on the first Monday in April. The tradition also had the Reds opening before any other team seeing as it was the first professional baseball team--founded in 1869. 

Modern MLB scheduling has has done away with much of that, although the Reds are still afforded the privilege of opening at home. 

This year has been extra strange, with Opening Day slated for the last Thursday in March just shy of an early Easter weekend. The Findlay Market Parade was even moved to the following Monday due to downtown merchant concerns that the parade festivities might spook Easter shoppers. On Wednesday, forecasts of rain on Thursday prompted the Reds to postpone the game until Friday (follow that?), thereby marking the first Opening Day rain out since 1966 (which is a year or two prior to where my Baseball Memory kicks in).


But here we are. It's Friday noon and skies appear to be clearing to the west right on cue. Although playing the opener on Good Friday will likely cut into hot dog sales at the ballpark, and folding chairs may not be set up in the outfield as they were for Robby's first in 1956 at Crosley Field, we prepare to shed the shackles of winter once again.

Baseball's back.

Thursday, March 29, 2018

Democracy, Incrementalism, and State Power

Louden Swain: Can 800 million Chinese be wrong?
Tanneran: Frequently
--Vision Quest

Jeff Deist discusses the danger that democracy poses to freedom over time. Using past examples of income taxes, Social Security, and Medicare, as well as the present situation related to gun control, he argues that these programs evolved over long periods of time as a result of incremental gains gradually obtained thru democratic process.

This is not a new argument, of course. Growth of state power thru incrementalism (a.k.a. gradualism or fabianism) has been discussed on these pages before. A necessary ingredient of incrementalism is ability to foster compromise, the favored strategy of statists for getting people to cede liberty over time.

He makes a particularly insightful remark near the end of the piece:

"Democracy is nothing more than the process of politically vanquishing minority viewpoints."

Indeed--as these pages have long observed. Democracy, defined as decision-making processes based on majority vote, strips rights from some for the benefit of others. Although the dangers of democracy were well known to our founding ancestors, they are little understood today.

Seemingly, democracy's incremental compromises that erode liberty grow chains of bondage so gradually that most people fail to notice.

Wednesday, March 28, 2018

Capitalism, Socialism, and Wealth

"Look, what does a capitalist do? Let me ask you that, Mike. Huh? Tell me. I mean, what does he make, besides money? I don't know what he makes. The workers do all the work, don't they?"
--John Reed (Reds)

Not a bad sketch of socialists tend to view, or at least how they like to discuss, the two systems of economic organizing. The important feature of capitalism is that the rising tide of productivity improvement lifts all boats.


The only change I might make involves the upper right quadrant. With socialism, there is likely to be a large disparity of wealth between rich and poor. There may be less rich people, but those who are live high above the squalor of the masses.

Tuesday, March 27, 2018

Successful Test...For Now

It's not in the way that you hold me
It's not in the way you say you care
--Toto

Yesterday's test of the 200 day moving avg proved successful. Exceedingly so in fact with the Dow ripping nearly 700 pts higher.


That's twice now in about six weeks that the SPX has bounced off this line of technical support. A central tenet of technical analysis is that support gets weaker with each successive test as layers of demand that support the level are used up during the test.

As such, bulls need to hold the gains. Not sure they can withstand another test should it occur in the next few days.

position in SPX

Monday, March 26, 2018

Textbook Bounce

On the rebound, you came to me
On the rebound, to set me free
On the rebound, too bad for me
--Russ Ballard

Textbook bounce off last week's technical set up with a nearly 2% gap higher this am.


Not sure the bulls really wanted a big gap open. Slipping a little here already. If they can't hold 'em higher, then it could get ugly.

position in SPX

Sunday, March 25, 2018

Gun Grabbers are Pro Gun

"Go to the sporting goods store. From the files obtain forms 4473. These will contain descriptions of weapons and lists of private ownership
--Colonel Ernesto Bella (Red Dawn)

The hypocrisy of statists never ceases to captivate me. The gun grabber segment is particularly active at the present time. Many like to say that they are 'anti gun.'

But they are not anti gun at all. They need guns in order to enforce their agenda. Gun grabbers must point guns at people and threaten them with bodily harm in attempts to keep them from owning guns. Whether that strategy can be effective is of course another discussion entirely.

Gun grabbers are pro gun. They support using guns to initiate violence on others. As principals of violence, they prefer guns in the hands of their strong-armed government agents in order to enact policies that require force to implement.

Saturday, March 24, 2018

Retest Coming

And there's some chance we could fail
But the last time someone was always there for bail
--Toad the Wet Sprocket

One of the rougher weeks for stock markets in recent memory quickly finds the SPX retesting the February lows. On a closing basis, we're already there in the 2580-90 zone.


Friday's close also finds the SPX sitting right on top of its 200 day moving avg. The 200 day is where the index bounced on an intraday basis last month. A decisive drop thru the 200 day early next week, particularly if the decline breaches the 2530ish Feb intraday low, might ignite some fireworks.

Meanwhile, the gold complex is perking up. The metal itself is rallying toward the top of the recent channel. The chart below has a cup-and-handlish look (bullish). Miners are also showing signs of life.


Should the it scamper thru 1360ish, the yellow dog might be off to the races.

positions in SPX, gold

Friday, March 23, 2018

Going Bust With Omnibus

In violent times
You shouldn't have to sell your soul
In black and white
They really, really ought to know
--Tears for Fears

With a multi-trillion 'omnibus' spending bill breezing thru both sides of a GOP majority Congress, we're once again reminded that there is little difference between your typical Hill Republican and the progressives that the party purports to oppose.
The exceptions continue to be a handful of senators including Rand Paul, who yesterday actually printed out the entire 2200+ page bill (a 2+ hr endeavor in itself ) and spent the remainder of the day reading and tweeting bill provisions. He signed off last nite after about 500 pages.

Quiz Question #1: Calculate the time to read a 2232 page bill assuming each page takes 2 minutes to read.

Quiz Question #2: Estimate how many members of Congress have read the entire omnibus bill.

The other exceptions are House members collectively known as the Freedom Caucus. The Caucus has not been shy in its opposition to the spending bill. It also wrote the below letter to the president asking him to join the Caucus in vetoing the bill.



Were it not for these few Tea Party remainders, it would be difficult to maintain hope that sailing over the fast approaching cliff can be averted.

Thursday, March 22, 2018

FISA 'Courts'

I'll move myself and my family aside
If we happen to be left half alive
I'll get all my papers and smile at the sky
For I know that the hypnotized never lie
--The Who

The Foreign Intelligence Surveillance Act (FISA) requires an assembly to authorize surveillance on individuals. These assemblies are called 'courts,' which serves as a euphemism that lends an air of legitimacy to the unjust FISA process.

Judge Nap once again recounts just how far away from legitimate courts these FISA assemblies are. They are held in secret with rulings and records unavailable to the public. Only government lawyers appear before a FISA judge, meaning that there is no one on the other side to challenge the government's submissions. No probable cause of a crime needs to be presented.

As the Judge observes, it takes no constitutional scholar to realize just how profoundly unconstitutional FISA courts are. As our founding ancestors well understood, secret courts that do not respect the principle of due process are ripe for abuse. They are tools of tyrants and lead to the corruption of judicial process and to the erosion of freedom.

FISA-facilitated corruption has been coming to light in the case of former FBI Deputy Director Andrew McCabe. McCabe allegedly approved the use of an unsubstantiated political dossier as the basis for obtaining a FISA court approval for spying on presidential candidate Donald Trump. The dossier itself and subsequent FISA court-approved surveillance formed the basis for an investigation into the Trump campaign's alleged ties to Russia by the Obama Dept of Justice, and now being run by special counsel Robert Mueller.

Where this particular investigation leads is anyone's guess, but it is clear that it was initiated in an unconstitutional manner. And this, the Judge notes, creates lessons to be learned. Courts that hear no challenge to the government are not courts as we understand them. They are merely vehicles to advance political agendas.

The purpose of the Constitution is to restrain government, thereby protecting liberty. FISA courts do the opposite. They infuse government with corruption and undermine privacy of us all.

Wednesday, March 21, 2018

The Surplus Side of Deficits

You can go the distance
We'll find out
In the long run
--Eagles

Which would you rather have: a trade deficit or a foreign investment surplus? Turns out this isn't an either/or question.


As we have noted, when you buy goods from someone else with cash, that someone else has to invest that cash.

While timing may be off a bit (holders of cash may wait a while before investing), trade deficits and investment surpluses must balance.

Tuesday, March 20, 2018

Facebook and Personal Productivity

"Come. Waste time here."
--Miyagi (Karate Kid 3)

I joined Facebook in the early days when a .edu email address was still required. To join the network, enrollees must agree to Facebook's policies regarding property rights and information sharing. The content on your page is not your own. Facebook can share your information with whom it wants. It can even mine your site for data that it can use.

Despite the restrictions on privacy, I enrolled. The privacy issues did not bother me initially because my primary motivation for joining Facebook was job-related. I was working with an entrepreneurial financial media firm that sought extend its reach toward the academic community and I wanted to learn about Facebook's potential to connect with college students and perhaps even market to them.

After creating an account, I immediately commenced with the 'friending process,' sending requests to pretty much anyone I could think of in my higher ed circle. Upon confirming my request, a grad student acquaintance at the University of Wisconsin became the first to write on my wall. His message was, "Wow, welcome to the number one time waster for college students!"

It did not take long before I realized that my friend was right about Facebook as a magnet for people's time. Here was an novel, easy-to-use, and free platform for virtually networking with others. You could connect with friends anywhere. You could see what they were up to. You could build a 'profile' that conveyed your identity. You could 'like' what others were doing and saying, and others could do the same for you. You could measure how popular you were by the size of your network. The more people that you connected with, the more alluring the platform became.

Over time, I overstepped my original work-related scope. I had a profile. I was posting on my wall and on the walls of my friends. I was also, for lack of a better word, snooping. I was spending hours reading what others were saying in various threads. Occasionally, I'd jump into those threads and reply myself. I would engage in those mindless debates commonly seen in 'comments' sections of on-line posts. I began anticipating push-back, and looked forward to posts that I could counter.

After this process intensified over the course of years, I finally caught myself. An audit of my time revealed that I was spending at least an hour per day on Facebook--most of it unproductively. It had become, as my friend observed on my first day, my 'number one time waster.'

So I quit.

That was 5 or so years ago and I'm a better person for it. I am now considering the merits of my remaining social network connections, namely Twitter, the networks implied by by gmail and hotmail accounts, and, of course, this blog. My concern this time is not the snooping and debate problems I had with Facebook. Twitter, for example, has become almost exclusively an news and information feed for me. Almost all inbound with an occasional outbound.

Instead, my concern is privacy, and what I concede through my on-line choices and activity. Facebook is currently being questioned about how far the company has taken its access to user information, but it should not be surprising given what users agree to upfront.

It really is amazing what we seem to be willing to give away when we go on-line. In fact, this is a phenomenon that I would like to address in future posts.

Provided that I decide to remain here, that is.

Monday, March 19, 2018

Knowledge and Calculation Problems of Socialism

I wanna know what you're thinking
There are some things you can't hide
I wanna know what you're thinking
Tell me what's on your mind
--Information Society

Robert Murphy reviews two primary impediments to socialism. Hayek (1945) stressed the 'knowledge problem' facing central planners. The size and complexity of modern economies make it impossible for bureaucrats in a room to comprehend all of the relevant information necessary to direct production and distribution.

Mises (1949), on the other hand, emphasized the calculation problem facing socialists. Suppose that thru super computing technology central planners could process economic minutiae as if they were on the ground in millions of places at once. They would still be missing a calculation that the supercomputers could not undertake.

That missing information is the relative taste preferences of all individuals on the planet, as well as entrepreneurial perceptions about how to transform matter into different forms to satisfy those preferences. These cannot be calculated via a model.

In fact, the only way they can be determined is by setting up a market economy and letting people 'self-calculate.' The primary outcome of these calculations, prices, drives economizing.

Market prices, derived from dynamic economic calculations done inside people's heads, are phenomena that socialists cannot replicate.

References

Hayek, F.A. (1945). The use of knowledge in society. American Economic Review, 35: 519-530.

Mises, L. (1949). Human action. New Haven: Yale University Press.

Sunday, March 18, 2018

Stupid Smart

Professor Jerry Hathaway: When you first started at Pacific Tech you were well on your way to becoming another Einstein, and then you know what happened?
Chris Knight: I got a haircut?
--Real Genius

Professor Bylund notes that recently deceased physicist Stephen Hawking was one of the latest in a line of 'geniuses' to whiff when discussing economics. One of his many mistakes concerned inability to distinguish between factors of production and economic resources.

In recent commentary devoted to 'the robots (and the capitalists that own them) will take over the world' meme, Hawking stated:

"If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine owners successfully lobby against wealth redistribution."

Hawking erroneously assumes that ownership of factors of production grants economic power. However, owning factors of production is only valuable to the extent that they are employed to produce goods that consumers value. If a single individual buys up all the machinery in the world and does not use it to produce and sell goods to consumers, then that machinery has no economic value.

If we do reach a future state where robots were able to 'produce everything we need,' then the cost of production plummets--as do prices as supply explodes higher. That's good. In fact, this is the proper role of capital--i.e., to improve the productivity of labor.

There are other problems with Hawking's argument that Prof Bylund does not address. For example, why would investors allocate capital to projects that are likely to have no payoff? Stated differently, if machines and their output are horded by producers, then how do they collect the the resources to pay back investors? And knowing this, why would investors fund such projects?

The upshot to ever increasing productivity facilitated by machinery is that people do not have to work as much while enjoying a much higher standard of living. This has been going on since the first machine was employed in production. In the future, wouldn't it be nice to only work a few hours to support a month's or year's worth of consumption?

Apparently not to some geniuses drenched in socialism.

Saturday, March 17, 2018

Home Price Trends

Rory Devaney: These houses are fantastic.
Tom O'Meara: They're pretty old, around 1900.
Rory Devaney: Our new ones are older than that.
--The Devil's Own

Interesting analysis on home price appreciation. From 1891 thru 1996, US home prices only exceeded inflation by 15% on a cumulative, not annual, basis.


In fact, for the 50 year period stretching from 1890 thru 1940, home prices had trouble keeping up with inflation.


That thinking changed, of course, during early 2000s run-up in home prices when it seemed that home values only went higher. Housing became an 'investment' and then a 'speculation.'

Then the bubble popped.


While some home markets once again have that frothy feel, long term data suggest that, from an investment standpoint, home purchases are, at best, an inflation hedge. And likely worse once borrowing and maintenance costs are factored in.

Friday, March 16, 2018

Old Crosley

"I've heard that old men wake up and scratch itchy legs that have been dust for over fifty years. That was me. I'd wake up at night with the smell of the ball park in my nose, the cool of the grass on my feet...The thrill of the grass."
--Shoeless Joe Jackson (Field of Dreams)

Always captivated by old photos of Crosley Field.


Notice the building density.


Almost as if they had to shoe horn the field into the surrounding neighborhood.


By the time I went to my first ball game as a seven year old, much of the neighborhood had been bulldozed over to make room for the freeway beyond the outfield wall:


The wrath of eminent domain strikes again.

Meanwhile, less than 2 weeks till Opening Day!

Thursday, March 15, 2018

Kids as Political Pawns

Another night in any town
You can hear the thunder of their cry
Ahead of their time
They wonder why
--Journey

Herbert long ago observed that as stakes rise associated with controlling the massive power of a democratic state, factions in competition for that power will become increasingly polarized. Moreover, those factions will become increasingly motivated to use all possible means to capture and retain state power.

This includes employing kids as political pawns.

In many ways, kids are ideal political instruments. Generally speaking, their reasoning powers are not fully developed, leaving them gullible to half baked arguments. They have not yet learned to fully control their feelings, making them susceptible to emotional capture. They are dependent on grown-ups for both tangible and psychic resources, making them open to adult influence in order to obtain what they need.

Perhaps the most desirable feature that kids possess for political operatives is the strong influence that kids, particularly perceived as innocent and victimized, can have on others. A crying child attracts more attention than a crying adult. While kids are prone to being emotionally captured themselves, they also possess tremendous capacity for emotionally capturing others.

Stated differently, kids can serve as excellent marketers for political agendas.

Thus, appeals for passing laws or government programs 'for the children' become increasingly common--as dubious as the underlying logic may be. More recently, those desperate to gain control of state power are trotting out kids as central participants in organized political protests--first on college campuses and now in high schools.

This should not be surprising. In fact, we should expect demand for children as political pawns to escalate as do the stakes associated with control of the state.

That does not mean, however, that individuals should sit idly while kids are being manipulated by political operatives.

Wednesday, March 14, 2018

Gold Price and Daily Closes

Oh, and there we were all in one place
A generation lost in space
With no time left to start again
--Don McClean

Posted yesterday by Fleck, interesting chart comparing recent gold prices to running total of number of upside closes in gold price over the past 30 days.


Like Fleck, I've never seen a chart like this before, but does suggest stability of gold price in midst of a period of down days. Obvious implication is that a few up days have overpowered many down days in order for price to remain this stable.

Seems bullish.

position in gold

Tuesday, March 13, 2018

Protecting God-Given Rights

"Would you like a lesson, sir, in the rules of war? Or perhaps your children would."
--Colonel William Tavington (The Patriot)

Jacob Hornberger reminds us that the Second Amendment does not 'give' us a right. Instead, the Second Amendment, and the rest of the amendments that comprise the Bill of Rights, expressly prohibit the federal government from infringing on those rights.

The origin of those rights is explained in the Declaration of Independence. They are natural and God-given. As such, they are unalienable, meaning that no earthly being can justly take away what God has given.

The proper role of government is to protect the existence and exercise of people's God-given rights. When government steps over its just boundaries and infringes on the very rights that it is supposed to protect, then, as the Declaration observes, people can rightly 'throw off' that government in favor of a more capable design.

Because government is empowered with state-of-the art weaponry to enforce those rights, citizens must be permitted to carry similar arms in the event that the government must be thrown off. As Hornberger observes, our founding ancestors understood this principle well. Hence the Second Amendment.

That so few people, particularly children, seem to understand this thought train reflects an abject failure of our education system in explaining the founding logic of this country.

Monday, March 12, 2018

Buyback Bandwagon

"And with the surplus cash, we implement a major stock repurchase. So Trask is protected and their stock goes up, and everybody's happy...or not."
--Tess McGill (Working Girl)

Once again shaking my head as investors cheer another epic round of share buybacks while stock prices mark all time highs.


At current nosebleed prices, many shareholders would not personally buy more shares. But they're ok with corporate managers spending shareholder funds to buy back shares.

Perhaps they should take a closer look at Friedman's matrix.

What's going on is the furthest thing from 'buying low'...

Sunday, March 11, 2018

Fair Trade

It was thirty days around the Horn
The captain says it's thirty five more
The moon looks and the crew ain't stayin'
'There's gonna be some blood' is what they're sayin'
--Jay Ferguson

As we have noted in the past, Leftists often invoke the concept of 'fairness' when attempting to justify use of government force. Redistribution of income, for example, is often framed as a fairness issue.

But Leftists don't have a lock on fairness as a positive substitute symbol. When it suits their needs, people on the Right like appeal to people's sense of fairness as well.

For instance, President Trump has justified his tariff plan as necessary to foster 'fair trade.' Tariffs help 'even the playing field,' so the argument goes, against countries judged to be giving their firms an unfair leg up via subsidies and other mercantile programs.

Whenever political partisans from either end to the statist spectrum utter the term 'fairness,' take it as a euphemism or justification for use of government force to advance an agenda. When the Right promotes trade that is governed by discretionary rule, and it has a long history of doing so, it is a far thing from true fairness.

Saturday, March 10, 2018

Slow But Sure

"You can't expect an enormous volcano with three tiny bags of explosives. You have to let nature take her course. Give it time. It'll work."
--Miller (Force 10 From Navarone)

Short rates closed the week at their highest levels in nine years.


Higher short term rates serve to curb near term credit markets. They also boost attractiveness of CDs and other low risk, cash-like instruments vis-a-vis riskier yield-bearing securities such as dividend-paying stocks.

Slowly but surely, higher short rates are altering the competition for capital.

position in SPX

Friday, March 9, 2018

Kidding Around

Sometimes I feel I gotta get away
Bells chime I know I gotta get away
And I know if I don't, I'll go out of my mind
Better leave her behind with the kids, they're alright
The kids are alright
--The Who

Federal spending as a percentage of GDP, both historical and projected.


Major entitlements include Social Security and the healthcare triad (Medicare, Medicaid, Obamacare).

Were I to cover the labels and ask my students to identify which of the three categories corresponded to which line, I'm confident that most would associate the red line with military spending.

When our kids and grand kids wake up to what's going on here--that they're paying our way--they're gonna to love us.

Thursday, March 8, 2018

Disarming Mass Shooters

John Cale: I got three rounds. Tell me you got some weapons in the residence.
President James Sawyer. No. We usually have two agents right there with machine guns.
John Cale: What?
President James Sawyer: They're big knives.
John Cale: Great, then you can make me a sandwich.
--White House Down

A frequent argument made by gun grabbers for banning 'high capacity' magazines (e.g., reducing the legal limit for AR-15 style mags from 30 rounds down to 10) is that mass shooters would need to reload more often, giving victims more opportunity to, um, grab the perp's gun.

There is some element of truth in this argument. When shooters are reloading, they are not firing, leaving them vulnerable to counterattack. Moreover, the more times perps have to slam fresh mags into their weapon and rack the slide, the greater the likelihood that a gun will jam, which creates additional downtime for vics to disarm or flee.

However, as Mas Ayoob recounts, little historical evidence supports the claim that reloads have resulting in clean gun takeaways. In fact, there appears to be more evidence that trying to disarm shooters by hand are usually unsuccessful and often lethal.

One reason why this is so is that it is difficult to get close to a mass shooter. Nearby targets are usually the first victims. Plus, the natural reaction of untrained people is to move farther away from a shooter, leaving them in poor position to exploit a temporary cease fire while gunmen are reloading.
Mass shooters are also prone to carry multiple guns which serve to offset lower capacity magazines.
There is also, of course, the reality that people motivated to commit heinous crimes are unlikely to be deterred by laws of any kind--including those limiting how many bullets they can put in their guns.

History suggests that waiting for a shooter to run empty and then grabbing the gun is not a very viable strategy.

Another strategy works far better. In nearly every mass shooting incident on record, as soon as the gunman is met with return fire, he ceases to attack. He is either killed, kills himself, or surrenders.

The most viable strategy to disarm mass shooters is for the would-be targets to be armed.

Wednesday, March 7, 2018

Murder and Morality

Forty seven deadbeats living in the back street
North, east, west, south all in the same house
Sitting in a back room waiting for the big boom
I'm in a bedroom waiting for my baby
--Escape Club

Prof Williams lends some reasoned thoughts to offset recent gun-related emotional capture. Some mortality statistics:

Vehicle deaths where alcohol is involved: about 30/day
Deaths due to stabbing or hacking: more than 1500/yr
Deaths due to shotgun or rifle: about 550

If the thinking is that comprehensive background checks would reduce rifle related deaths, then why aren't federal background checks and waiting periods required for purchasing a car, for getting a driver's license, or for buying a knife?


Williams also observes that gun availability is far more limited now than in the past. A 1902 Sears catalog included 35 pages of firearms that could be purchased by mail. In the 1940-1960 period, magazines were full of gun ads directed at both adults and youngsters. Few states had advertisements on buying guns, and firearm transfers to juveniles was largely unrestricted.

His point is that current levels of murder, mayhem, and other forms of anti-social behavior are no more gun-related than they are car- or knife-related. Uncivilized behavior increases when moral standards decrease. And moral standards have been under siege in the US for more than half a century.

Because morality is the first line of defense against anti-social behavior, Williams argues that problems of murder et al. will continue until we regain our moral footing.

Tuesday, March 6, 2018

Trade Deficits

We've got no future, we've got no past
Here today, built to last
In every city and every nation
From Lake Geneva to the Finland station
--Pet Shop Boys

I run a trade deficit with Target (TGT). I buy more goods from TGT than it buys from me. Are trade deficits a bad thing?

When I trade with TGT, I receive goods from the retailer in exchange for dollars. In accounting, I am running a 'current account deficit.' Somewhere that must be offset with a surplus--a 'capital account surplus.'

TGT must take the dollars it received from me and do something with them. That 'something' includes investment. That investment could be 'direct' in the form of new plant, property, and equipment for the retailer. Or it could be 'indirect' in the form of buying portfolios of financial securities such as stocks and bonds.

Ignoring timing issues, deficits and surpluses must balance.

The US has been running large trade deficits with many countries, including China, for some time. This has some people concerned. However, at the same time, we have been running large capital account surpluses with China as the Chinese invest billion$ in the US.

Restricting trade thru tariffs will surely reduce our trade deficit with other countries. By definition this will result in fewer goods imported that US consumers currently desire. It will also mean that foreigners will have less money to invest in the US.

Less goods and investment are not factors associated with prosperity.

When was the last time the US ran a trade surplus for most of a decade? The 1930s...a.k.a. the Great Depression.

Monday, March 5, 2018

Relief Valve

Better get yourself together
And hold on to what you've got
--Miami Sound Machine

Recent shallow pullback in 10 yr yields doesn't look like much, but it has been enough to relieve some of the near term 'overbought' technical pressure. Stochastics et al no longer twisting high.


Conceptually, I like to think about this as adding 'potential energy' to another possible thrust higher.

no positions

Anti Tariff or Anti Trump?

Some break the rules and live to count the cost
The insecurity is the thing that won't get lost
--Howard Jones

People coming out of the woodwork against President's Trump's proposed steel tariffs. That's good.

Of course, many of those same people are for interventionist actions of other kinds. That's bad.

A tariff is a tax on imports. Taxing imports reduces reduces trade and the benefits that come from specialization of labor. Prosperity is therefore compromised.

Other forms of intervention, many of them the equivalent of 'local tariffs,' essentially do the same.

Not supporting Trump's tariff proposal while supporting, say, taxes on income or minimum wage laws, demonstrates either ignorance or political partisanship.

Sunday, March 4, 2018

Replying to Fools

Do not answer fools according to their folly, or you will be a fool yourself.
--Proverbs 26:4

Social networking seems to increase propensity to reply to fools. Solomon reminds us to resist the temptation. Don't take it personally, and walk away.

Pray for them as well.

Saturday, March 3, 2018

Age Discrimination and Guns

They're seeing through the promises
And all the lies they dare to tell
Is it heaven or hell?
They know very well
--Journey

In the wave of emotional capture following the Valentines Day school shooting in Florida, some retailers, most notably Dick's Sporting Goods, have proclaimed that they will no longer sell 'assault-style' rifles. It is, of course, completely within a seller's rights to do so. No one can put a gun to retailers' heads and order them to sell...guns.

Other retailers who do sell guns have announced that they will raise the minimum age for gun and ammo purchase to 21. Under federal law the minimum age for firearm purchase is 18.

No problem here either, you say. Just like no one can force a retailer what to sell, no one should be able to force a retailer who to sell to.

In a free market environment, this would be true. People should be free to associate with whomever they wish--including associations for business transactions.

The counterargument has been that freedom of association breeds discrimination, and discrimination should not be allowed. Even if, say, a baker does not care to bake a cake for a gay couple, legally the baker should be forced to do so.

Consequently, freedom of association has not been permitted. Laws have been put on the books that prohibit discrimination when selling goods and services.

It is not difficult to apply the discrimination argument to the case of young people and guns. If it is legal to sell guns to 18 year olds, and a retailer chooses to sell guns, then why isn't that retailer legally obligated to sell guns to 18, 19, and 20 year olds?

This is different, you might argue. It is an issue of maturity, and those younger than 21 are not really adults yet. They are generally not mature enough to own and operate guns.

That is a difficult argument to make given what people of that age group are legally allowed to do. For instance, they are permitted to drive cars, to vote, and, ironically, to join the military.

Does, a 20 yr old single mom who wants to protect her home have a legal case against a retailer that refuses to sell her an AR-15 from the gun rack in the store because of her age? Under extant laws that prohibit discrimination in retail sales, I believe that she might.

Friday, March 2, 2018

Steel Blues

Well we're living here in Allentown
And they're closing all the factories down
Out in Bethlehem they're killing time
Filling out forms
Standing in line
--Billy Joel

Yesterday, after President Trump indicated that a big tariff on steel imports was coming, stock markets drained a couple percent. This morning Trump followed up with comments that trade wars are 'good' and 'easy to win.'
Even the ghosts of Smoot and Hawley might be raising eyebrows at that one.

Of course, we have come to learn that it can be a bad idea to take the president's blurts at face value. He floats revocable thoughts in the spirit that all issues are fluid and negotiable.

The spectre of escalating trade wars is disturbing nonetheless. ZeroHedge observes that the last time significant tariffs were slapped on steel (under President Bush), stock markets sank about 30% over the course of the next year.


The graph appearing in this analysis shows that the Bush steel tariff did little to protect domestic steel jobs. In fact, US steelworker jobs are down nearly 60% since 1990. However, over that same time period, steel production is up about 8%. That's an increase in productivity of over 150%.


Societies benefit from such productivity increases. Not from policies that slow such productivity increases down.

Thursday, March 1, 2018

Beware the People Weeping

Ed Harrison: And, yeah, we'll put the old boy on himself. You know, the forgotten man angle. Tear their hearts out.
Bob Wallace: Sorry, Ed, but that's out. We're not capitalizing on the old man's hard luck. No chance.
--White Christmas

Judge Nap adds to our recent discussion of emotional capture and institutional failure in the context of gun control. Of course, he does it in a much more eloquent manner than these pages ever could. In my view, this is one of the Judge's more insightful pieces (and that's saying something). Reading and re-reading is recommended.

I would like to discuss several of his thoughts here.

Putting traumatized kids before television cameras soon after a tragedy virtually guarantees emotional capture, or what the Judge calls 'madness' among the children and onlookers. Madness in this sense is "the passionate and stubborn refusal to accept reason." Madness is common after a tragedy. The Judge cites poet Herman Melville, who after witnessing the railroading of individuals accused of being involved with President Lincoln's assassination, wrote, "Beware the People weeping. When they bare the iron hand."

The lesson: it is nearly impossible to argue rationally with tears and pain. Take a step back from a tragedy before addressing it with 'legalized' force.

The concept of natural rights can be viewed religiously or aesthetically. Those who believe in an all loving God see natural rights as the claims and privileges attached to humanity by Him. For those who do not accept the existence of a Supreme Being, the argument for natural rights still holds. Because it is obvious that humans are the superior rational beings on earth, our exercise of reason leads us to the exercise of freedoms that are integral to our humanity and independent of government. The first among these is our right to life--the right to be and to remain alive.

The right to life implies the right to defend one's life. Our founding ancestors recognized this right when they ratified the Second Amendment. They wrote it to ensure that all governments (in place then and in the future) would respect the right to keep and bear arms as a natural extension of the right to self-defense.

The Supreme Court has characterized this right as 'pre-political'--meaning that the right pre-existed government. If it pre-existed government, then it must be a natural right, i.e., it must come from our human nature. When Judge Nap asked the late Justice Antonin Scalia why he used the term 'pre-political' instead of 'natural' when authoring the majority opinion in the landmark District of Columbia v. Heller case, Scalia replied, "You and I know they mean the same thing, but 'natural' sounds too Catholic, and I am interpreting the Constitution, not Aquinas."

The Heller opinion also recognized that the Second Amendment was written soon after a war had been fought against a king and an army that was regarded as the most powerful army on earth. That war would surely have been lost had not the colonists borne arms equal to or better than those of the British troops.

The Second Amendment was not written to protect the right to shoot deer. It was written to protect the right to defend against acts of aggression, whether those acts are perpetrated by bad guys, crazy people, or tyrannical governmentHeller articulated that the right to self defense means that individuals have the right to use guns that are of the same level of sophistication as their adversaries.

Gun grabbers are unwilling to accept this. A colleague recently asked the Judge on air: Suppose we confiscated all guns? Wouldn't that keep us safe? The Judge replied that we'd need to start with the government's guns. No, his colleague said. What if we confiscated guns from the civilian population only?

An extension of this question would be: What if we confiscated 'assault style' weapons from civilians but left them in the hands of government?

To the reasoning mind that grasps the concept of institutional failure, the answer is obvious.