Distinction Without Difference

"Nice thing about you, Joe, is that you can sound like a liberal, but at heart you're an American."--T.T. Claypoole (The Best Man)

Pundits are promoting next week's election as the most important midterm ever. We've heard this before, of course. And there is some merit to the notion that, as stakes escalate ever higher in winner-take-all democratic votes, every election becomes more important than those before.

 Yet despite the campaign ads claiming the superiority of one political policy over another, Ron Paul reminds us just how close the two warring factions are.

Republicans are the party of WAR...But so are the Democrats.

Democrats are the party of WELFARE...But so are the Republicans.

Democrats are BIG SPENDING SOCIALISTS...But so are the Republicans.

Government Power vs. Individual Liberty

That's the game.

The rest is theatre. pic.twitter.com/mD7QO1Mjgq

— Ron Paul (@RonPaul) October 24, 2018

When it comes to destruction of liberty, the policies of both sides condone it.

Distinction between these parties amounts to little real difference.

Nation by Consent

Oh Rio, Rio
Hear them shout across the land
From mountains in the north
Down to the Rio Grande
--Duran Duran

Excerpted from this larger essay, Murray Rothbard considers the birthright citizenship problem as construed from the Fourteenth Amendment. The most visible problem is this: birthright citizenship, which, when automatically confers citizenship to every baby born in the US, invites 'welfare immigration' by expectant parents. Those babies-turned-citizens (and their parents) become entitled to permanent welfare payments and free health care. As such, birthright citizenship forcibly transfers resources from incumbent citizens to the incoming group.

Plainly, a policy of birthright citizenship is likely to erode the wealth as well as the common culture of the incumbents.

The less visible problem is that birthright citizenship increases the coercive power of the nation-state and decreases the voluntary union of a nation by consent. In a nation by consent, national boundaries are drawn by those who freely agree to become part of a particular nation--and by those in the extant nation who agree to take on newcomers. People are also free to leave that nation and change affiliations (i.e., secede) if they so choose.

The implication of a nation by consent is that immigrants would have to be invited. Only then could newcomers enter and be permitted to rent or purchase property. A nation by consent would therefore be as 'closed' as the current inhabitants desire.

Clearly, Rothbard concludes in the larger essay, the 'open borders' regime that exists de facto in the US "really amounts to a compulsory opening by the central state, the state in charge of all streets and public land areas, and does not genuinely reflect the wishes of the proprietors."

A nation by consent requires complete privatization of land so that true 'border control' can be established. Moreover, voting rights would not be automatically conferred to new entrants. In a nation where property is completely privatized--meaning that government could no longer confiscate it by order of democratic majority--voting becomes less important.

Instead, the scope of private contract and of voluntary consent is enhanced as the repressive state is dissolved into a harmonious and increasingly prosperous social order.

Fed's Frankenstein

"Look, it's moving! It's alive! It's alive!"
--Henry Frankenstein (Frankenstein)

WSJ article reports price increases in many sectors. Higher prices are evident both upstream and downstream in supply chains.

The accuracy of price indexes as currently measured is certainly debatable. But it is difficult to debate the general trend.

For reasons largely incomprehensible to the rational mind, the Fed has been hard at work trying to 'manufacture' inflation. The question is whether the central bank can control what it is creating.

Is the Fed creating its own Frankenstein?

Piggy Bank for Statists

"Shut it down. Shut it down, now."
--Telco operator (Die Hard)

As long as government can shower special interest groups with economic resources, then politicians will be for sale. Campaign finance laws will not stop this as there are other avenues for buying political favor.

Markets for political favor will only be shut down when the spigot of economic resources flowing to government is turned off. Two valves must be shut. One is the income tax valve.

The other, as Ron Paul and Lew Rockwell observe, is the Federal Reserve valve.

The Fed is the beating heart of big government. It can create any amount of currency (out-of-thin-air) to fund whatever politicians want.

Politicians want power

Their primary tools are wars & welfare. Dependency & Fear

The Fed is the piggy bank that funds it all.

End The Fed pic.twitter.com/jeX5G9zb1U

— Ron Paul (@RonPaul) October 30, 2018

Because overt confiscation via income taxes has a ceiling before people will revolt, the Fed is a more lucrative channel for acquiring resources. The Fed is indeed the piggy bank for statists.

Speculating is not Saving

Coleman: My life savings, sir. Try not to lose it.
Billy Ray Valentine: Lose it? In a couple of hours, you're gonna be the richest butler that ever lived.
Ophelia: I worked real hard for this, Louie. I hope you know what you're doing.
--Trading Places

A local investment advisor who advertises on the radio frequently states that people can't afford NOT to be in the stock market. He argues that stocks, with their combined capital gains and dividend payouts, protects savings against inflation.

What he doesn't mention is what Ron Paul and his FB link quoting Tom Woods, note here. Buying stocks involves speculation. Speculation puts economic resources at risk. Those saving for the future should not be speculating.

Most people do not belong in the stock market.

They speculate because Federal Reserve Notes are constantly losing value. Need to make up for it somehow, right?

This wasn't always the case, nor does it have to remain this way.

More here:https://t.co/SkLyjkkdLH pic.twitter.com/kSbCnrQ0RQ

— Ron Paul (@RonPaul) October 28, 2018

By definition, saving means setting aside resources for future use. As RP and TW observe, in the days of hard money, savers could merely set aside gold and silver coins. There was no need to worry about these coins losing their value in terms of how much economic resources they represented.

The age of fiat money has changes that mindset. People know that saving by setting aside Federal Reserve notes is a losing proposition. Even by the vastly understated official statistics on inflation, paper money loses purchasing power to the tune of 2-3% per year. Do the math. How long does it take your dollar-denominated saving hoard to lose 10%, 25%, 50% of its value at that rate?

Destruction of the purchasing power of paper money via inflation has forced savers into risky markets. When they do so, these people are no longer savers. They are speculators. They are putting capital at risk.

Unless they get lucky, these savers-turned-speculators are likely to lose a large portion of true savings that way.

position in gold, silver

Voting for a Living

Hundred dollar car note
Two hundred rent
I get a check on Friday
But it's already spent
--Huey Lewis & The News

Six years ago, then presidential candidate Mitt Romney noted that nearly half of all Americans pay less in taxes than they receive in transfer payments from the government. His primary point at the time was that it would be difficult for most of those people to support political platforms grounded in tax cut policy because voting for lower taxes would mean voting for lower transfer payments.

Fast forward to today. The fraction of all Americans receiving more in transfer than they are paying in taxes has now surpassed 50%. Mises observed that once the majority of a voters in a democratic system receive more in benefits than they pay in taxes, they will demand ever more wealth transferred to them from the minority of remaining producers. Politically, the wealth of the minority is forcibly extracted to subsidize the majority.

Rather than working for a living, people realize they can vote for a living.

A fundamental problem with democracy is thus revealed. How is it possible to limit size and scope of government when elections are determined by majority vote, and when increasingly more voters act as principals contracting with strong armed government agents to confiscate resources from ever smaller minority groups on the principals' behalf?

Pressuring the Fed

The heat is on
On the street
Inside your head
On every beat
--Glenn Frey

The president's attacks on the Fed will only get louder as markets move lower. He won't be the only one.

For nearly ten years, stocks have risen to record levels on an ocean of easy money. Investors have been trained to expect ever higher prices. When prices go down, they will play the blame game. And, ironically, they will blame precisely the entity that created the asset price bubble in the first place.

When will the Fed and other central banks give in to the pressure to stop tightening and start relaxing monetary policy once again? "Twenty percent off the highs" is an estimate floating around my circles.
We're nearly 10% off the highs currently.

The faster markets drop, the louder the calls will get, and the quicker the Fed will cave.

Whether that action blows the bubble bigger, or actually serves to pop it, remains to be seen.

no positions

Voting Sanctions Violence

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

In lieu of recent events, Kim Strassel argues that people should not settle political differences with acts of violence. Instead, they should settle them at the ballot box.

These bombs threats are nasty and cowardly acts. We don’t settle disputes with violence—or with mobs. It is why we have a ballot box.

— Kimberley Strassel (@KimStrassel) October 24, 2018

She does not seem to understand that, in democratic elections, voting is a form of sanctioning violence. Voters become principals of violence when they elect strong armed government agents to force some to do the will of others.

Save for the rare instances where people vote to push government back toward its proper scope in a peaceful manner, voting constitutes pulling levers of aggression.

Double Bottom

You know people are funny sometimes
'Cause they just can't wait
To get hurt again
--Phil Collins

Consistent with the muscle memory pattern, big rally yesterday followed by a mirror image melt this am. This puts most major indexes in position to test a near term double bottom.

You can bet that bulls will make a stand here in an attempt to avoid the abyss and weekend chatter. After all, Monday will be October 29--a 'black' anniversary of sorts for Wall Street...

no positions

Muscle Memory

Only the beginning
Only just the start
--Chicago

When bull markets turn bearish, the early stages of the turn involve big drops followed by rallies. The rallies are driven by dip buyers doing what worked during the bull market rise. With each rally, the bulls think the worst is over.

Muscle memory takes a while to forget.

no positions