What Is Really Happening Again

It's been a while again, which is all on me. I don't blame my audience at all for the infrequency of these posts. I could make promises that they will come with greater frequency in the future, in the hopes that some of you would be happy about that, but it would be better to just do it, so here goes.

The Virus

So we've been dealing with the virus for some time. A common theme in the annals of the Bureau has been the lack of solid, reliable information. There have been many instances where presumably competent people have said stuff that is obviously untrue, yet we are daily harangued for not believing these same people when they claim they need us to.

For instance, the dufus-in-chief, Joe Biden, made a speech where he asserted the various inoculations against the virus were all approved by the FDA, which is, of course, untrue. He also went on to insist that those who have been inoculated are at risk from those who haven't, which is risible.

Do the Vaccines Work?

Short answer? I don't know; someone will have to define some parameters first. For instance, the Johnson & Johnson vaccine has readily available information that you can peruse yourself about its efficacy and risk, and isn't some completely new idea on the concept of vaccine. It also doesn't work that well.

There is some evidence that being vaccinated reduces the potential severity of the disease. However, once again, much important information is missing, and there is also evidence that areas with a higher vaccination rate have a higher overall damage from this latest variant.

More importantly, we don't know the risk from the vaccine, which information is simply not being released, except for the Johnson & Johnson vaccine. There are serious questions about the long-term risks of messenger-RNA vaccines. They have been tried before and have had serious complications that last a life time. Particularly in the case of the very young, the usage of a completely new vaccine that may have long-term effects is unwise.

But, Surely, the Science Is Settled?

This is the cry of the new religionist, with his inquisitors and armies of snitches, enforcing compliance to the latest nostrum regardless of evidence. These vaccines are only approved for use on an emergency basis; the science on them is in no way settled. We won't know for perhaps ten years what the actual fallout from this experiment is.

Please note I'm not saying that the vaccines are dangerous; I'm saying we specifically don't know, and, worse, the information necessary to make that determination is being withheld. One thing that has been true since the dawn of medicine is that a treatment that actually works is not hard to sell, but doing so requires convincing the public of the benefit of the treatment.

If these things actually protected you from getting the virus, you could charge a fair amount of money and people would happily pay. The fact is that none of them do prevent you from getting the virus in any meaningful way, and we're on our second variant that appears to prefer vaccinated people as a vector.

That, the Bureau is convinced, is mostly because those vaccinated proceed to lower their guard and thus engage in riskier activity. Since the beginning of this pandemic, the analysts of the Bureau have pursued a policy of distance: distance by ordering online rather than shopping in person, distance by having meetings remotely, distance by not getting closer than six feet to strangers. Whether by luck, or through the success of this policy, none of the analysts so far have tested positive for this virus.

However, it appears those vaccinated tend to ignore these simple rules and return to some sort of normalcy. This means a much higher risk of transmission of this disease.

So Then, You Support the Lockdowns?

Absolutely not. The lockdowns did far more damage than the virus ever did. We now have a generation of kids that have been badly bent by lack of proper schooling. The lockdowns triggered the demographic overhang the Bureau has been warning of for some time early, meaning many people who could left the work force. The general response to this virus has been to constrain freedom and create perverse incentives.

What do I mean about that? Tell a bunch of kids to stay home and not go anywhere, then make it clear that it is perfectly ok to go out in mobs and join one side or the other of the Black Lives Matter movement. Before the flames start, I should point out that I, in general, approve of the idea that lives matter, regardless of color, which statement, I understand, has somehow become considered racist by some, although I'm leaving that paradox alone for now.

What happened is that kids and young adults had no outlet for socialization except to protest, so protests swarmed all over. Throw in a government that seemed determined to pay people to not work, and you have two of the major support legs for social unrest, a lack of acceptable outlet for socializing and nothing better to do with their time. Quite literally, these kids thought they were engaged in a divine work and also able to meet with people who agreed with them.

What they actually believed didn't matter so much for this. Both sides, the Proud Boy types, and Antifa and the whole constellation of the left, were engaged in saving the world while getting out and getting fresh air. If these people had a job to go to, they would be less likely to burn down a neighborhood or shoot each other. If they could go to a bar or a movie, they would be less likely to go to a protest as well.

So What Should Have Been Done?

Well, first of all, a short, maybe two weeks, maybe a month, complete hard lockdown at the beginning of the virus so public health officials could work out what was going on and also prepare for the inevitable onslaught on emergency rooms would not be out of order. Such a lockdown is a serious breech of liberty so must be both very short and very precisely tailored for a specific set of goals, which must be monitored constantly with an eye to modifying the lockdown to meet the goals or stopping it altogether if it doesn't.

While vaccines are an admirable idea, to get people to actually take them, you need to have credibility, which means not having provably lied already, and you need to charge for them, even if it is a nominal charge that you wave for people who can't afford it. Giving something away for free generally convinces people that its value is low or there is an ulterior motive to giving it away. Forcing people to take something that is free is likely to lead to pushback on basic principle. We have reams of research on human behavior on this, and those who would be our masters have simply ignored it all, choosing to fight a moral battle against the other side rather than keep in mind what the goal should be.

What Can We Do Now?

Not much. The Biden Administration has now made it completely clear they do not care about half the country. Recent polls show more people in this country identify with the opposition than with the current leadership. If Biden actually commits to healing this country and starts by listening to the opposition, maybe that situation can be salvaged, but it is doubtful he will do so, given the number of chances he has had to do so.

What we will need to remember going forward is that this country, and, indeed, the world, is composed of many different factions with differing goals and differing methods of achieving them, and a centralized solution is unlikely to make anyone happy as a result. We need decentralization, with ruling power at the lowest possible level, while rights are protected at the highest possible level.

As for this virus, we can just wait, which was always the correct response. It would be bad to start, then improve over time to the point it is nearing now, where it is no worse than other diseases we just live with. Doing nothing has actually worked rather well for other countries that have tried it, with outcomes not significantly different from countries that initiated draconian policies.

What's Really Happening, or I Have Been Away For a While

Trump

I'm such a fence sitter on Trump.  He does brilliant things, like his tax breaks, policy on regulation and right-to-try, but he also is anti-immigration and has picked a trade war with China.  Oh, and he's talking about gun control now, which is a hard no from me.  We shall see if anything comes from it, but, at the moment, he is in peril of losing his support, not because of any of the things for which Democrats hate him, but for doing things that are anathema to Republicans.  So, after all this time, we're still at 'wait and see' on him.

Political Unpleasantness

I'm always looking to talk with people who disagree with me.  I do this mainly to learn why they think the way they do, as convincing a man against his will does nothing useful and won't stick.  Fortunately. in my sphere of friends, I do have several doctrinaire liberals, and, as has been noted before, there is one rather left-leaning analyst in the Bureau, so there's that.

I know it's been done to death, discussing this unpleasantness we have going on, but it is somewhat concerning to me that the left, particularly with gun control, does not care what happens to this great experiment 'testing whether that nation, or any nation so conceived, can long endure'.

Disenfranchisement

A major reason we have Trump as president is the sense the common man has that nobody cares about the things he cares about.  For instance, through much of the South, parts of the West and quite a bit of the Midwest, guns are a way of life.  I pick guns to talk about for a few reasons, but a major reason is that they are the most contentious difference I have with otherwise rational Democrats, such as Mayor Pete, who I might otherwise be able to support.

How a Society Deals With Unnecessary Things is a Great Barometer of Freedom

So, the left argues we don't 'need guns'.  Frankly, I find that argument risible, as I, personally, have used a gun to defend my property more than once, for which the mere presence of the gun sufficed.  Setting that aside, this argument that something is not necessary therefore can be safely outlawed is anti-freedom.

When a society allows things that are perhaps dangerous and are not necessary, that is a mark of actual freedom.  The statist, like a control freak, wishes to enumerate the things you can do; those who seek freedom enumerate those things you cannot do.  In the instance of guns, some simple time-series data shows that they do not lead to 'rivers of blood' as was predicted when Texas adopted concealed carry, as crime has trended down since.  Without a compelling argument that guns are in fact terribly dangerous to a civilized society, they should be legal.  This is freedom.

Wait, What About Mass Shootings?

Mass shootings are a terrible tragedy.  Sandy Hook is what finally made me get my CHL so I could carry a gun with me so I can defend my family.  I believe that's a major difference between the leftist view of 'the government will protect you' and the libertarian/individualist view of 'I will look after myself'.

However, a simple point is that handguns, in particular, are used at least 800,000 times a year in the United States in self-defense.  Think about that.  That's 800,000 rapes, murders, assaults, robberies and general mayhem prevented, meaning 800,000 instances of human misery prevented.  While mass shootings are deplorable and tragic, the left is asking us to allow those 800,000 instances of human misery to happen in exchange for saving, on average, fewer than 100 lives per year.  This is not a good exchange.

Well, Can We at Least Reduce Magazine Capacity?

The short answer is no.  The longer answer goes like this: in a mass shooting, limiting a shooter to 10 rounds makes very little difference in the deadliness of the attack.  Mass shootings have been accomplished with single-shot shotguns and six-shot revolvers.  When people are not shooting back, just cowering and running away, you do not need to have a rapid-fire gun to kill a lot of people.  It can be easily accomplished with fewer rounds in the gun, if you think about it.

Now, assume you are facing a situation that actually happened near where I live, in Fort Worth, Texas.  My son came home with a rumor of an attack with eight armed gangsters who forced their way into an apartment and robbed a family at gunpoint, even going so far as to steal the dog.  It turns out it was only three gangsters, but the point still stands.

When you are facing more than three people, a revolver really isn't going to cut it.  When shooting under stress, misses are likely, and a six shot revolver requires at least a 50% hit rate.  Even the three people that were actually involved would have been difficult to deal with with my .38 that I'm back to carrying, as it only has 5 shots.

So, I broke out my KelTec SU-16b.  It's a .223 carbine (short rifle) that would be in the group of guns misidentified as 'assault weapons' by the left.  As anyone who reads this blog (all six of you) knows, an assault rifle is specifically a select-fire battle carbine, meaning short rifle that can be fired fully automatic.  While it is legal to own a fully automatic weapon in the US, it requires a lot of effort, a lot of money, and is rather pointless.

On the other hand, a carbine similar to the SU-16b or one of the AR series, fires only one round per trigger pull, but contains up to 30 rounds, on average, meaning you can deal with a larger group of attackers.  You can handle 10 with a hit rate of 33%.  And, while the mass shooter can take his time selecting targets, the defensive person has no such luxury, as the opponent is also armed and ready to do injury, meaning you do not necessarily have time to reload.

One of the biggest concerns that is addressed by such a weapon is what happens when society breaks down, such as during a riot.  People rioting will often commit mayhem, far more than merely property damage, at least setting fire to things, which can be deadly.  Looting also happens.  While affluent people may have insurance for their things, and, generally, can afford to replace them, less affluent people neither have insurance nor can afford to replace their things, including their car, which is part of their livelihood.  Under that condition, when facing a large group of opponents, you will need a large capacity weapon.  Riots like this have happened periodically in the United States.

The biggest joke so far is Biden's statement that a side-by-side 12ga shotgun is a perfectly serviceable defensive weapon.  First, you only have two shots before you have to reload and reloading is slow and fiddly.  Second, 12ga does a horrific amount of damage and is not very controllable.  It will tear up your house, can rebound and injure or kill the shooter, and can easily kill people who are not part of the encounter, which means increased liability, both civil and criminal.

There are uses for a shotgun, for sure, but home defense is not really one of them.  A shotgun is better than nothing, I will allow, but it is not a good choice for home defense.  In the situations in which you need a semi-automatic carbine, you will simply be dead with a shotgun.

Besides, shotguns are not easy to shoot well due to their horrific recoil.  The average person has trouble handling even mild loads in a shotgun but anyone can shoot a .223 carbine, and learn to shoot it well.

But, Certainly, You do not Need a .500 S&W Magnum

Well, the fifty cals are simply not used in crime.  Like a shotgun, the recoil is horrific and it takes time to acquire the skill to use them.  Unlike a shotgun, they are very expensive to shoot so acquiring that skill takes a lot of time and money.  Criminals, generally, do not invest any time nor any money in improving their skills with any weapon, so tend to use much cheaper guns.  Believe it or not, the venerable .22 long rifle is still one of the most-used rounds in crime because it is so cheap.  While few civilians would choose to defend themselves with a .22, criminals regularly use them to commit crime.  Comparably, none of the big, heavy rounds are used in crime.  Neither would I use one for self-defense because of the risk of over penetration leading to damage to property and injury to innocent people.

As I've said before, a litmus test of a free society is whether it allows things that are not injurious to civil society or prohibits things that are 'unnecessary'.  Since there is no reason to ban large-caliber guns, they should not be banned.

So, What Do We Do?

I really don't know.  I understand that people believe something must be done, but everything we do has consequences.  Banning all large-capacity or large-caliber guns will have unintended consequences, such as the above 800,000 instances of human misery.  Therefore, we should focus on solutions that actually make sense.

For instance, nearly every mass shooter so far has acquired their weapon through legal means, so background checks are not the answer.  Increasing the strictness of background checks won't stop mass shootings but will massively inconvenience law-abiding citizens.  For instance, one proposal would have made it impossible for me to loan a gun to one of my own children.  While people who know nothing of guns believe that isn't a hardship, it very much would be for me.  This is why many gun owners feel that most gun control is aimed at harassing law-abiding citizens rather than doing anything about gun violence.

Linking mental health issues to gun ownership would have the effect of reducing the number of people who seek help for mental health issues so, quixotically, could actually increase the number of mass shootings.  Since visiting a mental-health expert could lead to you losing your guns, you might not go.  That means your mental health issue goes untreated and gets worse with time.

Better mental health support, something that actually increases the effectiveness and the number of people helped, could lower mass shootings, as well as crime in general.

Stop Ranting About Gun Control and Get to the Point

Fine.  Here's the point: the leftists, particularly on the coasts simply have no idea what they're doing with gun control.  They don't care about my life, my happiness, or my traditional values.  To the leftist, I am the enemy.  Hillary Clinton put it best when she misspoke and called us a 'basket of deplorables'.  That, really, is how they view us, those of us who get in the way of their grand plans to improve all our lives.

The problem is that many of us are very angry and getting angrier.  I have long said that a decent Democrat would be a breath of fresh air, as I do not particularly like Republicans, but the Democrats seem to be in a race to see who can do the most damage to my life and my pursuit of happiness.

I'd go into low-flush toilets as an example, but nobody wants to hear about my every other day toilet plunging habit.  I could talk about low-flow shower heads but nobody wants to hear about how annoying it is to have to take a longer shower and work harder just to get the soap off my body.  Oh, and another unintended consequence is the modern multi shower head systems that get around that law and are selling like hotcakes because people like a shower that works.

A similar stupidity is the CAFE requirements: there is actually an engineering limit to how efficient a car can get, and hitting Obama's target would mean we all drove tiny little horrid cars of very limited utility.  I make no secret that I drive a Ford Expedition, and have plenty of reasons for that, but the biggest one is simply that I fit in it.  I'm very tall from my butt to the top of my head and few modern cars are tall enough for me, leading to discomfort and actual injury if I drive one too long.

So, all these policies lead to more misery for me, but the leftist simply does not care.  They do not care about me or about what I want or how I live my life.  They know best and I am evil for suggesting otherwise.  This means we can not have a civil discussion.  I can go talk to them and find out why they think the way they do but they get very angry with me if I try to explain why I think the way I do.

Many on the left and a few on the right are of the opinion that Trump is the cause of the incivility in our public debate.  In reality, he's a symptom.  He was elected out of anger at the left and some on the right for this relentless drive to make our lives more miserable without once bothering to find out anything about us.

For instance, back to guns, the average gun-banning lefty has no inkling about guns.  Go do some research, learn something about guns, maybe shoot one or two, then go read the rhetoric on the left.  It's both hilarious and sad how little they know about guns.  Before you decide that you should make a lifestyle enjoyed by at least a third of this country illegal, you really should spend a little bit of time trying to understand it.

It's this attitude that, I think, may finally break up this country.  I've been very worried about this for a long time, and, if we can't find a way to have a reasoned, civil discussion about the things that divide us, I fear that the division will get deeper and finally manifest in dissolution.  The left simply does not understand that the right won't give up their guns.

It is this disconnect that bothers me; the rural Americans are simply not going to accept the law the left wishes to enforce upon us.  I do not understand why they do not see this.  Simply enacting a law does not make the thing happen; you have to then enforce it.  Forty years of the 'war on drugs' have led to drugs being cheaper and more available than ever before, for instance.  Prohibition of a thing that a large swathe of the population wants almost always leads to failure.

Worse, it leads to corruption.  It leads to a striated society where the rich can afford to jump through the hoops to get armed defense for themselves and their families, but the poor simply must die.  The weak and downtrodden will get weaker and more downtrodden.

I think everyone should take a deep breath and realize that policy has consequences to other people.  We need to try to understand those other people rather than dismiss, or worse, insult them.  We need policy that is based on results, not hot air.  We need a real effort to advance the human condition rather than empty political pandering.  We need politicians who are learned and intelligent and dedicated to making the world a better place.  We need to quit enacting laws in haste in response to an emotional event.

What we need, in a nutshell, is wisdom, and it is lacking.

The problem with unfettered lending

Definitions

For starters, we have to establish some definitions.  Historically, lending had to come from actual money; when it didn't bad things happened.  By that, I mean that lending came from money set aside for that lending.  So, when you wanted to buy a house, you went to a rich man and begged to borrow money, which he lent to you with interest.  That money was wholly and completely owned by the lender, and, once he signed it over to you, he no longer had it.  This is classical lending.

At some point, the rich men turned into bankers and started writing notes for money rather than hand out money itself.  This was quite a bit of an improvement, as you only had to carry around a paper note, the note was backed by real money and it was normally directed to someone making it harder to steal than physical money, commonly gold or silver at the time.

Anyway, bankers took deposits and made payments on behalf of their clients.  A draft drawn on one banker might be submitted to another banker as payment.  Then they would settle accounts later, reducing the amount of physical money that had to be transferred between banks.  At this time, bankers for bankers came to be, who dealt primarily with reconciling banks.

Anyway, a given bank would have a large amount of money it didn't expect to be redeemed.  Since it primarily passed around paper notes and it had become fashionable to not actually redeem the notes, the bankers decided they could write some notes beyond the amount they actually had on hand.  This allowed them to make more money than they could otherwise do.  This is called 'fractional reserve banking'.

How it works: consider a banker.  We'll call him Hank.  Hank has exactly 100 gold bars that has been given into his custody.  On a monthly basis, when he reconciles with other banks, he finds that he seldom has a turnover of more than one gold bar, meaning he's almost always either had to pay a single gold bar or gotten a single gold bar.

Doing some quick math, he decides that he can lend out up to half his gold reserves and still have a nice cushion in case everyone demands their money.  He's been lending at, say, 10%, meaning that for each gold bar that he has that someone has allowed him to lend on, he's making a tenth of a gold bar a year in simple interest.

Supposing he has two gold bars he can lend, as the people who have given him those have agreed to not redeem them in exchange for some interest payment from him, say 5%.  Off those two, he gets a tenth of a gold bar per year, his clients get a tenth, and he increases his lending ability by a tenth.  He has a further gold bar that is his, for another tenth a year.

Well, he figures that even those two gold bars are part of his 'reserve', so he can lend a further five gold bars without paying anyone interest.  On those, he gets another half a gold bar a year.  This means he is now getting eight tenths of a gold bar off an actual investment of just one gold bar of his and two of his clients.  He still only pays out one tenth of that to his clients, so he is now getting seven tenths of his own.  He's gone from a return on his personal investment of about 20% to 70%.  This is very good for him.

Initially, it's good for society as well, apparently, as those five extra gold bars in loans mean much more work available.  As we shall see, long term, it's not so good.  Initially, the loans are paid off, and all is well.  As we shall see, later on, the payments will start drying up as he has to chase ever worse loans to keep the lending flowing.

Fast forward many, many years, and now we have the modern era where money has no backing whatsoever.  Further, loans need not even come from actual monetary backing.  The fractional reserve above is about 66%, meaning that, for the outstanding loans, Hank has 66% actual gold to back it.  These days, apparently, the reserve percentage is something like 3 to 5%.  Hank's bank is actually not loaning out more money than he has, while the modern bank loans out as much as twenty times as much money as it has.  This is the era of 'quantitative easing'.

So, why is this bad?

We've only talked about the banker's side of things.  It's been great for Hank.  He's never made so much money.  His accumulation of money has allowed him to grow the business of loaning and thus make even more money.  In the modern era, bankers don't even have to have much money to start; they only have to qualify as a bank.

Anyway, we'll consider what happens in our fake economy.  We'll pick, say, 100 people, one of whom will be a banker.  Our economy will only discuss the purchasing of cars.  They get distributed income to make things easy, so each person gets, say, $100 per month.  Our banker starts with, say, $1000 and each car costs $1200.

Normally, each person would have to save at least twelve months to get a car.  With 100 people buying cars without banking, that means around 100 cars sold per year.  We like easy to work with numbers.

Since the cars move so well, the car companies keep around 20% extra capacity, or twenty cars, on hand as inventory.  A banker comes to a car dealership and offers to finance those twenty cars to people with good credit.  The terms are fifteen months' pay for a car, but you get it today.  The banker is financing the $1000 and getting back $1250.

What happens is that twenty people buy those cars immediately because they get to keep their savings and will have to pay back in the future.  This means that twenty cars are retired early or that they buy an extra car.  Either way, there are more cars than used to be necessary.

Over the next fifteen months, the banker will get the savings that would have been put towards the car . The banker simply wrote notes for the cars, at the 20 to 1 ratio, meaning that he's making 2500% return on his investment.  At the end, he goes from having $1000 to having $6000.

Since the car purchasing wiped out several months of normal car purchases, meaning that the only way more car purchases can be made is to make more loans, so the car dealerships ask if they can keep selling on loans, to maybe less reliable payers.  He agrees but requires 18 months repayment for those buyers.  For the remaining 11 months, the car sellers sell their normal yearly allotment of 100 cars, not building inventory, at the new terms.  We're going to wave hands a bit and say that, at the end of the year, the banker has gotten about nine new loans a month.  At the end of the year, he has received $70,200.  More importantly, each and every resident is now indebted to him and isn't saving anymore.  When all the loans are repaid, he will receive $79,200 in real money.  He ends up loaning for all sorts of different things so he can get more money.  He has to make more and more marginal loans to even be able to make loans.

What I'm getting at is that each loan that a person takes out leads to them not saving, not spending as much and buying earlier than they otherwise would.  As you can see, 119 cars were sold rather than the 100 that normally would be sold.  Car manufacturers will have to scramble to increase their production, initially by hiring more people, then by making less reliable cars.  This is a classical bubble in cars.

As this progresses, the banker comes to hold ever more a portion of the wealth of the society, as well as more and more of the earnings.  Eventually, he can control everything but the staples like food, energy and utilities.  Oddly, this means that, for the short term, productivity goes up as everyone works like lemmings to pay for everything, but this is observable in modern society, as we are all working longer hours just to stay even.

This explains everything

As I said above, we work more to stay ahead.  Productivity has soared in the last hundred years or so, but most people are still barely scraping by.  We also see the so-called 1% gain ever more control of the economy.  We see an increased spread in wealth distribution, where the rich control ever more of the economy.  All of this is predicted by our model and all of it is caused by fractional-reserve banking coupled with quantitative easing that allows banks to get money from the Federal Reserve Bank for low or no interest, allowing them to loan money they don't have.

What we have allowed is certain well-connected people to get money for which they have not worked and for which they have no claim, and it makes me so mad I can't see straight.  Fixing this is easy; simply get rid of the Federal Reserve.  That would, unfortunately, lead to a massive depression caused by massive deflation as a result of a contraction of the money supply and the need to clear all the malinvestments from the economy.

Malinvestments are things that were done that would not have been done if money hadn't been so free, things that don't necessarily make sense and might even be things nobody wants.  A malinvestment is more than just lost money; it's lost opportunity to produce.  Each and every person working on one of these pink elephants is not making tooling or fixing cars or whatever people really need and want, meaning that while they are off making things people don't want, they are competing for things people do want and generally driving up prices.

Clearing out those malinvestments will wipe out an awful lot of money from the system and make money scarce.  This will raise the prices of nearly everything, causing defaults on loans, which will make money even scarcer.  To protect yourself in such a situation, you need cash reserves, but it's a difficult call, because the bureau does not expect any politician will let such a situation develop, especially since it would hurt their buddies the bankers.  If you keep cash and hyperinflation sets in, you are going to be wiped out.

So, the only option really available is to acquire things of substance, as an inflationary regime will make them appreciate in value and a deflationary regime won't wipe out their value compared to other things.  Of particular worth is farmland, because people always have to eat.  Also useful, as has been pointed out before, is owning a small business with good people.

Of course, none of this is economic advice; these are all the musings of a few admittedly odd individuals.  You must do your own thinking when it comes to your own money.

What is really happening, scandal edition

Trump

Well, it's the name on everyones' lips.  There seems to be two major factions, one that is insistent that he is the antichrist incarnate and the other that insists that he is our savior.  Those two are engaged in a battle that is largely pointless to the rest of us.

I supported Trump over Hilary Clinton.  I thought Trump might actually be good.  I'm seeing little to actually disabuse me of that notion.  From an objective evaluation, what Trump has done is not that far out of the ordinary, even the things he does with which I do not agree.

Immigration

So, Trump's immigration order has resulted in a rather unprecedented response.  Courts have made blanket, nation-wide injunctions, which aren't particularly common, believe it or not.  People have been screaming about constitutionality and fairness and the American way.

While I agree that Trump has beliefs on immigration that are not in alignment with what I believe is the American way, I do need to point out that the immigration order, itself, doesn't really violate the American way.

As for constitutionality, that argument is actually rather weak.  I have yet to have anyone successfully defend this particular charge, as the order itself is not in any classical way discriminatory.

I will agree it's largely pointless, but that is nothing new to the United States federal government.  After all, we've been dealing with the enhanced security at airports and general loss of rights all over for no really good reason, and courts have even held that it's not up to them to determine if such a policy is actually effective as an elected person has a right to do that for which he was elected.

Personally, as always, I believe that once a person manages to set foot on American soil, they become an American citizen.  I hold a minority position.

We do have to balance the good with the bad, however, and that is what this post is about.

Regulation

While everyone is losing their shit over the network neutrality rules change, Trump has quietly been reducing regulation all over the federal government.  Instead of being noticed for his wholesale reduction in expensive regulation, everyone is going on about the loss of the network neutrality regulation that was, apparently, a triumph of the Obama administration.

That regulation was another attempt by the Obama administration to legislate from the Oval Office.  Obama was annoyed at how slowly Congress was addressing the issue and decided that, since Title II applied, it should be done that way.  This, of course, put an end to the efforts in Congress to address the issue.  The FTC, which used to deal with consumer complaints against ISPs, lost that power.

Further, the regulation didn't address those in the smallest markets, the ones most damaged by ISPs misbehaving.  Also, it didn't address the fundamental problem, which was the lack of real competition in the market.  This is, of course, caused by existing regulation that grants a monopoly to various cable companies.  It wasn't a bad deal for the cable companies, getting Title II regulation in exchange for retaining utility-level monopoly status.

So, in exchange for returning regulation of network neutrality to the Congress and the FTC, we've gotten a lot of other regulations removed.  On the whole, I find this positive.  I might point out that there is no consensus amongst the analysts at the bureau on this issue.

Comey

So, there are two readings to this.  There is the official, establishment reading, that Comey caught Trump trying to influence an investigation.  Then there is the reading I see, which is that nothing of any objective import happened, and a disgruntled Comey tried to hurt Trump.

Comey got fired by Trump.  Everybody in the administration works at the pleasure of the president unless their post is specifically protected by law and Comey's wasn't.  Further, there are a lot of questions as to how Comey went about it.  Comey testified he specifically leaked his document in order to cause a special prosecutor to be appointed, not merely to get the truth out.  Coupled with his testimony that he never liked Trump and was always suspicious of him, Comey's testimony is rather suspect.

Did Trump lean on anyone?  There doesn't appear to be any solid evidence he did.  Everything he said or did can be alternatively interpreted as him expressing a hope for the fate of his friend.  There is no situation where Trump said that if Comey didn't stop the investigation into Flynn, he was fired.

This leads me to my final point on this, which is that presidents are normally given a while to settle in.  In this case, the establishment hates Trump and is leaking every embarrassing thing they can.  They are doing anything they can to paint him in a bad light so they can be rid of him.  Everything he says or does must be read in the worst possible light in this holy war of theirs to defend their comfortable corruption.

What is really happening

So, Trump is a naive president, sent to Washington to raise hell.  One analyst refers to him as a 'pooball' thrown at Washington by the electorate.  Trump has the cojones to actually effect change.  He's not the effete Obama or the befuddled Bush.  Not only has he promised to take on sacred cows in the city, but he has actually attempted to deliver on that promise.

There are a lot of special interests in Washington quietly working out deals to the detriment of the rest of us in this country.  Those special interests are angry with Trump because he actually threatens them.  This is the first president since Ronald Reagan with the will and ability to fight the establishment.  That he is a loose cannon only makes it worse for them, because they can't predict and thus manage him.

So they've flung every accusation they can find at him, accusations that used to reliably ruin a politician, but, with Trump, has effected nothing.  The Donald is not teflon like Bill Clinton; the electorate simply does not care anymore.  They don't trust the news media a bit.  They don't trust their politicians in Washington.  They don't trust Trump.  Trump, however, is trying to do things that they agree with and therefore is the least evil there.

I do not know how history will view Donald Trump.  I do know I wouldn't change places with him for any amount of money.  He is a lonely man against whom the entire establishment of the country is arrayed and yet he soldiers on doing what he wants to do regardless.  It's that he is either completely tone deaf or that he is possessed of great courage in the face of adversity.  Instead of seeing this lonely fight for what it is, much of the media is trying desperately to convince us that he is the ultimate evil.

Trump's supporters

Ah, these people.  They aren't doing Trump any favors.  They really aren't hurting him, either.  I get several emails a day from Trump supporters asking for my money and wondering if I'm 'faithful' to Trump.

See, elected officials in this country are our servants.  They serve at our pleasure and should be loyal to us, not the other way around.  This is a bit Hilary Clinton got wrong; we don't want to be led around by the nose for our benefit.  We want to be free to forge our own destiny.  To that end, we elect people to go to government and take care of things so that we may be free.

So, no, I'm not loyal to Trump.  But I do think he's getting a raw deal.

Some more thoughts on production

Much of the idiocy the great and good seem to spout stems from a misunderstanding of the nature of production.  There has always been a sense of the immutable value of money amongst those who would raise minimum wage or increase the progressive nature of taxation or engage in outright payments to level the income imbalance.

Money is not production

This is the first major problem with the idea that you can simply pay people money and make these sorts of problems go away.  The way to increase the wealth and quality of life for everyone is to improve production.  This is pretty obvious because there's only so many goods and services available, a concept known as 'scarcity' in economic circles, so the share a person can acquire is limited by the percentage of the total money supply in circulation he can acquire.

We can use our imaginary economy, complete with burritos, to explain.  With ten workers making one burrito each, the total production is ten burritos.  The time frame doesn't matter really, but we could say ten burritos per day.  Each worker gets paid ten dollars per day, and can purchase whatever he likes, but, since there are only burritos, he's pretty obviously going to buy burritos.  Since there are ten of them and each only needs one burrito and the burritos don't keep, they each buy one burrito per day.

Now, we can pay one guy more for some reason, but there's only ten burritos, so all that would really accomplish is that person pointlessly accumulating money unless one of the other guys fasts for a day, at which point he can have two burritos, but, as we already said, the burritos don't keep.

Now, if one man is determined to be disabled and therefore unable to pay for his quotidienne burrito, and the rest of the people decide to buy his burrito for him, we have a problem.  He's not making his burrito to be sold in the market, so we have ten people with only nine burritos.  The guy who got paid more above is going to get his burrito because he can bid more for it.  The man who was determined to be disabled will have to bid with everyone else, and one person will go hungry.

A solution to this, of course, is to pay someone extra to make an extra burrito, or to see if a machine can be invented that can make the extra burrito.  Either one would work, although the first leads to worsening work-life-balance and the second leads to encroaching automation.  However, everyone would now be fed.

A problem with this, of course, is that now the guy who made the machine can make another or someone else can make an extra burrito both of which lead to more money being paid to them.  Here our little economy breaks down because there's no point in their making any more money than it takes to buy their burritos, so we introduce the trinket, which trades at a rate of one burrito to ten trinkets.  Now, there's incentive to make more than the minimum to buy a burrito.

Suddenly, the guy above who got paid more for his lone burrito, perhaps it was better than the others, and the guys who can make more than one burrito in a day and the guy who can make the machine that can make a burrito, can all make more money and thus get more things.  So, there are, say, five guys involved in making burritos now and four making trinkets.  Each person gets enough money for a burrito, as the burrito production is now ten again, so there's no shortage of burritos and thus no tight market increasing prices.

However, there are only four guys making trinkets, which they sell to the five guys making burritos, so there is a shortage in trinkets, as the guy on what we will call welfare for convenience is not getting any trinkets.  Giving him more money for trinkets will fix this but reduce the available trinkets in the whole society.

Money is not value

As we've seen above, we have non-durable goods, the burritos, which spoil if you try to save them, and durable goods, the trinkets, which don't, in our economy.  We've also established that burritos are essential while trinkets are not.  We've also established that the people who are on state support don't like getting only the essentials.

It turns out, however, that, while you can save trinkets, you really can't save money.  The production does not increase, so you can buy trinkets later, but that would cause prices of trinkets to rise, causing others to save their money.  The number of trinkets produced cannot increase without improving production like we did with burritos, so the only way, obviously, to increase the trinkets every person can have is to increase the production of trinkets.

Some people, through shrewd trading, can amass vast quantities of trinkets, but this leads to social unrest as it is viewed as unfair.  After all, fairness is the reason we gave the guy who couldn't work some money for burritos and trinkets.

You can use some money to paper over economic issues so long as it keeps value, but you really can't save up production because when you spend the money you will be competing with other people for the production.

So socialist schemes are doomed

Since each person who does not work reduces production.  You can pay him all you like and you won't help the economy produce more unless someone else steps up and works more or someone increases production.

Taking money from the rich to give the poor does not help either as it causes the kinds of people who could increase production to not do so because they don't have an incentive.  Thus total production does not increase, and there simply aren't enough rich people to rob to pay the poor.

As an aside, regulations impeded innovation most of the time, so increased regulations result in reduced production.  For this reason, regulations have to be very carefully constructed to only affect the things that must be regulated.

Over time, recently, for reasons having to do with the banking system, the very rich have managed to increase the percent of production they can control, while the overall production has grown faster, so the average person has seen the amount of production they can control go up as well.  The average person is now better off than at any other time in history.

They are also working more.  The pace of modern life is faster.  There are a lot of reasons for this, but one of them is the above-mentioned fact that, in order to support all the various schemes of a heavy government, they have to work harder to make up for lost production.

A better idea

What to do about those in our imaginary economy that can't afford a burrito?  This is actually a real problem, shown up in the need for essentials in the world economy today.  If you cannot work, as we've already shown, then you reduce the available production by not working, then reduce it further by consuming.

A simple solution is to provide everyone with enough money to afford a burrito.  Give the money to everyone so that any money they make above that they can use to buy trinkets.  In order for this scheme to work, the money has to be given to everyone and there can be no means testing or restrictions on it.

The reason is that the above disabled man might be able to work some, but not enough to get his burrito.  Most systems will only pay disability if there's no way for the person to support himself, so he's restricted to not working at all in order to get disability.  In the proposed scheme, he can got work part-time for his trinkets, and the whole society is ahead because he has increased production for everyone.  He's now only a partial drag, not a complete drag.

A second, possibly more important reason is that those who innovate are not disincentivized to do so because they can make way more money if they do.  They are also not as likely to be angry about it because everyone gets it.  It seems odd that they would pay taxes, often many times more than the payment, and still get the payment, which they would likely simply apply to taxes anyway, but it is the principle of fairness that would make the system work.

China, as I understand it, takes this approach with healthcare.  Everyone is given an amount for healthcare they can spend, and when it's gone, it's gone.  This would allow price information and innovation into the health care industry.

What's Really Happening, Trump Edition

Trump has been a source of division everywhere, including in the Bureau.  Many electrons have been spewed and much vitriol unleashed on this very subject, inside and out of the Bureau.  You've probably seen a lot of the stuff outside.

There is a saying that you should include someone who opposes you in your group of advisors to keep you honest.  The Bureau contains conservatives, liberals and libertarians, and yes, there's more than one of us.  Your author is an anarcho-capitalist who tends to caucus with minarchists and is generally more to the right than left.  However, the ranks include at least one progressive, and it is to this poor soul that many, many questions have been posed.  We will address some of them below.

Why did liberals protest the Trump presidency?

Actually, this is something your author does not at all understand.  No liberal has been able to explain it.  However, some interesting bits have come to light.

One, the author simply was not aware of how certain the Clintonistas were of victory.  Trump's victory did not surprise this author.  The polls seemed to be roughly 50/50 heading into the election if you looked at the electoral college.  So, the first issue is that the left was sure of victory, which made the loss that much more damaging to their souls.

Two, there is an astonishing amount of disinformation about Donald Trump that is taken as gospel by the left.  Trump, of course, is the source of some of that, as he does not think much before he says something.  Also, there's a lot of carefully disseminated disinformation about Hillary Clinton in that she worked hard to convince everyone who would listen that she would defend the downtrodden, fix race problems and raise up the income of the lower classes.  The facts of the case aren't part of this essay, so your author will let them slide for now, which requires a powerful act of will.

Three seems to be the assumption that the right that elected Trump will control Trump.  It seems that Democrats tend to stay bought by the constituency that elected them whereas Republicans tend rather to pursue ideological purity that suits them.  Donald Trump, of course, does neither, which we will get into below.

Exactly what the protesters hoped to accomplish is, of course, a mystery, as is why the left attempted to force recounts everywhere and tried to suborn electors.  Rather ironically, both attempts backfired and made Trump's margin of victory higher.  But, I digress.  It seems that the left felt so strongly that Trump would lead us all to ruin and Hillary, despite all evidence to the contrary, wouldn't, so did the things that liberal firebrands have done throughout history: they set out to 'raise awareness' as if anybody was unaware of this election, and to use whatever tricks they had to avoid the manifest disaster they saw coming.  What that disaster would be, exactly, none of them have been able to inform me, because there really isn't that much to hang Trump on that Hillary herself hasn't been doing.

Is Trump a conservative?

Not at all.  Trump used to be a Democrat.  Seriously.  There are a ton of pictures of him beaming and shaking hands with the Clinton family.  They came out during the Republican primary.  They didn't come out in the general election, of course, because that would have been Clinton saying 'hey, don't elect Trump because he used to be friends with me', which would be counter-productive at the least.

Is Trump evil?

No.  Trump is a blowhard.  Trump is brash.  Trump gets in snits and says and does things that are inadvisable.  However, there is plenty of actual evidence that Trump listens to calmer people, that Trump himself tries to be a nice guy and that Trump does what he can to be what he thinks a good person should be.  That may not be what you think a good person should be, but Trump is not, essentially, evil.

So, why the hate?

Well, there are a lot of reasons.  First, Hillary was a solid candidate for those who would be our masters.  She stands for the advancement of the globalists, the bankers, and federal government power.  While that sounds like a load of conspiracy claptrap, it's really not because you can actually go read the documents these people have written, some of which were in the DNC emails stolen by some hackers somewhere.  The fact that it wasn't a Russian government operation is also not part of the scope of this essay, but it really wasn't likely to have been.

So, along comes Trump.  Trump isn't a good candidate by any stretch of the imagination.  He infuriated whole demographics.  Were the Democrats to put up any candidate but Hillary, he would not have won.  However, his very inability to avoid stuffing his foot in his mouth was perceived as evidence that he was speaking truthfully from his heart, so he was perceived as genuine, and the American, and, indeed, the world, electorate is clearly tired of managed leaders who do nothing to help the people.

Also, everyone that seems to be a part of 'the system' hated Trump.  Each of these he took out, one by one.  When George Soros counseled against voting for Trump. your author started seriously considering voting for Trump.  That sort of thing won him a large number of votes simply because he had the right enemies and he did not back down from them.  Rather, he doubled down.

So, we have a candidate that has no record, has a history of making up his own mind on the fly and who hates the sorts of people who had been in power for decades.  Yeah, there's enough of a reason to whip up the populace against him.

Will he be a good president?

The bureau does not know.  Nobody does.  This is a source of a lot of concern for many analysts.  Confidence in Trump is rather more dependent on the opinion a given analyst has of Hillary than anything else, as, if you believe, as this author does, that she is the most corrupt politician to arrive to the scene in many decades, at least since Richard Nixon, then you believe that nearly anyone would be better than she.

Since nobody knows anything about Trump other than his public businessman persona, nobody knows whether he will be good or bad, but the chance remains he will be good.  There is evidence of this.

First, he's already made good on one of his promises and kept some jobs here.  He's working on keeping more.  His methods are cause for concern, but Trump is about the deal, not the mechanics of governance as Hillary.  For this reason, Trump surveys the information available and then makes the best decision he can see at the time.  This means he won't ever be predictable.  It also means he won't let political realities impinge on what he thinks is best.

We see this in his recent statements about the F-35 program.  The bureau has long been of the opinion that the F-35 is an utter waste of money, built for a war that will never happen and already obsolete.  The one thing it is is fabulously expensive, and provides a lot of money stuffed into the coffers of LockMart, which is often payback for favors during electioneering.

Trump wasn't paid for by LockMart.  That means he can look at the F-35 for what it is.  Survey the internet for a list of its failings; there are plenty.  Simply put, the Chinese airforce can see it, it is not particularly good at a gunfight and it is basically not field-repairable.  Also, its airframe is not durable so we will have to replace them much sooner than an equivalent aluminum-framed fighter.  Add it all up and you can understand why many analysts all over the internet have been calling for the cancellation of the F-35 program.  Trump sees this and, surprisingly, has made a rational choice.

Will he cancel the program?  Who knows.  Perhaps he will see the political expediency of retaining the program.  Perhaps he is simply trying to renegotiate the contract and bring down the cost of the program.  Perhaps he will do the thing that the Bureau has been calling for and create a new set of stop-gap fighters such as the F-18E/F and the F-15 SE, which would tide us over until such a time as supersonic drone warfare is a thing.

This author, for one, remains cautiously optimistic that the Donald will, indeed, make America great again.  We still wrap ourselves in our cynicism because we've felt this way before, in the early days of the Obama presidency, as well as the early days of the Bush presidency, but, perhaps, this time, it really is different.

Why We Can Never Repay the Federal Debt

I keep hearing many people talk of repaying the United States' federal debt.  This cannot happen.  Let me explain.

First, as has been discussed before, the United States Dollar is actually properly called the Federal Reserve Note.  What does this mean?  It is emitted by the Federal Reserve Bank of the United States and not by the Treasury.  It is backed by nothing and is pure fiat money.  There is no way to meaningfully redeem a Federal Reserve Note except by paying taxes.

The way a Federal Reserve Note gets born is interesting.  Ok, it's interesting to economics geeks, but might be passably diverting to the rest of you.  First, the Treasury Department issues a bond.  Then the Federal Reserve Bank buys some of those bonds.  To do this, it creates money by simply flipping a few electrons in a computer.  Then, once it receives the bond, it considers that an 'asset' and makes loans, swaps and so on using that to create money into the banking system, getting a nominal interest on everything it does.

Yes, for each dollar it creates to buy a federal bond, it creates a matching dollar to stuff into the banks.  If it were to see the debt paid down, the Federal Reserve Bank would see its assets shrink, and, were it not mendacious, it would be forced to recall its loans to banks to cover the loss of assets.  This is how the law is set up to work.  If the Federal Reserve Bank sees its assets go down, it must lower its loans by the same amount.

It wouldn't actually take much of a lowering of the federal debt, then, to cause a major problem in the economy, so accustomed is it to suckling at the teat of easy money.  Remember the hoary economist adage 'all activity is at the margin'?  If the debt goes down by 1% that means that the Federal Reserve Bank must reduce the money in the banks by 1% as well.  If the bank already has a reserve of, say, the minimum, which we'll call 3%, then suddenly its reserves will drop below the minimum and it will have to scramble to increase its reserves, which it can do by either increasing interest income or simply reducing its loans.  This would mean a greater recession and possibly a deflationary depression.

Yes, what I'm saying is that the bankers have gotten themselves into a position where not taking out loans would be ruinous.  This means they get to have a sustained income in interest for little to no risk, meaning they can maintain their lifestyles at everyone else's expense.  This is the essential fraud of the banking system.

There is no easy way to get rid of this monkey on our backs.  It will take either an economic disaster of biblical proportions or an amazing political will to effect change.  Until then, the bank will continue to skim off the top of the economy.

Why does it matter?  The activities of the fed cause inflation.  That is actually a stated goal they have.  That inflation is a hidden tax as it means that someone else is spending money to compete with the money you make in your job, and that money they are spending is reducing your purchasing power, meaning your life is worse.  From my viewpoint, it is much worse than that because the banks take no risk but receive profits as a result of their neat little scheme, so they actually provide no value.

In a classical economic system, a person that lends money he has to provide capital for industry provides value.  Such a person has accumulated the capital, presumably, through careful effort, and thus is likely to make good decisions about the dispensation of his capital.  This means such a person is, effectively, a controller.  This person decides what economic activity will happen, and, should such a person gain more and more capital in the process, such a person can be presumed to be good at such decisions.

If there's no requirement to use personal capital, such a person is merely getting money for no risk, meaning that person has no skin in the game and is lots more likely to waste money, so the economy's efficiency will suffer, leading to less of the things people want being available, thus increasing the cost of things people want.

So, in effect, the banks are stealing from us and hoping we never notice.